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Systems of Purchase and Payment in the Vijayanagara Empire

This document explains how goods were bought and sold during the Vijayanagara Empire (14th–16th centuries), addressing whether people used barter, currency, or mixed systems. All information is historically verified using inscriptions, archaeology, traveller accounts, and academic research. Working source links are provided for reference and further study.

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Overview: Was Vijayanagara a Barter Economy?

No. Vijayanagara was not primarily a barter-based economy. It was a highly monetised economy, especially in cities, markets, temples, ports, and international trade hubs. However, barter continued to exist in limited rural and agrarian contexts.

In practice, the empire followed a multi-system economy: - Currency-based transactions (dominant) - Barter-based exchanges (localized) - Mixed payments (most common in daily life) - Credit and deferred settlement systems

Currency-Based System (Primary and Dominant)

What currencies were used?

Vijayanagara issued and widely circulated coins, especially gold.

Common currencies included: - Varaha – Gold coin; primary high-value currency - Pagoda – European name for the Varaha - Pan / Hana / Fanam – Smaller gold or silver denominations - Copper coins – Used for everyday retail purchases

Gold coins of Vijayanagara rulers are found in large hoards across South India, confirming widespread usage.

Where currency was used

  • Urban markets (Hampi, Penukonda, Chandragiri)

  • Gem, spice, horse, and textile trade

  • Temple donations, salaries, and endowments

  • Tax payments (Sunka/customs)

  • International trade with Arabs and Portuguese

Sources

Barter System (Secondary and Localised)

Where barter existed

Barter survived mainly in: - Villages and agrarian settlements - Exchange of agricultural surplus - Artisan and service payments - Temple villages

Typical barter examples

  • Grain exchanged for tools or labour

  • Produce given as part of tax obligations

  • Artisans paid in food or raw materials

  • Temples accepting oil, rice, or ghee

Barter was situational, not the primary system.

Sources

Mixed Payment System (Most Common in Practice)

The most realistic and widely used system was mixed payment, combining money and goods.

How mixed payments worked

A single transaction could involve: - Payment in gold coins (varahas) - Commission in pan or silver - Transport or labour paid in grain - Tax assessed in weight units (pala) but paid in coins

This flexibility allowed trade to function smoothly across regions and social classes.

Sources

Credit, Advances, and Deferred Payments

Did credit exist?

Yes. Credit systems were well established, especially among: - Merchant guilds - Long-distance traders - Temple treasuries

How credit worked

  • Advances recorded on palm-leaf documents

  • Repayment scheduled later

  • Witnesses and seals ensured validity

Temples often functioned as banks, lending money and earning interest.

Sources

International Trade and Payments

Foreign merchants (Arab, Persian, Portuguese) traded under royal protection.

Payment methods included

  • Gold coins (varaha/pagoda)

  • Bullion and silver

  • Goods of equivalent assessed value

Portuguese chroniclers praised Vijayanagara for abundant gold circulation.

Sources

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