Balaji Vishwanath's Legacy & The Chautai System (1719-1720)

Marathi History Book Reading Session Summary

The Fragmented Maratha Kingdom

The Initial Situation:

• Marathas were no longer truly unified
• Kolhapur branch refused to give up its small kingdom
• Prevented from becoming a dominant power
• No real future for the Kolhapur line

The Result:

• Central authority now in Pune under Shahu
• Kolhapur relegated to second rank
• Focus shifted entirely to Shahu's empire

The Chautai System: Ancient Tax-Based Incentive

What It Was:

• System existed before Shivaji
• Chautai = one-fourth (1/4) of tax revenue from conquered territory
• Paid by the losing side to the winning side

How It Worked:

• Loser pays victor the right to collect 1/4 of taxes
• Loser still owns the land but loses tax revenue
• Winner keeps remaining 3/4 of tax revenue
• Revenue used for military maintenance

Shahu's Radical Change: The Incentive Revolution

The Traditional System (Shivaji Era):

"Land belonged to the king"

• King paid soldiers fixed salaries
• King retained all revenues
• No personal tax base for commanders

The New System (Shahu Era):

• Commanders keep their assigned territories
• 3/4 of tax revenue stays with commander
• 1/4 goes to the king/Peshwa
• Each commander responsible for their own army

Why the Change:

• Central power not strong enough
• Kings needed recognition like previous monarchs had
• Incentivized rapid expansion

Sardeshmukhi: The Companion System

The Timeline:

• Chautai: Ongoing system (1/4 tax)
• Sardeshmukhi: Emerged around 1650
• Development period: 1650-1730

The Amounts:

• Chautai = 1/4 of tax revenue
• Sardeshmukhi = 1/10 of tax revenue

The Result:

• Justice Ranade credits these systems with the manifold growth of Maratha Empire
• Commanders had massive incentive to expand territories
• Made empire grow "by leaps and bounds"

The Growth Incentive: Why It Worked

Commander Economics:

• When new areas conquered, commander receives 3/4 of revenue
• Must send 1/4 to Peshwa
• Profit motive was enormous
• Had to maintain their own army from this revenue

The Genius:

• Commanders themselves had to maintain army readiness
• No salary from king to rely on
• Had to make profit to survive
• Incentivized aggressive expansion and efficient governance

Comparison:

• Shivaji's time: King paid salaries, commanders got nothing
• Shahu's time: Commanders got 3/4 of revenue, plus responsibility
• Result: Empire expanded dramatically

The Kolhapur & Tanjavur Problem

Why These Kingdoms Stagnated:

• Tanjavur: Controlled by Vyankoji (Shivaji's brother)
• Kolhapur: Controlled by Rajaram's successors
• Critical difference: Did NOT use Chautai/Sardeshmukhi system
• Kept all revenues for themselves (like Shivaji model)

The Consequence:

• Kolhapur stayed small and limited
• Tanjavur similarly couldn't expand
• Proof: System itself drove expansion, not just military might
• Without incentives, even capable kingdoms stagnated

The Dark Side: Looting and Loss of People's Trust

The Problem with Profit Motive:

"The commanders were only interested in making the most money"

• Commanders maximized profit by looting local populations
• Instead of being protectors, became extractors
• People lost confidence in their rulers

The Mechanism:

• King said: "Go collect taxes, any which way you can"
• "Maintain your own army"
• "No help from me, no salary, no benefits"
• "Keep everything above the 1/4 I take"

The Reality:

• No rain during monsoon? = Locals starve
• Commanders still needed to fund armies
• Only solution: extract whatever possible from the people
• Lost "mandate of heaven" from the population

Balaji Vishwanath's Dilemma

His Timeline:

• Left Delhi (Delhi mission accomplished)
• Returned to Pune
• Died within 1-2 years of return

What He Did:

• Allocated portions of Chautai/Sardeshmukhi revenues
• Some went to Shahu
• Some to local commanders in the 6 provinces
• Set boundaries to prevent quarrels

Why It Mattered:

• System matured under his watch
• Left everything to Shahu to manage
• His death marked end of his active period
• Policies became embedded during Shahu's reign

The Blame Game: Who's Really Responsible?

