The problem of the Indian States under British Rule

White Paper on Indian States (1950)


Ministry of States, Government of India



The problem of Indian States in the form in which it was inherited by free India, was an accident of the ascendency of British power in India. The institution of rulership had, no doubt, been a recognised feature of ancient Indian polity and the States had studded the map of India even before the advent of the British in this country. However, the Princes, their status and their possessions constituting the Indian States system, as it was stabilised under British rule, were all evolved during the first two decades of the 19th century as a concomitant of the rise of British power in India. It was during this period that a “strange and unknown volcanic force made its way through the soft and yielding strata of Indian society” and “crystallised” Indian States into the form in which they were found at the time of the withdrawal of the British from India. The process of re-moulding the States structure was practically completed as early as 1819 and the framework of this structure was sustained in all its essentials all through the remaining 180 years of British rule in India. The problem of Indian States was an inevitable consequence of a system which virtually brought history to a standstill in a multitude of isolated principalities forming about two fifths of the territory of India and scattered over the whole of this sub-continent.

East India Company’s Treaty-Making Activities

2. The first phase of the East India Company’s treaty-making activities, which may be said to have extended from 1757 after the victory of Plassey to the close of the first Lord Minto’s Governor-Generalship in 1813, was, generally speaking, marked by a desire to confine British interests to trading in and around the territories in which the British possessed settlements. During this period, the Company was struggling for a foothold in India and it recoiled from the expense and danger of extending its commitments beyond the ringfence of its own territorial acquisitions.

3. To the policy of non-involvement, the treaty-making career of Wellesley formed an exception. Wellesley came to India “inspired with imperial projects”. “From the first he laid down, as his guiding principle, that the British must be the one paramount power in India, and that native Princes could only retain the personal insignia of sovereignty by surrendering their political independence.” The Subsidiary System introduced by Wellesley contained in it the essentials of the framework of States as it was developed and maintained under British Rule. From the British point of view, the system had distinct advantages. It ensured the fidelity of the State by the presence of the subsidiary force maintained by the Company at the cost of the State; it enabled “the British to throw forward their military considerably in advance of their political frontier”. The system contributed to the breakdown of the internal independence of the States on which it was imposed and paved the ground for advance towards paramountcy.

Lord Hastings’ Settlements: Policy of Subordinate Isolation

4. In the second phase which lasted from 1813 to 1857, larger schemes of Empire dawned upon the horizon and dominated the policy of the Company’s agents. The march of events in India was leading up to an inevitable swing of the pendulum in the direction of the emergence of the British as the dominant power in India. It was no longer part of prudence to refrain from expansionist or imperial projects. The feudatory system, which may be distinguished from the protected alliance, came into existence with the changed conditions which, after the elimination of the Maharatta power, placed the Company in a position of unquestioned supremacy in India. The considerations underlying the new policy were set out by Metcalfe, one of the principal architects of the British Empire in India, in a letter written in 1816. The passage runs:

“They said that some power in India had always existed, to which the peacable States submitted, and in return obtained protection against the invasion of upstart Chiefs and the armies of lawless banditti; that the British Government now occupied the place of that protecting power and was the natural guardian of weak States………”
5. The policy of “the ringfence” now gave way to what Lee Warner describes as the policy of “subordinate isolation”. From now onwards the place of treaties of mutual amity, friendly co-operation and reciprocal obligations was taken by treaties exhorting co-operation, allegiance and loyalty.

6. The new policy found its expression in the settlements made by the Marquis of Hastings under which the Princes virtually assumed the form in which they were found at the end of British rule in India. By the end of 1819 all States were caught in the wide net of treaties and engagements of subordinate co-operation. The protection guaranteed to the Princes by the British stabilised their position and the surviving States were saved from further disintegration or absorption.

