Q. Consider the following statements with respect to the ‘Token Currency’ reform of Muhammad bin Tughlaq:
- It was inspired by the shortage of supply of gold and silver in the 14th century.
- It was the first ever experiment in the world to issue a token currency.
Which of the above is / are correct?
Answer:
Only 1
Notes: An important experiment by Muhammad bin Tughlaq was the introduction of ‘Token Currency’. He decided to introduce a bronze coin which was to have the same value as the silver ‘Tanka’. Before that, a silver, gold or copper coin was worth only as much as the intrinsic worth of metal of which it was made of. Success of this move was entirely dependent on the trust in the sovereign authority and the ability of the state to prevent counterfeiting. This step was taken because there was a shortage of silver in the world in the 14th century. So, there was not enough silver to make silver coins i.e. the intrinsic worth of a silver coin was going up and it was causing deflationary effect. So, the statement 1 is correct. Moreover, Qublai Khan in China and Ghazan Khan in Iran had also experimented with the token currency. So, the experiment by Muhammad was not the first of its kind in the world. So, statement 2 is incorrect.