In Bengal the revenue had previously been collected through hereditary Zamindars. The Zamindars of Bengal were really the rural agents of government.
Below the Zamindars came the cultivating peasants. They were exposed to the rods of the Zamindars as the Zamindars were liable to the rods of the government officers, but like the Zamindars themselves they had a traditional hereditary right and were rarely dispossessed. But in British period every right had been confiscated.
The great difficulty of the company was to know how much the countryside could safely pay. This was the Zamindar’s secret which they were disinclined to share since their living depended on its exploitation. At first tiled company’s demand together with its servants’ derangement of the local economy led to over collection.
Hastings made several attempts to regularize the situation but he never succeeded in penetrating the Zamindars’ secret. Due to this settlements were made with the Zamindars for a term of years, fixed at ten in 1789 and finally made permanent.
The Zamindars were looked as the landlords. In England the central figure in agriculture at the time was the landlord and the British officials made the mistake of thinking that the Zamindars were their Indian counterpart. The landlord in Britain was the owner of the land not only in relation to the tenants but also in relation to the state.
But in Bengal while the zamindars were landlord over the tenants, he was himself subordinated to the state. Infact he was reduced virtually to the status of a tenant of the East India Company.
The Zamindar was to make a fixed annual payment to the government, retaining one tenth of his collection as his fee. But at first the rates were high and prices did not rise, so that he could not even squeeze the peasant. Then he was sold up instead of being beaten up but left where he was in the Mughal way.
The result was a big change in Zamindari personnel and the appearance of new men from Calcutta who bought estates as financial speculations. The new landlords were often absentees with no local connections. The Bengal peasantry became a rustic proletariat.