CHAPTER II
IMPERIALISM V. FEDERALISM
As the result of the cost of the Mutiny of 1857 the already precarious condition of the Imperial Finance became so grave that no problem during the succeeding decade can be said to have engrossed the attention of responsible authorities as the one relating to the rehabilitation of that tottering system. Although the controversy as to the proper line of reconstruction to be adopted was long drawn out, the causes of the collapse were so patent that all those who had anything to do with Indian Finance unmistakably laid their finger on one supreme defect in the system whose breakdown they had witnessed, namely, the irresponsible extravagance it engendered in the Provincial Governments. To obviate this evil it was sought on the one hand by some responsible authorities
“to make the Local Governments partners in the great joint stock of Indian Finances, and, so to enlist their interest and animated co-operation with the Government of India, instead of keeping them on the footing of agents and servants, who, having no motive for economy and using the means of their masters, think only of enhancing their own demands by comparisons more or less well founded, with the indulgence conceded to others.” [1]
This view gradually led to the formation of a considerable body of well-trained opinion for changing united India into the United States of India, [2] by making the provinces into separate and sovereign States. The aim was to substitute a Federal system for the Imperial system and to assimilate the financial position of the Central authority in India to that of the Central authority in the
1 Minute by H.E. Sir W. R. Mansfield, Commander-in-Chief, dated October 17,
- Papers, etc. on the extension of Financial Powers to Local Governments, pp. 99-103.
2 Cf. the Note of Col. R. Strachey dated August 17, 1867, in J. F. Finlay’s History of Provincial Financial Arrangements, List of extracts, p. 3.