Ch. HADJIIOSSIF & S. PETMEZAS (eds.

) Credit Activities in Eastern Mediterranean : Economic

and Social Aspects, ca. 1750-1920, Heracleion (forthcoming).

STRUCTURE AND FUNCTION OF REGIONAL CREDIT MARKETS IN THE OTTOMAN

EUROPE : THE CASE OF THE PROTO-INDUSTRIAL EASTERN THESSALY
(CA.1750-1840)

Socrates D. PETMEZAS

Introduction
The structure and function of credit (and capital) markets is seldom studied in
the pre-Tanzimat period, usually because scholars lack adequate quantifiable data and
sometimes because the existing documentation is too fragmentary and spread in time and
space, so as to make research irksome and any meaningful conclusion doubtful. I have
chosen to concentrate on one area and time period, Eastern Thessaly during the
relatively short period of its proto-industrial prosperity (ca.1750-1840), because
quantifiable data on a specific credit market and relevant activities were available and
because additional necessary information on capital markets could be obtained from
various other sources. I shall begin by concentrating on the credit nexus that solidly
linked together local small-owners and merchant-notables. I will then try to show what
little we know about the various capital markets that financed tax farming, production
and trade in the Empire. In fact, capital mobilisation and production was dependant on
flexible credit networks. Finally, the structure and function of relatively sophisticated
local credit markets in an active and expanding proto-industrial area will be examined,
using the example of the communal debt market of the township of Zagora. Communal
administration and the management of local corporate bodies were closely related to and
influenced by credit activities. In short, proto-industrial Eastern Thessaly can serve as an
exemplary case for the study of the structure and function of local credit and capital
market.
 What do we know about ottoman regional credit markets?
Actually very little is known about regional credit and credit markets in the late-
modern Ottoman heartland (ca. 1650-1850). The earlier historiography insisted on the 1

role of credit as a means of exploitation of peasants and artisans by the state elite and
merchants. Credit was the unequivocal means of land alienation and social degradation of
the debtor. Its use was mostly destined to provide for the necessary consumption and
taxation of the poorer strata or for the luxuries and military requirements of the
“declining” military elite. The relative lack of capital and the overshadowing power of the
ottoman askarî and the sarraf, imposed high (“usurious”) interest rates on the
impoverished peasantry and labouring urban poor . No one can doubt, of course, the
2

fact that indebtedness was one of the prime reasons for peasant land expropriation . The 3

communal notables of the prosperous towns and villages of the proto-industrial Eastern
Thessaly went to great lengths to make sure that their commune was not excessively
indebted to Muslim lord or sarraf. One has, nevertheless, to make sure that this
overwhelming reality does not obscure the other functions of credit. Bistra Cvetkova
herself pointed out that the “conquering” orthodox Balkan merchant class made good
use of the (industrial and commercial) credit opportunities to reinforce its position. But
she did not provide any other information as to the specificities of such an industrial and
commercial credit market.
Recent research has pointed out that, contrary to the pre-existent view, credit
institutions and a mercantile mentality were never absent from or, at least, were not

1 A representative example is B. CVETKOVA, “Le crédit dans les Balkans, XVIe-XVIIe siècles”, in
J.-L. BACQUÉ-GRAMMONT and P. DUMONT (eds.), Contributions à l'Histoire économique et sociale de l'Empire
ottoman, Paris 1983, p.299-308.
2
This is not only a particularity of the Ottoman historiography. Gérard BEAUR, “Foncier et crédit
dans les sociétés préindustrielles. Des liens solides ou des chaînes fragiles ?”, Annales, E.S.C., 49/6 (1994),
p.1411-1428, has recently reminded us that “credit” is seen as the prime mover for “land concentration” in
Modern France.
3
See S. ASDRACHAS, “Η Ελληνική Οικονοµία κατά τον ιη’ αιώνα: οι Μηχανισµοί”, Ελληνική
Κοινωνία και Οικονοµία, Athens 1982, p.9, and B. Mc GOWAN, The Economic Life of Ottoman Europe, Cambridge
1981, p.62-73. This process of land expropriation did not only involve ottoman landlords and reaya, but
Christian landowners and small-owners in areas without Muslim presence, as in 17th century Naxos studied
by A. KASDAGLI, Land and marriage settlements in the Aegean. A case-study of 17 century Naxos, Venice 1999,
th

p.315.

2
under-developed, in the Ottoman heartland in the late modern era . Jennings, using the
4

kadi sicilleri of early 17 century Kayseri , was the first to describe an extremely
th 5

individualistic, small-scale and “unsophisticated” regional credit structure, where credit

activities were widespread (and perfectly legal and legitimised) among almost all 6

population strata, irrespective of their religious beliefs. Muslims, uninhibited by the

formal Koran interdiction of interest (riba) , were imbued with a mentality as mercantile
7

as that of Christians in 17 century Anatolia or elsewhere in early Modern Europe. What

th

is astonishing though in this picture is the absence of any major moneylender. Even the
numerous cash-vakıfs were engaged in “once-only” credit operations. A few years later,
Haïm Gerber was to show that, in the larger and more industrially dynamic urban centre
of Bursa, there were actually rich and powerful money-lenders who had a prominent
position in this credit market, although he did not imply that this was an oligopolistic
market, where the few large money lenders dominated the credit market . This 8

oligopolistic domination in regional credit markets is implicitly or explicitly documented

in Ottoman Greece. On the 17 century island of Naxos , the 18 century island of
th 9 th

