Macpherson offered a regular but unintelligent opposition to the measures of Warren Hastings during the latter years of that governor-general's rule. In February 1785, as senior member of the council, he became governor-general on Hastings's resignation. Owing to the long and desperate war in which the English had been engaged, he found the finances in great disorder. Pressing demands for assistance were coming from Bombay and Madras, the arrears of pay due to the troops amounted to two millions sterling, and the deficit in the revenue of the current year was estimated at 1,300,000l. Macpherson began by using the actual cash in the treasury to pay the troops, who were on the verge of mutiny. All other payments were made in bonds bearing interest at eight per cent. per annum till redeemed. Strenuous reductions were made in the public expenditure, the utmost care was exercised over the collections, and in twelve months' time enough cash had been accumulated to pay off the whole of the new paper debt, besides meeting the ordinary expenses of government. At the close of his administration Macpherson was able to boast that he had reduced expenditure by the large sum of 1,250,000l. It must, however, be remembered that during his rule no war took place; and his financial achievements were really due to the suggestions of a subordinate, Jonathan Duncan. Macpherson moreover did nothing to stop the gross corruption indulged in by the company's officials, and Lord Cornwallis, an impartial critic, denounces his government as ‘a system of the dirtiest jobbery’ (Earl Cornwallis to Dundas, 1 Nov. 1788, in Ross's Cornwallis Correspondence).
Shortly after Macpherson's accession to the supreme power, the Mahratta chieftain, Mahdoji Sindia, having obtained possession of Shah Alum, titular emperor of India, demanded from the English a sum of 4,000,000l. as arrears of the tribute promised by them to the emperor in 1765. Macpherson answered by insisting upon an immediate withdrawal and disavowal of the claim, threatening war if it were repeated. To further guard against the ambition of Sindia, he established Charles Malet as English envoy at Poonah, the acknowledged capital of the Mahratta confederacy. In 1786 the Mahrattas declared war against Tippoo, sultan of Mysore. Macpherson offered them the assistance of three battalions to be employed in defending the Mahratta territories. The offer remained unaccepted during Macpherson's tenure of office, and was withdrawn by his successor. Macpherson was created a baronet on 10 June 1786, and was superseded, much to his dissatisfaction, by Lord Cornwallis in September, after which he returned to England.
His friends endeavoured to show that the legal term of the governor-generalship was five years, and that Macpherson's removal, save for misconduct, after only twenty months was an injustice. The claim, for which there was no foundation, was disregarded, and Macpherson now endeavoured to obtain from Dundas a promise of the succession to Lord Cornwallis, or at any rate a return to his old place on the Bengal council. This also was refused. Macpherson's sole object in harassing the government with these demands was to obtain some heavy pecuniary compensation, and when his chances of office became quite hopeless, he applied to the court of directors for a pension of 2,000l. a year. After some delay he obtained a sum of 15,301l. 7s., payable in three instalments between 1 March 1789 and 1 March 1790. In June 1809 he obtained in addition a pension of 1,000l. a year in return for assigning to the company a claim of 10,000l. on the nabob of Arcot.
In 1788 Macpherson was again elected to the House of Commons for Cricklade, but was unseated for bribery on the petition of his opponent, Samuel Petrie, and cast in penalties to the amount of 3,000l. He now joined the whig opposition, and was till 1802 on intimate terms with the Prince of Wales. In 1789 he visited Florence, where his advice was asked by the Grand Duke Leopold on financial and administrative matters. When Leopold became emperor in 1790 he visited him at Vienna. Macpherson's tall figure, handsome face, and courtly manners made him a great favourite in society; and his wide knowledge and linguistic talents won him the respect of scholars. He obtained a seat for Horsham in September 1796, and continued in the house till June 1802. In 1806, in a discussion on Indian affairs, Whitshed Keene, the member for Montgomery, availed himself of the opportunity to censure his relations with the nabob of Arcot. Macpherson replied to the implied charges in an ‘Open Letter to Whitshed Keene, Esq., M.P.,’ dated 31 May 1806. He stated that in 1777 he had, through his intimacy with the nabob, obtained knowledge of secret overtures made to that prince by France, the exposure of which had been of great service to the British government. He also added that his claims on the nabob were still unpaid. Macpherson died unmarried, at Brompton Grove, on 12 Jan. 1821, when the baronetcy became extinct.
