The Government of India Act of 1858

The Government of India Act of 1858 was an act of the British parliament that ended the existence and long tenure of the British East India Company in India and transferred its power and assets directly to the British Crown.

Thus ended the role that the remaining 1,700 shareholders in the company had, directly or indirectly, over the lives of 250 million Indian people. This revocation of the company happened in spite of the fact that the charter of the East India Company had been renewed in 1853.

The impetus for the Government of India Act was the Indian Mutiny (or the War of Independence, as the Indians later called it) that took place in 1857 and shook the power of the British in India. The British East India Company was founded in 1600. Initially lucrative, it incurred large losses beginning in the 1700s and had to be bailed out by the British government, in William Pitt’s India Act of 1784. The East India Company’s deep financial trouble continued after the Indian Mutiny, leading to an overhaul in 1858.

The main provision of the bill that was passed by Parliament transferred the territories of the East India Company to the British Crown. This meant that all treaties and contracts made by the company would be honored by the British government, including a debt of £98 million, one-ninth of the entire British government’s national debt. The rule of India was placed in the hands of the secretary of state for India who was able to deal directly on Indian matters under the prime minister’s administration. The British government would also appoint a governor-general who was under the secretary of state for India.

The bill was introduced by Prime Minister Lord Palmerston and was passed on February 18, 1858. It finally became law on August 2, 1858, and started the period of direct rule of India that lasted until independence for India and Pakistan in August 1947.

Justin Corfield