Currency Ancient Dr. CA. Varadraj Bapat Indian Institute of - PowerPoint PPT Presentation

Currency Ancient Dr. CA. Varadraj Bapat Indian Institute of Technology, Mumbai varadraj@som.iitb.ac.in 9892413119

What is Currency? Currency is a form of Money which is generally accepted. As per IMF definition of money, money can be anything that can serve as a: • Unit of account , that is, provide a common base for prices; • Medium of exchange , something that can be used to transact from one another. • Store of value , something that can be used to save value and use it later; Money can be broadly classified into following categories: Coins, Paper, Bank, Electronic Money

History of Currency : Ancient Coinage The first use of currency in the world has been mentioned in one of the oldest literature of the world- The Rig Veda . The Rig Veda although (earlier believed to be around 1500 B.C) is much older than that. The exact vedic era is unfathomable but some scientists estimated it to be well before 50000 B.C., as per recent estimates. The knowledge have been passed on from generations to generations. Dr. David Frawley

History of Currency : Ancient Coinage Due to unsuitable medium (like Cows) for store or as the object of high value, an alternative medium Nishka was introduced by the Vedic people. References in Vedas: • As mentioned in Rig Veda, Rishi Kakshivat recieves a present of 100 Nishkas with 100 horses and 100 bulls from Raja Bhavayavya (Rig Veda, I.126.2) • In the Atharvaveda, another poet describes how his generous royal patron gave him a 100 Nishkas, 300 horses and 10000 cows. (ArthavVed, XX.127.3). When the poet prays for 10 Hiranyapindas or 100 Nishkas, they obviously seem to have asked for 10 or 100 articles of uniform size, value and weight.

History of Currency : Ancient Coinage The use of Nishkas as currency is quite clear from the Vedic texts (Vedic Index, I.455), the Jatakas and the Satapatha Brahmana. A snapshot from the book: Vedic Index of Names and Subjects, Volume 2 -By Arthur Berriedale Keith

History of Currency : Ancient Coinage Other references • Rajarshi Manu defines Nishka as equal in weight to 4 Suvarna or 320 Rattis (Laws of Manu (VIII, 137). Its relative weight is equal to 1 karsha or 80 Gunjas (140 grains). • The use of currency as a mode of exchange has references in Ramayanaand Mahabharata, as mentioned in the ancient Indian texts (Itihas). • There are references of exchanging uniform weights of Gold and Silver which establishes the fact commodity money was being used in that era and Gold was generally accepted medium of exchange. • Based on Dr. P.V Vartak’s astronomical dating, Ramayana era can be around 7000 B.C and Mahabharata war was fought around 5500 B.C. Hence, the use of commodity money can be traced back to 7000 B.C in Indian sub-continent.

History of Currency : Ancient Coinage The Indus-Saraswati Valley Civilization (more than 3500 B.C.) • The Indus Valley economy was heavily based on trading, it was one of the most important characteristics of this civilization. • Evidence of trade between between Harappan and Mesopotamian people. • Exchange of pottery, seals and other objects through middlemen from Dilmun. • Eminent Scholars debate the fact that Harappan seals were currency. • Existence of organized weight system, familiarity with gold as a precious commodity & a sophisticated system of trading point to existence of a definite form of exchange system in the period . The Mohenjo Daro and Harappan seals of Indus valley Civilization Source: RBI

History of Currency : Ancient Coinage The Iron Age (1500 B.C. - 500 B.C.) • Indian Sub-continent consisted of 16 Mahajanpadas. • Each Mahajanpada issued a unique coinage with varied symbols punched on the coin as a symbol of its sovereignty for circulation in its own jurisdiction. • These coins are thus called ‘Punch Marked Coins’ by modern numismatists named after the unique technique of using multiple punches to strike various symbols on the coins. A silver punch marked coin, 600-500 B.C. Length : 11.3mm / 0.44 inches Weight : 11.25 gm (100 ratti) Gandhara Janpada Source: http://www.columbia.edu/itc/mealac/pritchett/00routesdata/bce_500back/janapadacoins/janapa dacoins.html

