The Hyderabad Mining Scandal (1888)
Deccan Mining Company · Abdul Huq · The Great Swindle · Parliamentary Inquiry
The Hyderabad Mining Scandal of 1888 was one of the most extraordinary financial frauds of the 19th century, involving the Nizam's government, a rising Hyderabadi official named Abdul Huq (later Sirdar Diler-ul-Mulk), and a London-based company called the Deccan Mining Company. The scandal "startled all India" and extended to England, where it was investigated by a Select Committee of the British Parliament.
At its core, the scandal involved the gratuitous concession of all mining rights in Hyderabad State to two Englishmen, Watson and Stewart, who then sold these rights in London for £850,000. The Nizam was then persuaded to buy back a one-eighth share of his own mining rights at a heavy premium — a transaction described by contemporary newspapers as a "regular swindle" and a "plain swindle" that cost the Nizam an estimated one crore of rupees.
The scandal exposed the "rottenness" of Hyderabad's administration, implicated the British Resident Mr. Cordery and Colonel Marshall (the Nizam's Private Secretary), and left 1,600 British investors as victims in the London stock market.
"The plain facts of this scandalous case are that, in 1885, Sir Salar Jung, the then Prime Minister of Hyderabad, was induced by Abdul Huq, a rising man of the time, to grant a gratuitous concession, in the name of the Nizam, of all the mining rights in his territories to Messrs. Watson and Stewart. These people having thus obtained the concession formed a design with their accomplice Abdul Huq to sell it in London for a large sum of money to a company called the Deccan Mining Company. Not only that, but they had also the audacity to saddle the Nizam with one-eighth share at a heavy premium in the mining right granted by himself. This is the short history of the scandal."
Rast Goftar (Anglo-Gujarati Weekly), Bombay, April 22, 1888: "It is not denied that not many years ago his pay was that of a District Inspector of Police; and unless between that time and this, during the whole of which he has been in Hyderabad service, the Nizam discovered some fresh diamond mines at Golconda and bestowed them on its protege together with the title of Sirdar, how could he, so have people wondered, buy up some of the most valuable properties in Bombay within the last three years?"
Amrita Bazar Patrika (English Weekly), Calcutta, April 26, 1888: "Now, this Abdul Huq is a wonderful person. He had a subordinate position in the Hyderabad police, but he gradually attained a position of singular influence not only in Hyderabad, but with the Government of India, and even at the India Office. Latterly, Abdul Huq got for his colleagues Mr. Cordery, the Resident at Hyderabad, and Col. Marshall, the Private Secretary of the Nizam. This triumvirate carried on the affairs at Hyderabad in the name of the Nizam, who, poor fellow, soon found himself to be only a tool in their hands, and in disgust shut himself up in the zenana."
Darussultanat (Urdu Weekly), Calcutta, May 5, 1888: "Abdul Huq, the Home Secretary to the Government of the Nizam, was such a great curse that his suspension has given general satisfaction throughout the Nizam's State. Sweetmeats were distributed, placards pasted in every conspicuous place, and extra papers published about it. He belongs to the Bombay Presidency. At first he entered Government service on a monthly salary of Rs. 30."
"It was a regular swindle if the details are accurate. Mr. Watson passed off 10,000 shares reserved by himself as a concessionaire to the Sirdar at more than £12 per share of £10, when the shares in fact were actually selling in the Bazaars at 30 shillings each. This was a plain swindle so far as the Nizam was concerned of about 10 lakhs of rupees."
The Hindu (English Tri-weekly), Madras, April 20, 1888: "The narrative of the fraud is interesting in more respects than one. It shows how rotten is the state of the administration of Hyderabad, notwithstanding the extravagant laudation that one reads often in the columns of certain Anglo-Indian newspapers. No province of India, it was recently said, contains an abler and more devoted knot of public servants than the Nawabs and Sirdars now serving His Highness the Nizam. To honest observers the rottenness was too apparent; and the present exposures will alter the opinion of the warmest admirers of the present regime."
Native Opinion (Anglo-Marathi Weekly), Bombay, May 6, 1888: "The plain fact is that Sir Salar Jung, the then minister, having in 1885 been induced by Abdul Huq to grant a gratuitous concession of all the Mining rights in the Nizam's territory to a body of financiers, they at once sold the concession in London for £850,000 to the Deccan Mining Company, and then had the audacity to make the young Nizam purchase back at a heavy premium one-eighth share in the Mining rights granted by himself."
Amrita Bazar Patrika: "This triumvirate carried on the affairs at Hyderabad in the name of the Nizam, who poor fellow, soon found himself to be only a tool in their hands, and in disgust shut himself up in the zenana. After the successful termination of the Railway scheme, which is said to have already emptied the Nizam's treasury of nearly £300,000, Abdul Huq entered into another speculation with an English Company in London, in the name of the Nizam's Government. This Company, called the Deccan Mining, got a gratuitous concession from the Nizam of all the mining rights in his territories, through the influence of Huq. But it has just been discovered that by this means, the young Nizam has been swindled out of a million sterling of money by Huq and his English accomplices."
