The Origins of Indirect Rule in India:

Hyderabad and the British Imperial Order

KAVITA SARASWATHI DATLA

The main problem with the orthodox account of modern world

politics is that it describes only one of these patterns of interna-
tional order: the one that was dedicated to the pursuit of peaceful
coexistence between equal and mutually independent sovereigns,
which developed within the Westphalian system and the
European society of states....Orthodox theorists have paid far too
little attention to the other pattern of international order, which
evolved during roughly the same period of time, but beyond rather
than within Europe; not through relations between Europeans, but
through relations between Europeans and non-Europeans. Instead
of being based on a states-system, this pattern of order was based
on colonial and imperial systems, and its characteristic practice
was not the reciprocal recognition of sovereign independence be-
tween states, but rather the division of sovereignty across territorial
borders and the enforcement of individuals’ rights to their persons
and property.1

The American Revolution and the “revolution” in Bengal posed new polit-
ical questions for domestic British politics and inaugurated a new era for

1. Edward Keene, Beyond the Anarchical Society: Grotius, Colonialism and Order in
World Politics (Cambridge: Cambridge University Press, 2004), 5–6.

Kavita Saraswathi Datla is an associate professor of history at Mount Holyoke

College <[email protected]>. The author thanks Teena Purohit, Rama
Mantena, Bhavani Raman, Tamer el-Leithy, Thomas Metcalf, and Karuna
Mantena for their careful reading and valuable suggestions, and Mount Holyoke
College for the financial assistance that made this research possible.

Law and History Review May 2015, Vol. 33, No. 2

© the American Society for Legal History, Inc. 2015
doi:10.1017/S0738248015000115

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 322 Law and History Review, May 2015
the British empire.2 As the British committed themselves to the administra-
tion of a vast population of non-Europeans in the Indian province of
Bengal, and estimations of financial windfalls were presented to stockhold-
ers and politicians, the center of the British Empire came slowly to shift
toward the East. The evolution of a system of indirect rule in India as it
related to larger political questions being posed in Britain, partly because
of its protracted and diverse nature, has not received the same attention.3
Attention to Indian states, in the scholarship on eighteenth century South
Asia, has closely followed the expanding colonial frontier, focusing on
those states that most engaged British military attention: Bengal,
Mysore, and the Marathas. And yet, the eighteenth century should also
command our attention as a crucial moment of transition from an earlier
Indian Ocean world trading system, in which European powers inserted
themselves as one sovereign authority among many, to that of being
supreme political authorities of territories that they did not govern directly.4
India’s native states, or “country powers,” as the British referred to them in
the eighteenth century, underwrote the expansion of the East India
Company in the East. The tribute paid by these states became an important
financial resource at the company’s disposal, as it attempted to balance its
books in the late eighteenth century.5 Additionally, the troops maintained
to protect these states were significant in Britain’s late eighteenth century

2. Nicholas Dirks, The Scandal of Empire: India and the Creation of Imperial Britain
(Cambridge: Belknap Press of Harvard University, 2006); John G. A. Pocock, “Political
Thought in the English-speaking Atlantic, 1760–1790: (i) The imperial crisis,” in The
Varieties of British Political Thought, 1500–1800 (Cambridge: Cambridge University
Press, 1993); Robert Travers, Ideology and Empire in Eighteenth-Century India: The
British in Bengal (Cambridge: Cambridge University Press, 2007); Nasser Hussain, The
Jurisprudence of Emergency: Colonialism and the Rule of Law (Ann Arbor: University
of Michigan Press, 2003); James M. Vaughn, “The Politics of Empire: Metropolitan
Socio-Political Development and the Imperial Transformation of the British East India
Company, 1675–1775” (PhD diss., University of Chicago, 2009); and Spencer Austin
Leonard, “A Fit of Absence of Mind? Illiberal Imperialism and the Founding of British
India, 1757–1776” (PhD diss., University of Chicago, 2010).
3. Notable exceptions are Sudipta Sen, “Unfinished Conquest: Residual Sovereignty and
the Legal Foundations of the British Empire in India,” Law, Culture, and the Humanities 9
(2013): 227–42; and Lauren Benton, A Search for Sovereignty: Law and Geography in
European Empires, 1400–1900 (Cambridge: Cambridge University Press, 2009). Philip J.
Stern, The Company-State: Corporate Sovereignty and the Early Modern Foundations of
the British Empire in India (Oxford: Oxford University Press, 2011) provides an account
of the longer history and precedent for imperial formations in India.
4. C. H. Alexandrowicz, An Introduction to the History of the Law of Nations in the East
Indies (16th, 17th and 18th Centuries) (Oxford: Clarendon Press, 1967).
5. Robert Travers, “‘The Real Value of the Lands’: The Nawabs, the British and the Land
Tax in Eighteenth-Century Bengal,” Modern Asian Studies 38 (2004): 517–58.

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 The Origins of Indirect Rule in India 323
military calculations.6 These states, in other words, were absolutely central
to the forging of the British imperial order, and generative of the very prac-
tices that came to characterize colonial expansion and governance.
In 1765, the East India Company secured diwani (the right to collect taxes)
in Bengal. At the same time, Robert Clive (subsequently, First Baron Clive)
also obtained from the Mughal emperor rights to tax lands in the south—the
Northern Circars—that came under the authority of the Nizam of
Hyderabad. However, the history of these two regions and the men who
ruled them played out in completely different ways. In the south, the
Company in its relations with the Nizam utilized a new form of colonial
power—the protectorate (although it was by no means called that at the
time)—which was adapted and survived through independence until 1948.7
The model of indirect rule forged in eighteenth century India departed from
practices of the first British Empire in the West, which had focused on the sub-
ordination of internal and external populations (i.e., slave and native) in order
to secure the freedoms and economy of settler societies.8 In south India, the
Northern Circars were ceded to the British not simply as a matter of the rights
of conquest, or by right of Mughal decree, but also in exchange for the main-
tenance of troops to protect the Nizam. The logic of this relationship evolved in
the late eighteenth century, ensuring by the early nineteenth century the crea-
tion (despite objections and debate among the British themselves) of a system
of politics adhered to by the British as a matter of policy, especially after 1857,
known subsequently as “indirect rule.” Indirect rule was as consequential for
the history of the Second British Empire as those practices pioneered in
Bengal and was utilized, in modified form, by a range of European powers
in the creation of indirectly ruled territories in Africa, after the Scramble,
and in the Middle East, after World War I.9
In addition, therefore, to asking when and how the British were able to
conquer different parts of the Indian subcontinent, we might also ask:
When and why did the British decide not to conquer certain states?

6. Huw V. Bowen, The Business of Empire: The East India Company and Imperial
Britain, 1756–1833 (Cambridge: Cambridge University Press, 2005).
7. Robert Paton McAuliffe, The Nizam: The Origin and Future of the Hyderabad State
(London: C. J. Clay and Sons, Cambridge University Press Warehouse, 1904).
8. Although in North America, also, questions of native sovereignty were disputed
throughout the eighteenth century. For one such example, see Craig Bryan Yirush,
“Claiming the New World: Empire, Law, and Indigenous Rights in the Mohegan Case,
1704–1743,” Law and History Review 29 (2011): 333–73.
9. Michael Fisher, Indirect Rule in India: Residents and the Residency System, 1764–1857
(New York: Oxford University Press, 1991). For an account of the ideological contours of indirect
rule in the late nineteenth century, see Karuna Mantena, Alibis of Empire: Henry Maine and the Ends
of Liberal Imperialism (Princeton: Princeton University Press, 2010); and Mahmood Mamdani,
Define and Rule: Native as Political Identity (Cambridge: Harvard University Press, 2012).

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 324 Law and History Review, May 2015
How did they deal with those states that never became a part of their
directly ruled empire? The first section of this article explains how the
Company came to establish a dual sovereignty in Bengal. As they estab-
lished their territorial empire in India, the British braided together notions
of sovereignty that then existed in Europe with those that existed in South
Asia. This section explores how the British used the different legal instru-
ments at their disposal, and the tensions created between a charter granted
by the British crown that privileged the purpose of trade and diwani grant-
ed by the Mughal emperor for the expanded purposes of governance. The
second section moves to south India and explores the forms of political au-
thority that existed in the subcontinent in this period, and how the British
inserted themselves in political and economic relationships at even the
local level. The third section focuses on how these Indian states were re-
made from the outside in, through an evolution in treaty-making that one
can see most clearly in their dealings with the Hyderabad state. Here,
the British returned to using the legal instrument (grants received from
the Mughal emperor) that had become the basis of their administration
in Bengal. The final section of this article considers the novelty of these
arrangements, and the way that a systematized treaty system with lesser
states came to be considered an alterative to colonialism by territorial ex-
pansion. Through these political and legal instruments, the British brought
about a new division of sovereignty on the subcontinent.
Viewing British relations with Indian states from the south will allow us,
therefore, to think anew the contingent political possibilities available to
the British Empire in this period, and the different ways that eighteenth
century “revolutions” affected the interstate relations of this period. In trac-
ing the history of Nizam–British relations in the mid-eighteenth century,
these sections taken together seek to make three interconnected arguments.
(1) The evolution of indirect rule in India was not simply determined on the
periphery. Indirect rule was shaped by metropolitan political preoccupa-
tions. (2) The new interstate relations of this period reshaped the nature
of the polities that existed in eighteenth-century south India. (3)
Therefore, the system of indirect rule should not be understood as an ab-
sence of colonialism, or a delayed colonialism, but rather a novel system
of interstate politics, involving the parceling of sovereign rights, which
was essential to the forging of a new global order.

