When worlds collide, there is supposed to be an almighty explosion. But when the English are involved, there is more likely to be mutual irritation, incomprehension and messy compromise.

And this place is not just England, but the very epitome of it – or at any rate the epitome of a vision of England. Stow-on-the-Wold is in the heart of the Cotswolds: a lovely looking town full of antique dealers and – in good times – would-be weekend cottagers staring longingly into the estate agents’ windows.

Its market square is particularly exquisite, hardly changed since Victoria was on the throne. And for one day only, when I arrived, it sounded much the same too. There were few cars, and the loudest noise was the clip-clop of horses’ hooves.

And that is very strange, because it’s the day of Stow Fair, which has marked the feast of St Philip and St James since 1476. The joint ought to be jumping, the shopkeepers raking in the cash. Instead Stow is cowering.

The pubs and shops are mostly shut and shuttered. Even the Tourist Information Office is closed. The Co-op is open, but with burly security men half-blocking the aisles. The Royalist Hotel (established 947 AD, “the oldest inn in England”) must have coped with the Conqueror, the Black Death, Cromwell, Napoleon and Hitler. But Stow Fair is too much. Door locked.

Among Stow’s slices of history are the town stocks which were used, says a notice, for “villains and knaves and drunks and hooligans and foreign folk of unsavoury appearance”. Or, to put that another way, gypsies.

For this is no ordinary fair: it is a horse fair. Travellers from across the country converge on Stow every May (and again in October) to show off, race and occasionally sell the sturdy piebalds and skewbalds known as gypsy cobs. And to display themselves.

Gorgios – the muggles who inhabit the world of fixed homes and conventional values – are not unwelcome. Indeed the main gathering on the gypsy calendar, Appleby Fair in Westmorland (being held this weekend), is a Lake District tourist attraction. But Stow recoils from its visitors with righteous horror. Astonishingly few of the thousands at the fair appeared to be non-travellers. And Stowites were nowhere to be seen.

The teenage girls who marched through the streets were emphatically not local. They were dressed, on a damp spring day, for a night’s clubbing: skimpy tops, shorts in violent lime greens and flamingo pinks, and heels so high that Cotswold District Council would normally insist on planning permission. Gawping at them were groups of dark-skinned young men with spiky gelled hair, wearing what looked like expensive jeans. It was reminiscent of the passegiata, the mass constitutional that takes place each evening in every small town in Italy. This is not a custom that has much resonance in Stow.

Gypsy culture rests on attention to microscopic detail. The traditional caravans are gorgeously arrayed, inside and out. Several of the market stalls at the fair were selling crockery, all of it Orientally ornate. And the clothes stalls were extraordinary: furs for the women (“mink, fox, chinchilla, bit of rabbit, pussycat, you name it”); lavishly frilled dresses for pre-skimpy-top girls.

And yet travellers can be strangely oblivious to the macro-beauty of the places they visit. The fair now takes place in a huge field on the edge of town. By lunchtime almost every inch was covered in rubbish. It all gets cleaned up, I was assured, but here one gets close to the heart of the antipathy. Stow is pristine, to the point of being sanitised. It loves its history, but well-scrubbed. The horse fair is living history, and that’s too messy to contemplate.

“The fair may have been appropriate 500 years ago when all transport was by horses,” says antique dealer Antony Preston. “But now it’s a bit of an anachronism. No one wants to stop them holding the fair. But it may not be right for a small town.”

There was a stabbing a few years back, which put paid to the attendant funfair. There have clearly been cases of shoplifting. “There’s always a little bit more crime at this time of year,” says Preston. “I don’t know if it’s relevant, but it’s a funny coincidence. Small stuff: chicken-stealing, wood taken from sheds, that sort of thing.”

But the complaint that keeps recurring is about what the visitors do in neighbouring gardens. “Peeing?” I asked “Worse. The other thing,” I was told, with Stowish delicacy. I am not surprised by this, having spent a chunk of the day trying to find somewhere to go myself. There are no public toilets on the site and it’s 20p a pee (no change given) if you trudge into town unless you find the well-concealed Portaloos. This is absurd, and the blame would seem to be shared by the owners of the field and the council.

A group of travelling families bought the field after the fair was driven off the streets of Stow, a move that probably saved the event from oblivion. (The clip-clopping in town now comes from police horses.) Nonetheless, it is clearly struggling. “Today’s the worst it’s been for 10 years,” said Jim of Jim’s DVDs. And he blamed the owners not the recession. “They’re ruining it. They’re charging traders more rent for one day than Appleby does for five.”

He pointed into empty space in the middle distance. “See that dirt track. That’s normally full of stalls. And I know four stall-holders who’ve said they’re not coming back.”

The essential problem is that no one has a real sense of what Stow Fair should be about. The old horse auction that used to be its centrepiece has gone, and with no funfair, it is left as little more than a giant car boot sale, a biannual gathering of the clans and the travellers’ assertion of their rights against the snotty folk of Stow.

“We do no harm whatsoever,” said Johnny Birch (“Johnny the pegmaker king”). “But they’ve no done anything for us, so we don’t care about them and we look after ourselves.”

Yet it doesn’t have to be that way. In the words of Jim the DVD man: “We don’t just want it to be for travelling people. We want everyone to see the traditions of our life and then they won’t be so a-feared of us.”

The communities of the Cotswolds have been masterful at preserving the architectural fabric of their history. But there is almost nothing left of the ancient way of life. The Gypsies represent an amazing survival, an unbroken link with an ancient and mysterious past. In a country now obsessed by CCTV, DNA and GPS, with far too little MYOB, their life represents a greater affront than ever to convention and officialdom. I think we should cherish that. And Stow might sensibly be more Stowical about it.

matthew.engel@ft.com
Matthew Engel’s dispatch appears fortnightly

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Dispatch update

Good news – the closed-down Temple Bar Inn in Ewyas Harold, Herefordshire (April 25) has, to the astonishment of locals, suddenly reopened with new tenants. Maybe bad news – Sunday ferries to Stornoway in the Hebrides whose non-existence, I discovered (July 5 2008), was popular even with many irreligious locals, are to start shortly. The ferry company has been told their absence is a form of religious discrimination under the Equality Act.