Growth of Paramountcy

7. The principle of paramountcy although elaborated as a political doctrine later was clearly and vigorously asserted during this period. Wellesley was the first Governor-General to feel and act as the Paramount Power and his paramountcy complex was reflected in the attitude of his immediate subordinates. Of the East India Company, Metcalfe wrote in 1806: “Sovereigns you are, as such must act”. During the regime of Lord Hastings, the relative position of the parties changed “too decidedly to be governed merely by the written words of treaties”. The first clear enunciation of the idea of paramountcy is to be found in Ochterlony’s letter to Metcalfe, dated March 21, 1820, in which he writes: “I hope His Lordship will in Virtue of his Power and Paramountcy forbid all future invasions of Surhoie and fix himself a sum which the Rajah must take”. In his Minute, 1825, Metcalfe speaks of the fact of paramountcy by which the British Government had itself the “duty as supreme guardians of general tranquillity, law and right to maintain the legal succession”. Thus, as early as the first quarter of the 19th century, Metcalfe and Ochterlony had evolved the full doctrine of paramountcy in a form indistinguishable from that held by Lord Reading in his famous letter to the Nizam. (Appendix I.)


Letter from the Viceroy and Governor-General of India to His Exalted Highness the Nizam of Hyderabad, dated Delhi, the 27th March, 1926

Your Exalted Highness,

Your Exalted Highness’s letter of 20th September, 1925, which has already been acknowledged, raises questions of importance, and I have, therefore taken time to consider my reply.

I do not propose to follow Your Exalted Highness into a discussion of the historical details of the case. As I informed you in my previous letter, your representations have been carefully examined, and there is nothing in what you now say which appears to affect the conclusions arrived at by me and my Government and by the Secretary of State. Your Exalted Highness’s reply is not in all respects a correct presentation of the position as stated in my letter of 11th March last, but I am glad to observe that in your latest communication you disclaim any intention of casting imputations on my distinguished predecessor, the late Marquis Curzon.

I shall devote the remainder of this letter to the claim made by Your Exalted Highness in the second and third paragraphs of your letter and to your request for the appointment of a commission.

2. In the paragraphs which I have mentioned you state and develop the position that in respect of the internal affairs of Hyderabad, you, as Ruler of the Hyderabad State, stand on the same footing as the British Government in India in respect of the internal affairs of British India. Lest I should be thought to overstate your claims, I quote Your Exalted Highness’s own words: “Save and except matters relating to foreign powers and policies, the Nizams of Hyderabad, have been independent in the internal affairs of their State just as much as the British Government in British India. With the reservation mentioned by me, the two parties have on all occasions acted with complete freedom and independence in all inter-Governmental questions that naturally arise from time to time between neighbours. Now, the Berar question is not and cannot be covered by that reservation. No foreign power or policy is concerned or involved in its examination, and thus the subject comes to be a controversy between the two Governments that stand on the same place without any limitations of subordination of one to the other.”

3. These words would seem to indicate a misconception of Your Exalted Highness’s relations to the Paramount Power, which it is incumbent on me as His Imperial Majesty’s representative to remove, since my silence on such a subject now might hereafter be interpreted as acquiescence in the propositions which you have enunciated.

4. The Sovereignty of the British Crown is supreme in India, and therefore no Ruler of an Indian State can justifiably claim to negotiate with the British Government on an equal footing. Its supremacy is not based only upon treaties and engagements, but exists independently of them and, quite apart from its prerogative in matters relating to foreign powers and policies, it is the right and duty of the British Government, while scrupulously respecting all treaties and engagements with the Indian States, to preserve peace and good order throughout India. The consequences that follow are so well known, and so clearly apply no less to Your Exalted Highness than to other Rulers, that it seems hardly necessary to point them out. But if illustrations are necessary, I would remind Your Exalted Highness that the Ruler of Hyderabad along with other Rulers received in 1862 a Sanad declaratory of the British Government’s desire for the perpetuation of his House and Government, subject. to continued loyalty to the Crown: that no succession in the Masnad of Hyderabad is valid unless it is recognised by His Majesty the King-Emperor: and that the British Government is the only arbiter in cases of disputed succession.

