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<p>[QUOTE=&quot;bgarg, post: 951686, member: 1876&quot;]Indian currency system was pretty complicated before British period. To understand the currency issue in early 19th century, knowing few historical details about existing currencies is essential.</p><p><br /></p><p>The economic system in India was founded by famous mogul emperor Akbar and his unit of currency was gold <i>mohur</i> and silver <i>rupee</i>. For the first time, he introduced the rupee coin in Indian region. He decided that both, the mohur and the rupee will be of identical weight, i.e. 175 grains. During his period, the coins were supposed to be minted without any alloy.</p><p><br /></p><p>During entire mogul period (for roughly 300 years), the right to mint coinage was exercised with great sense of responsibility. None of the mogul emperor debased their coinage and throughout the period of empire everybody adhered to the standard weight of 175 grains.</p><p>(Few examples of rupee weights: </p><p>&nbsp;&nbsp;&nbsp; Akbar&nbsp; &nbsp; &nbsp; - Rupee of Lahore&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; - 175.0 grains</p><p>&nbsp;&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp; - Rupee of Agra&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; - 174.0 grains</p><p>&nbsp;&nbsp;&nbsp; Jahangir&nbsp; &nbsp; &nbsp; - Rupee of Agra&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; - 174.6 grains</p><p>&nbsp;&nbsp; &nbsp; &nbsp;&nbsp; - Rupee of Allahabad&nbsp;&nbsp; - 173.6 grains</p><p>&nbsp;&nbsp;&nbsp; Shah Jahan&nbsp; &nbsp; - Rupee of Agra&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; - 175.0 grains</p><p>&nbsp;&nbsp; &nbsp; &nbsp;&nbsp; - Rupee of Delhi&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; - 175.0 grains</p><p>&nbsp;&nbsp;&nbsp; Alamgir&nbsp; &nbsp; - Rupee of Delhi&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; - 174.8 grains</p><p>&nbsp;&nbsp; &nbsp; &nbsp;&nbsp; - Murshidabad&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; - 175.9 grains</p><p>&nbsp;&nbsp;&nbsp; Shah Alam&nbsp; &nbsp;&nbsp; - Various mints&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; - 174.0 – 175.8 grains)</p><p><br /></p><p>During Shah Alam’s period (around 1770), the mogul empire started disrupting. As the mogul empire was falling, the local rulers in various states started using imperial mint centers as factories to mint their own coins. During this time, the right to coinage which was exercised so religiously before, started being abused. Everywhere the mints were kept in full swing and soon the country was filled with diverse coins(weight and purity). Individual states proceeded to debase their coinage to a different degree without changing the denomination. This caused severe trade issues as there was no longer any “imperial currency”. Every state had its own local currency which was good only in its own states and not acceptable by any neighboring states (unless one goes through a money exchanger and converts one local currency into another).</p><p><br /></p><p>By this time, the English East India Company, who succeeded to the empire of Moguls in India, decided that the region must have uniform good money. A uniform currency which can be used in all parts of India without worrying about local conversion rates.</p><p><br /></p><p>The currency reform was proposed by the Directors of the Company in their famous dispatch, dated April 25, 1806, to the authorities administering their territories in India. In this historic document they mentioned:—</p><p><br /></p><p>&quot;21. ......... that silver should be the universal money of account (in India), and that all ...... accounts should be kept in the same denominations of rupees, annas and pice.......”</p><p>The rupee was not, however, to be the same as that of the Moghul Emperors in weight and fineness. The proposal was that</p><p>&quot;9. ......the new rupee ...... be of the gross weight of— </p><p>Troy grains&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp; ...&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; 180 </p><p>Deduct one-twelfth alloy&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; ...&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp; 15 </p><p>And contain of fine silver troy grains.&nbsp; &nbsp;&nbsp; 165&quot;</p><p><br /></p><p>This was the proposals put forth by the Court of Directors for the reform of Indian currency.</p><p><br /></p><p>The choice of a rupee weighing 180 grains troy and containing 165 grains pure silver as the unit for the future currency system of India was a well-reasoned choice.</p><p><br /></p><p>The primary reason for selecting this particular weight for the rupee seems to have been the desire to make it as little of a departure as possible from the existing practice. It was believed that 180, or rather 179.5511, grains was the standard weight of the rupee coin originally issued from the Mogul Mints, so that the adoption of it was really a restoration of the old unit and not the introduction of a new one. </p><p><br /></p><p>Another advantage claimed in favor of a unit of 180 grains was that such a unit of currency would again become what it had ceased to be, the unit of weight also (hence a rupee coin can be used as weight measure).</p><p><br /></p><p>In addition to reasons for fixing the weight of rupee coin, the proposal to make it a 165 grains fine had its justification too.</p><p><br /></p><p>The main consideration in selecting 165 grains as the standard of fineness was to cause the least possible disturbance in existing arrangements. The proposed standard of fineness was not very different from existing silver coins recognized by the different governments in India as the principal units of their currency.</p><p><br /></p><p>Silver Coins recognized as Principal Units and their Fineness</p><p>Coin&nbsp; &nbsp; &nbsp; &nbsp;&nbsp; Purity in grains</p><p>Surat Rupee&nbsp; &nbsp; &nbsp;&nbsp; 164.74</p><p>Arcot Rupee&nbsp; &nbsp; &nbsp;&nbsp; 166.47</p><p>Sicca Rupee&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp; 175.92</p><p>Farrukhabad&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;&nbsp; 166.13</p><p>Benaras Rupee&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; 169.25</p><p><br /></p><p>Looking at data above, one can notice that with the exception of Sicca rupee, the proposed standard of fineness agreed closely with other rupees. This confirmed that the proposed fineness will not have any adoption issue by the general public.</p><p><br /></p><p>Another consideration that seemed to have prevailed upon the Court of Directors in selecting 165 grains as the standard of fineness was the opinion of the British Committee on Mint and Coinage, appointed in 1803. “One-twelfth alloy and eleven-twelfths fine is by a variety of extensive experiments proved to be the best proportion, or at least as good as any which could have been chosen.&quot; This standard, so authoritatively upheld, the court desired to incorporate this for new Indian currency and decided to make the rupee eleven-twelfths fine. This will also make the rupee 165 grains pure.</p><p><br /></p><p>By an Act of the Imperial Government (XVII of 1835) a common currency was introduced for entire India. The new monetary reform stated that &quot;a Rupee weighing 180 grains and containing 165 grains fine as the common currency and sole legal tender throughout the country&quot;.</p><p><br /></p><p>So, that’s how the purity of British Indian coins was fixed at</p><p><br /></p><p>165 / 180 = 0.916666. </p><p><br /></p><p>All British silver coins minted since 1835 are based on these standards.</p><p><br /></p><p>Regards,</p><p>Ballabh Garg[/QUOTE]</p><p><br /></p>

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