The Accusation:

"Balaji Vishwanath is faulted for this policy"

The Defense:

• Balaji died within 1 year of returning from Delhi
• Shahu lived 30 more years and was the sovereign
• Shahu had the authority to change the policies
• Shahu chose not to make corrections

The Verdict: According to the historian: Shahu is ultimately responsible, not Balaji

The Dynastic Solution: Bajirao I Appointed

The Year: 1720

• After Balaji Vishwanath's death
• Shahu appointed Bajirao I as Peshwa
• First of the hereditary Peshwas

The Shift:

• Not officially called "dynastic"
• But became hereditary in practice
• After Shahu died (1749), Peshwas had no check on their power
• Effectively became de facto rulers

The Rise of Peshwa Power

Timeline of Power Consolidation:

• 1720: Bajirao I becomes Peshwa (Shahu still alive)
• 1740: Bajirao I dies (Shahu still alive)
• 1749: Shahu dies (no successor to check Peshwa)
• After 1749: Peshwa becomes absolute power

The Power Vacuum:

• Shahu had no son to inherit
• No check on Peshwa authority remained
• Peshwas became "wholesome" (completely in control)
• King position became ceremonial

The Root of Future Disaster

This System's Legacy:

"This is an extremely profound sentence. You can later appreciate why the Marathas lost the Panipat battle."

The Problem:

• 150,000+ died at Panipat
• Root cause: commanders driven by profit, not duty
• No unified vision
• Each commander looking out for themselves
• Politics and personal gain over strategy

The Cycle:

• Balaji created incentive system
• System worked for rapid expansion
• But destroyed social bonds and loyalty
• Commanders became autonomous profit-seekers
• When unified front needed = couldn't deliver it

Key Players

Critical Timeline

Geographic Context

• Pune: Maratha center (Shahu's base)
• Kolhapur: Southern branch, refused to expand
• Tanjavur: Southern branch, stagnated
• Six Provinces: Main areas with Chautai rights

Major Themes

1. Systems Drive Behavior

The Chautai system was perfectly designed to incentivize expansion. It worked. But it also incentivized looting and created commanders who were profit-focused rather than duty-focused.

2. The Expansion-vs-Governance Trade-off

Shivaji balanced expansion with good governance. His successors prioritized expansion. By the time Panipat came, the empire was vast but fragile—held together by profit motives, not loyalty.

3. Power Without Check

When Shahu died without an heir, the Peshwa became absolute. No balance of power. No constitutional check. Just one man making all decisions for an empire that was barely unified to begin with.

4. The Profit Motive's Dark Side

Commanders getting 3/4 of revenue meant they had to maximize extraction. When monsoons failed, they still needed army funds. Result: they looted the very people they were supposed to protect.

5. The Panipat Foreshadowing

"All that, the root cause was this particular system where individual commanders didn't get any salary, but were allowed to keep some tax base for their own army... They were driven by profit."

The seeds of Panipat disaster were planted here. Individual commanders, each running their own profit centers, couldn't unify when the existential threat came.

Key Quotes

"You cannot make enemies out of our natural allies." — Bajirao I's principle (referenced later)

"The problem that happened because of the system that Bajeev Vishwanath put in place is that the whole attention of the Maratha commanders was to maximize their profit."

"This is an extremely profound sentence. You can later on appreciate why the Marathas lost the Panipat battle."

Where We Left Off: The foundation is set. Balaji's system created expansion but destroyed cohesion. Shahu allowed it to continue unchecked. When Shahu died, the Peshwa became supreme. By then, the empire was vast but hollow—a collection of profit-seeking commanders, not a unified force. The seeds of Panipat were already sown.

Balaji Vishwanath returned from Delhi with a brilliant system: commanders get 3/4 of revenue, keep the territory, but must maintain their own army. Perfect incentive for expansion. Perfect system for rapid empire growth. But terrible system for building loyalty or unified purpose. Instead of servants of a king, commanders became entrepreneurs maximizing profit. When Panipat came 41 years later, this fragmented profit-motive structure would collapse entirely. 150,000 would die. The empire would fall. And it all started with a system designed to make commanders rich.