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'Portfolio Capitalism’ and the Ottoman Empire

Session V-06, 2022 Annual Meeting

On Friday, December 2 at 1:30 pm

Panel Description
In a classic article published in 1988, Sanjay Subrahmanyam and C.A. Bayly identified a strata of figures operating in early modern India whom they called “portfolio capitalists.” The typology of the portfolio capitalist was intended to counter the entrenched idea that regional merchants were fundamentally apolitical creatures, living precariously at the mercy of rapacious rulers and apathetic towards the acquisition of state power. As a retort, Subrahmanyam and Bayly delineated the careers of a variety of figures who straddled the commercial and political realms between roughly 1580 to 1750, and who combined ‘portfolios’ in revenue collection, long-distance trade, and kingmaking. Integral to this narrative was a notion of the political and mercantile spheres as both polycentric and fungible, characteristics which portfolio capitalists were able to exploit to their advantage. The onset of colonial rule, however, hardened the divide between the political and mercantile spheres, thus depriving portfolio capitalists of their share in sovereign power and reducing them to a strictly merchant class. Even so, more recently, the notion of portfolio capitalism has been extended into the nineteenth century to show how portfolio capitalists persisted in parts of South Asia into the 1830s. This panel tests the relevance of portfolio capitalism in the Ottoman Empire from the seventeenth to early twentieth centuries, and asks whether it might serve as a useful paradigm for reframing the nexus between politics and the economy in the Ottoman context. In contrast to the narrative that asserts a strict bifurcation between commercial and bureaucratic power in this period, these papers show that portfolio capitalism supplies a pretext for demonstrating the porousness of these two spheres. As the papers in this panel demonstrate, not only did non-Muslim (and non-Ottoman) merchants exercise a degree of political authority at the local and imperial level, but Muslim bureaucrats likewise pivoted between their official functions and the world of trade. The Ottoman state also outsourced financial operations to foreign merchants, and utilized tax farming to incorporate diverse constituencies into the governing system. The concept of portfolio capitalism is also worth considering in the Ottoman context in light of the long-standing assertion by economic historians of the failures of the Ottoman state to implement mercantilist policies or to consistently promote industrialization. At the same time, however, portfolio capitalism permits us to test whether the permeability of the political and the economic spheres became progressively narrower with the introduction of new Ottoman legal codes and international financial control after 1876. But as some papers here show, 'liberal' institutions or economic policies were not a precondition for the continued porousness of the political realm until the end of empire.
  • In the 1870s and 1880s, well-to-do merchants in Ottoman Thrace and Macedonia acted as creditors for increasingly cash-strapped but market-oriented cultivators while modest merchants traded credit amongst themselves through personal loans and bills of exchange. Many of these transactions had by then become integrated into modern commercial law embodied in Ottoman codebooks such as the Commercial Procedures of 1861. The standardization of commercial law over the course of the nineteenth century had created a separate specialized field of knowledge that merchants, creditors, and legal professionals needed to come to terms with in order to accumulate capital and expand their market networks. With the establishment of the Régie Company — the monopoly-holder over tobacco sales and cigarette production from 1883 onwards — tobacco merchants were obligated to adhere to Régie policy for cultivating, transporting, and selling their tobacco. At least that was the theory. However, some merchants continued to mobilize resources and relationships in an effort to circumvent the stipulations of the Régie and continue benefitting extensively from the tobacco trade. Portfolio capitalism was conceptually born out of historiographical debates over the economic legacies of Mughal India. The originators of the term used it to dispel the alleged division between the commercial and political realms in early modern South Asia. In the very different context of the late Ottoman Empire, following decades of reform, Ottoman merchants were supposedly relegated to an apolitical status and the specialization of commercial law created distinct ‘legal’ professions. However, the historical examples analyzed in this paper demonstrate that this separation provided the most industrious tobacco merchants with a framework for confronting the Régie Company as a political force within the context of commercial law. In particular, a number of merchants maintained robust commercial portfolios in part thanks to their own legal expertise and their personal networks within the provincial administration. At the same time, legal experts could work in tandem with international financial bodies like the Régie or on behalf of the customs office to force merchants into submission and thereby advance the agenda of the Ottoman Empire’s international creditors and the policy goals of the Sublime Porte. By analyzing the commercial entrepreneurship and legal expertise of these merchants, this paper seeks to utilize portfolio capitalism to generate new understandings of political economy in late nineteenth-century Ottoman Thrace and Macedonia.