History of Currency : Ancient Coinage The early coins in Lydia, 6 th Century B.C • One of the earliest coins (parallel to later Vedic period in ancient India) are found mainly in the parts of modern Turkey that formed the ancient kingdom of Lydia • Made from a naturally occurring mixture of gold and silver called Electrum . • The denominations ranged from one stater (weighing about 14.1 grams) down through half-staters, thirds, sixths, twelfths, 1/24ths and 1/48ths to 1/96th stater (about 0.15gm) The Mauryan Coinage • Consisted almost exclusively of silver Karshapanas of roughly 3.4 gm • Almost all Mauryan coins have five punches, as did the Magadhan coins before them • The economy must have been very prosperous, as the coins seem to have been minted in the millions. • Arthashastra, written by Chanakya, 340-290 B.C mentions silver coins as rupyarupa. Other types of coins including gold coins (Suvarnarupa), copper coins Silver karshapana used during Mauryan empire ( Tamararupa) and lead coins (Sisarupa) are also mentioned.

History of Currency : Ancient Coinage Post-Mauryan period of Indo-Greek influence (200 B.C. – 55 B.C.) • After decline of Mauryan empire, under King Demetrius-I emerged a new kingdom in North of Hindukush & North- western parts of India referred to as ‘Indo - Greek Kingdom’ by modern historians. • Demetrius issued a bilingual coinage using Greek script on obverse and North-Western Indian script of Kharosthi on the reverse • His successors, Agathocles and Pantaleon issued a bilingual coin using Greek and the North Indian script of Brahmi A coin during the Indo-Greek kingdom, the inscription on the left face is in Greek , and on the right is in the Indic Kharoshthi script Source: http://www.columbia.edu/itc/mealac/pritchett/00routesdata/bce_199_10 0/indogreekcoins/indogreekcoins.html The Indo-Greek period left an indelible mark upon the numismatic traditions of the Indian sub-continent long after the disappearance of the Indo-Greek kingdom.

History of Currency : Ancient Coinage Dynastic coinage post Indo-Greek Kingdom • The coinage after the decline of Indo-Greek period evolved with ruling dynasties. Western Kshatraps: ruled Western India between the 1 st and 4 th Century AD. The legends on the coins were gener • in Greek and Brahmi. • Gupta: Gupta coinage (4th-6th centuries AD), depicted the king on the obverse and a deity on the reverse. The deities were Indian and the legends were in Brahmi. Some Coins of the Gupta Dynasty The Coins continuously evolved over a period of time and were adopted across various countries in various designs. The 7 th century saw first use of Paper Money

History of Currency : Paper Currency Hundis: The ancient form of paper currency (Bills of Exchange) in India • A Hundi is a financial instrument that had evolved in India and was used in trade and credit transactions as a bill of exchange or an IOU. It was also used as a remittance instrument to transfer funds from one place to another. Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of money to a third person, named in the order. • Hundis are used for very long time, but writing about 1596, Abul Fazl, the greatest historian of medieval India, has given a detailed account of hundi from which it appears that the instrument was quite well- known at that time, and frequently used in monetary transactions. .

History of Currency : Paper Currency Banking in Bharat • Money lending activity in India could be traced back to the Vedic period. • The existence of professional banking in India could be traced to the 1000 BC +. • Kautilya’s Arthashastra , dating back to 400 BC+ contained references to creditors, lenders and lending rates. Banking was fairly varied and catered to the credit needs of the trade, commerce, agriculture as well as individuals in the economy. • [According to the Central Banking Enquiry Committee (1931)] .

History of Currency : Paper Currency Paper currency known as ‘flying money’ was used by the Chinese, during the Tang Dynasty (618-907 A.D) — mostly in the form of privately issued bills of credit or exchange notes — and used it for more than 500 years before the practice began to catch on in Europe in the 17th century. Flying Money These notes, known as “flying money”, were similar to modern day bank drafts. The vouchers were strictly limited for use in mercantile transactions between distant places. Merchants deposited cash at the point of origin in return for paper (flying money) guaranteeing reimbursement in distant provinces. Thus a double transfer of cash was made without any physical transfer between points. The picturesque term “flying money” evolved from this practice, as though the cash had “flown” from point of origin to destination. This one kwan note was issued during the reign of emperor Wu Tsung (841-846 AD)