In the mean time letters were continually written by the Rajah and his minister to this government, explanatory of their situation and motives, proposing their mediation and guaranty for a peace and alliance with the Peshwa, and professing, without solicitation on our part, the most friendly disposition towards us, and the most determined resolution to maintain it.  Conformably to these assurances, and the acceptance of a proposal made by Moodajee Boosla to depute his minister to Bengal for the purpose of negotiating and concluding the proposed treaty of peace, application had been made to the Peshwa for credentials to the same effect.

In the mean time the fatal news arrived of the defeat of your army at Conjeveram.  It now became necessary that every other object should give place or be made subservient to the preservation of the Carnatic; nor would the measures requisite for that end admit an instant of delay.  Peace with the Mahrattas was the first object; to conciliate their alliance, and that of every other power in natural enmity with Hyder Ali, the next.  Instant measures were taken (as our general advices will inform you) to secure both these points, and to employ the government of Berar as the channel and instrument of accomplishing them.  Its army still lay on our borders, and in distress for a long arrear of pay, not less occasioned by the want of pecuniary funds than a stoppage of communication.  An application had been made to us for a supply of money; and the sum specified for the complete relief of the army was sixteen lacs.  We had neither money to spare, nor, in the apparent state of that government in its relation to ours, would it have been either prudent or consistent with our public credit to have afforded it.  It was nevertheless my decided opinion that some aid should be given,—­not less as a necessary relief than as an indication of confidence, and a return for the many instances of substantial kindness which we had within the course of the last two years experienced from the government of Berar.  I had an assurance that such a proposal would receive the acquiescence of the board; but I knew that it would not pass without opposition, and it would have become public, which might have defeated its purpose.  Convinced of the necessity of the expedient, and assured of the sincerity of the government of Berar, from evidences of stronger proof to me than I could make them appear to the other members of the board, I resolved to adopt it, and take the entire responsibility of it upon myself.  In this mode a less considerable sum would suffice.  I accordingly caused three lacs of rupees to be delivered to the minister of the Rajah of Berar, resident in Calcutta:  he has transmitted it to Cuttack.  Two thirds of this sum I have raised by my own credit, and shall charge it in my official accounts; the other third I have supplied from the cash in my hands belonging to the Honorable Company.  I have given due notice to Moodajee Boosla of this transaction, and explained it to have been a private act of my own, unknown to the other members of the Council.  I have given him expectations of the remainder of the amount required for the arrears of his army, proportioned to the extent to which he may put it in my power to propose it as a public gratuity by his effectual orders for the recall of these troops, or for their junction with ours.