Dual Sovereignty

The expansion of the British Empire in eighteenth century India involved a

complex legal and political negotiation with Indian states. This negotiation

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 The Origins of Indirect Rule in India 325
had as much to do with the management of different states’ conflicting am-
bitions in South Asia as it did with the evolution of politics in Britain itself.
In securing rights to Indian territory through the Mughal emperor, Clive
inaugurated his “dual system,” which acknowledged the Company’s pow-
ers in India as emanating dually from its charters with the British and
Mughal crowns. As Nicholas Dirks has pointed out, this arrangement
was perhaps the first experiment with British indirect rule, and applied
equally in the south and to the early administration of Bengal.10 Shortly
after the acquisition of diwani in Bengal, Harry Verelst, as he departed
from his post as governor of the Council in Calcutta, issued a warning
to the remaining members of the Council that clarified some of the advan-
tages to be drawn from this dual system of government. “But there is a
rock, and a dangerous one, which requires the greatest circumspection to
avoid. . ..we have reached that supreme line, which, to pass, would be an
open avowal of sovereignty. It should be remembered, that we cannot be
more, without being greater than found policy allows; the interests of
our employers at home, no less than our national connections abroad, for-
bid it. . .. [Destroying the Nizamut (the native government of Bengal)] may
become the source of perplexities and jealousies, if not the deprivation of
the Company’s privileges.”11 Robert Travers has revealed how Company
officials were well aware of the advantages and protection that this “dual
system” offered them, both from the jealousies of foreign rivals, such as
the French, and from oversight in Britain itself. “A legal opinion from
1757 suggested a distinction between territories conquered by British
arms, which would be subject to both the dominion and dominium (sover-
eignty and property) of the Crown, and territories leased or granted from
Indian rulers, which would remain the property of the Company. Thus
by claiming to hold much of Bengal as diwan by grant from the Mughal
emperor, the Company sought to define its territorial revenues as its own
property.”12
In the same year (1765), that the British faced opposition in their
American colonies to the introduction of the Stamp Act, the Company se-
cured the right to revenues in Bengal in the name of the Mughal emperor,

10. Dirks, Scandal of Empire, 177.

11. Harry Verelst, Letter to John Carter, Esq. and Council of Fort William, dated
December 16, 1769, in View of Rise, Progress, and Present State of the English
Government in Bengal: Including a Reply to the Misrepresentations of Mr. Bolts, and
other Writers (London: J. Nourse [etc.], 1772), Appendix, p.123.
12. Travers, Ideology and Empire, 46; Philip Stern notes: “The opinion thus made a far
more extensive claim to a right to dominion by conquest in the East Indies, independent
of the East India Company, than any previous British monarch had.” Stern, The
Company-State, 198.

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 326 Law and History Review, May 2015
rather than through an act of Parliament. John G. A. Pocock has argued that
British fears of domestic strife, and civil war, had produced a fierce com-
mitment to the unified sovereignty of king-in-Parliament that made
American demands to override the decisions of Britain’s Parliament a fun-
damental political challenge to widely held beliefs about the origins and
rightful operation of British sovereignty.13 The recognition of native sov-
ereignties in India, and the preference for the maintenance of their territo-
rial integrity, was not only a matter of expedience in the periphery (i.e., not
only because those territories were not particularly fertile, or they were use-
ful as buffers with other antagonistic states, an ancient practice of imperial
politics). Expedience itself should perhaps be rethought. What appeared
expedient in any particular period and context would have as much to
do with facts as with how those facts were assessed. In the middle and
late eighteenth century, preserving these states served to obviate the polit-
ical and legal problems that would arise from an empire that made claims
to territory through conquest and the questions of sovereignty—as they re-
lated to colonial governance—that would concomitantly become a political
problem for domestic British politics.
In the same letter, Verelst noted the political and economic contradic-
tions created by the East India Company in Bengal.
The consequences are but too evidently exemplified in the decline of com-
merce and cultivation, the diminution of specie, and the general distresses
of the poor. . ..Experience must convince the most prejudiced, that to hold
vast possessions, and yet to act on the level of mere merchants, making im-
mediate gain our first principle; to receive an immense revenue, without pos-
sessing an adequate protective power over the people who pay it; . . . are
paradoxes not to be reconciled, highly injurious to our national character,
dangerous to the best defended establishment, and absolutely bordering on
inhumanity.14
In linking Bengal’s poverty to the actions of the Company, Verelst was
only stating beforehand some of what his critics (such as William Bolts)
would subsequently say publicly and much more dramatically shortly
after.15 One can see in Verelst’s letter an acknowledgement not only of
the economic difficulties faced by Bengal’s peasantry by virtue of the
Company’s policies (some comment in the midst of the massive famine

13. Pocock, “The Imperial Crisis.”

14. Verelst, Letter, View of Rise, 122.
15. Partha Chatterjee, Black Hole of Empire: History of a Global Practice of Power
(Princeton: Princeton University Press, 2012), 56–58.

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 The Origins of Indirect Rule in India 327
of 1769–70 was perhaps unavoidable), but also the suggestion that the fu-
ture of the Company might lie in making it less a commercial venture and
more a political one.
After 1772, when the Court of Directors in London sent orders that the
East India Company should directly “stand forth as diwan” in Bengal, dis-
cussion of native forms of authority and rule did not disappear. Again and
again, British administrators (such as Warren Hastings, Philip Francis, and
Thomas Munro) in the Company’s directly ruled territories referred in de-
bate to precolonial political forms, the ancient constitution, or the original
rights and practices of India’s inhabitants.16 Often, revolutionary policies
that would drastically alter the political and economic landscape of India
were justified in a language of pre-existing forms, and not coincidentally,
given how the Company had come to establish itself in India. For example,
Burton Stein has pointed out (that in the territories surrounding Madras)
“Munro’s ryotwar [a system of assessing taxes with individual cultivators]
purportedly based upon historical praxis and thus presumably free of inno-
vations and disruptions was a powerful force for extended monetization
and individuation of wealth through society!”17 Kathleen Davis has de-
scribed even (member of the Bengal Council’s) Francis’s revolutionary
plans for a system of private property in Bengal as being based on a de-
scription of “Indian property relations as feudal, likening the relationship
between Mughal prince and zamindars to that of a ‘liege lord and his vas-
sals,’ and depicting zamindars as feudal landlords,” relegating Bengal to an
ambivalent temporality where it had “to be, and not be, medieval at
once.”18 Both Stein and Davis draw our attention to how projects of
British reform in both Bengal and Madras were often framed in a language
that made reference to past practice, especially as it had to do with the
economy, property rights, and revenue systems.
Ultimately, however, as Sudipta Sen has argued, there were important
lacunae in British attempts to understand precolonial political practice.
“In British India, where Persian had long been recognized as the official
language of correspondence with the Mughals and other native regimes,
terms close or analogous to ‘sovereignty’ in contemporary Persian or
Hindustani usage such as mulkgiri or iqtidar were never seriously consid-
ered as substantively equivalent concepts in contemporary debates on the
legal validity of East India Company’s territorial acquisitions.”19 This

16. Travers, Ideology and Empire.

17. Stein, Thomas Munro, 217.
18. Kathleen Davis, Periodization and Sovereignty: How Ideas of Feudalism and
Secularization Govern the Politics of Time (Philadelphia: University of Pennsylvania,
2008), 71–72. Emphasis in the original.
19. Sen, “Unfinished Conquest,” 240–41.

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 328 Law and History Review, May 2015
lack of engagement with Indian political concepts was contemporary with
the Company’s decisive intervention in the interstate politics of India. We
must, therefore, take recourse to a variety of sources, and the many legal
arrangements that the British entered into, in order to understand the
shift in the balance of power in the late eighteenth century and the pro-
found political transformation, both direct and indirect, that accompanied
East India Company rule.

