In the late nineteenth century, opportunities for obtaining officially sanctioned credit expanded in the rural regions of the Ottoman Empire. Borrowers and lenders, mainly cultivators and merchants, had long used forward-purchase contracts to complete transactions of agricultural commodities, sometimes attaching privately owned urban property as collateral. However, controversial clauses in the Ottoman Land Code of 1858 legalized using agricultural land as collateral against debt. The Hamidian regime also created the Ottoman Agricultural Bank, the first state lending institution aimed at provincial cultivators and providing cash loans with land as collateral. This paper will explore the contestations around late Ottoman mortgage policy as well as the dynamics of mortgaging landed property in Syria during the Hamidian and CUP periods. Although they used language developed previously for privately held urban property, the clauses sanctioning mortgage of agricultural land in the Land Code were innovative and Ottoman jurists debated the potential social dynamics of this legal infrastructure extensively. These debates, informed by bureaucrats’ reports about credit practices in the provinces, provided the context for the founding of the Ottoman Agricultural Bank. Ottoman mortgage regulations and the Agricultural Bank opened the legal and institutional doors for producers to lose land over which they had only recently gained legal ownership. However, the same regulations rendered foreclosure complex and costly. This contested expression of the conflicting interests of borrowers, creditors and the Ottoman treasury was the legal and institutional context of rural finance inherited by colonial regimes in the twentieth century. To investigate the social context of these debates and regulations, the paper will turn to the district of Salt in Syria (contemporary Jordan), where the Sharia court and land administration were involved in sanctioning the use of agricultural land as collateral in exchange for cash credit. Imperial legislation provided a legal framework for producers like nomads, whose main fixed property was land, to use mortgage on the official credit market, including borrowing from the local branch of the Agricultural Bank. Mortgage also served to tie particular communities of small-holding agricultural producers more closely to particular merchant lenders, intensifying existing credit relationships. However, especially at times of environmental and political crisis, mortgage provided a route to crushing debt for some producers, if not landlessness. The paper will explore how these contradictions contributed to the slew of amendments to legislation on mortgage at the imperial level during the last years of Ottoman rule.

In the early 1900s, Egypt enjoyed the global reputation of a latter-day El Dorado. But in the spring of 1907, the financial bubble that had bolstered this moment of vaunted prosperity finally burst. Proclaiming the crisis that ensued to be a temporary corrective to the perilous excess of unscrupulous stock speculators, British officials promised that the sudden constriction of foreign capital flows would not harm the country’s peasant majority. Contrary to their confident pronouncements, however, the slump was not so quick to pass. And by February 1910, the Agricultural Bank that the British had established in 1902 to promote lending to peasant smallholders announced that a startling 40,000 of its roughly 250,000 clients were in default. Drawing together research from state archives in Britain and Egypt and several British bank archives, the opening section of this paper shows that the class character of the crisis was nearly the reverse of what British officials had predicted. By the end of 1907, several European banks had spotted opportunity in Egypt’s misfortune; profiting from the overall shortage of money, they began extending new loans to the wealthiest landowners at inflated interest rates. The country’s smallholders, meanwhile, were forced to employ a variety of desperate and risky strategies to retain their land. For a quarter century, the British had argued that improved access to mortgage credit would transform peasants into prosperous agrarian capitalists. Now, attributing the differential effects of the crisis not to class striations of the credit market but rather to innate and immutable characteristics of discrete social types, they determined that the only solution to the peasant’s woes was to sever his access to credit altogether. Building on this analysis of the crisis, the latter half of the paper reconsiders the form of economic nationalism that emerged prior to WWI. Critics of the British occupation could and did now argue that it was providing cover and support for foreign profiteering at the Egyptian public’s expense. But the protracted hardships of the crisis had also demonstrated that Egyptian landowners both great and small now depended on flows of foreign capital as much as water to sustain their livelihoods. Far more than a developmentalist concern with industrialization, it was the effort to resolve these contradictory entanglements of imperial finance that explains the wide appeal of calls for agricultural cooperation and national capital formation in these years.

