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especially those which were poor in economic resources. It is not valid for the richest regions of India, where the empire began. Bengal on the eve of the Battle of Plassey in 1757 was not a lawless anarchic state.
    The alternative view, offered by Christopher Bayly and others, explains the origin of the British empire by pointing out the congruence of interests between Indian merchants and the Company in India. The collapse of the Mughal empire in the second and the third decades of the eighteenth century had led to a dispersal of commerce, banking, coinage and skilled services to new regional centres. Patna, Benares, Pune, Murshidabad, Hyderabad, or Jaipur, acquired the same level ofsignificance that Lahore, Delhi and Agra had enjoyed before. Regionally rooted moneyed classes emerged. Some of them realized that their own interests would be better served by the European traders than by the bankrupt regional courts. The Company found collaborators who would be willing to accept, even plot, a change of regime. The Company, in this view, fell into an Indian pattern of state formation that had been unfolding for some time. In a less political sense, the regime that came in place has been called the ‘Anglo-Bania order’ by Lakshmi Subramanian.
    It is true that in the late-eighteenth century, when the old Indian states were embroiled in strife and collapse, sections of Indian merchants perceived advantages in forming alliances with the English Company. It is also true that a great deal of Indian money was working for the Company, and vice versa, in the eighteenth century. There was indeed a relationship of deep mutual dependence between the European merchants and their Indian counterparts. And yet, if from this evidence we conclude that there was ordinarily a warm and friendly partnership between the European and the Indian capitalists, we would go too far. The relationship was full of contradictions, and these contradictions should suggest to us another very different drive behind the Empire.
    Whatever else the Anglo-Bania order may have been, it was not a model of trust and friendship; quite the opposite in fact. European visitors to India rarely had nice things to say about their Indian partners—the merchants, the weavers and the peasants, though they admired the Indians for their skills. And while many complained of ‘the mischief they cause under-hand’ (John Henry Grose, 1772), and wrote about the Indians’ propensity to employ ‘low cunning, stratagem, and deceit’ (Thomas Tennant, 1804), few writers went so far as the doctor John Fryer (1670) who called the Indian merchant a ‘vermin’, ‘blood-sucker’, ‘horse-leech’, ‘flea’, ‘worse broker than the Jews’, ‘an expert in lying, dissembling, and cheating’, and a ‘map of sordidness’. But even when they were more tempered in tone, the Europeans almost never liked the Indian merchants as individuals, and the sentiment was returned.
    There were many reasons behind the uneasy relationship. Business ethics were identical with the customs of castes and communities in India; the Europeans and the Indians shared neither the same customs nor similar levels of motivation to engage in local traditions. It was not as if one of them was more honest than the other; their mental models of good conduct were different. Moreover, while earlierpotentials for dispute had been limited because the scale of contractual transactions was smaller, the Europeans expanded the use of long-period contracts, without there being a corresponding development of contract law. The prospect of breach of contracts increased greatly as a result. For example, ‘the problem of bad debts’, writes the historian Om Prakash in a 1998 book, ‘plagued all commodities the Europeans procured in India’. Two economists, Rachel Kranton and Anand Swamy, who have recently studied opium and textile contracts, write, ‘enforcement problems appear to be widespread: producers default on