The Mutiny sealed the fate of the East India company, after a life of more than two and a half centuries. The Act for the Better Government of India (1858), which finally transferred the entire administration from the company to the crown, was not passed without an eloquent protest from the directors, nor without acrimonious party discussion in parliament. It enacts that India shall be governed by, and in the name of, the sovereign of England through a principal secretary of state, assisted by a council. The governor-general received the new title of viceroy. The European troops of the company, numbering about 24,000 officers and men, were amalgamated with the royal service, and the Indian navy was abolished. By the Indian Councils Act 1861 the governor-general's council and also the councils at Madras and Bombay were augmented by the addition of non-official members, either natives or Europeans, for legislative purposes only; and by another act passed in the same year high courts of judicature were constituted out of the existing supreme courts and company's courts at the presidency towns.
It fell to the lot of Lord Canning both to suppress the Mutiny and to introduce the peaceful revolution that followed. As regards his execution of the former part of his duties, it is sufficient to say that he preserved his equanimity undisturbed in the darkest hours of peril, and that the strict impartiality of his conduct incurred alternate praise and blame from the fanatics on either side. The epithet then scornfully applied to him of "Clemency" Canning is now remembered only to his honour. On November 1, 1858, at a grand durbar held at Allahabad the royal proclamation was published which announced that the queen had assumed the government of India. This document, which has been called the Magna Charta of the Indian people, went on to explain the policy of political justice and religious toleration which it was her royal pleasure to pursue, and granted an amnesty to all except those who had directly taken part in the murder of British subjects. Peace was proclaimed throughout India on the 8th of July 1859; and in the following cold season Lord Canning made a viceregal progress through the upper provinces, to receive the homage of loyal princes and chiefs, and to guarantee to them the right of adoption. The suppression of the Mutiny increased the debt of India by about 40 millions sterling, and the military changes that ensued augmented the annual expenditure by about 10 millions. To grapple with this deficit, James Wilson was sent out from the treasury as financial member of council. He reorganized the customs system, imposed an income tax and licence duty and created a state paper currency. The penal code, originally drawn up by Macaulay in 1837, passed into law in 1860, together with codes of civil and criminal procedure.