Lord Wellesley succeeded Sir John Shore as the Governor General of the company in 1798. He was one of the greatest British rulers of India who can be compared with Clive, Warren Hastings, and Lord Dalhousie, but in actual achievements he surpassed them all.

He was an imperialist and endeavored, his best to make the company the paramount power in India. He clearly declared that the ‘company must be viewed in the capacity of a sovereign power.” He wanted to reduce all Indian states to a position of dependence on the company.

So he followed a high handed and offensive policy towards the Indian powers. The prevailing circumstances favoured Wellesley to implement his schemes. The Nizam of Hyderabad had deserted the British camp after his defeat by the Marathas at Kharda in March 1795.

He was providing training to his troops under the supervision of a French Officer named Raymond. The Marathas after their victory against the Nizam were increasing their power and influence. The Maratha “chief Daulat Rao Sindhia was drilling his troops under a French General named Perron.


Tipu Sultan of Mysore was carrying on negotiation with the French Governors of Maurititus and Reunion in order to get military help against the English in India.

To counter act the growth of French influence in the court of native princes and to bring the Indian states within the orbit of British political power Lord Wellesley followed the System of Subsidiary Alliance. This system helped the company in the expansion of its dominions.

According to Sir Alfred Lyall there were four stages in the evolution of the system of subsidiary alliance. In the first stage the English company under took to lend military contingent to help an Indian prince in his wars. Governor General Warren Hastings had lent British troops to Nawab Suja- ud-daulah of Oudh to fight against the Rohilas.

In the second stage the English company took the field on its own account with the help of an Indian ally who made common cause with him. In the third stage the company asked its Indian ally to pay money to raise, train and equippe army, for the defence of his state.


In 1797 Holm Shore had made such an arrangement with the Nawab of Oudh. A similar agreement was concluded by Lord Wellesley with the Nizam of Hyderabad in 1798.

In the final stage the company guaranteed protection to the territories of an Indian alliy. Accordingly Subsidiary force was maintained on the soil of that state.

The Indian ruler was asked to surrender to the company a part of his territory. So that out of its revenue the expenses of the subsidiary force were to be met. Such a treaty was concluded with the Nizam of Hyderabad in i800 A.D.

The French Governor Duplex began the system of lending European troops to Indian, princes at the expense of the later. The English also followed this practice.


In 1765 the East India Company had concluded a treaty with the Nawab of Oudh. Accordingly the company undertook to defend the frontiers of Oudh and the Nawab agreed defrays the war expenses. However it was Lord Wellesley who elaborated and perfected the system of Subsidiary alliances.

The system of Subsidiary Alliance provided that the ruler who would enter in to this alliance would recognise the Suzerainty of the East India Company.

He was not to declare war or to carry on negotiations with any other state, without the knowledge and consent of the East India Company.

He was to maintain a contingent of company’s troops for the defence of his territories, and for the preservation of public peace.


The ruler of a bigger state would cede certain territories in full sovereignty to meet the vearly expenses of his companys army but a smaller state was required to pay tribute in cash to the company. The rulers accepting the Subsidiary Alliance were to maintain. British residents in their capitals.

They were to expel all European officials other than English from their territories. In lieu of all these the East India Company was to provide the rulers effective security against external aggression and internal rebellion.

The Nizam of Hyderabad who was the feeblest of all Indian powers readily accepted the Subsidiary Alliance in September 1798.

Advantages of the Company:


The Subsidiary alliance increased the power and the resources of the company. The East India Company got subsidies from the Native powers who accepted the Subsidiary alliance.

It maintained troops at the cost of the native powers. Company’s troops commanded by British officers were established on the territories of the native princes.

Wellesley claimed that this system enabled the British government to preserve the tranquility of India by exercising a general control over the restless spirit of ambition and violence which is the Characteristic of every Asiatic Government.”

The system of subsidiary alliance enabled the English to throw forward their military frontier in advance of the political frontier.


Company’s troops were maintained in the capitals of the Indian princes and by this the English could control some of die strategic and key position in India without arousing the Jealousy of other European powers.” Not only the company’s military frontier was shifted to the political frontier of the allies but the costs of the army were placed on their revenues.

The evils of war were removed to a far distance from the territories of the company.” Wars and battle w ere fought on the soil of the allies.

The East India Company could avoid the Jealousy of other. European powers because in this system the independence of the state was maintained outwordly.

The East India Company succeeded in eliminating the growth of French influence in the court of the native princes. The native rulers who entered in to this alliance were asked to dismiss all. European officials other than English from their courts.

The dominions of the East India Company also expanded because of the Subsidiary’ system. According to the treaty of October 1800 AD.

The Nizam of Hyderabad ceded to the company ail the territories which he had acquired from Mysore in 1799. Similarly the Nawab of Qudli also surrendered Rohil Khand and the lower Doab in 1801 A.D.

Disadvantages to the Indian States:

The rulers accepting the Subsidiary alliance remained under the protection of the company, which took over the responsibility of maintaining law and order in their states. So the system of subsidiary alliance wakened and demoralised the Indian princes.

The native rulers lost their administrative and military spirit. The growth of mal administration in their dominions paved the way for the intervention of the company in their internal affairs.

The ruler who accepted the Subsidiary alliance paid subsidy to the company which usually amounted to one third of the annul revenue of lift states. He taxed his people heavily. So this led to the gross oppression of the people. The rulers neglected the welfare of the people.

Thomas Monroe has remarked whereever the subsidiary system is introduced the country win soon learn the marks of it indecaying villages and decreasing population.”

The state accepted the subordination of the company and virtually lost her independence. A state purchased security at the sacrifice of independence of national character and of whatever renders a people respectable.”

The weak and oppressive rulers enjoyed the protection of the company against internal rebellion accepting the subsidiary system.

So the people were deprived of their right to revolt against the misrule of their rulers. Sir Thomas Munro has rightly remarked the usual remedy of a bad government in India is a quiet revolution in the palace, or a violent one by rebellion, or foreign conquests.

But the presence of British force puts off every chance of remedy, by supporting the price on the throne against every foreign and domestic enemy.”

The Nizam of Hyderabad accepted the Subsidiary alliance in September 1798. The ruler of Mysore and of Tanjore also accepted the subsidiary Alliance in 1799 and the Nawab of Oudh in 1801.

The Peshwa Baji Rao Ilentered into the system of subsidiary Alliane in December 1802. Similarly after their defeats. Raja Raghuji Bhonsale of Berar and the Sindhia accepted the subsidiary alliance respectively in December 1803 and in February 1804.