Revenue Grants and State Sovereignty in Hyderabad

Despite the fact that the British secured rights to collect revenue from
Bengal and the Northern Circars simultaneously, the Northern Circars do
not figure prominently in accounts of eighteenth century colonial expan-
sion. This is not without reason. Throughout the eighteenth century, the
Company delayed collecting revenue in the Northern Circars, had immense
difficulties and intermittent success when it did, and ultimately even wit-
nessed a proposal by Governor Hastings to return the territories to the
Nizam of Hyderabad. Peter J. Marshall has described the variance between
Company policy in Bengal and in the south as resting on differences in the
nature of the native states encountered in these two regions. “A brief expla-
nation would be that in Bengal the British inherited a centralized indige-
nous state structure through which they could impose their direct
authority with relative ease. They had neither the need nor the inclination
to preserve Bengal’s Indian rulers. . ..In the south, there was no comparable
state structure and so the Company had no real alternative to working
through the Nawab of the Carnatic who was endeavouring to extend his
authority over largely unincorporated local powers.”20 Whatever the initial
differences in policy between the two regions, the Nawabs of the Carnatic
also ultimately met the same fate—being set aside entirely—as the Nawabs
of Bengal, only significantly later. The Northern Circars also ultimately
became part of the directly ruled territorial empire of the British in
India, although here what will be emphasized is the role of the Northern
Circars in the evolution of alternative forms of empire in the eighteenth
century. Attending to the history of the Northern Circars allows us to
pose larger questions about the reasons for a variance in British policy
in the subcontinent, about the nature of the Indian states that the British
encountered, and also about how the British inserted themselves into
these political relationships, interacting with local actors seeking revenue

20. P. J. Marshall, The Making and Unmaking of Empires: Britain, India, and America
c. 1750–1783 (Oxford: Oxford University Press, 2005), 55.

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The Origins of Indirect Rule in India

Figure 1. Left, map of India in 1765. Right, map of India in 1805. Source: Imperial Gazetteer of India, vol. 26, Atlas. (Oxford:
Clarendon Press, 1909). http://commons.wikimedia.org/wiki/File:India1765and1805b.jpg Wikipedia User:Fowler&fowler.

329
 330 Law and History Review, May 2015
grants from the Company and its servants. Ultimately, this description of
state-making in south India will allow us to understand the novelty of trea-
ties signed with the Nizam subsequently, and the ways that they inaugurat-
ed a new state form.
Clive’s interest in the Northern Circars had been ignited by his partici-
pation in the Carnatic wars and prior French claims to that same land.21
The Mughal emperor’s firman (royal order/decree) made explicit reference
to the French and to the English company’s ability, indeed right, to expel
them from these territories. This firman rendered French possession illegit-
imate by proclaiming that the English company had expelled them “in con-
sequence of its [the Nizam’s grant of the lands to the French] not being
confirmed by us, either by Firmaun or otherwise,” and proceeded to
award these same territories to the British “by way of enam or free
gift.”22 The Northern Circars (in much the same way as Bengal) were
thus granted to the English company free and clear, or so it would seem.
The path of English policy in these southern districts was far from straight-
forward, however, and into the 1790s, “Company officials had yet to deter-
mine how revenue was assessed on the land and how it was collected by
the tax contractors to whom this was entrusted.”23 The Company’s rights
to the Northern Circars were also necessarily complicated, as witnessed
in the Mughal emperor’s firman, by the Nizam of Hyderabad’s claims to
the same territories, a story we will return to shortly.
Company records repeatedly stressed difficulty penetrating the revenue
systems of the Northern Circars. Initially, President Palk of the Madras
Council wrote to London explaining that the Company should delay taking
possession of these southern territories. “Untill all is settled & likely to
continue quiet in Bengal it may not be safe to avail ourselves of the grants
received for the Northern Circars unless Nizam Ally can be brought to con-
firm them. . .if we do not take possession of these Circars till another year,
it can make no great difference. . .”24 Clearly then, securing the Company’s
possessions in the north would take precedence, as would guaranteeing the
Nizam’s consent to the acquisition. It also seems that Clive had a plan

21. Henry Dodwell, Dupleix and Clive: The Beginning of Empire (London: Methuen &
Co., 1920).
22. Charles U. Aitchison (comp.), A Collection of Treaties, Engagements, and Sunnuds
Relating to India and Neighbouring Countries: Volume V, Containing the Treaties, &c.,
Relating to Hyderabad, Mysore, Coorg, the States under the Madras Presidency, and
Ceylon (Calcutta: J.L. Kingham, Foreign Department Press, 1864; 1876 [reprint]), 145–46.
23. Burton Stein, Thomas Munro: The Origins of the Colonial State and His Vision of
Empire (Delhi: Oxford University Press, 1989), 25.
24. Extract of a letter from President Palk to the Court of Directors, dated October 11,
1765, India Office Records (hereafter IOR) H/262, 105–6.

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 The Origins of Indirect Rule in India 331
“from his Arrival in India, of repossessing Cuttack, or that part of Oriza,
belonging formerly to Bengal, situated between Ganjam and Ballasone,
in order to make the Junction of the two Presidencies compleat.”25 This
initial delay could also have devolved from Clive’s ambition to make pol-
icy matters in both regions a united consideration. And although the doc-
uments of this period refer to the Company’s possessions in Bengal, Bihar,
and Orissa (reflecting Clive’s desires), the latter territory was not con-
quered by the British from the Marathas until the early nineteenth century.
Once negotiations began in 1766 over the Northern Circars, the
Company considered putting the Nawab of Arcot/Carnatic in charge of
these territories on its behalf, and utilizing his troops to secure the revenue
demand. Ultimately, they decided against this policy in order to “give less
umbrage to Nizam Ally already jealous of the Nabob’s Designs on the
Decan, [who] would therefore judge that Existence of his Government de-
pended on opposing the Firmaund which gives us Possession of a Country
adjoining almost to Hydrabad, especially, as there is not Fort of any con-
sequence to interrupt our march to that Capital or even to Aurangabad.”26
The Northern Circars may have lain on the path from Madras to Bengal,
but they also lay on paths to the heart of the Nizam’s territories.
Company records indicate that the Nawab of Arcot had greater ambitions
than supervision of these limited territories. “When the Provinces of
Bengal became subject to the Company the Nabob had the vanity to pro-
pose that his oldest son Omdut ul Omra should be made Soubadar of
Bengal, and that his second son the Ameer ul Omra should succeed to
the Musnud of the Carnatic, while he himself aspired to the Soubadarry
of the Decan.”27 Not only, then, were the Northern Circars subject to the
Nizam of Hyderabad, and therefore also the largely symbolic claims of
the Mughal emperor, but the Nawab of Arcot also was imagining a larger
political realignment on the subcontinent, giving him and his family rights
to lands through the intervention of a third party.28

25. Extract of a separate letter from Fort St. George, dated January 22, 1767, IOR H/262,
149–50.
26. Extract of a general letter from Fort St. George, dated April 11, 1766, IOR H/262,
129.
27. IOR H/285D, 6.
28. Clearly, the acquisition of these territories and the setting aside of the Nawabs of
Bengal led the Nawab of Arcot to believe that revolutionary changes might be in the offing.
For a pamphlet arguing the Nawab of Arcot’s case, see A Seasonable Letter on the Late
Treaty with Nizam Allee Kawn, and the Commotions in Consequence of it, on the Coast
of the Coromandel: Addressed to the Serious Consideration of the Present Directors of
the East-India Company and the Propreitors of India-Stock (London: Printed for
J. Williams [etc.], 1768).

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 332 Law and History Review, May 2015
Initial negotiations with the Nizam about these districts had been con-
ducted through Husain Ali Khan, who had been put in charge of them
by the Nizam. Madras was not sanguine, however, about his abilities.
“Hussain Alli Cawn appointed by Nizam Alli Cawn had the
Management of all, but neither he nor his Master being much regarded
in any of them he could collect but a very small part of the Revenues,
& that only by means of such a force as devoured the whole. . ..”29 In
fact, it was difficult for the British to even estimate revenue values for
these territories. Fantasies of financial windfalls depended upon calcula-
tions of French revenue collections, estimated in one instance as 39
lacks (3,900,000).30 Testifying before the House of Commons in 1766–
67, Henry Vanisttart is reported to have claimed that the French had farmed
them at 29 lacks (2,900,000) but after deductions, they had only yielded
1,800,000, or the equivalent of ₤225,000.31 Husain Ali Khan himself
claimed to have never sent the Nizam more than 50,000 from these
same territories.32 Therefore, how should we understand these large dis-
crepancies, competing political ambitions over the same territories, and
the difficulties that the British faced in extracting revenue in the south?
What kind of state did the British encounter in the Northern Circars?
Although he had been deputed to the Deccan as a Mughal governor, the
founder of the Hyderabad state, Nizam-ul Mulk, had departed in significant
ways from Mughal administrative ideals. “Thus, for example. . .complex
processes of bargaining rather than cadastral surveys (although one was
taken in 1726–27) tended to determine revenue payments by zamindars;
many lower-level revenue offices were allowed to become hereditary;
and revenue farming (ijaradari) was tolerated, albeit reluctantly.”33 The

29. Extract of a general letter from Fort St. George, dated November 9, 1762, IOR H/262,
55. The British had, in fact, been involved with Husain Ali Khan prior as foujdar of Ellore,
Rajahmundry and Mustafanagar (the Northern Circars). For details, see V. K. Bawa, “The
French in India: The Case of Hyderabad,” in Studies in the Foreign Relations of India,
from the Earliest Times to 1947: Prof. H. K. Sherwani Felicitation Volume. ed. P. M.
Joshi (Hyderabad: Andhra Pradesh State Archives, 1975), 269–70.
30. Extract from a general letter from Fort St. George, dated March 26, 1764, IOR H/
262, 62.
31. Manuscript minutes, dated 27 Mar-13 Apr 1767, of a House of Commons Committee
of the Whole House 1766–67, set up to enquire into East India Company affairs, including
evidence by civil and military officers in India, British Library (Hereafter BL) Mss Eur
D1018, 10. These are not official proceedings, but rather private notes.
32. Extract from a general letter from Fort St. George, dated March 26, 1764, IOR H/
262, 56.
33. Munis Faruqui, “At Empire’s End: The Nizam, Hyderabad and Eighteenth-Century
India,” Modern Asian Studies 43 (2009): 32. See also Karen Leonard, “The Hyderabad
Political System and its Participants,” Journal of Asian Studies 30 (1971): 569–82.

