Clive set an example of disinterestedness by handing over to public uses a legacy which had been left him by the prince he had raised to the throne of Bengal; and returned poorer than he went to face the storm his acts had roused among those who were interested in Indian abuses at home. His unsparing denunciations of the mis-government of Bengal at last stirred even Lord North to interfere; and when the financial distress of the Company drove it for aid to Government, the grant of aid was coupled with measures of administrative reform. The Regulating Act of 1773 established a Governor-General and a Supreme Court of Judicature for all British possessions in India, prohibited judges and members of Council from trading, forbade any receipt of presents from natives, and ordered that every act of the Directors should be signified to the Government to be approved or disallowed. The new interest which had been aroused in the subject of India was seen in an investigation of the whole question of its administration by a Committee of the House of Commons. Clive's own early acts were examined with unsparing severity.

His bitter complaint in the Lords that, Baron of Plassey as he was, he had been arraigned like a sheep-stealer, failed to prevent the passing of resolutions which censured the corruption and treachery of the early days of British rule in India. Here, however, the justice of the House stopped. When his accusers passed from the censure of Indian mis-government to the censure of Clive himself, the memory of his great deeds won from the House of Commons a unanimous vote, "That Robert Lord Clive did at the same time render great and meritorious services to his country".

By the Act of 1773 Warren Hastings was named Governor-General of Bengal, with powers of superintendence and control over the other presidencies. Hastings was sprung of a noble family which had long fallen into decay, and poverty had driven him in boyhood to accept a writership in the Company's service. Clive, whose quick eye discerned his merits, drew him after Plassey into political life; and the administrative ability he showed, during the disturbed period which followed, raised him step by step to the post of Governor of Bengal. No man could have been better fitted to discharge the duties of the new office which the Government at home had created without a thought of its real greatness. Hastings was gifted with rare powers of organization and control. His first measure was to establish the direct rule of the Company over Bengal by abolishing the government of its native princes, which, though it had become nominal, hindered all plans for effective administration. The Nabob sank into a pensionary, and the Company's new province was roughly but efficiently organized.

Out of the clerks and traders about him Hastings formed that body of public servants which still remains the noblest product of our rule in India. The system of law and finance which be devised, hasty and imperfect as it necessarily was, was far superior to any that India had ever seen. Corruption he put down with as firm a hand as Clive's, but he won the love of the new "civilians" as he won the love of the Hindoos. Although he raised the revenue of Bengal and was able to send home every year a surplus of half a million to the Company, he did this without laying a fresh burden on the natives or losing their good will. His government was guided by an intimate knowledge of and sympathy with the people. At a time when their tongue was looked on simply as a medium of trade and business, Hastings was skilled in the languages of India; he was versed in native customs, and familiar with native feeling. We can hardly wonder that his popularity with the Bengalees was such as no later ruler has ever attained, or that after a century of great events Indian mothers still hush their infants with the name of Warren Hastings.

As yet, though English influence was great in the south, Bengal alone was directly in English hands. Warren Hastings recognized a formidable danger to the power of Britain in that of the Mahrattas, freebooters of Hindoo blood whose tribes had for a century past carried their raids over India from the hills of the western coast, and founded sovereignties in Guzerat, Malwa, and Tanjore, and who were bound by a slight tie of subjection to the Mahratta chief who reigned at Poonah. The policy of Hastings was to prevent the Mahrattas from over-running the whole of India, and taking the place which the Mogul Emperors had occupied. He bound native princes, as in Oudh or Berar, by treaties and subsidies, crushed without scruple the Rohillas to strengthen his ally the Nabob Vizier of Oudh, and watched with incessant jealousy the growth of powers even as distant as the Sikhs. The jealousy of France sought in the Mahrattas a counterpoise to the power of Britain, and through their chieftain the French envoys were able to set the whole confederacy in motion against the English presidencies. The danger was met by Hastings with characteristic swiftness of resolve. His difficulties were great.

For two years he had been rendered powerless through the opposition of his Council; and when freed from this obstacle the Company pressed him incessantly for money, and the Crown more than once strove to recall him. His own general, Sir Eyre Coote, was miserly, capricious, and had to be humoured like a child. Censures and complaints reached him with every mail. But his calm self-command never failed. No trace of his embarrassments showed itself in his work. The war with the Mahrattas was pressed with a tenacity of purpose which the blunders of subordinates and the inefficiency of the soldiers he was forced to use never shook for a moment. Failure followed failure, and success had hardly been wrung from fortune when a new and overwhelming danger threatened from the south. A military adventurer, Hyder Ali, had built up a compact and vigorous empire out of the wreck of older principalities on the table-land of Mysore. Tyrant as he was, no native rule was so just as Hyder's, no statesmanship so vigorous. He was quickwitted enough to discern the real power of Britain, and only the wretched blundering of the Council of Madras forced him at last to the conclusion that war with the English was less dangerous than friendship with them.