Last Nizam (9781742626109) (10 page)

But in September 1835 the directors finally ordered the Resident to issue the Nizam with an ultimatum. The Company, it stated, ‘could not remain indifferent spectators to the disorder and misrule which had so long prevailed'. If Chandu Lal ‘would not provide for the proper and efficient administration of the country, it would be the duty of the British Government to urge upon His Highness the necessity of changing his Minister as well as adopting such other arrangements as might appear to be advisable for the purpose of securing good government'.
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The warning had little effect. By the mid-1830s Hyderabad's credit rating plunged so low that local bankers refused to grant it loans. Chandu Lal pretended he was ready to accept any proposal the British might put forward, including reverting to the old system of supervision of districts by British officers or the appointment of reliable Indians who would report directly to the Nizam. But for all the powers invested in him, Chandu Lal did little or nothing to improve Hyderabad's financial position. He did not demand a reduction in the upkeep of the Hyderabad
Contingent, as the Russell Brigade was now known, or the Subsidiary Force, and he did not rein in corruption in the revenue department. Instead he continued to make land grants so recklessly during the 1830s that
sanads
on their own were not accepted as proof of ownership. People offered him huge
nazars
for the privilege of farming out one or more districts. The same district would then be offered to several people.

With the arrival of Captain James Stuart Fraser as Resident in 1838, Chandu Lal's days were numbered. Fraser's distinguished career included postings as Private Secretary to the Governor of Madras, Commandant of Pondicherry, Secretary to the Government in the Military Department and Resident at the Courts of Mysore and Travancore. Meticulous and assertive, Fraser was also a man who stood on principle, a trait which later brought him into direct conflict with the Governor-General, Lord Dalhousie.

Fraser was at first impressed by Chandu Lal's ‘mild and clement disposition which prevents him from ever committing a harsh or cruel act, his generosity and lavish disbursement of money, which secure him many friends and partisans'. But he was quick to grasp the dangers of the
Diwan
's autocratic style of government. ‘As long as Chandoo Lal lives, I apprehend little or nothing can be done,' he wrote to Calcutta.

He has played the game of government long and skilfully, a word which I use rather than ably, for I cannot ascribe to him genuine capacity nor, still less, great talent. We have been tools in his hand. Adroitly opposing the Nizam to us, or us at other times to his sovereign, as might suit the aim and object of the moment, he has contrived to keep the government – or rather the dictatorship – of the country for thirty years.
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By the early 1840s the Hyderabad Contingent was costing four million rupees annually or nearly one-third of the total revenue of the state. Shortly after his arrival in Hyderabad, Fraser proposed that the Nizam's government be given a loan of one million pounds to clear the arrears due to the irregular troops and reduce their numbers. He also proposed putting districts temporarily under control of Indians approved by him to arrest the maladministration. In both cases the Company refused. As long as it did not plunge into anarchy, it suited British interests to see Hyderabad slide further into debt, and therefore greater dependency. By 1843, however, the situation was becoming acute. ‘The Nizam's government is on the brink of open bankruptcy, which as you know in India means mutiny of troops for their pay,' the Governor-General, Lord Ellenborough, warned.
⁴²

With the payments to the Hyderabad Contingent and Subsidiary Force falling further into arrears, Chandu Lal had to act. In February 1843 he offered to cede the territories of Berar, Raichur and Bhir to the British, which generated 450,000 rupees a year against a loan of 7.5 million rupees. The offer was turned down. He then added more territories generating a combined revenue of 1.75 million rupees, but again the British refused. He then proposed raising a loan of 10 million rupees (£1 million). This time Ellenborough said he was willing to advance the loan but only on condition that the administration of the state be handed back to the British, an allowance be made for the maintenance of the Nizam and any excess revenue be handed over to the government. The proposals were never even put to the Nizam. Realising that he had no more cards to play, and blaming Fraser for being ‘bent on his ruin', Chandu Lal granted himself a generous pension of 1000 rupees per day and tendered his letter of resignation on 6 September 1843.

With Chandu Lal out of the way, Nasir ud-Daula set to work to discharge his state's liabilities. For the first time since the
establishment of the Asaf Jahi dynasty, a ruler was forced to fall back on his personal treasury to avert the bankruptcy of his kingdom. From a strongroom in Golconda he withdrew 10 million rupees in cash. Another 800,000 rupees in gold was taken from his palace in Hyderabad.

The raid on the treasury brought only a temporary reprieve. In April 1845, Ellenborough's replacement Lord Hardinge sent a strongly worded letter to the Nizam regarding the arrears that were again mounting for the payment of the Hyderabad Contingent and the general maladministration of the state:

In the event of this state of things leading to serious and unhappy consequences, the British Government will not consent to put down by force of arms, troubles and opposition to your Highness's authority, manifestly caused by the oppression under which the people suffer in consequence of the maladministration of your Highness's Dominions.
⁴³

The immediate effect of the letter was another withdrawal of 12 million rupees from the Nizam's own treasury. But within a year the debt again began mounting and by September 1846 stood at 3.8 million rupees. After another dressing down from the Governor, the Nizam caved in and appointed Suraj ul-Mulk as Prime Minister. Suraj ul-Mulk was ‘the only man in the Nizam's country whose mind had been a little enlarged by intercourse with European gentlemen', Fraser later wrote. ‘He alone seemed to be sensible to the necessity of reform with a view to the prosperity of the country.'
⁴⁴
Though Suraj ul-Mulk had Fraser's backing, he did not have the support of the Nizam and, therefore, could do little to improve the overall situation of the state. In 1848, Fraser's deputy, Colonel John Low, wrote to the Governor-General that the financial affairs of the Nizam's
government were in a worse condition than they had ever been since the Treaty of 1800. ‘The Nizam in those days had large private treasures, and the amount of his debt was trifling. His Highness's treasures have been since almost entirely exhausted.' Low reported that the state debt stood at 35 million rupees, ‘a large proportion of which consists of arrears to pay troops and public servants'.
⁴⁵
Another large portion of the debts was owed to
sowcars
(local bankers) who were charging ruinous rates of interest.

