diff --git a/src/core/PaperScope.js b/src/core/PaperScope.js
index a392a789..87ef3880 100644
--- a/src/core/PaperScope.js
+++ b/src/core/PaperScope.js
@@ -49,6 +49,7 @@ var PaperScope = Base.extend(/** @lends PaperScope# */{
 		paper = this;
 		// Default configurable settings.
 		this.settings = {
+			applyMatrix: true,
 			handleSize: 4,
 			hitTolerance: 0
 		};
@@ -89,6 +90,8 @@ var PaperScope = Base.extend(/** @lends PaperScope# */{
 	/**
 	 * Gives access to paper's configurable settings.
 	 *
+	 * <b>settings.applyMatrix:</b>
+	 *
 	 * <b>settings.handleSize:</b> 
 	 *
 	 * <b>settings.hitTolerance:</b>
diff --git a/src/item/Item.js b/src/item/Item.js
index 0fdd983e..1c172542 100644
--- a/src/item/Item.js
+++ b/src/item/Item.js
@@ -96,6 +96,8 @@ var Item = Base.extend(Callback, /** @lends Item# */{
 			project = paper.project;
 		if (!internal)
 			this._id = Item._id = (Item._id || 0) + 1;
+		// Inherit the applyMatrix setting from paper.settings.applyMatrix
+		this._applyMatrix = this._canApplyMatrix && paper.settings.applyMatrix;
 		// Handle matrix before everything else, to avoid issues with
 		// #addChild() calling _changed() and accessing _matrix already.
 		if (point)