Banking in Bengal, when All the World was a Seth – Harshit Thakkar

_mg_1509They were known as the Jagat Seths – the bankers of the world for such was the strength of the promissory notes executed by them, that they were honoured in every part of the known world, where they were presented. They were the bankers of the Nawab of Bengal, and as some historians point out, three out of four Rupees raised as revenue in Bengal, Bihar and Orissa went into their coffers as payment of interest on loans extended earlier. They literally controlled the imperial mint and had extensive money lending operations the sheer breadth of which is impossible to gauge even to this day. Legend has it that Jagat Seth Manik Chand was so fabulously rich that he could stop the flow of the river Ganges by constructing a wall of gold and silver coins across its stream. According to historian Nick Robins, “the Jagat Seths were unrivaled in northern India for their financial power”.

With a stranglehold on the local economy that had neither been seen in the past, or hence, the Jagat Seth family were literally the Rothschilds of Bengal, though their functioning has also been widely compared to that of the Bank of England.

Nathan Mayer Rothschild was the tilting force using his financial acumen and clout to aid the British that led to the debacle of Napoleon in Waterloo (legend has it that Nathan Rothschild used his advance knowledge about the debacle at Waterloo to mint a speculative fortune in the Stock Market). Similarly the name of the Jagat Seth family is closely intertwined with the victory of the British over Siraj-ud-Daula, the Nawab of Bengal in the battle of Plassey.

While Mir Jafar has been identified as the traitor who conspired with the British to pave their way to the Peacock Throne and the role of Amin Chand too, has been talked about, history has been strangely silent about the role played or the compulsions (crafty calculations?) of the Jagat Seths. Fact is, it was the Jagat Seth family that switched allegiance, shifted the might of their finances behind the British and conspired to ensure the defeat of the Nawab, paving the way for the foreign yoke.

Forced to leave Nagore in Marwar, Rajasthan, the Marwari Jain family had first settled in Patna, only to move to Dhaka – one of the major trading centers of the day, in search of their fortune. It was from Dhaka that Seth Manik Chand collaborated with Murshidkuli Khan, the then Dewan of Azimussan, the Nawab of Dhaka, not only to make him the Dewan of Bengal, but also to set up the city of Murshidabad to which the Jagat Seth Seth family shifted. The huge amounts spent by the Seth family to help Murshidabad acquire its position of pre-eminence too, is a recorded fact, as is the extremely close ties that the family had with rulers of Bengal and the powers that be in the court.

What was the reason to back the foreigners then? Why did a family of established Bankers, who had it all, back the rookies? History is again strangely silent, throwing up questionable theories like the young Nawab slapping the Seth, threatening him with circumcision and quenching his lust on a woman engaged to be married to the Seth’s family. Surely, trivial matters for a hard-nosed banker who literally ran the economy for the Nawab and had so much at stake?

What seems to be a much plausible reason is that the farsighted banking family had already been aware of the advantages of doing Business with the British, having got inputs from its upcountry sources in Surat and Mumbai. Besides, the Seths were themselves well apprised of the British ways – Rule of Law and all – having conducted business with them for some time. And Calcutta, fast emerging as the destination of choice all businesses, was already an attractive proposition for the Seths who wanted to shift their wealth to a more secure place than Murshidabad.

It was business, after all. A real pity, that the family did not survive their mechanizations.

The piece was originally written for the Financial Express BFSI@Kolkata.

Harshit Thakkar is a student of Corporate Communications at the Bhawanipur Education Society College, BESC. Kolkata. Harshit’s raigning interest is the history of economic development and he is fascinated by the compelling economic reasons that have led to the shaping of history as we know it. History, according to Harshit, is not what meets the eye and is often the outcome of conflicts and circumstances with deep rooted economic biases – an area he wants to delve into, to make sense of the past. “Hopefully”, says Harshit, “one day i will learn enough to clean the cobwebs of our mind, so that future generations may look into the past with the clarity it deserves”.