Lord Wellesley (as Governor General) came to India in 1798 at a time when the British were locked in a life and death struggle with France all over the world.
Lord Wellesley decided that the time was ripe for bringing as many Indian states as possible under British control.
By 1797, the two strongest Indian powers, Mysore and the Marathas, had declined in power.
The Third Anglo-Mysore war had reduced Mysore to a mere shadow of its recent greatness and the Marathas were dissipating their strength in mutual intrigues and wars.
Political conditions in India were propitious for a policy of (British) expansion: aggression was easy as well as profitable.
To achieve his political aims, Wellesley relied on three methods i.e.
The system of Subsidiary Alliances;
Outright wars; and
Assumptions of the territories of previously subordinated rulers.
The doctrine of subsidiary alliance was introduced by Lord Wellesley.
Under the subsidiary alliance system, the ruler of the allying Indian State was compelled to accept the permanent stationing of a British force within his territory and to pay a subsidy for its maintenance.
In reality, by signing a Subsidiary Alliance, an India state virtually signed away−
The right of self-defense;
Maintaining the diplomatic relations;
Employing foreign experts; and
Settling its disputes with its neighbors.
As a consequence of Subsidiary Alliance, lakhs of soldiers and officers were deprived of their hereditary livelihood, spreading misery and degradation in the country.
Many of the unemployed soldiers joined the roaming bands of Pindarees which were to ravage the whole of India during the first two decades of the 19th century.
The Subsidiary Alliance system was, on the other hand, extremely advantageous to the British. They could now maintain a large army at the cost of the Indian states.
Lord Wellesley signed his first Subsidiary Treaty with the Nizam of Hyderabad in 1798.
The Nizam was to dismiss his French-trained troops and to maintain a subsidiary force of six battalions at a cost of £ 241,710 per year. In return, the British guaranteed his state against Maratha encroachments.
In 1800, the subsidiary force was increased and, in lieu of cash payment, the Nizam ceded part of his territories to the Company.
The Nawab of Avadh was forced to sign a Subsidiary Treaty in 1801. In return for a larger subsidiary force, the Nawab was forced to surrender to the British nearly half of his kingdom consisting of Rohilkhand and the territory lying between the Rivers Ganga and the Yamuna.
Wellesley dealt with Mysore, Carnatic, Tanjore, and Surat even more sternly.
Tipu of Mysore would, of course, never agreed to a Subsidiary Treaty. On the contrary, he had never reconciled himself to the loss of half of his territory in 1791. He worked incessantly to strengthen his forces for the inevitable struggle with the British.
Tipu Sultan entered into negotiations for an alliance with Revolutionary France. He sent missions 'to Afghanistan, Arabia, and Turkey to forge an anti-British alliance.
Lord Wellesley was no less determined to bring Tipu to heel and to prevent any possibility of the French re-entering India.
The British army attacked and defeated Tipu in a brief but fierce war in 1799, before French help could reach him.
Tipu still refused to beg for peace on humiliating terms. He proudly declared that it was "better to die like a soldier, than to live a miserable dependent on the infidels, in the list of their pensioned, rajas and Nawabs."
Tipu met a hero's end on 4 May 1799 while defending his capital Seringapatam. His army remained loyal to him to the very end.
Nearly half of Tipu's dominions were divided between the British and their ally, the Nizam. The reduced kingdom of Mysore was restored to the descendants of the original rajas from whom Haidar Ali had seized power.
A special treaty of Subsidiary Alliance was imposed on the new Raja by which the Governor-General was authorized to take over the administration of the state in case of necessity.
An important result of the Fourth Anglo-Mysore War was the complete elimination of the French threat to British supremacy in India.
In 1801, Lord Wellesley forced a new treaty upon the puppet Nawab of Carnatic compelling him to cede his kingdom to the Company in return for a handsome pension.
The Madras Presidency as it existed till 1947 was created, by attaching the Carnatic to territories seized from Mysore and Malabar.
The territories of the rulers of Tanjore and Surat were taken over and their rulers pensioned off.
The Marathas were the only major Indian power left outside the sphere of British control. Wellesley now turned his attention towards them and began aggressive interference in their internal affairs.
The Maratha Empire (during the Wellesley time) consisted of a confederacy of five big chiefs, namely −
The Peshwa at Poona;
The Gaekwad at Baroda;
The Sindhia at Gwalior;
The Holkar at Indore; and
The Bhonsle at Nagpur.
The Peshwa was the nominal head of the confederacy.
Unfortunately, the Marathas lost nearly all of their wise and experienced leaders towards the close of the 18th century.
Mahadji Sindhia, Tukoji Holker, Ahilya Bai Holker, Peshwa Madhav Rao II, and Nana Phadnavis, the people who had kept the Maratha confederacy together for the last 30 years, all were dead by the year 1800.
What was worse, the Maratha chiefs were engaged in bitter fratricidal strife, blind to the real danger from the rapidly advancing foreigners.
Wellesley had repeatedly offered a subsidiary alliance to the Peshwa and Sindhia. But the far-sighted Nana Phadnavis had refused to fall into the trap.
On 25 October 1802, the day of the great festival of Diwali, Holkar defeated the combined armies of' the Peshwa and Sindhia, the cowardly Peshwa Baji Rao II rushed into the arms of the English and on the fateful last day of 1802 signed the Subsidiary Treaty at Bassein.
The following map shows the acquired British territories in 1765 and 1805.