5. The right of the British Government to intervene in the internal affairs of Indian States is another instance of the consequences necessarily involved in the supremacy of the British Crown. The British Government have indeed shown again and again that they have no desire to exercise this right without grave reason. But the internal, no less than the external security which the Ruling Princes enjoy is due ultimately to the protecting power of the British Government, and where Imperial interests are concerned, or the general welfare of the people of a State is seriously and grievously affected by the action of its Government, it is with the Paramount Power that the ultimate responsibility of taking remedial action, if necessary, must lie. The varying degrees of internal sovereignty which the Rulers enjoy are all subject to the due exercise by the Paramount Power of this responsibility. Other illustrations could be added no less inconsistent than the foregoing with the suggestion that, except in matters relating to foreign powers and policies, the Government of Your Exalted Highness and the British Government stand on a plane of equality. But I do not think I need pursue the subject further. I will merely add that the title “Faithful Ally” which Your Exalted Highness enjoys has not the effect of putting Your Government in a category separate from that of other States under paramountcy of the British Crown.

6. In pursuance of your present conception of the relations between Hyderabad and the paramount power, you further urged that I have misdescribed the conclusion at which His Majesty’s Government have arrived at a “decision” and that the doctrine of res judicata has been misapplied to matters in controversy between Hyderabad and the Government of India.

7. I regret that I cannot accept Your Exalted Highness’s view that the orders of the Secretary of State on your representation do not amount to a decision. It is the right and privilege of the Paramount Power to decide all disputes that may arise between States, or between one of the States and itself, and even though a court of Arbitration may be appointed in certain cases, its function is merely to offer independent advice to the Government of India with whom the decision rests. I need not remind you that this position has been accepted by the general body of Indian Rulers as a result of their deliberations on paragraph 308 of the Montagu-Chelmsford Report. As regards the use of the term res judicata, I am, of course, aware that the Government of India is not, like a Civil Court, precluded from taking cognizance of a matter which has already formed the subject of a decision, but the legal principle of res judicata is based on sound practical considerations, and it is obviously undesirable that a matter which has once been decided should form the subject of repeated controversies between the same parties.

8. I now pass on to consider your request for the appointment of a Commission to enquire into the Berar case and submit a report. As Your Exalted Highness is aware, the Government of India not long ago made definite provision for the appointment of a Court of Arbitration in cases where a State is dissatisfied with a ruling given by the Government of India. If, however, you will refer to the document embodying the new arrangement, you will find that there is no provision for the appointment of a Court of Arbitration in any case which has been decided by His Majesty’s Government, and I cannot conceive that a case like the present one, where a long controversy has been terminated by an agreement executed after full consideration and couched in terms which are free from ambiguity, would be a suitable one for submission to arbitration.

9. In accordance with Your Exalted Highness’s request your present letter has been submitted to His Majesty’s Secretary of State, and this letter of mine in reply carries with it his authority as well as that of the Government of India.

Yours sincerely,⁠

Evils of Subsidiary System

8. The Subsidiary System of alliance which guaranteed to the Rulers their position and their possessions not only against external aggression but also against rebellion, revolution or opposition on the part of their subjects, removed all incentive for good government. Insured against the consequences of misrule, the Princes no longer found it necessary to cultivate the goodwill of the people or to maintain efficiency of administration. On the evils of the Subsidiary System, Thomas Munroe wrote as follows:—

“It is the natural tendency to render the Government of every country in which it exists, weak and too oppressive; to extinguish all honourable spirit amongst higher classes of society, to degrade and impoverish the whole people. The usual remedy of a bad Government in India is a quiet revolution in the palace, or a violent one by rebellion. But the presence of the British Force cuts off every chance of remedy by supporting the Prince on the throne against any foreign and domestic enemy. It renders him indolent by teaching him to trust to strangers for his security; cruel and avaricious by showing him that he has nothing to fear from the hatred of his subjects. Wherever the subsidiary system is introduced, the country will soon bear the mark of it in the decaying villages, a decreasing population”.
9. In every State which came under subsidiary alliance, its influence had the same baneful effect. The situation deteriorated to such an extent that the London Times in a leading article described it thus in 1853:—

