THE EVOLUTION OF THE STATE BANK OF INDIA: SOME COMMENTS 67 it is generally well known that unlike in the classical cases, modern joint stock banking in India did not arise out of the efforts of accumulated private capital to make larger profits per period through enhancing its speed of circulation. Quite the contrary, it arose out of the initiative of the users of liquid funds-European Business Community and the government itself-the latter needing funds not only for spending but also to enable the assessees to pay their large revenue assessment. The implication of this somewhat obvious fact is not sufficiently well understood. It implies that early modern banking in India did not represent a competition within private capital but essentially was a managed institution whose function was to market credit in the interest of the borrower. Most of the early problems of the Presidency Banks are the outcome of this patent absurdity-the contradiction involved in managing a selling organization in the interest of the buyer and expecting it to do well as a seller. The narrative of events in Bagchi's book clearly document the contradictory, at times comic, situation that prevailed in the banking scene for the most part of the nineteenth century. The confusion has been confounded by the intervention of personalities whose understanding of banking was shaped by the experience of Great Britain, where banks were what they aught to be sellers' organization for the benefit of the sellers. This also has been documented in great detail. In fact the narrative in the book is a documentation of the outcome of this absurdity. This is not to deny the individuality of the many problems that the banks faced in their infancy, nor to suggest that it is unimportant to study the specificities of these crises. Each crisis the banks faced was unique; but there was a generality in the manner in which the crises impeded on the banks, and in the way the banks struggled to cope with it. This generality derives from the absurdity mentioned earlier. Thus the agency house crisis of 1828-3- certainly had its origin elsewhere in the economic system but the severity with which it hit the Bank of Bengal most certainly speaks of banking practices and asset management that cannot be explained without the fact of substantial collusion between the bank management and the debtors. As Bagchi describes in detail, this collusion was not only a mere possibility because of the nature of the constitution of the bank and its origin, but European social life in Calcutta, through various fora like the Bengal Club, continuously nurtured this collusive possibility. Likewise, the cheap money policy pursued by the Bank of Bengal to the extent of even violating the charter (while the government looked ^way) during the period of the agency house crisis makes no commercial sense. The explanation of this cheap money was not only accommodating the merchants in distress, but also accommodating the government whose debt tended to be first liquidated by the merchants in time of distress. One might add that there was collusion not only between private borrowers and the bank- private borrowers also in turn lent to the government, which turned a blind eye to a collusion. Public debt was