Thus Britain found herself faced with an imperial problem of apparently insuperable difficulty, which reached its most acute stage just at the time when the American trouble was at its height.  The British parliament and government intervened, and in 1773 for the first time assumed some responsibility for the affairs of the East India Company.  But they did not understand the Indian problem—­how, indeed, should they?—­and their first solution was a failure.  By a happy fortune, however, the East India Company had conferred the governorship of Bengal (1772) upon the greatest Englishman of the eighteenth century, Warren Hastings.  Hastings pensioned off the Nawab, took over direct responsibility for the government of Bengal, and organised a system of justice which, though far from perfect, established for the first time the Reign of Law in an Indian realm.  His firm and straightforward dealings with the other Indian powers still further strengthened the position of the company; and when in the midst of the American war, at a moment when no aid could be expected from Britain, a combination of the most formidable Indian powers, backed by a French fleet, threatened the downfall of the company’s authority, Hastings’ resourceful and inspiring leadership was equal to every emergency.  He not only brought the company with heightened prestige out of the war, but throughout its course no hostile army was ever allowed to cross the frontiers of Bengal.  In the midst of the unceasing and desolating wars of India, the territories under direct British rule formed an island of secure peace and of justice.  That was Hastings’ supreme contribution:  it was the foundation upon which arose the fabric of the Indian Empire.  Hastings was not a great conqueror or annexer of territory; the only important acquisition made during his regime was effected, in defiance of his protests, by the hostile majority which for a time overrode him in his own council, and which condemned him for ambition.  His work was to make the British rule mean security and justice in place of tyranny; and it was because it had come to mean this that it grew, after his time, with extraordinary rapidity.

It was not by the desire of the directors or the home government that it grew.  They did everything in their power to check its growth, for they shrank from any increase to their responsibilities.  They even prohibited by law all annexations, or the making of alliances with Indian powers. [Footnote:  India Act of 1784] But fate was too strong for them.  Even a governor like Lord Cornwallis, a convinced supporter of the policy of non-expansion and non-intervention, found himself forced into war, and compelled to annex territories; because non-intervention was interpreted by the Indian powers as a confession of weakness and an invitation to attack.  Non-intervention also gave openings to the French, who, since the outbreak of the Revolution, had revived their old Indian ambitions; and while Bonaparte was engaged in the conquest of Egypt as a half-way house to India (1797), French agents were busy building up a new combination of Indian powers against the company.