Muslim Herald (English Tri-weekly), Madras, April 28, 1888: "Mr. Cordery was a man of undoubted integrity; but he held a hard-and-fast theory of a balance of power and official infallibility which infected all he did and warped his judgment to an undue extent in his intercourse with Sirdar Abdul Huq, whom he kept on his feet at all costs. The Resident was the Government of Hyderabad and the Government of Hyderabad was the Resident. The course adopted by the Resident towards his protege proved, as the sequel shows, detrimental to the object of so much trust and confidence; for with the Resident at his back, Abdul Huq snapped his fingers in the face of the Nizam and his Minister, and hurried into acts, quite reckless of results."
Reis and Rayyet (English Weekly), Calcutta, April 28, 1888: "Too long has this astute ex-Police-officer played such fantastic tricks before High Heaven as makes angels weep, all the while gathering his pagoda harvests for himself and his confederates, until the recent strong attitude taken by Lord Dufferin in Hyderabad matters, which has freed the Durbar from the usurped dictation of the despotic Private Secretary supported by a weak Residency. The retirement of Mr. Cordery and the accession to the Residency of Mr. Arthur Howell have completed the emancipation. The new Resident was not pledged to continue the old abuses of the British diplomatic camp at Secunderabad, nor had he any temptations against loyally carrying out the Viceroy's policy."
Dacca Prokash (Bengali Weekly), Dacca, May 6, 1888: "Mr. Howell's succession to the Residentship of Hyderabad has unravelled a mystery that long overhung the Nizam's State. Abdul Huq and his English partners have fallen victims to their own malpractices."
"Lord Dufferin deserves real credit for coming to the rescue of the Nizam and his subjects in exposing a grave and gross scandal and fraud. H.E. the Viceroy must have realised the paramount necessity of telegraphing to the authorities in England his strong desire for the constitution of a Select Committee for inquiry into Hyderabad affairs."
Bangabasi (Bengali Weekly), Calcutta, May 12, 1888: "We don't think that the Hyderabad Mining scandal will easily be settled. A Parliamentary Committee has been appointed in England. There would have been no hope if the matter had only concerned the Hyderabad State. The interests of the British shareholders have been affected so something will be done. Sir Henry James, the Attorney General of the late Liberal Government, has been appointed chairman. He is acquainted with Abdul Huq in connection with the London Statesman libel case in connection with Hyderabad affairs. The Committee of Inquiry, it appears, will be able to reveal mysteries. Mr. Labouchere has asked the Nizam's Government to send a delegate to England, with necessary papers. Now let us see what turns up?"
Swadesa Mitran (Tamil Bi-weekly), Madras, May 6, 1888: "We hear from an authentic source that Mr. Abdul Huq, the late Minister for P.W.D. in the Nizam's Government, has been suspended pending the result of inquiry into his conduct in connection with the lease of Hyderabad mines, and we are also informed that Mr. Cordery, the Resident of Hyderabad, has also been suspended, as he is also suspected to have been concerned in the transaction. It is also believed that several Englishmen in India and several merchants in England are also concerned in the affair. The House of Commons have appointed a committee consisting of members of Parliament to investigate into the matter."
Rast Goftar (Anglo-Gujarati Weekly), Bombay, April 22, 1888: "And since this time it is the sixteen hundred English investors on the Royal Exchange who are the victims, we have no fear that the matter will be hushed up or indifferently treated as might have been the case if the victims had been only poor Hyderabadis, sixty times sixteen hundred though they might have counted."
Behar Herald: "The swindle did not last here. When people saw such anxiety on the part of the Nizam to acquire shares in a concession which he has himself made they rushed for these shares, 85,000 of which was issued contrary to the original terms of concession, and there are now in London 1600 victims of this great swindle."
The Hindu, Madras, April 20, 1888: "His first great coup was the promotion of the Nizam's Railways, which he worked too smartly, not merely for the unsuspecting Prime Minister, but for his fellow-promoters in London."
Amrita Bazar Patrika: "After the successful termination of the Railway scheme, which is said to have already emptied the Nizam's treasury of nearly £300,000, Abdul Huq entered into another speculation with an English Company in London, in the name of the Nizam's Government."
Indu Prakash (Anglo-Marathi Weekly), Bombay, April 23 and May 14, 1888: "Abdul Huq is trying to secure all assistance that wealth can purchase. Three eminent lawyers from Bombay are fighting his case at Hyderabad at a cost, it is said, of nearly Rs. 5,000 per day. He will probably make like provision to represent his interests in England. What the issue of all these Herculian efforts to avert the impending fall will be it is impossible to predict. But certain it is that what with the Rumbold claims, the frontier defence contribution, and the Mining Company's shares, H.H. the Nizam's treasury has come to a pretty pass."