“We have emancipated these pale and ineffectual pageants of royalty from the ordinary fate that awaits oriental despotism………This advantage (of securing able and vigorous Princes through rebellion) we have taken away from the inhabitants of the States of India still governed by Native Princes. It has been well said that we give these Princes power without responsibility. Our hand of iron maintains them on the throne despite their imbecility, their vices and their crimes. The result is, in most of the States, a chronic anarchy, under which the revenues of the States are dissipated between the mercenaries of the camp and the minions of the Court. The heavy and arbitrary taxes levied on the miserable raiyats serve only to feed the meanest and the most degraded of mankind. The theory seams in fact admitted that the Government is not for the people but the people for the King, and that so long as we secure the King, his sinecure royalty, we discharge all the duty that we, as Sovereigns of India, owe to his subjects who are virtually ours”.
10. During the period following the retirement of Lord Hastings, the influence of the Company over the internal administration of the States rapidly increased, and the Company’s Residents got gradually “transformed from diplomatic agents representing a foreign power into executive and controlling officers of a superior Government”. The Residents assumed so much of authority that Colonel Macaulay wrote to the Raja of Cochin:

“The Resident will be glad to learn that on his arrival near Cochin, the Raja will find it convenient to wait on him”.
Yet in spite of the increasing interference by the Company in the internal affairs of the States, little was done to mitigate the evils of the Subsidiary System and the political system based on it. Conscientious statesmen viewed the corruption and tyranny which the Subsidiary System brought in its wake with concern. Mill from his detached position in the India Office advocated the abolition of States. To unscrupulous political adventurers the system provided a happy hunting ground for exercising “power without responsibility” end playing havoc with public funds. There were others who looked upon the States as a safety valve for the ‘ignoble elements’ of the Indian population, and tolerated with cynicism this scandalous state of affairs.

The Policy of Annexation

11. The policy of annexation, which was initiated with the annexation of Coorg in 1884, had, as one of its professed objectives, the mitigation of the evils of the Subsidiary System. It was contended that if a scrupulous avoidance of interference in the internal affairs of a host of States was to remain an essential factor in the political system of India then annexation was the only corrective. The new trend found expression in the directive issued by the Directors in 1841: “to persevere in the one clear and direct course of abandoning no just and honourable accession of territory or revenue”. The expansion of the Company’s dominion in India was sought to be justified not only on the ground of ensuring better Government for the people but also for the protection of the Empire against invasion. Every excuse was now good enough to annex the territories of the States. The accretion of the Punjab and Sind by conquest was sought to be justified by imperial considerations. Satara, Nagpur and Jhansi were annexed by the application of the doctrine of lapse. Coorg and Oudh were annexed by the exercise of the old Moghul right of annexation for gross maladministration. Oudh, “whose wretched Princes were so absolutely loyal that no excuse could ever be imagined for depriving them of their power”, was annexed because, in the words of Dalhousie, “the British Government would be guilty in the sight of God and man if it were any longer to aid in sustaining by its countenance an administration fraught with suffering to millions”.

12. “Annexation”, writes Lee Warner, “was not a mere incident arising from the peculiar views of a single Governor-General or from a temporary reaction against the king-making policy of the previous administration”. It was a distinct policy, clearly enunciated and understood by the Court of Directors in England and the Company’s agents in India. The policy, of which Dalhousie was the principal exponent, operated towards completing the work of Wellesley and Hastings. Whatever may have been the considerations underlying the policy of annexation, it had a clear and distinct objective, viz., the extension of the Company’s dominion by absorbing “the mischievous anomalies” represented by the “yellow patches” on the map of India.

States under the British Crown

18. The Mutiny and great revolt of 1857 demonstrated the value of the “yellow patches” to the British Government. Except for some minor defections, the Indian Princes not only remained aloof from the rising but, in certain cases, extended effective assistance to the British to suppress it. Canning gratefully acknowledged the role of the States as “breakwaters in the storm which would have swept over us in one great wave”. “Where should we have been now”, wrote Elphinstone with his characteristic frankness, “if Scindia, the Nizam and the Sikh chiefs, etc., had been annexed, the subordinate Presidencies abolished, the whole army thrown into one and the revenue system brought into one mould”. It was now realised that the States could play a most helpful role as a bulwark against the forces of Indian nationalism. This led to a radical change in the British policy towards the States. The new policy found expression in 1858; Queen Victoria’s proclamation promised, “We shall respect the rights, dignity and honour of native Princes as our own”. In 1861, Sanads were issued which guaranteed the Princes, big and small, their status and acknowledged their right of adoption. These sanads were intended to remove mistrust and suspicion and “to reassure and knit the naive sovereigns to paramount power”. No more was heard of annexation as the only means of granting the “blessings” of civilised government to “the suffering millions”. Under the new system described as that of “subordinate union”, the supreme power accepted its moral responsibility for a minimum of good government, security, law and order within the territories of the Indian States. The system basically differed but little from the earlier system of subordinate isolation. However, the policy of “cutting the knot which the political practice had failed to untie” so vigorously pursued by Dalhousie, now gave way to a policy of mere window dressing.