  • From his office in Istanbul in the late seventeenth century, the English merchant Peter Whitcomb orchestrated a vast financial network, sending bills of exchange to Ottoman officials in Aleppo, Baghdad, Beirut, Crete, Cyprus, Edirne, Thessaloniki, and Tunis and painstakingly recording his transactions in an Ottoman letter book. His bills of exchange, like those of other English merchants, transferred tax revenue to the central Ottoman treasury in Istanbul and provided short-term financing at a high rate of interest to local officials. Other English merchants in the Ottoman Empire also supplemented their trade through service to the Ottoman state. They swapped tax-farming shares contributing to a secondary market in Ottoman state debt, imported currency that served a legal tender, and provisioned Ottoman troops with food, weapons, and gunpowder. The enterprise of British merchants in the shadow of the Ottoman state prompts us to consider where the division between commercial and political power lay in the early modern Ottoman Empire. In their role as fiscal agents, English merchants could be compared to other agents in the early modern world like the famed “portfolio capitalists” of South Asia. These “portfolio capitalists” were large-scale entrepreneurs who farmed state revenues, participated in commerce, and supplied military resources. Like these merchants, English merchants in the Ottoman Empire moved smoothly between the world of commerce and the world of state finance. Unlike the “portfolio capitalists,” however, English merchants’ financial activities did not translate into considerable political sway. In asking why, this paper confronts the structure of state finance in the early modern Ottoman Empire. It reveals the capacity of Ottoman outsourcing and the power of the Ottoman credit system tied to tax farming to reconcile divergent interests through bonds of reciprocal obligation even during the tense political period of the late seventeenth century.
  • According to the Ottoman newspapers of Istanbul, on April 4, 1877, one of the most well-known bankers of the capital, Christos (also known as Christakis) Zografos started a trip with his family to a number of European cities including Napoli, Rome, and London. He had resigned from his position as a deputy in the Ottoman parliament where he had been elected after a series of protests by the Ottoman Greek community regarding the number of deputies allocated to represent it. At the same time, another well-known Ottoman Greek banker, Georgios Zarifis, was one of the closest consultants for the recently enthroned Abdulhamid II. Zarifis was one of Sultan’s personal financiers and met with him almost daily during a time of severe economic needs for the Ottoman Empire. The High Porte had to finance its impending war against the Russians though it had declared a default in 1875. Despite such references in primary sources, it is unclear how prominent members of the Ottoman Greek community navigated the rapidly changing political landscape of the first Ottoman constitutional period. Although there are quite a lot of studies on the politics of the imperial elite and the intellectuals of Ottomanism, we do not really know how these ideas were put into practice by members of the Ottoman public who did not have formal access to decision making. In my paper, I present the diverging approaches of Zografos and Zarifis toward the parliamentary experimentations of the High Porte and I explain how both, one fully embracing them and the other keeping its distance, belong to the spectrum of political strategies that can be described as Ottomanism. For my analysis, I focus on their political and economic activities to more accurately represent their strategies, while their relationship with previous Ottoman rulers (Abdülaziz, Murat V) and the kingdom of Greece are taken into consideration. Overall, I argue that significant portions of Ottoman society had interests in the survival of the empire without agreeing whether liberal institutions were necessary for this to happen. The fierce debates occurring in the Ottoman public sphere also reveal the eagerness of the public to use the newly granted political freedoms to articulate its thoughts on the future of the empire.