4 Cf. R.C. JENNINGS, “Loans and credit in early 17th century ottoman judicial records”, Journal of
Economic and Social History of the Orient, 16 (1973), p.168-216 ; H. GERBER, “Jews and Money-lending in the
Ottoman Empire”, Jewish Quarterly Review, 52 (1981), p.100-118 ; E. ELDEM, “Banque et crédit dans
l’empire ottoman : bref aperçu historique”, in J. THOBIE and S. KANÇAL (eds.), Système bancaire turc et réseaux
financiers internationaux, Paris 1995, p.3-10 ; S. PAMUK, A Monetary History of the Ottoman Empire, Cambridge
2000, p.78.
5 Cf. JENNINGS, op. cit.

6
I will not enter into the debate on Islamic and Ottoman mental and legal-religious attitudes
towards interest or the question of circumventing stratagems used to “legalise” interest taking. See
N. ÇAGATAY, “Riba and interest concept and banking in the Ottoman Empire”, Studia Islamica, 32 (1970)
p.54-78 ; IDEM, “Osmanli İmparatorluğunda Rıba-Faiz Konuşu”, Vakıflar Dergisi, Ankara, 9 (1971), p.39-
56 ; J.E. MANDAVILLE, “Usurious Piety : The Cash Waqf controversy in the ottoman empire”, International
Journal of Middle East Studies, 10 (1979), p.298-308 ; Ö.L. BARKAN, “Caractère religieux et caractère séculier
des institutions ottomans”, BACQUÉ-GRAMMONT, J.-L. and DUMONT, p.(eds.) op. cit., p.11-58 ;
M. ÇIZAKÇA, “Cash-Waqfs in Bursa, 1555-1823”, Journal of the Economic and Social History of the Orient, 39/3
(1995), p.313-354 and PAMUK, op. cit., p.77-82.
7
On the earlier implied negative repercussions of riba interdiction in the development of
capitalism and modernity in the Ottoman Orient, see N. ÇAGATAY’s contributions in note 6.
8 Cf. GERBER, Economy and Society in an Ottoman City : Bursa, 1600-1700, Jerusalem 1988, p.140-142.

9
In 17th century Naxos, credit relations as depicted in notary deeds show an urban population
where credit operations were relatively spread and might have involved relatively important sums of money

3
Paros and the early 19 century mountainous kaza of Karytaina in Morea , merchant-
10 th 11

financiers and notables, themselves merchants and landowners, dominated the local
credit markets.
Ιn the highly commercialised regional economy of late 18 century Eastern th

Thessaly as well, credit relations were present in every form of economic activity. Small
owners were indebted to merchants, who themselves depended on sarrafs and other
financiers, while complex credit and capital schemes were used to mobilise capital and
skills in mercantile and industrial activities. Money and capital investment took many
forms. Among them, the use of commercial paper produced in the process of tax
farming and tax collection was widespread. Side by side on the diversified local market of
communal debt, other markets were at work. What was most widespread and difficult to
pinpoint was that of small-scale year-round money lending, the credit nexus that secured
merchant dominance over the local agricultural and artisan production and reinforced the
political prestige of communal notable families.

and pledged collaterals (KASDAGLI, op. cit., p.60), while in the case of the rural hinterland they certainly
involved modest amounts and the overwhelming power of the landlords over the sharecroppers made
juridical confirmation unnecessary, although peasant indebtedness was widespread. To show how pervasive
credit relations were in urban areas, suffice it to say that one out of three testaments include provisions for
the payment of the testator’s debts (ibidem, p.207).
10 Cf. E. ZEI, “Το ακίνητο και το χρέος στη Πάρο, 18ος-19ος αιώνας. Ανάµεσα στο κοινό και το

ιδιωτικό”, Historica, Athens, 13/23-24 (1996), p.67-84. In the case of the large, agriculturally affluent, early
18th century island of Paros, land was an rapidly circulating good. Land also changed hands because of
inheritance, dowries or land exchange aiming at farm consolidation, as in Zagora on Mount Pelion. Two
out of three surviving notary deeds are related to the sale of land and other patrimonial assets. The interest
rate is “included” in the capital in cases of long-term debt : 5 years when the collateral (emanet) was a
mobile good, 10-years for an urban real estate and 15-years for land. Sometimes the free use of the
collateral substituted for the interest rate. Indebted small-owners (ibidem, p.75) were those who
predominantly sold their land, while the few known notable and landowning families were the buyers of
urban properties (ibidem, p.70). The latter sold their land, usually as a form of transferring the full
ownership of land to their sons-in-law instead of a dowry (ibidem, p.72). A substantial part of indebtedness
and real estate sale and/or transfer was related to the practices of dowry, something we do not necessarily
discern in the siccil or notary deeds. Those in command of disposable capital were the large landowners and
the monasteries and other corporate bodies (ibidem, p.80).
11 Cf. K. GARDIKA, “∆ανεισµός και φορολογία στα χωριά της Καρύταινας, 1817-1821”, ∆ελτίο του

Κέντρου Ερεύνης της Ιστορίας του Νεώτερου Ελληνισµού, I, Athens 1998, p.67-80.

