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
• ne 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

• ldest 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

• bject 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
• f 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.

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.

History of Currency : Ancient Coinage

The Mohenjo Daro and Harappan seals of Indus valley Civilization

Source: RBI

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

History of Currency : Ancient Coinage

Source: http://www.columbia.edu/itc/mealac/pritchett/00routesdata/bce_500back/janapadacoins/janapa dacoins.html

The early coins in Lydia, 6th 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 ( Tamararupa) and lead coins (Sisarupa) are also mentioned.

History of Currency : Ancient Coinage

Silver karshapana used during Mauryan empire

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
• f 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 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

Source: http://www.columbia.edu/itc/mealac/pritchett/00routesdata/bce_199_10 0/indogreekcoins/indogreekcoins.html

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 1st and 4th 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.

History of Currency : Ancient Coinage

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 7th century saw first use of Paper Money

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

• ne 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

• f 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

• r 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

• f emperor Wu Tsung (841-846 AD)

History of Currency : Paper Currency

Real paper currency, as we know it today, first made its appearance in China’s Szechuan province early in the Sung dynasty. Printed in black and red from copper plates the

notes contained various scenes of village life. Denominations were applied to the notes using a brush and black ink, ordinarily for one string (1000) of cash. This note is perhaps the earliest paper money ever

• discovered. Called “hue-tsu”, it is a Sung government

issue dating from 1023 AD. During excavation, several brass plates used in the preparation of this early Chinese paper money were unearthed Marco Polo astonished the Western world when he, in his book, described the use of paper currency throughout Khubilai Khan’s Yuan dynasty in China.

History of Currency : Paper Currency

The origin of the word “rupee” is found in the Sanskrit rūpya “shaped; stamped, impressed; coin” and also from the Sanskrit word “raupya” meaning silver. The original rūpaya was a silver coin weighing 175 grains troy (about 11.34 grams). The silver coin remained in use during the Mughal period, and later during the British rule.

History of Currency : Evolution of Indian Rupee

Some excerpts from “THE PROBLEM OF THE RUPEE: ITS ORIGIN AND ITS SOLUTION” by Dr. B.R Ambedkar

• Under the Hindu emperors the emphasis was laid on gold, while under

the Mussalmans silver formed a large part of the circulating medium.

• Since the time of Akbar, the founder of the economic system of the Moghul Empire in India, the units of

currency had been the gold Mohur and the silver rupee. Both coins, the Mohur and the rupee, were identical in weight, i.e., 175 grs Troy and were supposed to have been coined without any alloy.

• In Southern India, to which part the influence of the Moghuls had not extended, silver as a part of the

currency system was quite unknown. The pagoda, the gold coin of the ancient Hindu kings, was the standard of value and also the medium of exchange, and continued to be so till the time of the East India Company.

History of Currency : Evolution of Indian Rupee

Name of the Rupee Weight in pure Grs. Name of the Rupee Weight in pure Grs. Akbari of Lahore 175.0 Delhi Sonat 175.0 Akbari of Agra 174.0 Delhi Alamgir 175.0 Jehangiri of Agra 174.6 Old Surat 174.0 Jehangiri of Allahabad 173.6 Murshedabad 175.9 Jehangiri of Kandhar 173.9 Persian Rupee of 1745 174.5 Shehajehani of Agra 175.0 Old Dacca 173.3 Shehajehani ofAhmedab ad 174.2 Muhamadshai 170.0 Shehajehani of Delhi 174.2 Ahmadshai 172.8 Shehajehani of Delhi 175.0 Shaha Alam (1772) 175.8 Shehajehani of Lahore 174.0

The table of the assays of the Moghul rupees shows how the coinage throughout the period of the Empire adhered to the standard weight of 175 grs. pure.

Coinage of the British East India Company

• In AD 1600, the East India Company was founded and set up trading settlements on the coast of India.
• They Started with using Silver coins and gradually moved on to minting Bronze-gilt and Gold Mohurs as well.
• In 1858, after the Indian Mutiny, the East India Company was disbanded and administration of India was

transferred to the British government. As a result, the coinage no longer carried the name of the East India Company, but the British monarch. East India Company silver Rupee, 1639 East India Company gold mohur, 1835 Victoria as Queen, gold Mohur, 1862 Victoria as Empress of India, silver rupee, 1877

History of Currency : Evolution of Indian Rupee

One Anna coin of East India Company, 1616

Indian Financial and Business Models 48

Features of Indian Business Models

Dominance

• f Non-

corporate Sector Generation

• f funds from
• wn and

close sources Family Business Community Drive Relationship, Faith and Goodwill as the Base Less Dependence

• n State

Risk-bearing Nature

Indian Financial and Business Models 49

Family Orientation

• Age-old , rich and continuous tradition of family business
• Predominant proprietorship pattern
• Required finance for initial investment raised through

family savings, earnings of the family, support from relatives and friends, and borrowings from local financiers using family goodwill and against family assets

• Two outstanding features of India’s family business:

 Tradition of surrendering one’s individuality before the family  Attitude of self-denial and dedication

• Families provide continuity to business
• Family and ethnic ties give competitive advantage
• Advantages of division of responsibilities, pooling of

talents and sharing of risks

Indian Financial and Business Models 50

Dominance of Non-corporate Sector

Industry 2002 - 03 Manufacturing 36.6 Construction 62.8 Trade, hotels and restaurants 74.2 Transport, storage and communication 62.9 Financing, insurance, real estate & business services 39.6 Community, social & personal services 17.3 Net domestic product at factor cost 56.7 Share of Unorganized Segment in Net Domestic Product by Economic Activity

• Share of non-corporate sector to the Indian economy and

business is much higher than other sectors

Source: Statement 76.3, Statement of National Account Statistics 2005, Central Statistical Organization, Government of India.