Clay, metal, paper: How our money evolved
Money has had several avatars, and Indian paper money is now 160 years old. See the journey it has taken.
600 BCE: Kingdoms in present-day India, China and Turkey move away from the barter system and issue coins within their kingdoms and republics. The clay and metal money bears recognisable motifs such as flowers, wheels, swastikas.
322 BCE:The Mauryan empire in India issues punch-marked coins that raise the motif above the coin’s face. Lead, copper, silver and gold coins feature portraits of rulers, a practice borrowed from the Greeks of the time.
118 BCE: The Chinese empire takes its first steps towards lighter, more representative money by issuing tokens or promissory notes on leather.
1024: In Sichuan, mulberry-paper receipts are used instead of bulky strings of coins. These are soft, cloth-like, printed on both sides in black and red, with coin values handwritten on them. Sixteen merchants are awarded rights to issue these jiaozi (exchange) bills, and ultimately the government takes over, issuing the first fixed-denomination banknotes. They’re called huizi.
Over the next century, paper vouchers or hundis will gain acceptance in central and western Asia all the way to Indonesia. They are used mainly by merchants, to buy and sell, borrow and lend, and remit funds.
1296: Kublai Khan’s currency, the chao, helps popularise paper across the Chinese Empire, and spreads all the way to Persia, where they called it djaou or djaw. But it baffles Europe. Those reading about paper money in Marco Polo’s travels think it so preposterous, they question whether he is making it all up.
1294: Under a century of Delhi Sultanate rule, coins issued in northern India change from punch-marked rupees to minted tankas and jittals, the imagery replaced by calligraphy, in keeping with Islamic belief.
The Persian city of Tabriz experiments with paper money at this time, but issues too much of it, sending the trading port of Basra into financial ruin.
1455: The Chinese goof up too. Their over-production of paper notes devalues their money. Paper notes are then eliminated and will not return for centuries.
1542: The rupee returns! The Afghan Sher Shah Suri’s brief rule in Delhi restores the old monetary system by issuing a 178-gm silver rupiya, divided into 40 copper paise. Under Mughal rule, northern India is eventually unified under one currency for the first time.
1605: Mughal emperor Jahangir issues beautiful coins featuring couplets, and a special series representing the twelve signs of the Zodiac. His son Shah Jahan later has most of them melted, so they are hard to find today.
1661: Dutch entrepreneur Johan Palmstruch, who founded the Stockholms Banco in collaboration with the Swedish government, introduces kreditivsedlar or credit notes. They come in set denominations, are watermarked, bear a date of issue, bank seal and eight banker signatures. A hit! But they issue too many too and the bank is liquidated.
1694: England learns from Sweden and sets up the Bank of England to issue Pound Sterling notes to help fund a war with France.
1700s: India’s colonial-era cities get their own banks. The Bank of Bombay is established in 1720, and issues interest notes. Early money-like notes are issued by the Bank of Hindostan in 1770, General Bank of Bengal and Bihar (1773), Bengal Bank (1784) and Carnatic Bank (1788). Rangoon, Kanpur, Lahore and Karachi establish banks too. The notes are circulated within banking regions. For the public, it is a convenient and safe way to move money around. For the banks, it creates wealth from thin air – banks were permitted to print as much as 1/3rd more notes than they had coins in reserve.
1757: The British East India Company starts to issue its own money in India and mints its first rupee coins in Calcutta.
1764: In British colonies in North America, money is printed using engraved plates in multiple colours, with blue fibres and mica mixed into the pulp to make the notes more difficult to counterfeit. But a Currency Act then takes control of the monetary system, abolishing local notes in favour of pound-based British money. Protests follow, precipitating the American War of Independence in 1775. The US dollar is instituted in 1792.
1835: To clear up the confusion arising from having more than 100 kinds of rupees and coinage in circulation, India adopts the Madras rupee of 1818 as the uniform currency format for all of British India. New coins bear the image of King William IV and indicate denominations in English and Persian. Coins issued after 1840 bear the image of the new sovereign, Queen Victoria.
1861: The Paper Currency Act is passed, making it illegal for anyone but the British government to issue notes in the colony. The first notes issued under the Act feature an image of Queen Victoria, and come in denominations of ₹10, 20, 50, 100 and 1,000. The Re 1 note comes later, amid the scarcities of the First World War.
1874: France’s Banque de l’Indochine issues its own roupie notes, which will remain in circulation in Pondicherry until 1954.
1883: The Portuguese issue rupia notes for their colonies, which will remain in use in Goa until 1961.
1928: India gets its first currency printing press, in Nashik. By 1933, it is producing all of British India’s currency notes.
1930: Amid the Depression, the US begins to issue $100,000 notes. They are never used in public circulation, but to transfer money between the country’s 12 federal reserves.
1940s: After the economic ravages of World War 2, England prints nine £1 million notes to move money within and between its banks. Two notes survive, in private collections (they’ve long been demonetised).
1935: The Reserve Bank of India is established to regulate British India’s currency.
1949: New money for a new India, with Indian symbols like the Sarnath pillar replacing imperial ones.
1953: More denominations acquire new designs, and Hindi text.
1957: Goodbye annas and pies. India moves to the decimal system on all coins and notes.
1971: US President Richard Nixon unlinks the US dollar’s representative value from gold — a landmark decision. Central banks around the world eventually move to this new fiat currency system.
1983: Countries such as Costa Rica and Haiti experiment with polymer-based or plastic currency notes in the hopes that they will be more durable. Instead, the ink wears off and they have to be discontinued.
1998: The Philippines issues the world’s largest banknote by size, to mark 100 years of freedom from Spanish rule. The commemorative 100,000 peso note is 14 inches in length and 8.5 inches in height. Collectors can buy it for 180,000 pesos.
1999: Twelve countries of the European Union switch to the Euro. For the first three years it is only used for accounting purposes and electronic payments. The first coins and banknotes are issued in 2002, constituting the biggest monetary changeover in history.
2009: During the last days of its period of hyperinflation, Zimbabwe issues a 100-trillion-dollar note, the highest denomination ever issued globally. It barely buys groceries for the week. (On the ground, most people are instead using the US dollar.)
2011: The Reserve Bank of India and Government of India formalise the ₹ symbol in 2010, putting it on banknotes and coins a year later.
2016: Overnight, the ₹500 and ₹1,000 denominations are demonetised. This is not the first time a currency note is removed from the Indian monetary system, but it is by far the largest such operation ever conducted in the country.
(Sources: RBI Monetary Museum; Indian Monetary History by J Laurence Laughlin (1893); The Conjuror’s Trick by Bazil Shaikh (2020); One Rupee One Hundred Years: 1917-2017 by Rezwan Razack (2017); Fractional Pieces and Non-Metallic Monies in Medieval India (1200–1750) by Najaf Haider from Money in Asia (1200-1900))