Tokonomics of Gold ..

Gold was the basis of both the monetary and the measurement systems.

No one knows for sure when gold mining began. Our current estimates are around 4000 BC. That puts it around the same time as Mahabharata. The frequent mentions of gold ornaments among kings and deities and as jewelry among women during the times of the epic, indicate usage of gold as a scarce but in-fashion store of value.

In Mahabharata, there is a clear mention of gold coins being abundantly used. In the fourth book (Viarata Parva), the prince Uttara offered Arjuna (disguised as a transgender named Vrihnnala) a hundred gold coins for saving him (and his bovine wealth) from Kaurvas.

There is evidence of countable units of precious metal being used for exchange from the Vedic period onward. A term Nishka appears in this sense in the Rigveda. A unit called Śatamāna, literally a “ hundred standard “, representing 100 krishnalas is mentioned in Satapatha Brahmana. A later commentary on Katyayana Srautasutra explains that a Śatamāna could also be 100 Rattis . A Ratti is the weight equal to seeds of Abrus Precatorius. A hundred of them are almost equal to a Tola that is used for gold trade to date in India. All these units referred to gold currency in some form, though they were later adapted to silver currency.

Barter system was widespread for the smaller transactions. Commoners used fruits and grains to get what they needed. Rich people used copper as a store of value. A one time adult meal was normally considered one copper coin. So was the ride fare. You could hop on and hop off any boat or cart at any place along its route for one copper coin. Super rich used copper for utensils at their home. For them the valuable thing was silver. A silver coin was considered the same as a hundred copper coins. Ultra rich ate their food in Silver utensils. For them the store of value was a gold coin.

A gold coin was equal to a hundred Silver’s. The valuation was based on rough order of rigor in mining these metals. Silver was considered hundred times harder to purify than copper, and gold being similar orders of magnitude harder than Silver because of very low yield. In a way “proof of work” was baked in universally acceptable currency.

All states, no matter what their political equations, honored this simple “proof of work” based storage of value. Privacy, self custody and universality were the underpin of trade. Value exchange protocol was owned by people NOT kingdoms though kingdoms could issue coins (currency) aligned to universally accepted methods. It is a well established fact that after the great war of Mahabharta, sixteen main kingdoms (mahapadas) got formed over a couple of centuries. Each one of them issued their own coins, though they were all different shapes or stamps on gold coins. Quarter gold coins (Svarna) are excavated from Gandhara.

Currency was pegged to people’s trust in “proof of work”. Important point to note here, currency was not pegged to commodities such as iron or wheat. Gold and silver were NOT treated as commodities. Gold’s only purpose was value storage and silver was used purely for minting. Copper was primarily used for making utensils for the rich. Copper was supposedly the best metal to store food and water. Eating in silver, though common for the rich, was considered a show-off.

This simple to understand and time tested system of powers of ten, was later exploited by Aryabhatta to conceptualize zero and decimal system - the very basis of modern arithmetic. The seeds of Abrus precatorius (Ratti) being very consistent were used to weigh gold using a measure where 8 Ratti = 1 Masha; 12 Masha = 1 Tola (12 X 8 = 96 Ratti), or roughly equal to 100 Ratti ( 96 Ratti pure gold and 4 Ratti impurities to solidify the gold). In other words, a Tola’s “weight unit” was 100 Ratti while its “price unit” was 96 Ratti. In simple calculations 10 grams (one Tola) of solid gold was worth one kilo of solid silver or hundred kilos of solid copper. Or one Ratti (tiny seed) of gold was equal to one kilo of copper.

The common word used for one Kilo was Ser or Seer- roughly equal to 1.07 kilos in weight units or volume wise roughly equal to one liter. Volume was a preferred way to exchange at a larger scale to weed out as many impurities as possible from molten metals. One Seer is around 80 Tola in weight.

During the days of Mahabharata, a Tola was called Śatamāna - a Sanskrit word representing the measure of one hundred. And a Ratti was called a Krishnala - most probably named after Krishna the supreme personality of Godhead. In later times of middle eastern empires, a Tola was named an Ashrafi - The same weight specifications. One Tola of gold - was adopted as Ashrafi - around fourteenth century in Prussia. The weight of an Ashrafi gold coin varies depending on the coin’s origin and history:

• Nizam-era gold Ashrafi: A gold Ashrafi coin issued by Nizam VI Mir Mahbub Ali Khan in 1893 CE weighed about 11 grams.
• India-Princely States HYDERABAD Ashrafi : This coin weighed 11.1780 grams and had a fineness of 0.9100.
• Awadh Gold Ashrafi: This coin weighed 10.73 grams and was made of 22-carat gold.