In this emergency the British merchants showed the resource which has always been their characteristic, and, in default of an adequate supply of specie, relieved the strain upon their currency by issuing paper. Mediæval banking had gone no further than the establishment of reserves of coin, to serve as a medium for clearing bills of exchange; the English took the great step of accelerating the circulation of their money, by using this reserve as a basis for a paper currency which might be largely expanded. The Bank of England was incorporated in 1694, the Bank of Scotland in 1695, and the effect was unquestionably considerable. Adam Smith has thus described the impetus received by Glasgow:—
“The effects of it have been precisely those above described. The business of the country is almost entirely carried on by means of the paper of those different banking companies, with which purchases and payments of all kinds are commonly made. Silver very seldom appears except in the change of a twenty shillings bank note, and gold still seldomer. But though the conduct of all those different companies has not been unexceptionable ... the country, notwithstanding, has evidently derived great benefit from their trade. I have heard it asserted, that the trade of the city of Glasgow doubled in about fifteen years after the first erection of the banks there; and that the trade of Scotland has more than quadrupled since the first erection of the two public banks at Edinburgh.”[331]
But although by this means a certain degree of relief was given, and though prices rose slowly throughout the first half of the eighteenth century, the fundamental difficulty remained. There was insufficient silver for export, exchanges were adverse, and that stock of coined money was lacking which is the form in which force clothes itself in highly centralized communities. How England finally supplied her needs is one of the most dramatic pages of history.
As Jevons has aptly observed, Asia is “the great reservoir and sink of the precious metals.” From time immemorial the Oriental custom has been to hoard, and from the Mogul blazing with the diamonds of Golconda, to the peasant starving on his wretched pittance, every Hindoo had, in former days, a treasure stored away against a day of trouble. Year by year, since Pizarro had murdered the Inca Atahualpa for his gold, a stream of bullion had flowed from America to Europe, and from Europe to the East: there it had vanished as completely as though once more buried in the bowels of the mine. These hoards, the savings of millions of human beings for centuries, the English seized and took to London, as the Romans had taken the spoil of Greece and Pontus to Italy. What the value of the treasure was, no man can estimate, but it must have been many millions of pounds—a vast sum in proportion to the stock of the precious metals then owned by Europeans. Some faint idea of the booty of the conqueror may be drawn from Macaulay’s description of the first visit of an English soldier to an Oriental treasure chamber:—
“As to Clive, there was no limit to his acquisitions but his own moderation. The treasury of Bengal was thrown open to him. There were piled up, after the usage of Indian princes, immense masses of coin, among which might not seldom be detected the florins and byzants with which, before any European ship had turned the Cape of Good Hope, the Venetians purchased the stuffs and spices of the East. Clive walked between heaps of gold and silver, crowned with rubies and diamonds, and was at liberty to help himself.”[332]
The lives of few men are better known than those of Clive and Hastings, and yet there are few whose influence upon the fate of mankind has had such scant appreciation. It is not too much to say that the destiny of Europe hinged upon the conquest of Bengal. Robert Clive was of the same stock as Drake and Hawkins, Raleigh, Blake, and Cromwell; he was the eldest son of one of those small farmers whose ancestors had held their land ever since the Conquest, and who, when at last evicted and driven out to sea, had fought and conquered on every continent and on every ocean. Among the throng of great English adventurers none is greater than he.
He was born in 1725, and from childhood displayed those qualities which made him pre-eminent on the field of battle; fighting was his delight, and so fierce was his temper that his family could not control him. At last, when eighteen, his father gladly sent him to Madras as a clerk in the service of the East India Company; and there, in a torrid climate which shattered his health, poor and neglected, lonely and forlorn, he pined, until in melancholy he twice attempted suicide. But he was destined to found an empire, and at last his hour came.
When Clive went to India, the Company was still a purely commercial concern, holding only the land needed for its warehouses, and having in their pay a few ill-disciplined sepoys. In the year 1746, when Clive was twenty-one, the war of the Austrian Succession was raging, and suddenly a French fleet, commanded by Labourdonnais, appeared off Madras, and attacked Fort Saint George. Resistance was hopeless, the place surrendered, and the governor and chief inhabitants were taken to Pondicherry. Clive, however, managed to escape, and, volunteering, received an ensign’s commission, and began his military career.
Shortly after, peace was made in Europe, but in India the issue of the struggle lay undecided between the French and English, the prize being the peninsula. Dupleix, the French governor of Pondicherry, was a man of commanding intellect, who first saw the possibility of constructing a European empire in Hindostan by controlling native princes. Following up his idea, he mixed in a war of succession, and having succeeded in establishing a sovereign of the Deccan, he made himself master of Southern India. The Nizam’s treasure was thrown open to him, and beside many jewels of price, he is said to have appropriated two hundred thousand pounds in coin. This was the man whom Clive, when only a clerk of twenty-five, without military education or experience, attacked and overthrew.