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Unit 1: British Expansion

1. Civil Reforms: The transformation of the Company into a political body had called for Notes
administrative reforms. The three revolutions of Bengal (1757, 1760 and 1764), had enriched the
governors and councillors and demoralised the servants of the Company from top to bottom. The
general desire to ‘get-rich quick’ had vitiated the whole atmosphere. Bribery and corruption were
rampant and acceptance of presents was carried to extreme limits. The servants of the Company
indulged in private trade and misused the Company’s dastak to seek exemption from payment of
internal duties. The servants of the Company put self-advancement above the interests of the
Company.
Clive compelled the servants of the Company to sign ‘covenants’ prohibiting acceptance of presents.
He forbade the servants of the Company from indulging in private trade and made payment of
internal duties obligatory.
To compensate the servants of the Company for their low salaries and loss of income from cessation
of private trade, Clive sought to regulate and regularise the control of internal trade. A Society of
Trade was formed in August 1765 with monopoly of trade in Salt, Betelnut and Tobacco. All the
production and import of these goods into Bengal was purchased by this Society and then sold at
selected centres to the retailers. The profits from this trade were to go the superior servants of the
Company on a graduated scale, the Governor to receive £ 17,5000 per annum out of the profits, a
member of the Council and a Colonel in the army to get £ 7000, a Major’s share was £ 2000 and so
on the lower ranks to receive in a descending scale.
The evils of private trade had raised the prices of ordinary commodities of life and the people of
Bengal suffered. Clive sought to abolish plunder by the individual servants of the Company only
to put the plundering activities of the Company’s servants on a collective basis. The Society of
Trade made the matters worse for the people. The Court of Directors disallowed the mostrous
scheme in 1766. Clive decided to abolish the Society in January 1767 but the work of the Society
was not actually wound up till September, 1768.
2. Military Reforms: As early as 1763 the Court of Directors had sent orders for reduction of the
double bhatta (field allowances) paid to military officers in Bengal. Due to one or the other reason
the enforcement of the order was deferred to until Clive’s arrival. The double bhatta originally
granted on active service was continued by Mir Jaffar in times of peace also. The practice had
continued since then and bhatta was considered by military officers as a part of their salary. Thus
the allowance of Bengal army officers was twice as high as of corresponding officers in the Madras
army. The Directors sent orders that the bhatta be brought on par with the bhatta of Madras army
Clive issued orders that with effect from I January 1766 double allowance would be paid only to
officers on service outside the frontiers of Bengal and Bihar.
The Court of Directors decided to end the Dual System of administration set up by Clive and in
1772 required the President and Council to ‘stand forth as the Diwan’ and take over charge for the
entire care and management of the revenues of Bengal, Bihar and Orissa. Warren Hastings
dismissed the two Deputy Diwans, Mohammad Reza Khan and Raja Shitab Rai. The Governor
and the Council formed the Board of Revenue and the Company appointed its own officers called
Collectors to manage revenue affairs. The treasury was removed from Murshidabad to Calcutta.
Thus the entire internal administration was transferred to the servants of the Company arid the
Nawab deprived of even an ostensible share in the government. However, the Nawab still lived
in a state of sovereignty. Hastings also reorganised the household of the Nawab of Bengal and
appointed Munny Begum, the widow of Mir Jaffar, as the guardian of the minor Nawab Mubarak-
ud-daula. The allowance of the Nawab was reduced from 32 lakhs to 16 lakhs. Further, Hastings
redefined relations with the Emperor. He stopped the payment of 26 lakhs of rupees annually
paid to Emperor Shah Alam since 1765. The districts of Allahabad and Kora assigned to the Emperor
by Clive in 1765 were also taken back and sold to the Nawab of Oudh for 50 lakhs of rupees.
Though the motivating force was economy, the plea put forward was that the Emperor had accepted
the protection of the Marathas. Evidently the treatment meted out to the Emperor was harsh and
an ex-parte action. The Emperor was never warned of the consequences of his dealings with the
Marathas. Warren Hastings’ action was a breach of a solemn promise and remains morally and
legally indefensible.

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