Consolidation of British power as a Unifying Factor

14. The new policy aimed at consolidating not the territories but the powers of the British Government. This involved a process of infiltration into the States, mainly in the economic field, without annexing their territories. Some projects could be undertaken only on a national scale. The lines of communications, the railways and posts could develop only on a national basis. The one feature which distinguished the British negotiations with the Princes during this period from those which preceded the Great Rebellion, is, the larger attention given to matters of common interest such as communications, currencies, tariff and other fiscal policies, rights and sources of irrigation, extradition, extra-territorial jurisdiction etc. In many of these matters, co-ordination of development policy as between British India and the States was secured either by the execution of formal documents or informal exchange of assurances. It was during this period that on the basis of usage, sufferance and conventions, the edifice of political practice was built up. Paramountcy provided British power an elastic instrument for regulating the relations with the Princes and between British India and the States. It was through paramountcy that the British brought about some kind of working arrangement between the two parts of India and enforced a measure of administrative and economic unity over the country.

15. Paramountcy of the British Crown, as British ingenuity developed it, was the coping stone of the imperial edifice in India. It constituted at once a link and a barrier. On the one hand, it provided a nexus between British India and States and thereby integrated the economic and administrative life of the country. On the obverse side, it drove a wedge between the two parts of India. The policy of “Hands off the Indian States” in British India with its reciprocal implication of “Hands off British Indian concerns” for States, which reared up high walls of isolationism around the States, could be made effective only by the operation of paramountcy.

The Influence of the First World War

16. The growing impact of modern conditions oi life was breaking down the isolation of States from one another and from the rest of India and the States began to be drawn into the vortex of questions, mainly economic, which concerned India as whole. The influences which were working to increase the range of matters in which there was need for a common policy and common action between the Provinces and States gathered momentum during the first World War. The war necessitated the mobilisation of the resources of the entire country; the organisation of the country’s war-effort involved closer co-ordination of administrative activity in States a well as Provinces. During the stress of the War, the emphasis was on unity, unity of the British Empire, as a whole, on the one hand, and unity between British India and Indian States, on the other. The War, therefore, greatly accelerated the imperceptible process of infiltration into the States and brought them nearer to what was then British India.

Change of Policy towards States owing to possible Constitutional Developments in British India

17. Until towards the last phase of the first World War, Indian nationalism had not developed into real challenge to foreign rule in India, nor until then had the grant of responsible Government to British India been viewed as a real possibility. Up to 1909, the position was that such reforms as were introduced were purely administrative and the view expressed by Dufferin in 1888 that “England should never abdicate her supreme control of public affairs” firmly held the field. The objective of tho Minto-Morley reforms was not the eventual grant of responsible Government, but the establishment of what Minto described as “a constitutional autocracy”. The authors of the reforms scheme of 1909 put it beyond doubt that no parting of power was contemplated. “I am no advocate of representative Government for India in the Western sense of the term”, Minto clearly stated. “As heirs to a long series of Indian rulers”, he went on to say, “we are bound to reserve to ourselves the ultimate control over all executive action and the final decision in matters of legislation”. Morley was equally clear regarding the limited objective of the reforms of 1909. “If it could be said”, he stated in the House of Lords, “that this chapter of reforms led directly or necessarily to the establishment of parliamentary system in India, I for one would have nothing at all to do with it”. He was as emphatic on this point in private as in public. “Not one whit more than you”, he wrote ta Minto, “do I think it desirable or possible or even conceivable, to adapt English political institutions to the nations who inhabit India”.

