Flow of silver into India

Also called: Bullion inflow, Inflow of precious metals into India · Topic: Mughal Agrarian Society and Economy · NCERT: Class 12, Ch 1 "Through the Eyes of Travellers"; Class 12, Ch 4 "Peasants, Zamindars and the State"

Meaning

The flow of silver into India was the steady movement of silver from the New World (the Americas), through world trade, into Mughal India. It came in to pay for Indian goods such as cloth, spices, indigo and pepper, at a time when India had no silver mines of its own.

It matters because this silver kept the rupya (the silver coin) stable from the 16th to the 18th century. It also gave the Mughal state enough coins to collect land revenue in cash, which pulled villages into the market economy.

Explanation

Background: why silver moved towards India

• A ring of stable empires. In the 16th–17th centuries four large empires ruled Asia at the same time:
• the Mughals in India, the Ming in China, the Safavids in Iran and the Ottomans in Turkey;

• because they were stable, goods and money could travel safely on the long routes from China to the Mediterranean.

• New World voyages. European ships reached the Americas. This opened a much bigger sea trade between India and Europe.

• India had no silver mines. Every silver coin in India was made from silver that came from outside.

Main cause: India's export surplus

• India sold much more to the world than it bought from it.
• Class 8 calls this an export surplus: the value of goods India sold abroad was more than the value of goods it bought.
• Foreign buyers had few goods that Indians wanted, so they paid in silver.
• Giovanni Careri, an Italian traveller who wrote about India around 1690, said that the world's gold and silver "at last Centres" in Hindustan. In other words, it all finally collected in India.

How the silver worked inside the economy

• A stable coin. The silver rupya kept nearly the same weight and quality from the 16th to the 18th century. Few coins in history stayed so steady for so long. Because of this, people could trust prices and contracts.

• The Mughal coin system used three metals: gold, silver and copper. It was largely built by Sher Shah Suri (1540–1545), who issued a silver Rupiya weighing 178 grains. The Mughals kept this standard [2][3].

• Two everyday coins (Class 8):

• the silver rupaya, used for larger payments;

• the copper dam, a small coin that ordinary people used for daily buying.

• Minting grew. With more silver coming in, more mints opened and many more coins circulated.

• Credit without carrying coin. Merchants used the hundi, a written order to pay money, much like a modern cheque or bank draft.
• A merchant paid cash in one city and received a hundi.
• His partner in another city, or even another country, was paid cash against that paper.

• Marwari merchant networks were well known for running these hundi chains.

• Ports where trade and silver came in: Surat (west coast), Calicut (Malabar), Masulipatnam (Coromandel) and Hooghly (Bengal).

• Temples as money centres. Large temples held endowments (gifts of land and money), paid for irrigation and facilities for pilgrims, and gave loans to merchants.

Results: strength for the state, stress for the peasant

• Cash revenue. With plenty of coins in circulation, the Mughal state could demand land revenue in money and not only in grain.
• Peasants then had to sell their crops in the market to get coins.

• This spread markets and the use of money into the villages.

• The cost to peasants. The cash demand was heavy. By the late 1600s many peasants were over-taxed.

• To pay the tax, they borrowed money.
• Those who could not repay fell into bonded labour, working to clear a debt that could never be fully paid.

Time, place and evidence

• Period: the 16th–18th centuries, with the peak of Mughal power in the 16th–17th centuries.
• Rulers and dynasty: the Mughals, who kept the coin standard set earlier by Sher Shah Suri (1540–1545) [2][3].
• Places: silver came from the New World. It entered India through its trade and ports, mainly Surat, Calicut, Masulipatnam and Hooghly.
• Key people:
• Giovanni Careri, an Italian traveller (c. 1690), who described India as the place where the world's silver finally collected. He came after the Frenchman Bernier.

• Abu'l Fazl, author of the Ain-i Akbari (completed 1598) [4].

• How we know:

• Travellers' accounts, such as Careri's.
• Coins. The silver rupya kept the same weight and quality over about three centuries [2].
• The Ain-i Akbari. Its fiscal book, the mulk-abadi, records revenue in a column called naqdi (revenue assessed in cash). This shows how far the money economy had reached. Its prices and wages come mainly from Agra, so they do not give a fair picture of the whole empire.
• NCERT: Class 12, Ch 4 "Peasants, Zamindars and the State"; Class 8 (export surplus; rupaya and dam).

Don't confuse with

• Silver rupaya vs copper dam. The rupaya was the silver coin, made from imported silver. The dam was the small copper coin that ordinary people used every day.
• Hundi vs coin. A hundi was a paper order to pay money. It let merchants move value without carrying silver coins on dangerous roads.
• Silver inflow vs the colonial "drain of wealth". In Mughal times silver came into India because of its export surplus. The "drain of wealth" describes the much later colonial period, when wealth flowed out of India to Britain.
• Careri vs Bernier. Both were European travellers. Careri was Italian and wrote around 1690 about silver collecting in India. Bernier was French and came earlier.

Prelims Hooks

• India had no silver mines. All the silver in Mughal coins came from abroad, mainly New World silver.
• The Rupiya of 178 grains of silver was issued by Sher Shah Suri (1540–45), and the Mughals kept this standard [2][3].
• The silver rupya stayed stable from the 16th to the 18th century.
• Giovanni Careri (Italian, c. 1690) wrote that the world's gold and silver finally "Centres" in Hindustan.
• Hundi: a written payment order, similar to a bank draft, run by Marwari merchant networks.
• "Which of the following" trap: Surat, Calicut, Masulipatnam and Hooghly were all ports of this period. The copper dam, not the rupaya, was the coin of daily small purchases.

Mains Points

• Silver inflow made Mughal fiscal power possible.
• India's export surplus drew in New World silver.
• Plenty of coin let the state collect land revenue in cash.

• Peasants had to sell crops for money, so agriculture became more commercial, rural markets grew and merchant credit (the hundi) spread.

• Monetisation cut both ways. The cash economy that paid for a strong central state also pushed peasants into debt, and by the late 1600s into bonded labour. The empire's wealth and the cultivator's distress grew together; one did not simply follow the other.

• India as the world's "silver sink". Careri's remark (c. 1690) shows that people at the time already saw India as the place where world bullion ended up. This links Mughal India to the early modern world economy: the stable Ming, Safavid and Ottoman empires, the Atlantic voyages, and the European trading companies that later turned this trade into political control.

Related concepts

• Silver rupya
• Hundi
• Banjaras
• Mahajan
• Nagarsheth
• Urbanisation in Mughal India
• Urban professional classes
• Manzil-abadi
• Sipah-abadi
• Mulk-abadi

Read more

• Silver, trade and the Ain-i Akbari as source