INDIAN SOCIETY IN TRANSITION IS 3 Louis Dumont, Homo Hierachicus, London, 1967, p 34. 4 It was an Indian admirer of Louis Dumont, T N Madan, who edited a volume in his honour on his • seventieth 'birthday and whose institute presumably bore the cost of publication of the volume. See T N Madan (ed). Way of Life: King, Householder, Renouncer: Essays m Honour of Louis Dumont, Delhi, 1982. It is perhaps not accidental that there is no reference to the work. of D D Kosambi in any of the articles collected in the volume, including that authored by the editor, who called for the umpteenth time, "for a sociology of India". 5 See, for example, H Simon, "Theories of decision-making in economics and behavioural science", American Economic Review, June 1959; and 0 Williamson, Markets and Hierarchies, New York. 1975. 6 The objection may be raised that the hierarchy of modem corporations is not a social hierarchy but an organizational ranking only. But as the studies of urban society of the USA and Japan have shown, the organizational hierarchy, in fact, dominates the social hierarchy, especially of small towns or towns centred on activities of big'corporations. 7 For further discussion of some of the issues relating to property rights in land and their implications for conceptualization of Indian society, see A K Bagchi, "Daniel Thomer*s India", Economic and Political Weekly, 28 March 1981. The fact that Courts or Wards were used later on as much to realize assets of bankrupt zamindan estates as to protect them from the clutches of money-lenders battening on the extravagance of the owners does not invalidate our general point 8 Some of these issues are discussed in more detail in A K Bagchi, "Transition from Indian to British Indian Systems of Money and Banking", Modem Asian Studies, April 1981. 9 There was considerable discussion of the sources of the increased power of the money lender in the colonial ethnographic literature. One of the most interesting of such analyses occurs in R V Russell . and Hira Lal, The Tribes and Castes of the Central Provinces of India (originally published in 1916; reprinted, 1975, Delhi), Vol II, pp 131 -134. Two passages are worth quoting from this source : "The progress of administration, bringing with it easy and safe transit all over the country; the institution of a complete system of civil justice and the stringent enforcement of contracts through the courts; the introduction of cash coinage as the basis of all transactions; and the grant ofproprietory and transferable rights in land, appear to have at the same time enhanced the Bania's prosperity and increased the harshness and rapacity of his dealings. When the moneylender lived in the village he had an interest in the solvency of the tenants who constituted his clientele and was also amenable to public opinion, though not of his own caste.... But with the rise of the large banking-houses when dealings are conducted through agents over considerable tracts of country, public opinion can no longer act The agent looks mainly to his principal, and the latter has no interest, or a regard for the cultivators of distant villages" (p 131). "Interest on money was probably litde in vogue among pastoral peoples, and was looked upon with disfavour, being prohibited by both the Mosaic and Muhammadan Codes.... With the introduction of agriculture a system of loans on interest became a necessary and useful part of the public economy, as a cultivator could borrow grain to sow land and support himself and his family until the crop ripened, out of which the loan, principal and interest could be repaid. If, as seems likely, this was the first occasion for the introduction of the system of loan-giving on a large scale, it would follow that the rate of interest would be based largely on the return yielded by the earth to the seed. Support is afforded to this conjecture by the fact that in the case of grain loans in the Central Provinces the interest on loans of grain of the crops which yield a comparatively small return such as wheat, is twentyfive to fifty per cent, while in the case of those which yield a large return, such asjuari and kodon, it is one hundred per cent. These high rates of return were not of much importance so long as the transaction was in grain. The grain was much less valuable at harvest than at seed time, and in addition the lender had the expense of storing and protecting his stock of grain through the year. It is probable that a rate of twentyfive per cent on grain loans does not yield more than a reasonable profit to the lender. But when in recent times