INDIA 1 rupee 1940 P25a


INDIA, 1 rupee, 1940, Face: blue-gray and multicolor, coin, Back: blue-gray and multicolor, reverse of coin, black serial number, prefix Q13, P25a, spindle hole, light spot, XF

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Nicknamed “coin note.”

This was part of the British government’s campaign to get ordinary Indians to accept paper money.

India was a gold-silver-copper economy until the British got control. Paper money is essentially debt. It turned out that private banks could not be trusted to back their banknotes, so governments too them over, then they couldn’t restrain themselves either. So paper money came to India, where previously they had been thinking that even copper coins should have intrinsic value.

Aside from China, other governments started using circulating “banknotes” starting in the 17th century AD. The practice became general in the 19th century. In the 20th century value of paper money in circulation far surpassed the value of coinage. In the 21st century paper money is fading and credit transactions are growing.

Paper money, meaning the promise of a government to pay a set amount, and the paper promise allowed to circulate at will, was probably first used in China in the 12th century AD. At that time the merchants and governments of Europe were just writing letters to each other about what they owed.