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 The Origins of Indirect Rule in India 333
complex process of negotiation with a diverse group of local authorities
that Munis Faruqui describes is confirmed in one contemporaneous ac-
count of the (first) Nizam’s army.
He is followed by 10,000 mounted men under various commanders, as also
forty officers of state, and 20,000 cavalry. The sons of ‘Abd-un Nabi Khan,
the Nawab of Cuddapah are with the army. . .Their horse numbers 3,000.
There are also Poligars in the camp. . ..The army of these numbers 5,000 or
6,000 horse and 100,000 foot. The number of the Pindaris in the army is be-
yond calculation. The distinguished Mahrattas who have accompanied the
Nizam’s troops are Raja Chandrasen and Raja Nimbalisiyudosi. They have
a force of 20,000 horse. With this array, they proceeded to Tirupati, to wor-
ship the god of that place. . ..It is also reported that after a stay of fifteen or
twenty days at Arcot, he will leave his son Nasir Jung there, and move
with the whole of his forces to Trichinopoly. The object of this expedition,
it is stated, is to transfer the possession of Trichinopoly to the Mysorians.34
The state of Hyderabad had established itself in the Deccan through alli-
ances forged in the field with a multilingual and layered elite. The eigh-
teenth century Nizams moved through their territories, “as though the
sea was rising and flooding the land,” to display their military power
and demonstrate their authority and alliances.35 This particular description
of the Nizam’s retinue disguises the diverse set of circumstances that might
have brought any particular group to court. Some were clearly there to
show support for the Nizam, even as their own titles and lands were recog-
nized by the state; others, more recalcitrant participants perhaps, were there
so that the Nizam could keep an eye on them and the arms at their com-
mand (hostages of a sort); and yet others, such as the Marathas, represen-
tatives of another state, were there to keep an eye on the Nizam and be sure
that he met their tax demands.36
This elite, in turn, provided the state with both revenue and a consider-
able army. This mode of state making had clear precedents in the Deccan,

34. Entry dated Thursday, February 21, 1743, in Ananda Ranga Pillai (trans. and ed.
Frederick Price), The Private Diary of Ananda Ranga Pillai, Volume I, (Madras:
Superintendent, Government Press, 1904), 213–14.
35. Description taken from ibid. The first Nizam’s testament, dictated just before his
death, instructed his successors to “pass most of your life in travel, as every day brings
you to new destinations and new waters, and you should make a habit of living under
tents, as very often the administration of the country and the organization of the State affairs
lie therein.” Translation to be found in Yusuf Husain Khan, Nizāmu’l-Mulk, Āsaf Jāh I:
Founder of the Haiderabad State (Mangalore: The Basel Mission Press, 1936), 285.
36. Andre Wink, Land and Sovereignty in India: Agrarian Society and Politics under the
Eighteenth-century Maratha Svarajya (Cambridge: Cambridge University Press, 1986),
85–101.

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 334 Law and History Review, May 2015
and we can perhaps understand the Hyderabad state’s forging of a political
order at variance with Mughal ideals as the result of these regional prece-
dents.37 States in south India not only incorporated local elites in order to
build their armies and courts, but also granted tax-free land to other, even
more local actors: religious establishments, village servants, accountants,
and headmen.38 Clearly, in the Northern Circars, some of these chiefs
were especially resistant to the authority of the Mughals and the first
Nizam, as had been the case with Subbana Rao, the Valama Reddy
chief of Gundugolanu.39 Even into the nineteenth century, in the neighbor-
ing district of Guntur, the Company continued to face resistance to its au-
thority from village leaders: zamindars, dubashes, as well as from British
officers.40 This was a diverse set of political actors, with shifting political
alliances, operating in varied locales from villages, towns, and hills, to the
tents of the Nizam’s camps.41
There were new actors in these regions as well. Fifteen years after the
Company had acquired the Northern Circars, the president of the
Council at Fort St. George was reporting to London that “the Zemindars
are so loaded with debts to the Company, and to Individuals, that he ob-
serves with great concern the little prospect there is of any great increase
of Revenue from the Lands, or of the speedy payment of what remains
due from them.”42 The importance of financiers, many of them
Company servants, in the economy of the Northern Circars, posed specific
political problems, and as with their political policy in India, more gener-
ally raised allegations of corruption. The directors in London demanded
that its officials in Madras “strictly enquire, whether, in order to obtain
their Leases or Agreements, any present or gratuity hath been given or
made, directly or indirectly, by any Renter, Rajah, Zemindar, or other per-
son or persons, to any person whatever in the service of the Company, and
more especially to any Member or Members of our Council at Fort

37. See, especially, Christopher Chekuri, “A ‘Share’ in the ‘World Empire’: Nayamkara
as Sovereignty in Practice at Vijayanagara, 1480–1580,” Social Scientist 40 (2012): 41–67;
Velcheru Narayana Rao and Sanjay Subrahmanyam, “Notes on Political Thought in
Medieval and Early Modern South India,” Modern Asian Studies 43 (2009): 175–210.
38. Sanjay Subrahmanyam, Penumbral Visions: Making Polities in Early Modern South
Asia (Ann Arbor: University of Michigan, 2001), 175.
39. Faruqui, “At Empire’s End,” 29, n. 58.
40. Robert Eric Frykenberg, Guntur District, 1788–1848 (Oxford: Clarendon Press,
1965), 31.
41. For an example of one dynasty operating in the central Indian hills, see Bhangya
Bhukya, “The Subordination of Sovereigns: Colonialism and the Gond Rajas in Central
India, 1818–1948,” Modern Asian Studies 47 (2013), 288–317.
42. Letter to Fort St. George, dated January 10, 1781, IOR/E/4/869, 398–99.

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 The Origins of Indirect Rule in India 335
St. George.”43 The problem was that the private financial dealings of
Company men were sullying the Company’s claims to neutral governance.
Charges of corruption were shared by British governments at home and
in India. In England as in India, these charges of corruption accompanied
the expanding revenue capacities of the state. In England, we may note that
these charges, leveled by Tories and Whigs in the eighteenth century, were
radicalized in the wake of the Napoleonic Wars to become the basis of new
demands for electoral reform in the nineteenth century.44 In India, charges
of corruption also involved the territorial expansion of the state. The
Regulating Act of 1773 was formulated to address these allegations and re-
form Indian administration. “The bill sought to put in place a wide range of
checks on the corruption of the Company servants, raising the salaries of
key Company servants, while both prohibiting presents and placing
some new restrictions on private trade. Significantly, an important provi-
sion for dealing with the excesses of Company merchants in southern
India was dropped because of a deal with a group of powerful parliamen-
tarians who represented the ‘Arcot interest.’”45 Therefore, what was seen at
the local level in the Northern Circars, with revenue contracts, echoed al-
legations made elsewhere in India, especially in relation to the Nawab of
Arcot, whose debts to the Company and its officials gained some notoriety
in Britain.
Clearly, these private British financiers were stepping into a vacuum cre-
ated by indigenous “portfolio capitalists”—those large-scale entrepreneurs
involved simultaneously in economics and politics—who, Sanjay
Subrahmanyam and Christopher A. Bayly tell us, were in decline in this
region in precisely this period.46 It would not be surprising therefore, if

43. Letter to Fort St. George, dated January 11, 1781, IOR/E/4/869, 564.
44. “But it was precisely the growth of the central government in response to war with
revolutionary France that gave Old Corruption such force as a rallying-cry for radical polit-
ical change. Of course, allegations of ministerial greed and systematic corruption had fre-
quently been made by the government’s critics from at least the 1660s forward, and it
seems fair to characterize Old Corruption as a latter-day manifestation of the ‘country ide-
ology’ common to opposition politics throughout the eighteenth century. But what Cobbet
and other radicals meant by Old Corruption was in many a new system created by the
Napoleonic war machine. For. . .radicals emphasized that the wars had prompted the minis-
tries of Pitt and his followers not only to suppress traditional liberties, but also greatly to
enlarge the central bureaucracy and hence, they assumed, the opportunities for bribery
and peculation.” Philip Harling, “Rethinking ‘Old Corruption’,” Past & Present 147
(1995): 128–29.
45. Dirks, Scandal of Empire, 59.
46. “However, the late seventeenth and early eighteenth century in southern India sees the
beginnings of a process of erosion in the domain of the Asian portfolio capitalist. There is,
on the one hand, a decline in the size and complexity of the enterprise; on the other hand,
one item on the portfolio—namely independent seaborne commerce—seems increasingly to

