History Optional Paper- 1 Solution – 2004: Q.5 (b)
Q.5 (b) Write a short essay on: “The Token Currency System introduced by Muhammad Tughlaq.”
Muhammad bin Tughlaq wanted to reform the currency system. An experiment which was launched by Muhammad bin Tughlaq after the exodus to Deogiri in 1329-30, was the token currency. He issued coins of copper and brass which were to exchange as equal with silver and gold.
Early examples of Token Currency
Token Currency System was not a totally new thing. Paper currency in China was known. The Mangol ruler, Kublai Khan, had introduced in the first year of his reign in 1261 a paper currency called the chan which had lasted throughout his reign till his death in 1294. It had been accepted by everyone including foreign traders. This fact was widely known, and it is referred to by contemporary historian Barani to explain the background of Muhammad bin Tughlaq’s action.
Later, in 1294, an Iranian king had tried to introduce the paper chan in his country, but it had led to serious disturbances, and had to be discontinued after eight days.
Motives of Muhammad Tughlaq
He wanted to increase his resources for grand scheme of conquest and administrative reform, but revenue had fallen due to famine situation. The sultan’s treasury had also been exhausted by him reckless grant of gifts and awards.
According to Barani, it was part of his ambition to conquer all the inhabited quarters of the world for which a huge army was needed and a large treasury to pay them. Thus, it was for the purpose of supplementing the treasury.
So he introduced token currency and struck vast quantity of cupper coins known as Dirham.
However, shortage of gold and silver could not have been a major reason for the step because, when the experiment failed, the sultan called in the token coins, and paid gold and silver in exchange for them.
Failure of Token Currency System
The experiment failed largely because the sultan was unable to prevent forging of the new coins. Barani says that the ‘house of every Hindu became a mint’. Perhaps, what he implied was that the gold-smiths who were Hindus knew how to make alloys of copper and brass coins, and did so.
The state suffered a big loss because the khuts and muqaddams in the rural areas paid the land-revenue in the copper and brass coins, and purchased arms and horses with the same currency (Barani’s Tarikh-i-Firuz Shahi).
Soon, there was such an abundance of these new coins that their value depreciated rapidly. Trade and commerce began to be disrupted. Hence, Muhammad bin Tughlaq cancelled his orders, and redeemed the token coins by gold and silver coins. This could have been done only for the coins issued from the royal mints.
The token coins issued by Muhammad bin Tughlaq were both in copper and brass. None of the earlier sultans had issued any coins in brass which was an alloy of copper with tin and zinc etc.
Muhammad bin Tughlaq had issued coins of bronze which had distinct inscriptions in Persian and Arabic to mark the new coins. Confusion arose because ordinary people could not easily distinguish between these and the forged coins as they cannot read the language.
The forged coins brought by people for redemption, but not accepted by the government, lay heaped in mounds outside the fort for a long time.
The failure of the token currency must certainly have affected the treasury adversely. But it was not too serious a blow, or upset public life. It was given up by 1333, three years after its introduction. The token coins are not mentioned by Ibn Battutah who came to Delhi in 1334. This shows that the the entire episode had been speedily forgotten.
Significance of the Token Currency System
The idea of a token currency is known to everyone in the modern world, but it was a novelty in medieval times.
The experiment if successful, would have led to an expansion of India’s trade and commerce because there was a world wide shortage of silver at the time. This is reflected in the reduction of the silver content of the tanka by Muhammad bin Tughlaq from 178 to 140 grains early in his reign.