In 1934, after years of drought and a worldwide economic depression that caused a slump in crop prices, matters had reached crisis proportions in Syria’s agricultural sector. Farmers, unable to pay their debts due to low yields and prices, found their crops, animals and lands seized by mandate authorities and put up for public auction. Pleas for a moratorium on debt went unheeded. To protest these policies, in September 1934, a group of farmers met in Damascus to demand the agricultural bank under the French mandate change its mode of operation. Mandate authorities remained intransigent. What was at stake in this stand-off and why had the situation become so intractable? Using bank records and accounts as well as correspondence from the Ottoman and French archives and Arabic periodicals from the period, this paper will explore the transformation of the agricultural bank from an Ottoman institution established in the late 1880s ostensibly to help farmers acquire the funds necessary to purchase certain agricultural necessities or invest in improvements and new technologies to an establishment at the heart of a financial crisis in 1930s French mandate Syria. It considers what this historical trajectory reveals about different imperial approaches to agrarian finance. Following the installation of the French mandate in 1920, French banks were eager to get involved in the mortgage business, but were unwilling to do so until certain aspects of Ottoman-era banking regulations, namely the status of property held as collateral and the bank’s ability to dispose of it, were redefined. Mandate officials were intent to oblige. Thus the region’s agricultural banks, having had most of their capital and records carted off to Anatolia when the Ottoman army withdrew at the end of World War I, underwent a period of reorganization in the 1920s before being reopened with a modified scope. By examining the agricultural bank’s various sources of capital during the Ottoman and mandate periods as well as its changing processes for loan-making this paper will present a comparison of Ottoman and French approaches to managing agrarian credit in the region. It argues that these two empires had distinctly different priorities when it came to lending practices and the ways in which collateral was held, leading to divergent loan collection policies and consequences which culminated in the crisis of the 1930s.

This paper extends the analysis of credit and the emergence of capitalism in Palestine, and the tensions and contradictions that accompanied them, to the British Mandate period. As several pathbreaking studies of the Ottoman era have demonstrated, early capitalism – and particularly credit in the form of moneylending (including via devices such as forward-purchase contracts) – played a central role in shaping modern Palestinian society, increasing class stratification and altering the social bonds between agrarian producers and the rising stratum of merchant-creditors that utilized usury as a means of capital formation and accumulation. The study of capitalism and the role of credit within Arab society have received less attention during the period of the British Mandate. British rule was built on paradoxical foundations. Colonial administrators sought to modernize and improve what they perceived to be deficient Arab agricultural practice while conserving the rural social hierarchy and the restraining influence of elites. Instead of bolstering stability and building prosperity, however, the British regime’s zeal for rural tax collection, among other deleterious policies, destabilized and impoverished much of Arab society. Credit became a kind of Gordian knot. Without affordable credit any improvement of the peasant majority’s condition was unlikely and any move from extensive to intensive agriculture (i.e. “modernization”) was impossible. Yet here the liberal agenda of agrarian “improvement” foundered, as the interwar empire was both loath to assume financial obligations related to providing non-usurious credit and chary of undermining the conservative social power of the merchant elite. With Jewish colonization and Arab landlessness both advancing apace under the Mandatory regime, credit became a live wire within Palestinian society. The Palestinian national movement occasionally demanded access to affordable credit while at the same time its wealthy members seemed to alter their own moneylending practices little. Peasants pled for affordable credit in meetings with state officials and by the 1930s their simmering class discontents sometimes spilled across the pages of the press. When the Palestinians rose in revolt in 1936, the class tensions underlying Arab society broke forth and peasants turned the tables on elites, first compelling them to bankroll the movement and eventually raising the flag of social revolution and banning debt collection in 1938. This paper tracks these developments and limns the socio-political importance of credit relations, and their multiple institutional and political contexts, in Palestinian society and history between 1919 and 1939.