From a careful examination of the existing structure of Government and an exhaustive review of present conditions in India, the Montagu-Chelmsford Report deduced two definite conclusions:

(1) It is on the Central Government, i.e. the Government of India, that the whole structure rests; and the foundations must not be disturbed pending experience of the changes to be introduced into less vital parts. The Government of India must therefore remain wholly responsible to Parliament, and, saving such responsibility, its authority in essential matters must during the initial stages of the experiment remain indisputable.

(2) While popular control can be at once largely extended in the domain of local government, the Provinces provide the sphere in which the earlier steps towards the development of representative institutions and the progressive realisation of responsible government promised in the Declaration of August 20, 1917, can be most usefully and safely taken.

The whole of the second part of the Report was devoted to working out in considerable detail a practical scheme for giving effect to those two conclusions. The powers and responsibilities of the Government of India as the Central Government were left intact, but an All-Indian legislature consisting of two assemblies, the one as popular and democratic as a large elective majority proceeding from the broadest practicable franchise could make it—to be called the Indian Legislative Assembly—and the other a relatively small upper chamber to be known as the Council of State which, composed partly of elected members and partly of members nominated by Government or entitled ex officio to membership, was expected to provide the desired counterpoise of approved experience and enlightened conservatism. The Report expressed the pious hope that "inasmuch as the Council of State will be the supreme legislative authority for India on all crucial questions and the revising authority for all Indian legislation," it would "attract the services of the best men available," and "develop something of the experience and dignity of a body of Elder Statesmen"—an expression presumably borrowed, but not very aptly, from Japan, where the Elder Statesmen have no doubt had immense influence but never any constitutional status. The Report had, moreover, to contemplate the possibility of conflict between the Legislature and the Executive, and in accordance with the first of the two main conclusions at which it had arrived it proposed to arm the Governor-General in Council with power to override the Legislature if it failed to pass measures or grant supplies which he was prepared to "certify" as vital to the peace, safety, and interests of India.

For the great experiment in the provincial sphere, the eight provinces of Bombay, Madras, Bengal, the United Provinces, Behar and Orissa, the Punjab, the Central Provinces, and Assam, were deemed to be already ripe. Burma (which is not really India at all, and whose people belong to another race and to another stage of political development), the North-West Frontier Province, and Baluchistan (which for strategical reasons must remain under the direct control of the Government of India), and a few smaller areas, whose populations are altogether too backward, were not to be touched at present. The essential feature of the scheme was the division of the functions of the Provincial Government into two categories: the one comprising what are now termed "the reserved subjects," i.e. those with which the maintenance of peace and order and good government is immediately bound up; and the other, those which, though less vital, very closely affect the daily life and common interests of the people, and which were to be called "the transferred subjects," because it was proposed to transfer at once the largest possible measure of power and responsibility in regard to them to exclusively Indian shoulders. While all essential power and responsibility in regard to "the reserved subjects" were to remain vested in the Governor-in-Council, i.e. the executive body consisting of the Governor and (under the new scheme) one British and one Indian member of Council, real power and responsibility for dealing with "the transferred subjects" were to be conferred on Indian Ministers accountable to a Legislative Council in which there was to be a large Indian non-official majority, elected also on the broadest possible franchise. The Provincial Government would thus itself be divided into two compartments: in the one the Governor-in-Council, responsible as heretofore to the Government of India and to the Secretary of State, i.e. the British Parliament; in the other the Governor—but not "in Council"—acting with Indian Ministers responsible to an Indian legislature.

This was the system of partial but progressive devolution that had already come to be known as "Dyarchy," having been propounded in a somewhat different form by an independent inquirer, Mr. Lionel Curtis, whose "Letters to the People of India" on responsible Government, though they at first caused almost as much displeasure in official as in Extremist circles, did a great deal to educate the mind of the "politically-minded" classes, and to prepare the ground for the Montagu-Chelmsford Report. The authors of the Report were themselves fully alive to the demerits as well as to the merits of dyarchy, and they were careful to state it as their intention that "the Government thus composed and with this distribution of functions shall discharge them as one Government, and that as a general rule it shall deliberate as a whole." The Governor-in-Council was to have, on the other hand, within his narrower sphere, powers similar to those retained by the Viceroy for overriding the Provincial Legislature in extreme cases of conflict.

