Saturday, August 22, 2009
Nature and Evolution of Monetary Standards
The history of Monetary Standards in Pakistan can be traced back to the history of coinage in the undivided Indian subcontinent. Alexander Del Man in his book “A History of Money in Ancient Countries” has stated that metals like gold, silver, copper, iron in the shape of lanives, axes, pots, fish hooks etc were used in India in ancient times. The un-standardized metals of over 5000 years old have recently been discovered din India. The search in stupa area of Mohen-jo-Daro has led to the discovery of much worm out gold coins whose history runs far back into antiquity. The old gold coins were named as Nishka. In the early civilization in India, the chief metals used as coins were gold, silver, bronze and iron. The use of iron and bronze metals was steadily discarded; probably those base metals were discovered in abundance and also required in large quantity for ordinary transactions.
The use of gold and silver metals in un-coined forms continued for a long time as a media of exchange, because these metals possessed intrinsic value and were also required for ornamentals. In the beginning symbols were impressed on the face of coins by means of punches. Then as time passed on and technology developed, the shape and execution of the coins was improved considerably. In the region of Guptas the coins had some shape and fineness in them. An attempt was made by King Altamash, the great, to introduce round shape silver coins weighing 173 grains each. Muhammad Tughlaq further brought revolutionary changes in the coinage system by introducing token currency of copper coins in the country. Sher Shah Suri got the instruments of exchange better designed and introduced silver rupee weighing 172.5 grains as standard coin. He also issued a copper coin of small denomination which was named as Dam. King Akher made slight improvements in the coinage system. Aurangzeb too had his share in the standardization of coinage. The collection of state revenue was done in the currency of the country named as Dam.
With the fall of Mughal Empire the country was spilt up into small states. They had their own coins of different sizes, shapes, fineness and impression on them. When the East India Company came to the sub-continent, there were over 1000 different coins of various denominations. The mers was cleared by the company by standardizing the currency. It introduced a rupee silver coin in 1818 weighing 180 grams having 11/12 fineness as the standard coin of country. The act of 1835 finally got approval of the silver rupee as the standard coin.
The coinage of gold standard also continued in the country but they ceased to exist as legal tender money. The ratio of exchange of one gold coin named as Molar was equal to 15 silver rupees for all transaction purposes. In the year 1866, the Coinage Act was amended and the government was allowed to mint other metals bronze and nickel in addition to silver for coins of various denominations. During the Second World War people began to hoard and melt the silver coins as the intrisic value of the rupee exceeded its face. The government then demonelized Victoris and King Edward VII standard silver rupee and half rupee in 1941, and 1942, and King George V and King George VI silver rupee and half rupee in May 1943. Government introduced pure nickel rupee, half rupee and quarter rupee in 1946. There was no central bank at the time of partition in 1947 in Pakistan. The government of Pakistan authorized the Reserve Bank of India to issue currency notes and coins till June 30, 1948. The Indian coins remained legal tender for one year after partition in Pakistan. The new coins issued by the Government of Pakistan are pure nickel rupee half rupee and quarter rupee.
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