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 336 Law and History Review, May 2015
the local elites of the Northern Circars hoped, through their financial deal-
ings, to gain some political leverage within the British administration at
Madras.47 However, the “corrupt” players of South India may have been
different from their counterparts in England. My suggestion is that whereas
the “old corruption” of England aimed to re-entrench the political and eco-
nomic privilege of the landed gentry, the corruption of company officials
and local elites in south India may have been a sign of, and alibi for,
the expansion of the colonial state. As Bhavani Raman has demonstrated,
charges of corruption levied against the Indian clerks and accountants who
staffed the Company’s growing bureaucracy fueled a revolution in the re-
lationship among writing, learning, and the state in the Madras presidency,
entrenching and enlarging early colonial state practices.48 Charges of cor-
ruption in India may, therefore, have largely been a sign of the functioning
of financial and political actors on the margins of the oversight of the
Company state, some of whom were being newly incorporated into its ex-
panding bureaucratic apparatus. It was some of these (British) financial in-
terests, recently returned to England, who eliminated a proposal put
forward during discussion of the Regulating Act to prohibit trade between
Company servants and foreign merchants in south India.49 So whereas the
bill had never really been formulated to address the most radical critique of
the East India Company’s monopolies leveled by figures such as William
Bolts and Alexander Dow, it was the “Arcot interests” in Parliament who
opposed further restrictions on trade in the East.50 It was ironically, repre-
sentatives of Indian corruption who lobbied in Parliament for freer forms of
trade in south India.

disappear in the face of severe competition from European private trade.” Sanjay
Subrahmanyam and C.A. Bayly, “Portfolio Capitalists and the Political Economy of Early
Modern India,” Indian Economic and Social History Review 25 (1988): 412.
47. Dirks suggests something very similar for Arcot: “Indeed, the dependence of
Company servants on the wealth and perquisites of local politics gave the nawab a new
kind of political power, as he managed circuits of redistribution and entitlement that made
him as indispensable as he was bankrupt. . ..Besides, the Company was embodied in the un-
paralleled avarice and venality of a growing group of Englishmen who accession to the po-
sition of nabob was entirely dependent on the survival of the nawab. As a consequence, the
debts of the nawab of Arcot were enmeshed in a form of Company politics that both paro-
died precolonial performances of sovereignty and made the ‘old corruption’ of midcentury
English politics seem tame by comparison.” Dirks, Scandal of Empire, 63.
48. Bhavani Raman, Document Raj: Writing and Scribes in Early Colonial South India
(Chicago: University of Chicago, 2012).
49. Sally Sutherland, The East India Company in Eighteenth-Century Politics (Oxford:
Clarendon Press, 1952), 262.
50. In arriving at this suggestion, I am indebted to the paths opened up by the scholarship
of Leonard, “Fit of Absence of Mind?” and Vaughn, “Politics of Empire”.

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 The Origins of Indirect Rule in India 337
Client States, Military Campaigns, and Indirect Rule in Hyderabad

“The French,” Vasant K. Bawa argues, “contributed indirectly to the suc-

cess of the British empire in India by introducing a system of indirect con-
trol of the native state through an armed force, for whose maintenance
some territory was assigned. This pattern was later adopted by Lord
Wellesley and extended to different parts of India.”51 Indeed,
Wellesley’s introduction of the subsidiary alliance system, by which
India’s native states by treaty relinquished their rights to negotiate with for-
eign powers independently of the British, has been understood as the con-
solidation and systematization of the ad hoc policies and ambitions of the
British over the preceding half century. Viewed from the south, these pol-
icies were clearly driven in some measure by efforts to counteract French
influence on the subcontinent. However, moving too quickly from Dupleix
and Bussy’s ambitions on the Coromandal coast to the systematization of
indirect rule hazards eliding the specific nature of interstate politics as they
developed in the late eighteenth and early nineteenth centuries. This pro-
cess was far from seamless or inevitable, and was characterized by both
significant reversals of policy and differing opinion.
The French had intervened in succession disputes in the south, and ul-
timately extracted the rights to revenue in places such as the Northern
Circars. Whatever their imperial ambitions, they had largely operated
through client states. Initially, what the British also had in the Carnatic,
and (hoped to have in) Bengal, were client states, territories that were
ruled by leaders who owed their rise and ability to retain power to the
Company.52 In the Carnatic, this policy was especially effective because
of the Nawabs’ financial dependence on the Company. What the British
created in Hyderabad with the Nizam was different, and evolved swiftly.
The idea of making Hyderabad into another client state did exist, as will
be discussed, but it was set aside as the British tried to consolidate an al-
liance that would recognize the sovereignty of the Nizam, while also obli-
gating him to recognize their own alliances, therefore hemming in his
ability to conduct an independent foreign policy. The result in this case
was to transform the state from the outside in through an evolving process
of treaty making.

51. Bawa, “The French in India,” 259.

52. So, for example, Alexandrowicz notes: “In 1765 a trilateral treaty was negotiated be-
tween the English Company, the Nawab of Bengal and Shuja-ul-Dowla, the Ruler of Oudh.
It is noteworthy that in these negotiations the Ruler of Bengal was represented by Robert
Clive (acting jointly with John Carnac), which showed that the Nawab had been reduced
to the level of a nominal Ruler.” Alexandrowicz, History of the Law of Nations, 137.

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 338 Law and History Review, May 2015
In 1759, even before the Mughal emperor’s grant of diwani to Clive,
Colonel Forde entered into an agreement with the Nizam (Salabat Jung)
for territory on the Coromandal coast, the port town of Masulipatam,
and surrounding districts.53 Whereas major Asian powers, such as the
Mughal and Chinese emperors, were reluctant to enter into treaties with
European trading companies (rather than directly with their sovereigns),
other states had contracted agreements with them throughout the sixteenth,
seventeenth, and eighteenth centuries. Forde had been deputed to the
Northern Circars by Clive, who feared that the French would move
north to assist the Nawab of Bengal. The Madras government sent
M. John Andrews to accompany him. Together, they entered into an agree-
ment with Ananda Raju (Raja of Chicacole/Vizianagaram) that would
have put the British in possession of much larger expanses of territory
on the coast.
This classic expression of territorial aggrandizement pursued by
“men-on-the-spot” was not, however, applauded by their superiors. “The
Council at Fort William deplore his [Andrews] tendency to acquire more
territories in the name of the Company which according to them was
against the Company’s interest because it entails the maintenance of a
large force, the revenues of the country will not be sufficient to defray
the maintenance of a large force and that it is inconsistent with the general
plan of assisting the gentleman on the Coast in driving away the French
entirely out of India.”54 Clearly then, as late as 1759, the Company’s direc-
tors were most concerned with French rivalry, and intended to continue
their policy of exercising Company authority within coastal enclaves, not
a rapid territorial expansion. Under Laurence Sulivan’s leadership of the
Board of Directors in London, between 1758 and 1763, the Company re-
fused the diwani of Bengal three times.55 Under Clive, this policy changed,
as he pressed the issue through the Mughal emperor’s firman.56
Unlike Bengal, the Mughal firman granting the Company territory in
the south was not accompanied by a military defeat of the Nizam.

53. The treaty, dated May 14, 1759 stipulated that the “whole of the Circar of
Masulipatam, with eight districts, as well as the Circar of Nizampatam, and the districts
of Condavir and Wacalmanuer, shall be given to the English Company as an enam (or
free gift), and the Sunnuds granted to them in the same manner as was done to the
French.” Aitchison, Collection of Treaties, 145.
54. Quoted in Sarojini Regani, “French Influence in the Deccan,” Studies in the Foreign
Relations of India, 252–56; quote taken from 253.
55. Vaughn provides a compelling explanation of why the Company reversed course and
committed itself to a territorial empire in India; for an extended discussion of the different
political visions of Clive and Sulivan, see specifically Vaughn, “Politics of Empire,” 493.
56. The British did ultimately conclude a treaty with the Raja for more limited territories
on the banks of the Godavari River. Regani, “French Influence in the Deccan,” 255.