General principles were alone laid down in the Report, and its authors confined themselves to a rough preliminary indication of their views, as to the distribution of "reserved" and "transferred" subjects in the Provinces and as to the constitution of electorates. The latter problem they stated in brief terms: "We must measure the number of persons who can in the different parts of the country be reasonably entrusted with the duties of citizenship. We must ascertain what sort of franchise will be suited to local conditions, and how interests that may be unable to find adequate representation in such constituencies are to be represented." But it was perhaps Mr. Montagu's doctrinaire Radicalism that betrayed itself in the treatment of the question of "communal" representation, i.e. the creation of separate constituencies for various communities, which, however important or however much entitled to make their voices heard, might be submerged in constituencies based solely on territorial representation. "Communal representation" had been conceded to so powerful a minority as the Mahomedans under the Indian Councils Act of 1909; and the Report admitted that it could not be withdrawn from them, and that it might have to be conceded to other communities, such as the Sikhs. At the same time it developed at great length all the theoretical arguments against the principle, viz. that it is opposed to history, that it perpetuates class division, that it stereotypes existing relations based on traditions and prejudices which we should do everything to discourage.

At the risk even of travelling somewhat beyond the expressed terms of their reference, the Secretary of State and the Viceroy could not but recognise that the effects of great constitutional reforms, of which the statutory application would be necessarily confined to that part of India that is under direct British administration, must nevertheless react upon that other smaller but still very considerable part of India which enjoys more or less complete internal autonomy under its own hereditary rulers. A growing number of questions, and especially economic questions, must arise in future, which will affect the interests of the Native States as directly as those of the rest of India; and their rulers may legitimately claim, as the Report plainly admitted, to have constitutional opportunities of expressing their views and wishes and of conferring with one another and with the Government of India. For such purposes the Report included suggestions which were to take shape in the establishment of the Chamber of Princes.

One other recommendation of the Report deserves special notice, as it shows the authors to have realised how seriously Parliament, though more directly responsible than ever for the exercise of due vigilance over Indian affairs after the transfer to the Crown, had lost touch with them, since, with the disappearance of the East India Company after the Mutiny, it ceased to hold the regular and exhaustive inquiries which the renewal of the Charter had until then periodically required. As their own scheme was designed merely to give Parliament a lead in the first of a progressive series of constitutional reforms, they recommended that a Parliamentary Commission of Inquiry into the working of the new Indian institutions and the general progress of the people of India should at stated intervals determine the further stages of advance towards the final goal of self-government. Such a Commission, armed with power to examine witnesses, would not only enlighten British public opinion, but also probe Indian opinion in a much more searching way than can be done by impassioned and irresponsible arguments and counter-arguments in the press and on platforms. It would, above all, assist Parliament to master from time to time the many-sided problem whose progressive solution it would have constantly to watch and periodically to determine.

The Report was a document of such magnitude and complexity, and went so boldly to the roots of Indian government and administration, that even amongst the absorbing preoccupations of the war, which was only just emerging for the Allies from the terrible crisis of March-April 1918, its publication at once provoked a considerable stream of criticism. On the whole, British public opinion was favourable, though there was a small but not uninfluential group of British reactionaries who at once took up, and have ever since maintained, the position that the Report meant, not the mending, for which they saw, moreover, very little need, but the ending of British rule in India. Equal divergencies occurred in Indian public opinion. An Extremist gathering in Madras declared roundly that "the scheme is so radically wrong in principle and in detail that in our opinion it is impossible to modify or improve it." In vain had Mrs. Besant been released from her modern oubliette before Mr. Montagu started for India. "The scheme," she wrote in her haste, on the very day of its publication, "is unworthy to be offered by England or to be accepted by India." In vain had Mr. Montagu allowed himself to be garlanded by Mr. Tilak, who was not far behind Mrs. Besant in pronouncing the scheme to be "entirely unacceptable." The Calcutta Provincial Conference of the Congress party held a few days later abounded in the same sense, and a special session of the whole Congress convoked in August in Bombay was only in form somewhat less bitterly uncompromising, and only because it began to realise that the secession of the more moderate elements was likely to reduce "the Parliament of India" to a mere rump. Moderate opinion had not committed itself to acceptance of the scheme as precipitately as the Extremists to its rejection, but against rejection pure and simple it set its face at once, and it rallied so steadily and surely to acceptance that few of the Moderates attended the Provincial Congress, where they were promptly howled down, and they determined to hold a Conference of their own in opposition to the special Congress session. At this Conference, as well as in the Committee of non-official members of the Indian Legislative Council, there was a good deal of disjointed criticism of various recommendations in the Report, not infrequently due to misunderstanding of their import, but on the whole it was recognised as representing a great triumph for the cause of political progress on constitutional lines and therefore for the educated opinion of India. The breach between the Extremists and the Moderates was clearly defined by Mr. B.L. Mitter, a prominent Moderate of Calcutta and a member of the new Moderate organisation, the "National Liberal League":