Arunodaya (Marathi Weekly), Tanna, May 6 and 20, 1888: "The Government of Hyderabad persists in having the matter strictly investigated, and they have asked the High Court of Bombay to attach his extensive property situated thereabout."
"In this Mining affair Abdul Huq has robbed the Nizam of about one crore of rupees. This was not unknown to Mr. Cordery and Colonel Marshall. Mr. Cordery is now away on leave. Mr. Arthur Howell has succeeded him. Just after his accession to office Mr. Howell could see how Abdul Huq was robbing the Nizam. He asked for an explanation on the Mining question. Abdul Huq could not impose on Mr. Howell, and the Nizam has dismissed him. Mr. Labouchere has proposed in the Parliament for the appointment of a Committee. Lord Dufferin has no objection to the appointment of such a Committee. It would be better if the Committee were to produce a good result. Otherwise the Hyderabad scandal will be a stain on the British Government."
Subodh Patrika (Anglo-Marathi Weekly), Bombay, May 6, 1888: "Somehow or other, Hyderabad, of all Native States of India, seems to be peculiarly subject to gigantic frauds. It hardly reflects credit, however, on the penetration of the State authorities that a gentleman who not so long ago was an unknown personage should in the course of time have raised himself in their confidence so as to be entrusted with the large powers he held in negotiating in England with reference to the concession to work the mines."
Gujarat Mitra (Anglo-Gujarati Weekly), Surat, May 6, 1888: "Abdul Huq's malappropriation of millions of public money is by no means a mere personal case of imposture. It betrays far more serious features which benevolently point out the statesmanlike measures required for freeing some Residential Institutions of that laissez faire Policy which lets Native States their own ways till they approach the brink of perdition."
Kaiser-i-Hind (Gujarati Weekly), Bombay, May 13, 1888: "If the Nizam and his administrator, Sir Asman Jah, were well advised they would soon take in hand the task of thoroughly exposing the impurities of Hyderabad administration. The State of Hyderabad has of late afforded a good field for the spoliations of noblemen, high officials and adventurers, but the poor people are in no way better under the present regime than in past ones."
- Abdul Huq (Sirdar Diler-ul-Mulk): Home Secretary, Minister of Railways and Public Works. Rose from a salary of Rs. 30 to millionaire status. Suspended in April 1888. Known as a "noted dangerous railway broker."
- Sir Salar Jung (the elder): Prime Minister of Hyderabad who was induced to grant the gratuitous concession. His powers were failing, and he was succumbing to sinister advice.
- Mr. Cordery: British Resident at Hyderabad. Described as a man of "undoubted integrity" but with a "hard-and-fast theory of a balance of power." Retired in 1887. The Deccan Times said his policy "made the British Residency a reproach and all but a scandal."
- Colonel Marshall: Private Secretary of the Nizam. Part of the "triumvirate" that carried on affairs in the Nizam's name.
- Mr. Arthur Howell: Succeeded Cordery as Resident. His succession "unravelled a mystery" and led to Abdul Huq's suspension.
- Sir Asman Jah: The present Minister who detected the fraud and suspended Abdul Huq.
- Lord Dufferin: Viceroy of India. Took a "strong attitude" in Hyderabad matters and assented to the Parliamentary Committee.
- Mr. Labouchere: Member of Parliament who proposed the Committee of Inquiry and asked the Nizam's Government to send a delegate to England.
- Lord Randolph Churchill: Leader of the Tories who approved and supported the Committee of Inquiry.
- Sir Henry James: Former Attorney General of the Liberal Government, appointed chairman of the Parliamentary Committee.
- Messrs. Watson and Stewart: The Englishmen who received the gratuitous concession and sold it in London.
- The Concession: In 1885, Sir Salar Jung was induced to grant a gratuitous concession of all mining rights in Hyderabad to Watson and Stewart.
- The Sale: Watson, Stewart, and Abdul Huq sold this concession in London to the Deccan Mining Company for £850,000.
- The Share Purchase: The Nizam was persuaded to purchase 10,000 shares (a one-eighth share) at £12 per share — a total of £150,000 or about 10 lakhs of rupees.
- The Market Reality: These shares were actually selling in the London market at only 30 shillings (approximately £1.5) each — a fraction of what the Nizam paid.
- The Victims: The Nizam was swindled out of an estimated one crore of rupees. Additionally, 1,600 British investors in London were victimized when 85,000 shares were issued contrary to the original terms.
- The Cover-up: The entire transaction was carried on with the full knowledge and sanction of Mr. Cordery (Resident) and Colonel Marshall (Nizam's Private Secretary).
- The Exposure: The scandal was exposed after Mr. Howell succeeded Cordery as Resident. Abdul Huq was suspended in April 1888.
- The Inquiry: A Select Committee of the House of Commons was appointed to investigate the scandal.
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