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 The Origins of Indirect Rule in India 339
Hence, the Madras Council, as neighbor to the Nizam, found itself nego-
tiating the terms in Hyderabad on behalf of the Company. In 1766, they
concluded a treaty by which the Company received the circars as “a free
gift thereof on them and their heirs, for ever and ever, [and] do hereby
promise and engage to have a body of their troops to settle the affairs of
His Highness’ government in everything that is right and proper, whenever
required.”57 The promise of troops to assist the Nizam was in fact a con-
tinuation of the practices of the French, whose troops had become instru-
mental in succession disputes in both Hyderabad and the Carnatic. The
1766 treaty brought the Nawab of the Carnatic, the British, and the
Nizam together in “perpetual honour, favor, alliance, and attachment.”
Having the Nawab of the Carnatic as a signatory meant that his hereditary
claims to Arcot were simultaneously recognized by the Nizam and the
British. British military assistance was assured to the Nizam only when
their own possessions and those of the Carnatic were secure and at
peace. The size of these contingents was to be determined by the
Company alone, and the costs were to be born from the revenues that
the British would receive from the Northern Circars. The desire to secure
troops trained by European powers was not unique to the state of
Hyderabad.58 Willingness to militarily assist the Nizam was not necessarily
shared in London by the Company’s directors, and soon all but disap-
peared as a result of the Nizam and his family’s role in the first
Anglo-Mysore war in 1767.59
Soon after concluding this treaty with the British in 1766, the Nizam had
second thoughts. Vacillation ran from a military alliance with the British,
to the Nizam’s short-lived cooperation with their military rival, Hyder Ali
of Mysore, culminating in the Nizam’s agreeing to recognize Tipu (Hyder
Ali’s son) as the Nawab of Arcot, in place of the British client.60 Left hav-
ing to explain this reversal to the Court of Directors in London, the Madras
government wrote:
If any judgment could be formed of the Actions of the Soubah [Nizam] on
the principles of reason and prudence, it would appear impossible that he

57. Aitchison, Collection of Treaties, 147.

58. For an account of the Mughal emperor’s attempt to receive similar assistance, and the
alliance between the emperor and British radicals, see Leonard, “Fit of Absence of
Mind?” 50.
59. “[A]t best you will be kept in perpetual Alarms, and whenever any Hostile attempts
shall happen to be made in one part of the vast Line of Country you have now to defend,
it will be a Signal for a like attempt in another, from Tinnavelli to Cuttack.” IOR/E/4/
863, 571.
60. Sarojini Regani, Nizam–British Relations, 1724–1857 (Hyderabad: Distributed by
Booklovers, 1963), 133.

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 340 Law and History Review, May 2015
should so readily have relinquished our alliance when he had all the assuranc-
es both by words and actions of our determined resolution to establish and
support his authority, but that prevailing argument Money which Hyder
Alli plentifully Distributed among his Ministers soon garnered him a consid-
erable Party at Court, nor was this a point Difficult to be carried, as they nat-
urally concluded their Influence with the Soubah must decrease, in proportion
as ours prevailed. It was also to be expected that Bazalet Jung [the Nizam’s
nephew] would exert his utmost endeavours to prevent a mutual confidence
between us and the Soubah; as by that means he had two objects in view.
First that while the Soubah entertained any jealousy towards Us, he would
not oblige him to give up the Circar of Candavir. Or in case of a rupture,
and we should proceed to Extremities he might possibly entertain hopes of
obtaining the Soubahship [become the ruler of Hyderabad].61
At the time, the government of Madras was not unaware of the complex
ways in which Hyderabad’s policy was determined. The lines between for-
eign and domestic concerns were thin ones. Matters of succession, always
so important to the maintenance of even the Mughal Empire in its heyday,
could, in the context of eighteenth century politics, quickly evolve into
matters involving multiple parties and states, as they did with Basalat
Jung, or as they had when the question of the Northern Circars was first
raised.62 Likewise, if, as we noted earlier, the functioning of the
Nizam’s court, and state, was especially dependent upon the forging of al-
liances with various elites, it is not surprising that those alliances had to be
constantly renegotiated, as seems to have been the case in this instance
with the ministers who came to align themselves with the Mysore
government.63
It was during this war that officials in both Madras and Bengal thought
to simply replace the Nizam. Here they returned to the tried method of es-
tablishing a client state. The suggestion came to them initially from the
Vazir, or Nawab of Lucknow/Oudh, who recommended that “the
Governor must write an ’arzi to the resplendent Presence for a sanad for
the Deccan, and having obtained it, he may keep it. And when the
Nizam has been expelled, the Governor may give the sanad to whom he
pleases; when the disturbances begin, His Excellency must show it. By

61. Letter to the Honorable the Court of Directors, dated September 21, 1767, H/262,
230–31.
62. On the importance of succession to Mughal politics, Munis Faruqui, The Princes of
the Mughal Empire, 1504–1719 (Cambridge: Cambridge University Press, 2012).
63. As was, for example, the case with samasthans, Benjamin Cohen, Kingship and
Colonialism in India’s Deccan: 1850–1948 (New York: Palgrave, 2007); Karen Leonard
draws our attention to how the allegiances of foreign vakils could shift. Leonard,
“Hyderabad Political System,” 572.

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 The Origins of Indirect Rule in India 341
this means the Nizam will be deserted by his followers; and the lords and
zamindars of that country, which is very extensive, will be disaffected to-
wards him, and he will find it very difficult to support himself.”64 This was
an effort to delegitimize an enemy during a time of war by revoking his
recognition from the emperor in the north.
Therefore, the Governor in Bengal wrote “as faithful adherents to His
Majesty [the Mughal emperor], as protectors of the people of God, and
as defenders of their own possessions which they owe to the Royal farm-
ans, the English have been compelled to draw their swords in support of
His Majesty’s dominions, in their own protection, and in the cause of hu-
manity.” They asked
that His Majesty may cause a draft sanad to be issued. . .that in case this
enemy of mankind draws upon himself so calamitous a catastrophe as his
ejectment from his territories, everything may be found prepared for the im-
mediate nomination of a successor. Being a stranger to the family and con-
nections of the Nizam, the writer is yet undecided whom to recommend to
His Majesty for the office, but His Majesty may be assured that in a matter
of so much delicacy and importance, the writer will in no way interfere with-
out consulting His Majesty’s illustrious approbation.65
When news of this scheme eventually reached London, the directors were not
impressed. They wrote to record their disapproval of “your application to the
King for a blank firmaun for the Soubahdarry of the Decan, to be filled up at
your pleasure, or at the pleasure of the President and Council of Madras,”
and directed the Bengal government to “return it to the King & acquaint him
that we will not suffer our servants to be guilty of such an abuse of the confi-
dence he is pleased to repose in us.”66 The idea that the Company would create
client states across India seemed at that time insupportable from London, in
part, perhaps, because it was British actions on behalf of these “clients,”
both in representations to Parliament and in the waging of Indian wars,
that was arousing public suspicion of corruption.
In the wake of British success in the first Anglo-Mysore War, a new trea-
ty signed in 1768, 2 years later, recast many of the terms of the earlier ar-
rangement, and embodied the means by which the British hoped to
redefine their relationship to this state.67 “It was stipulated in the former

64. Calendar of Persian Correspondence: Vol. II, 1767–9 (Calcutta: Superintendent,

Government Printing, India, 1914), 169.
65. Dated November 22, Ibid., 182.
66. Letter to our president and council at Fort William in Bengal, dated May 11, 1769,
IOR/E/4/619, 462–4.
67. Keene notes a similar transition in Dutch policy toward the kingdom of Kandy in the
same period. See Keene, Beyond Anarchical Society, 79–83.

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 342 Law and History Review, May 2015
Treaty made at Hyderabad that the Company and the Soubah [Nizam]
would mutually assist each other when required, and their own affairs
would permit; but it being apprehended at present that such an agreement
may subject both parties to difficulties, and that misunderstandings may
arise on that account, it is now agreed only that a mutual peace, confidence,
and friendship shall subsist. . ..” The treaty did go on to promise the Nizam
that the Company and Nawab of Arcot “will always be ready to send two
battalions of sepoys and six pieces of artillery, manned by Europeans,
whenever the Soubah shall require them. . .provided the Soubah pays the
expense during the time that the said troops are employed.”68 This was a
move in the direction of the subsidiary alliance system developed by
Wellesley: a refusal to recognize or authorize the rights of this sovereign
to deploy British troops in war. It should, perhaps, go without saying
that no native leader under the authority of the Nizam would have been
able to make any similar claim by right. Additionally, the treaty separated
discussion of the Northern Circars from promises of military assistance,
treating both issues as independent. Now, the Company promised to pay
the Nizam “if they peaceably possess the Circars. . .and the Soubah
[Nizam] gives them no trouble.”69
The Company could no longer be understood to be renters in the
Nizam’s dominions.70 Whereas negotiations with the Nizam had begun
because the British believed they needed his consent to effectively assume
power in these districts, the language of this treaty was cast so as to assert
British rights as devolving from the Mughal emperor (who was not men-
tioned in the first treaty, but prominently in the second) and not the
Nizam. Additionally, this new treaty attempted to sever the relationship be-
tween Hyderabad and Mysore by having the Nizam declare “and [make]
known to all the world, that he regards the said Naique [Hyder Ali] as a
rebel and a usurper. . .because the said Naique has deceived the Nawab
Ausuph Jah [Nizam], broken his agreement, and rendered himself unwor-
thy of all further countenance and favours.”71 Not only did the British then
establish their own authority in the south as separate from that of the
Nizam, they also had to pry apart polities within the south, to define the

68. Aitchison, Collection of Treaties, 154.

69. Ibid., 154.
70. The Nizam saw this differently. “In 1768. . .the Company promised thereby to provide
a fixed sum of money as tribute to the Nizam from the revenues of the Northern Circars,
leased to the Company.” “Original Draft of the Letter, Addressed to Sir Eyre Coote by
the Nizam,” dated January 16, 1781, in Diplomatic Correspondence between Mir Nizam
Ali Khan and the East India Company (1780–1798), ed. Yusuf Husain (Hyderabad:
Central Records Office, Government of Andhra Pradesh, 1958), 6.
71. Ibid., 157.