18. When the authors of the reforms scheme of 1909 thus ruled out the establishment of a parliamentary system in India, they reckoned without the momentus events which the following decade held in its lap. The Great War of 1914-18 accelerated the march of history and inevitably affected the temper of Indian nationalism. The demand for self-Government now became more and more insistent and the principle underlying the Minto-Morley Reforms became patently out of tune with the times. What was considered inconceivable in 1909 became the accepted goal of the British policy in India in 1917. Montagu’s announcement of August 1917 accepted for the first time the objective of “gradual development of self-governing institutions with a view to the progressive realisation of self-Government in India as an integral part of the British Empire”.

19. After the introduction of Montagu-Chelmsford reforms, the Swaraj movement fired the imagination of the people and deepened the anxiety of the alien rulers of India to neutralise, or at least to isolate, the growing upsurge of Indian nationalism. This marked the beginning of the policy of utilising the services of States for organising a counter-revolution.

Theory of ‘Personal’ Relationship between the Princes and the Crown

20. Ever since the East India Company entered into treaty relations with the States, the whole of India had been treated as one unit and the Court of Directors and the British Parliament had functioned in India through the Government of India which exercised suzerainty over the States. Both before and after the transfer of the Company’s dominion to the British Crown relations of the States were both in constitutional theory and in actual practice with the Governor-General in Council. The Minto-Morley Reforms made provision for the appointment of a non-official Indian as a Member of the Governor-General’s Executive Council; after the Montagu-Chelmsford Reforms there were at least three Indians continuously serving on this Council. The Executive Council in this way lost its entirely British character and to some extent its bureaucratic character also became attenuated. The change did not affect the position of the Central Executive vis-a-vis the Indian States.

21. The relationship of the States with the Government of India had now to be reviewed in relation to possible constitutional developments in British India. It was thought that growing administrative unity between the States and the rest of India would detract from their role as breakwaters. An attempt was now made “to convert the Indian States into an Indian Ulster by pressing constitutional theories into service”. It was in this context that the theory of the Crown as the sole link between the Central Government and the States was systematically developed. The Butler Committee while summarily turning down the request of the Princes for a definition of the scope of paramountcy and codification of the political practice readily agreed with the Counsel of the States that “the relationship of the States to the paramount power is a relationship to the Crown and that the treaties made with them are treaties made with the Crown and that those treaties are of a continuing and binding force as between the States which made them and the Crown”. Of all the demands made by the Princes, the Butler Committee clearly and forcefully recognised only one, that for making any transfer of the Crown’s rights and obligations in relation to States to persons not under the Crown’s authority, conditional on the agreement of the States. In paragraph 58 of the report, the Committee said:

“The States demand that without their own agreement, the rights and obligations of the Paramount Power should not be assigned to persons who are not under its control, for instance, an Indian Government in British India responsible to an Indian Legislature. If any Government in the nature of a dominion government should be constituted in British India, such a government would clearly be a new government resting on a new and written constitution. The contingency has not arisen;……We feel bound however to draw attention to the really grave apprehension of the Princes on this score and to record our strong opinion that in view of the fact of the historical nature of the relationship between the Paramount Power and the Princes, the latter should not be transferred without their own agreement to a relationship with a new government in British India responsible to an Indian Legislature”.
22. The new concept of personal relationship between the States and the Crown found expression in the Act of 1935 and drove further the wedge between the States and the rest of India. Paramountcy which had become “the method by which the executive of British India aggrandized itself at the expense of the Indian States” now set in motion the reverse process of depriving the British Indian Executive of all constitutional status vis-a-vis the States. Ia complete disregard of patent historical facts and the established constitutional procedure, a new functionary, the Crown Representative, was now brought into existence to conduct the relations of the Crown with the States. The relations between the States and the Government of India were hereafter to be through the circuitous route of the Crown Representative. At one stroke of the pen, the States were “delinked” from the Governor General in Council and “pegged” to the British Crown. The policy of balance and counterpoise thus forged for the imperial political armoury another formidable weapon, the problem of the States.


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