Sultan Muhammad Tughlaq (r: 1325-1351) was an exceptionally ambitious ruler. As we have previously learned, one of his curious schemes involved the transfer of the capital to Devagiri, which ultimately proved to be a failure. Muhammad's third project was the introduction of a token currency, specifically copper and brass coins.
[Muhammad Bin Tughlaq's coins can be categorized into four classes: those struck in memory of his father, those bearing his own name, those recording the names of the Khalifas, and the forced currency. During the Delhi Sultanate, two types of tankas were in circulation: silver and gold, each weighing 175 grains. Muhammad introduced a gold dinar weighing 200 grains and an adali, a silver coin weighing 140 grains, soon after his accession.]
According to Barani, the Sultan's bounty and munificence had drained the treasury. The transfer of the capital to Devagiri had also resulted in significant expenses. 'The Sultan, in his lofty ambition, had conceived it to be his work to subdue the whole habitable world and bring it under his rule. To accomplish this impossible design, an army of countless numbers was necessary, and this could not be obtained without plenty of money.' As his revenue and troops were insufficient, he introduced copper money and mandated its use in buying and selling, on par with gold and silver coins.
'Among other sources of loss to the treasury was the Sultan's decision to make the copper mohur equal in value to the silver mohur. Those who refused to accept the copper mohur were punished severely,' according to Badauni. This led to corrupt practices throughout the kingdom.
Barani explains that the proclamation of this edict turned every Hindu household into a mint. They began to make millions of fake copper coins, which they used to pay their tribute and purchase horses, weapons, and goods. Even goldsmiths began to strike copper coins in their workshops, and the treasury was soon filled with these fake coins.
'Dishonest and rebellious individuals set up their own mints in their homes and produce counterfeit coins. They would then use these coins to acquire silver, horses, weapons, and other luxurious items, ultimately amassing great wealth and status,' Badauni corroborates this account.
Ferishta noted that the mint was poorly regulated. Bankers amassed vast fortunes through coinage, while merchants paid the impoverished manufacturers in copper. Meanwhile, the merchants themselves received silver and gold for the goods they sold in foreign markets.
This sudden shift in currency caused a significant disruption in trade and commerce, as distant countries refused to accept copper coins. As a result, the value of gold coins skyrocketed, with one gold coin being worth up to fifty or sixty copper coins, and even up to a hundred according to Barani.
According to Barani, 'When the copper tankas had become more worthless than clods, the Sultan repealed his edict'. He then ordered that anyone in possession of copper coins should exchange them for gold coins at the treasury. 'People who possessed thousands of these copper coins, and had flung them into corners along with their copper pots, now brought them to the treasury, and received in exchange gold and silver tankas, shashganis and duganis,' resulting in a significant increase in wealth. This exchange proved to be highly profitable for the people, and many became wealthy as a result. However, the treasury suffered a great loss due to the large sums of money that went out in exchange for copper coins. Yahya mentions that for a long time, the copper coins remained piled up in the palace of Tughlaqabad, even during the reign of Sultan Mubarak Shah Sayyid.
Ferishta states that after the treasury was emptied, there still remained a heavy demand, and this debt the Sultan struck off.
Agha Mahdi Husain suggests that Muhammad's experiment in credit currency may have been driven by the necessity of providing an adequate substitute for the much-needed silver. Ferishta, on the other hand, believes that Muhammad was inspired by the Chinese custom of using paper money.
In 1260, Kublai Khan, the Mongol emperor of China, revolutionized the monetary system by introducing a paper currency called Chao. Marco Polo, a Venetian merchant and explorer, documented that to create this currency, Kublai Khan ordered people to collect the bark of the mulberry tree and extract the thin rind between the bark and the interior wood. From this material, cards were formed, resembling paper, in black color. These cards were then cut into various sizes and printed with their respective values.
Each piece of paper was issued with great solemnity and authority, as if it were pure gold or silver. Every official responsible for the task had to write their name and put their seal on each note. Once this was done, the chief officer would apply vermilion to the seal and impress it upon the paper. This would leave a red stamp of the seal on the note, ensuring its authenticity.
By imperial edict, Kublai Khan declared his paper currency to be accepted as money throughout his vast dominions. The punishment for forging this currency was severe. The Khan's authority was so great that no one dared to refuse it under the threat of punishment.
In addition, merchants arriving from India or other countries with precious commodities such as gold, silver, gems, or pearls are prohibited from selling to anyone other than the emperor. The emperor had a team of twelve experts who appraised these items, and he pays a generous price for them in the form of paper currency. With this currency, the merchants could buy whatever they needed anywhere in the Empire.
Several times a year, the Khan would make a proclamation, inviting anyone with gold, silver, gems, or pearls to bring them to the mint for a handsome price. The owners were delighted to do so because they knew they would receive the best possible price. In this way, nearly all the valuables in the country came into the Khan's possession.
If any of the paper currency became damaged, the owner could exchange it for fresh notes at the mint, with a small deduction of 3 percent.
Interestingly, similar notes were issued by the Chinese as early as the ninth century, while the Italians used money made of stamped leather before Marco Polo's time. Even the Japanese had their own version of paper money before Kublai Khan's reign.
In 1294, Gaykhatu, the ruler of Persia (r: 1291-1295), attempted a similar experiment that ultimately failed. Gaykhatu was lavish in his expenditure, which quickly depleted the treasury. Thus he introduced Chao, a form of Chinese paper currency. The notes were rectangular pieces of paper with Chinese writing, followed by the Muhammadan profession of faith in Arabic. The scribe's name and the value of the note were also inscribed, along with a warning that anyone who altered or defaced the note would face severe consequences. Despite these warnings, people refused to accept the Chao, leading to bazaar riots and a halt in economic activity. Eventually, Gaykhatu was forced to abolish the paper currency.
Sultan Muhammad Tughlaq was aware of the failure of paper currency in Persia and chose to use copper instead. However, he failed to implement any measures to prevent fraud and forgery, leaving no means to distinguish the royal mint from private forgeries.
In contrast, when Muhammad attempted the token currency experiment, there were no riots or rebellions. According to numismatic evidence, the token currency only lasted from 1329 to 1332, and people simply forgot about it. When Ibn Battuta visited Delhi in 1334, he heard nothing about the token currency.
"He who obeys the Sultan, truly he obeys the Merciful one (Allah)"