In September 1896, the city of Bombay witnessed the beginning of a long-drawn-out epidemic crisis, with the outbreak of bubonic plague. This article investigates one particular dimension of this crisis – its effects upon the city's cotton textile mills, and its profound, though temporary, alteration of the relations between employers and workers. It argues that the structure of industrial relations in the textile mills in the second half of the nineteenth century rested upon the retention of wage arrears by mill managements, which forced workers into permanent debt, and bound them to the mill and their employers. The demographic and industrial crisis ushered in during the plague years, the article shows, cracked open this structure of industrial control, and workers were able to sustain a new, fleeting system of industrial “regulation from below”, based on the daily payment of wages. Through a study of the tensions in textile mills in 1897, situated within the broader context of a crisis of urban labour relations, the article shows the ways in which industrial relations were both deconstructed and reconstituted in a new form.