Long after the eclipse of Britain as the prime mover in the global economy, the “imperialism of free trade” continued to have powerful resonance in the rhetoric of British bureaucrats and businessmen. British enterprise, with its superior technology and industrial organization, was supposed to have proceeded unchallenged and dominated the primitive economies into which the entered. I argue that in reality, the survival and success of British businesses in these regions developed not through the inherent superiority of capitalist organization but through canny alliances with both local enterprise and the imperial bureaucracy. This paper consequently seeks to uncover the muted practices of British, Arab and Indian businesses who cooperated and competed to dominate the shipping lanes of the Persian Gulf and the Arabian Sea. Foreign Office and Admiralty files, as well as shipping company records and the family archives of the Ratansi Purshottam and Al-Sultan families of Muscat, indicate that corporate moguls like Lord Inchape, the chairman of the British India Steam Navigation Company (BISN), cultivated the collaboration of prominent local businessmen as well as the subsidies and preferential policies of imperial bureaucrats. The superior technology and management of British India steamships did not revolutionize shipping in the Gulf and the Arabian Sea. Indeed, despite subsidies and advanced technology, the price of labor, coal and the ships themselves made dhows a more cost-effective method of shipping. Dhows further offered the flexibility of shipping times, accessibility to the smallest ports in the Gulf and India and comparative invisibility to customs officials. So what followed was lobbying from Inchape and other British businessmen to increase smuggling and sanitation regulations on dhows. This was in turn undermined as dhows began to frequent smaller ports with more lenient customs officers, and embrace their role as traffickers of illicit cargo. Ultimately, though, success in the shipping business required tapping into the personal networks that moved merchandise across the waves, and British shipping companies depended on the recruitment of prominent local merchants who could cajole and pressure their peers into paying the more expensive charges of steam-shipping. Thus the interlacing histories of Lord Inchape, Indian merchants and Arab dhow captains reveal a far more complex and contested history of colonial capitalism than is usually depicted.