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U.P.P.C.S. (Spl) (Mains) 2004

Economic Experiments in History

Authentic Past Paper Standard Evaluation

For the first time, the token currency was introduced in India by:

Solution & Analysis

Answer: D

Concept Token currency refers to a medium of exchange where the value of the coin is not determined by the intrinsic value of its metal, but by the decree of the issuing authority.

Explanation Muhammad Bin Tughluq introduced token currency in India between 1330 and 1333. He issued copper and brass coins to be treated on par with silver and gold coins.

Logical Breakup
Logic 1: Tughluq was inspired by the paper currency system (Chao) used in Yuan China and the Ilkhanate of Persia.
Logic 2: While other rulers like Akbar and Alauddin Khalji performed major currency reforms, the specific 'token' concept was unique to Tughluq.

Active Recall

Question

What global situation influenced Tughluq's decision?

Answer

A worldwide shortage of silver in the 14th century prompted many rulers to experiment with alternative metals and fiduciary currency.

Core Insight

Tughluq's experiment failed not because the idea was unsound, but because the technology to prevent counterfeiting did not exist in medieval India.

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