This reinforcing band is fitted around the end of a wooden tool handle right where the metal shank or tang enters the wood. Chisels, gouges, and files rely on ferrules to absorb the outward pressure created when the tool is struck or pushed heavily. Without this metal collar, the wooden handle would quickly crack under the stress of normal use.
Heard on the job
The ferrule on my favorite bench chisel is loose, so the handle rattles when I strike it.