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 The Origins of Indirect Rule in India 343
foreign relations of the Nizam’s state even as they attempted to influence
them.72 The treaty was duly accompanied by a sanad (decree), under the
Nizam’s seal, which declared Hyder Ali to be a “rebel and usurper,”
even as it instructed the zamindars of the Carnatic Balagaute (a territory
that the British had recently annexed from Mysore) to pay no “attention
to his [Hyder Ali’s] deputies . . . [and] to stop all correspondence either
with him or them.”73 And so a remarkable injunction on correspondence
entered the annals of British India.

Treaties and the Imperial States’ System

Treaty-making with Hyderabad and the wars fought by Hyder Ali in the
south coincided with a parliamentary inquiry of the East India
Company’s affairs, as well as with a hard-fought election of Company di-
rectors that witnessed the return of Laurence Sulivan to the Board in
London. During this period, the whole system of treaty-making in South
Asia came under scrutiny, creating both skepticism about its usefulness
and, on the part of Governor General Hastings, a desire to enlarge and
systematize it. It was perhaps because of public scrutiny in Britain that
communication from London, even after these considerable changes in
Nizam–British relations, continued to express dissatisfaction with the
state of political relations in south India. “It is with utmost Concern We
find, that the Victory you have gained tends to involve Us still further in
this Chaos of Treaties and Engagements.” In fact, treaties themselves fu-
eled allegations of East India corruption in Britain. “We cannot take a
view of your Conduct, from the Commencement of your Negotiations
for the Sircars, without the strongest disapprobation, and when we see
the opulent Fortunes, suddenly acquired by our Servants, who are returned
since that period it gives but too much weight to the Public opinion, that
this Rage for Negotiations, Treaties and Alliances have private advantage
more for its object, than the public Good.”74
A year later, they were more generally ruing all of their actions in the
south, including their territorial acquisitions and their contracts with
revenue collectors.

72. Another example of overlapping jurisdictions and territories is the Gadwal

Samsthanam, subject to the revenue demands of both the Marathas and the Nizam.
Cohen, Kingship and Colonialism, 40.
73. Aitchison, Collection of Treaties, 160.
74. Letter to our president and council at Fort St. George, dated May 13, 1768, IOR/E/4/
864, 337, 342.

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 344 Law and History Review, May 2015
When we reflect on the vast Length of the Country from the Northern Parts of
Chicacole to the Southern Districts of Madura and Tinnuvelly, the Number of
Garrisons to be maintained, and the wild Independence of most of the Rajahs
and Polygars, from whom nothing can be collected but by a standing Force,
we regret our having ever passed the Boundaries of the Carnatic, even for the
Possession of the Circars; for we have great Doubts whether the Charges will
not always exceed the Collections, and apprehend many ill Consequences
from so great a Division of our Forces.75
The idea that the Company’s territorial empire in India had overextended
itself was contemporaneous with that very extension.
Therefore, when, in 1781, at the beginning of the second Anglo-Mysore
war, and after significant military defeats, Warren Hastings, the first
governor-general of Bengal, proposed returning the Northern Circars to
the Nizam of Hyderabad, he was reiterating themes that had been raised
by the board of directors over a decade earlier. The place of the
Northern Circars in discussions with the Nizam may have been one of
the main reasons–although a largely neglected one–why company policy
here continued to differ from that of Bengal. The immediate desire was
to entice the Nizam to ally with the British during the course of the war.
In January of 1782, newsletters from Poona were reporting conversations
between the Nizam and Marathas about the possibility of his joining an
“anti-English Confederacy.”76 But larger questions were also raised.
Were the Northern Circars a good investment? Were they profitable?
Did the British possess the military force required to defend them? The
Committee of Secrecy appointed by Parliament in 1773 had determined
that after expenses (military and pēshcash [tribute]) the Company would
be left with a clear profit of 43,310, just under the amount estimated by
Husain Ali Khan.77 The answer returned to Hastings’s proposal from
MacCartney (newly in charge of the Madras council) was that the
Company should retain the Northern Circars. The tide had also definitively
turned on the Board of Directors, who agreed with MacCartney. In the
Northern Circars, also, the Company would henceforth devote itself to rev-
enue extraction.

75. Extract of the Company’s separate letter to Fort St. George, dated March 17, 1769,
“Appendix No. 6,” Appendix to the Fifth Report from the Committee of Secrecy
Appointed to Enquire into the Causes of the War in the Carnatic, and of the Condition of
the British Possessions in Those Parts: Volume 4 (London: [n.p.], 1782).
76. Yusuf Husain (ed.), News-Letter, 1769–1799 (Nawab Mir Nizam Ali Khan’s Reign)
(Hyderabad: Central Records Office, Hyderabad Government, 1955), 15–17.
77. Letter to the Honorable Charles Smith Esquire, Present and Select Committee at Fort
St. George, dated July 2, 1781, IOR/H/246, 191–95.

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 The Origins of Indirect Rule in India 345
Hastings was motivated by a larger vision of the British Empire in India
and of regularizing the interactions between the Company and the native
states. Therefore, in 1777, he wrote to Alexander Elliot about the “general
system” he had hoped to be empowered to establish, “namely, to extend the
influence of the British nation to every part of India not too remote from
their possessions, without enlarging the circle of their defence or involving
them in hazardous or indefinite engagements, and to accept of the alle-
giance of such of our neighbours as shall sue to be enlisted among the
friends and allies of the King of Great Britain.”78 His plan to return the
Northern Circars to the Nizam was formulated within the context of this
larger imperial vision, one that imagined permanent relationships of alli-
ance with India’s native states. Hastings hoped to implement this new sys-
tem of relations first with Oudh/Awadh and Berar (states bordering
Bengal), but eventually also incorporating others in to a treaty system “ex-
ecuted in the name of the King of Britain.”79 Hastings’s plan acknowl-
edged that “an extension of territory beyond certain bounds is
dangerous,”80 and proposed, rather, the extension of a treaty-making sys-
tem that would afford the British greater military capacity (by requiring
the maintenance of British troops by native states), greater security (in
that states would be tied to the British imperial order by permanent rela-
tionships of defense), and greater income (in that they would pay subsidies
for the maintenance of these troops).81 In other words, Hastings hoped to
extend the power and the authority of the British Empire in India not
through conquest, but by means of establishing permanent relationships be-
tween India’s natives states and the British crown.
Treaties between European and non-European states in the East Indies
had at times, even prior to this period, been unequal. Charles H.
Alexandrowicz has argued that these unequal treaties, or the beginnings
of the parceling of sovereign rights, emerged from a desire to eliminate
rival European commercial competition. “The monopolization of trade
found its further expression in the application of the discriminatory clause
by which one Company made the contracting Ruler discriminate against
other Companies and their nationals. Inter-European discrimination was
gradually extended from trade to politics, and at this stage the monopoliza-
tion of external relations of the Ruler by one or another of the contracting
European agencies resulted in inequality of treaty making between

78. Letter to Alexander Elliott, dated January 12, 1777, cited in George R. Gleig,
Memoirs of the Life of the Right Hon. Warren Hastings, First Governor-General of
Bengal, Volume 2 (London: Richard Bentley, 1841), 136–37.
79. Enclosed in Elliott’s letter, dated February 10, 1777, cited in ibid., 145.
80. Ibid., 143.
81. Ibid., 146–47.

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 346 Law and History Review, May 2015
them.”82 In the case of Hyderabad, this inter-European discrimination had
been extended to non-Europeans rulers as well. What was unique about
Hastings’s vision then, was not the reference to unequal treaties. Rather,
it lay in his imagination of a web of such treaties stretching across the sub-
continent and being pursued as a possible alternative to territorial expan-
sion. Neilesh Sen has argued that Hastings’s desire to create treaty
relations directly with the British crown was not incidental, and that
Hastings had what “amounted to a coherent and farsighted proposal for
a government of reformed structure and more legitimate authority. The
[British] monarch, under. . . [Hastings’] scheme, was to have represented
a guarantee of open, regulated government, fettered neither by the pretence
of deferring to Mogul power nor by the subordination of the British prov-
inces to the interests of a commercial body.”83 In suggesting the Crown as
the arbiter of power on the subcontinent, Hastings proposed a plan that he
knew would be controversial, and which ultimately, at the time, had little
support in London itself.
Many of India’s native rulers themselves hoped to establish binding
agreements directly with the British crown, but had to wait for Queen
Victoria’s proclamation in the aftermath of the Rebellion of 1857 to do
so.84 It was only as the Indian Empire made a permanent transition from
the jurisdiction of Company to the British state that the native states
were also understood to be permanently tied to the Crown; Queen
Victoria’s Proclamation itself was understood as a Magna Charta by the
princes. By the late nineteenth century, as Laura Benton has demonstrated
“these [native] states could be viewed as relating to one another and at
times to the imperial power in the same way as nation-states in the inter-
national order, with the difference that the imperial government possessed
legal hegemony as the dominant political entity. In this sense, imperial ad-
ministration represented a perfected international order, one without the
Austinian problem of the absence of an overarching legal authority.”85
With the formalization of the order of princely states post-1857, figures
such as Henry Maine could understand imperial sovereignty as functioning
through a parceling of sovereign rights, with the British acting as a “para-
mount” power on the subcontinent. This formal theoretical

82. Alexandrowicz, History of the Law of Nations, 230.

83. Neilesh Sen, “Warren Hastings and British Sovereign Authority in Bengal, 1774–80,”
The Journal of Imperial and Commonwealth History 25 (1997): 61.
84. Early examples of the Nizam’s efforts to communicate directly with the King of
England can be found in Yusuf Husain (ed.), “Appendix A,” in Diplomatic
Correspondence between Mir Nizam Ali Khan and the East India Company (Hyderabad:
Central Records Office, Government of Andhra Pradesh, 1958), 1–10.
85. Benton, Search for Sovereignty, 237.

