Digital Rare Book:
Indian Finance, Currency and Banking
By S.V.Doaraiswami
Printed by G.Ramaswamy Naidu & Son, Madras - 1914

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Book Excerpt:

In European and American countries there is a vast number of able minds at work on their financial problems. Mr. Bagehot says : "There never was since the world began so high and massive a brain power applied to any one question as is applied to these questions in England."

I do not propose to-day to deal exhaustively with the present problems of currency and finance that are agitating the public mind and which formed the subject of the two Parliamentary debates in November 1912 and February 1913. I shall give a brief sketch of the history of Indian currency from the earliest times. The assertion that India has had nothing but a silver coinage from time immemorial (constantly made by ill-informed and interested critics), and that it is not possible to change the inveterate habits of a people, is utterly erroneous. That the people of India have used gold money from time immemorial, preferring gold to silver as currency, is an historical fact beyond dispute. There was no silver money in South India till 1818, when the East India Company forced the silver rupee upon the people for the first time against their will. In 1835 the silver rupee was declared to be the only legal tender throughout India, while gold coins were allowed to circulate at their market value and received in the Government Treasuries for public dues. In 1853, Lord Dalhousie demonetised the whole gold currency of India. It was reserved for the British to accord silver the present dominant position it now holds in the currency.
During the centuries of the Gupta and Kushan dominations large issues of gold coins were struck, specimens of which still exist in hundreds. The early Pandya and Chola coinage consisted exclusively of gold, with tiger and fish emblems. During the predominance of the Chalukya dynasty several forms of gold pagodas were issued some bearing the designs of conch and discus and some of the god Vishnu on them. When Hyder Ali of Mysore conquered the Polygars, he issued gold pagodas with the picture of Parvathi and Siva on one side and his initials on the other. In North India the Hindu coinage consisted exclusively of gold. It was the Pathan Kings, who issued the gold mohur and the silver rupee together. Akbar issued a splendid coinage in gold and silver, and Jehangir issued the remarkable zodiacal gold mohurs and silver rupees as well as those famous bacchanalian gold mohurs, on which he is represented as holding the winecup. The Maharajas of Indore and Nepal, the Peshwas and Sivaji, issued gold coins with Sanskrit inscriptions.

In 1816 Lord Liverpool reformed the English currency and declared the sovereign as the standard coin, limiting silver as legal tender up to only two pounds and closing the mint to the free coinage of silver.

The East India Company in 1818 instead of following the example of England, declared silver as the standard for India. They stopped minting gold pagodas and forced the rupee as the standard coin of South India, where gold had hitherto been the 'principal currency. In 1835 the silver rupee was declared to be the sole legal tender, though gold was authorised to be received in the public treasuries and gold mohurs were coined. In 1853 Lord Dalhousie demonetised gold, declaring that no gold coin of any sort would be received at the public treasury. For the first time India became solely a silver using country: This act of Dalhousie has been the origin of all our present monetary troubles. For 62 years we have
suffered from the currency muddle intensified by the experiments of every financial quack in power, and a satisfactory system of currency has not yet been established. In 1864 the Government of India requested the Secretary of State to make gold legal tender throughout British India at a fixed rate.