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BW Businessworld

Labha From Moolah

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As, when the rainy season comes,
the copious waters carried by clouds
are poured on mountaintops, and these
in turn flow down and fill the sea,
so goods stream from the sea to the land,
and from the land to the sea.
Unmeasured are the abundant wares
here brought and piled.

So wrote the Sangam poet Kannanar about the Chola port-city of Puhar. The half a millennium from the fall of the Mauryas in the second century BCE to the rise of the Guptas in the fourth century CE saw a spectacular expansion of the Indian economy, particularly of trade and industry. The ground for this expansion had been laid in the preceding centuries, during the Magadhan imperial expansion under the Nandas and the Mauryas, which resulted in the political, administrative and cultural integration of a large part of the subcontinent, and facilitated the emergence of an extensive and relatively unified market, regulated by a uniform set of laws, and with a fairly standardized system of weights and measures and currency. The momentum of this economic expansion continued even after the collapse of the Mauryan Empire; indeed, the pace of expansion accelerated then, even though political fragmentation had led to diversity of administrative regulations, weights and measures and currency, and to vexing exactions at the frontiers of the many kingdoms into which India was then divided.

Indian economy could overcome all these hurdles because it had by then attained the critical mass needed to keep growing even in an adverse political environment. Several developments had contributed to this, but the crucial factor was that the Indian economy at this time had, as its solid base, a thriving agricultural sector, for surplus agricultural produce available for disposal in the market was a prerequisite for the growth of trade in ancient economies. Another which not only stimulated trade by replacing the cumbersome barter system, but also facilitated the long-term accumulation of wealth-the formation of capital-indispensable for fuelling industrial and trade expansion. Growing literacy was yet another factor, for this enabled the wide use of promissory notes, letters of credit and pledges needed for efficient commercial transactions.
In a way, even the collapse of the Mauryan Empire benefited economic expansion, as it freed the economy from the rigours of state control. External factors-the high demand for Asian goods in the Roman Empire, and the integration of India with the other great civilizations of the age consequent to the establishment of several Indo-Central Asian kingdoms at this time- also significantly favoured the expansion of Indian economy.

COINAGE WAS FIRST introduced in India in the mid-first millennium BCE, initially in the Indus Valley, quite probably under the influence of Persians who ruled over the region at that time. From there monetization spread rapidly to the Gangetic Valley, and eventually to the peninsula. But progress in this was not uniform throughout the subcontinent. And everywhere in India, the barter economy continued to exist alongside the money economy well into medieval times; indeed, some sections of society predominantly used the barter system through this entire period. In South India, trade during the early centuries of the Common Era was entirely based on barter. There is no mention at all of money in Sangam literature. 'They sell fish and bring in boats heaps of paddy which fill the house,' writes a Sangam poet in Purananuru.

Adds Kannanar:
Those selling honey and edible roots
exchange them for fish-oil and wine.
They barter sugar cane and roasted rice
for toddy and venison . . .
And Maruthanar, another Sangam poet, writes:
Sea captains that sail over
the vast ocean in showy ships
from great and distant lands . . .
bring here choice horses and
other precious things to exchange
for fine jewels here made . . .

Even after coinage was introduced, South Indians continued to use barter as the chief mode of trade for many centuries, reserving money for longdistance trade or for trade in articles of high value. Very few ancient South Indian coins have been discovered, and those that have been found are quite crude, and their quality would remain poor well into medieval times, indicating the backwardness of money economy in the region.

IN THE BEGINNING, coins were primarily used by traders as a business facility, and were not in general circulation. And they were issued by traders and guilds, not by governments. These early coins were just flat pieces of precious metal of irregular shape, but of a specified weight and purity. Their value was the value of their metal. They bore no inscriptions, but had certain identifying marks punched on them by the guild that issued them, to indicate their weight and purity, which were regularly checked by the guild during the period of their circulation. 'The checking,' notes Kosambi in his study of ancient Indian coins, 'was shown by tiny marks punched on one side, which guaranteed weight and purity to all who knew the code of guild marks.' Money-changers, as Cunningham noted, were making similar marks even in modern times.

'The other side of the silver piece was originally blank at the time of issue,' continues Kosambi. '[In later times, kings] stepped in to put their own issuing marks on the coins, on the side that had once remained blank . . . Violent changes of dynasty are revealed by counterstruck coins; the new king restruck the coins of the displaced ruler found in the treasury with his own marks before issuing them again for circulation.' But even after kings took to issuing coins, minting was not kept a state monopoly; private parties were allowed to mint coins even in the rigorously controlled economy of the Mauryas, on the condition that issuers met the currency standards laid down by the state, and paid due fees to the royal treasury. Some dynasties-the Palas of Bengal, for instance-did not regularly mint their own coins, but allowed other existing coins to circulate freely.

The early Indian coins, termed punch-marked coins, were the regular medium of exchange among traders for several centuries, and they have been found in large numbers all over the subcontinent. But gradually, from around the second century BCE, these coins were replaced by die-struck or cast coins of fairly regular shape, and these usually bore inscriptions, figures and symbols. In South India, however, the old punch-marked coins continued to be in circulation far longer than in North India.

Excerpt from Abraham Eraly's recently released book, The First Spring: The Golden Age of India. With permission from Penguin Books India.