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 The Origins of Indirect Rule in India 347
acknowledgement of the semi- or “quasi-sovereign” status of India’s princ-
es and native institutions as indeed efforts to preserve that status, came, as
Karuna Mantena has shown, as a response to the wide-ranging rebellions
that shook the foundations of the British Empire in the mid-nineteenth cen-
tury.86 However, the drive toward this “perfected” international order
began much earlier than we have readily acknowledged, and in the context
of political debate over the expanding financial, administrative, and mili-
tary capabilities of the modern state.87 The parceling of sovereign rights
was not an accidental outcome of the Company’s military endeavors, nor
was it simply a reflection of the way things had to be. Rather, it was a con-
sequence of British attempts to spread their power, cut their costs, and
avoid political controversy; attempts that were a foundational element of
the expansion of the British Empire in South Asia.

Conclusion

Political debate in Britain about the rights of the Company in India was at a
high pitch in the aftermath of the “revolution” in Bengal. Contentious elec-
tions for the Board of Directors, along with Parliamentary enquiries, and
news of wars being fought in India, meant that the Company’s policy
was always potentially subject to the scrutiny of politicians, stockholders,
and a larger public. Spencer Leonard has drawn our attention to radical cri-
tiques of the Company, centered on a liberal political economy, which
questioned the legitimacy of the Company’s territorial conquest, in the pe-
riod of the 1767 enquiry by Parliament.88 As late as 1772, one anonymous
pamphleteer published a tract that he claimed to have written 2 years ear-
lier. In it, he accused the East India Company of having “contrived to es-
tablish the most complete system known of fraud and violence, by uniting,
in the same persons the several functions of Merchant, Soldier, Financier
and Judge; depriving, by that union, all those functions of their mutual
checks. . .. It is to be hoped that the time is not far off, when those func-
tions, so improperly combined, will be again separated: when his
Majesty will resume, from those Merchants, the sword, which, by our
happy Constitution, cannot be placed, with energy or safety, in any hand

86. Lauren Benton, “From International Law to Imperial Constitutions: The Problem of
Quasi-Sovereignty, 1870–1900,” Law and History Review 26 (2008), 595–619; and
Mantena, Alibis of Empire.
87. For a discussion of how indirect rule in South Asia has been periodized, see Barbara
Ramusack, The New Cambridge History of India: The Indian Princes and their States
(Cambridge: Cambridge University Press, 2003), 56–59.
88. Leonard, “Fit of Absence of Mind?” 399–409.

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 348 Law and History Review, May 2015
but his own.”89 It was in this context that the British first had to manage,
not only criticisms of their administration in Bengal, but also their relations
with other Indian states. Preserving these states avoided some of the polit-
ical questions that arose as the result of outright acquisition, about the
rights of the Company to govern vast populations, and about the organiza-
tion and principles of that governance, along with its relationship to com-
merce. Although the company had long assumed the functions of a state in
the east, in the mid-eighteenth century it was being asked to explain its
right to tax Indian subjects, or to wage offensive wars for purposes that
seemed to have little to do with supporting and protecting Britain’s
trade.90 Into the late 1780s, this questioning continued, most famously
with Edmund Burke’s denunciation of Warren Hastings actions as
governor-general.
However, treaty-making too was fraught with difficulties. The forging of
alliances with Indian powers was accompanied by charges of corruption,
and with expressions of dismay from different British players trying to
sort out their priorities in India. Leaving a native ruler on his throne, how-
ever, did not mean that the state would continue its native practices. The
waging of war on both internal and external frontiers was characteristic
of the state system as it then existed in south India, and stabilizing these
internal and external boundaries was a task to which the British would
apply themselves over the course of the next century, beginning in these
early years with the signing of treaties and the issuing of sanads. In this
evolving system of interstate relations, the British would fundamentally
alter the ways that sovereignty was made and performed on the subconti-
nent. From the movement of sovereigns and their military camps through
the countryside and communication with and shifting alliances between a
range of elites, these states had relied upon a variety of actors and relation-
ships to sustain and project their authority. This reliance made them no less
effective, as can be seen by the ability of the Nizam to establish his author-
ity over a wide expanse of territory in the eighteenth century Deccan. This
mode of authority, expressive of a certain tolerance indeed reliance upon
multiple parties across a range of territories, was ultimately displaced by
an order that attempted to divide sovereign rights in novel ways. This
new division began with the military powers of the native states. Now, na-
tive rulers would agree to house troops, even pay for them, but could not

89. An Enquiry into the Rights of the East-India Company of Making War and Peace; and
of Possessing their Territorial Acquisitions without the Participation or Inspection of the
British Government: In a Letter to the Proprietors of East-India Stock: Written in the
Year 1769, and Now First Published (London: W. Shropshire [etc.], 1772), iii–iv.
90. Stern, The Company-State.

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 The Origins of Indirect Rule in India 349
command them unilaterally. As these treaties were ultimately (despite
Hastings’ desire) signed with the Company, the only recourse these native
states had in seeking redress was to personally address the British crown
and Parliament, as leader after leader, beginning with Arcot, Awadh, and
the Mughal emperor himself tried to establish some relationship to those
two bodies.91 Ultimately then, well before 1857, the fate of these states
was tied to British politics.
Lauren Benton is right to remind us that “While an iconic association
with empire is the pink shading of British imperial possessions in
nineteenth- and early twentieth-century maps, that image, and others like
it, obscures the many variations of imperial territories. Empires did not
cover space evenly but composed a fabric that was full of holes, stitched
together out of pieces, a tangle of strings. Even in the most paradigmatic
cases, an empire’s spaces were politically fragmented; legally differentiat-
ed; and encased in irregular, porous, and sometimes undefined borders.”92
However, even this patchwork had its decisive moments; in the late eigh-
teenth and early nineteenth centuries, imperial administrators set about try-
ing to create a system of alliances with lesser states, states that vested many
of their sovereign rights in the hands of European companies. It is to be
hoped that this article has demonstrated that this moment of transition
not only affected the way that these states conducted their foreign policy,
but that it also, in separating them from elites in neighboring territories, af-
fected the ways that their sovereignty and political authority were renewed
internally.
It was in the wake of these events that theories of natural law came to be
reassessed in Europe. In the nineteenth century, John Austin could argue
that international law was not in fact positive law, as there was no sover-
eign to impose it.93 This influential legal theory emerged in the early nine-
teenth century, after the British had cemented their authority as sovereign
over a system of states in India. It was perhaps in response to Austin that
international jurists began to be more sparing in their attribution of sover-
eignty to non-European states, and, therefore, also to restrict the applicabil-
ity of the law of nations. “The question of the geographic scope of the law
of nations was central for theorists of international law throughout the sec-
ond half of the nineteenth century in a way that it had not been to the think-
ers they recognized as the founders of their field—Grotius, Pufendorf,

91. Mithi Mukherjee, India in the Shadows of Empire: A Legal and Political History
(1774–1950) (Oxford: Oxford University Press, 2010).
92. Benton, Search for Sovereignty, 2.
93. Casper Sylvest, “The Foundations of Victorian International Law,” in Victorian
Visions of Global Order: Empire and International Relations in Nineteenth Century, ed.
Duncan Bell (Cambridge: Cambridge University Press, 2007), 48–50.

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 350 Law and History Review, May 2015
Wolff, or Vattel, for instance.”94 Jennifer Pitts further argues that “While
international jurists, whatever their disagreements over the most satisfac-
tory grounds for the exclusion, agreed that international law could apply
to only very few non-European states, we find dissent from this position
in the broader public debate and efforts to establish European states’ exten-
sive legal obligations abroad.”95 In its most exclusionary form, this notion
of international law presented the colonial encounter “not [as] a confronta-
tion between two sovereign states, but rather between a sovereign
European state and a non-European society that was deemed by jurists to
be lacking in sovereignty—or else, at best only partially sovereign.”96
Understanding the equal antiquity of indirect rule and territorial acquisition
in South Asia as imperial practices might, therefore, also contribute to a
better understanding of the evolution of international legal thought, and
the particular problems that it has sought to resolve.

94. Jennifer Pitts, “Boundaries of Victorian International Law,” in ibid., 67.

95. Ibid., 68.
96. Antony Anghie, Imperialism, Sovereignty and the Making of International Law
(Cambridge: Cambridge University Press, 2004), 5.

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