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Rh land with European states in this respect, that whereas Austria or Russia raised armies on funds provided by England, Oudh or Haidarabad provided funds on which the British government raised armies. Large sums had hitherto been spent by the native princes in maintaining ill-managed and insubordinate bodies of troops, and in constant wars against each other; they might economize their revenues, be rid of a mutinous soldiery, and sit much more quietly at home by entering into contracts with a skilful and solvent administration that would undertake all serious military business for a fixed subsidy.

But as punctuality in money matters has never been a princely quality, this subsidy was apt to be paid very irregularly; so the next stage was to revive the long-standing practice of Asiatic governments, the assignment of lands for the payment of troops. There were now in India (excluding the Panjab, with which England had had no dealings as yet) only three states whose size or strength could give the English government any concern. One of these, the Maratha federation, was still strong and solvent, but the two Mohammedan states of Oudh and Haidarabad were in no condition to resist the proposals of Lord Wellesley, nor is it likely that either of them could have long maintained itself without British protection. The Nizam of Haidarabad had been very liberally treated in the partition of Mysore, and Tippu's destruction had relieved him of an inveterate foe. In 1800 he transferred considerable districts in perpetuity to the British government,