It was obvious to Fraser and Low that the cause of the Nizam's continued difficulties was the upkeep of a body of troops that he had no use for. By now the Hyderabad Contingent consisted of five regiments of cavalry, eight regiments of infantry and five companies of artillery. Whereas the presence of the Subsidiary Force could be justified as necessary to protect the Nizam from internal disturbances, there were no external threats to Hyderabad that could justify the continued presence of the Contingent. As Low pointed out in a letter to the Chairman of the Board of Directors, Sir James Law Lushington, in 1848: ‘We have been guilty towards the Nizam's government in keeping up for so many years the continued drain upon the revenues of this country of then less than forty
lakhs
of rupees per annum for the pay of the Contingent, in other words, for the purposes of our own, not of the Nizam.' Since the restoration of peace in the Deccan in 1819, ‘we have no right by treaty to demand a single rupee for the Contingent during the whole of that period, upwards of 28 years. In the course of that time, however, we have withdrawn from the Nizam's treasury the enormous sum of 11
crores
and 20
lakhs
of rupees, a large proportion of which has gone out of the Nizam's territory for ever.'
⁴⁶

Instead of alleviating the problem, the British watched as the Nizam blundered his way towards financial oblivion while continuing to hold out the threat of direct intervention in the
administration of the state. Meanwhile, the Nizam continued to blame his Prime Minister for his problems. Suraj ul-Mulk, for his part, complained of ‘the uncontrolled extravagance of the Nizam and of the baneful influence of female and other favourites in the palace'.
⁴⁷

The appointment of Lord Dalhousie as Governor-General in 1847 only worsened the situation. Dalhousie was a reformist under whose rule Hindu widows won the right to remarry. He also had little time for the princely states or ‘those petty intervening principalities' as he called them. One of his most controversial legacies was the doctrine of lapse, which held that the Paramount Power, i.e. Britain, had the right to assume the sovereignty of a state whose ruler was either incompetent or left no direct heir. Between 1847 and 1856 (when he left India), Dalhousie had acquired by this method the states of Satara, Sambalpur, the Punjab, Jhansi and Nagpur. Just weeks before his departure he annexed Lucknow and the kingdom of Oudh, whose nawabs ‘fulfilled to the bejewelled hilt their role as the dissipated Oriental despots of European imagining'.
⁴⁸

For the same reason as he despised Lucknow's lecherous nawabs, Dalhousie had little sympathy for Hyderabad's inept Nizam. Nor did he have much time for Fraser's entreaty that nothing less than a decisive British administration conducted by the Resident in communication with the Nizam's minister could save the country. Insisting that Britain had no moral or political obligation for ‘unwanted and officious meddling' in Hyderabad merely because of the Nizam's mismanagement, Dalhousie set a deadline of 31 December 1850 for the discharge of the Nizam's entire debt. ‘If the Governor-General's expectations were disappointed,' the ultimatum read, ‘his Lordship would feel it his duty to take such decided steps as the interests of the British Government demanded.'
⁴⁹
Although those steps were not spelled out it was understood that they would involve the extraction of territorial
security for the payment of principal and interest. The territory in question was Berar.

For the East India Company, Berar was the jewel in the crown of the Nizam's Dominions. The size of Switzerland, it contained in Dalhousie's own words ‘the finest cotton tracts' in India.
⁵⁰
In the 1850s the United States was supplying the bulk of cotton for the mills of Lancashire. To end this excessive dependency, Britain looked to India to produce raw material for what was then its most important industry. A report prepared by James Mann concluded that ‘Berar represents a larger scope for action as a cotton field than any other part of India, and were it put on the same footing as the seaboard district in respect to means of transport, there is little doubt but that a breadth of land would then become available adequate to supply the full demands of Great Britain'.
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When the latest deadline passed without any of the outstanding debt being cleared, Dalhousie called on the Nizam to ‘make over to the Resident for the British government those portions of his territories which would be specified, together with all the authority necessary for their management'.
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And to rub dirt into old wounds, Dalhousie reminded the Nizam that the Government of India's power was such that it ‘can make you dust under foot, and leave you neither a name nor a trace'.
⁵³

The letter had the desired effect. In June 1851 the Nizam promised to liquidate half of the debt immediately and the remainder by 31 October. On 15 August a first instalment of 3.4 million rupees was paid, leaving a balance owing of just under 3.3 million rupees. But the next deadline passed without any further payment being made, and by November the government was again reported to be bankrupt. ‘It lives by the strength of its Arabs, which enables it to inflict injustice, and by that means to avert disruption by exacting its obligations,' a resident of Hyderabad wrote in
The Englishman
on 21 November 1851. ‘The day of reckoning will be the day of revolution.'
⁵⁴

By now panic seems to have gripped Nasir ud-Daula. He gave orders for three million rupees' worth of his best jewellery, including a 300,000-rupee pair of diamond bracelets from the treasury of Tipu Sultan, to be pawned in the local bazaar. Unfortunately, the market for jewellery was down. After three days of negotiations with local moneylenders and bankers the best offer he could get was 643,000 rupees. Unwilling to part with his jewels for such a low price, Nasir ud-Daula rode up to the Residency on 13 January 1852 with the most valuable single stone in his collection – the legendary Nizam diamond. Weighing 400 carats it was said to be the largest in the world after the Brazil diamond. ‘Amongst the English people here its value is estimated at £600,000,' commented the
Madras Spectator
.
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