4
 The credit nexus: merchants and notables as economic
patrons
It is clearly documented that the local grocer (bakkal) was the “ideal” petty
moneylender in early 19 Milies, as he was in late 19 century Rapsani. In both cases he
th th

provided short-term credit (or loans in kind) to the petty cultivators and producers and
was disbursed (in cash or kind) after the harvest of the major local cash crops . What 12

makes the case of early 19 century Milies interesting, is that this grocer was part of an
th

extensive credit network under the control of the Philippidis Commercial House. The
individual producer had access to credit in kind offered by the grocer , and could also 13

borrow, in cash, to pay his part of the communal fiscal contributions. He paid it back in
cash or kind (usually in silk) at the end of the year. In 1804-1809, at least 60 small-owners
were thus permanently indebted to Arghyris Philippidis , who at that time also served as
14

the communal treasurer . In July 1806 he had thus collected 150 okkas of silk, of a value
15

of 3.134 kuruş (at 21 kuruş per okka). All but four of the sellers offered less than 5 okkas
(an average of 2,5 okka per person). However just three of them had given between them
more than 44% of the total. They were probably intermediaries who worked for
Philippidis or were indebted to him. Most peasants were permanently indebted to
Philippidis, like John son of Argyris (see Table 1). He was modestly indebted to
Philippidis, who paid his taxes and offered him credit when necessary. The exact interest
rate, when it can be calculated as in 1807, was 13%. In the five years for which we have
information, he had to sell the silk he produced to Philippidis to cover his debt. He never
fully redeemed his debt although he sold increasing quantities of silk at rising prices. On

12 Cf. E. BOURNOVA, “Le village et le marchand le cas de Rapsani”, in G. DERTILIS, (ed.)

Banquiers, usuriers et paysans. Réseaux de crédit et stratégies du capital en Grèce (1780-1930), Paris 1988, p.105-117.
13
Cf. Milies Municipal Library, series of Registers of Commercial Correspondence and Credit
Transactions of the Philippidis family for the years 1804-1809, Code of Credit Transactions II, f.12r.
14
Arghyris Philippidis was a member of a prominent family of notables, merchant-financiers,
intellectuals and politicians. He lived in the small township of Milies and acted as kocabaşı, tax-farmer,
moneylender, merchant, etc. He is also the author of a Regional Geography (Γεωγραφία Μερική written in
1815) and of a Book of Moral Conduct. Contrary to his cousin, the archediacre Daniel Philippides, the
celebrated co-author of the renovating Modern Geography (Γεωγραφία Νεωτερική, published in 1791), he was
not a progressive homme des Lumières. On the contrary his views and morals were those of a prosperous and
conservative member of the Greek-Orthodox notability.
15
Cf. Milies Municipal Library, series of Registers of Commercial Correspondence and Credit

5
the other hand, in spite of temporary high indebtedness as in the difficult year 1810, his
debt did not soar, but fluctuated, below the sum of 20 kuruş. The Philippidis family was
thus able to capture a part of the local silk production . But they did so by paying the
16

producers the local “market” price of silk, which rose well above the rate of kuruş
devaluation in 1804-1809. Peasants were vulnerable but they were not powerless . 17

Christian moneylenders in Eastern Thessaly seem to have been mainly concerned with
“financing” (directly or through intermediaries) cash crop production in anticipation of
profits from price differences. In that sense, moneylenders controlled the distribution of
the product but they did not control the producers themselves.

Transactions of the Philippidis family for the years 1804-1809, Code of Credit Transactions II, passim.
16
The Phlilippidis family has been engaged in silk exports since 1775, exporting silk to the
Chiotan silk industries, cf. Milies Municipal Library, series of Registers of Commercial Correspondence and
Credit Transactions of the Philippidis family for the years 1804-1809, Code of Commercial Correspondence
I, f.1r. Arghyris Philippidis, accused of mismanagement of communal finances, was obliged to leave his
native village and after a long tour of lowland Thessaly seek refuge in his protector valide Sultan in
Constantinople, where he wrote his Regional Geography (in 1815) and Book of Moral Conduct (in 1817). His real
political power should not be seen as an unchallenged monopolistic position.
17 It is doubtful if Greek producers were ever constrained to accept relations of dependence akin

to those of Latin-American peones that gave rise to the paradigm of clientalistic patronage as the basis of
economic exploitation and party politics. The use of credit (and “usurious money lending”) as a means of
imposing relations of economic dependence on producers and commercial intermediaries has been
extensively underlined and was transformed into a major explicatory variable in Modern Greek
historiography. In a society of small-owners and independent producers, chronic indebtedness is seen as
the major mechanism of surplus extraction and land alienation. At the same time in such diffuse traditional
societies, where class differences were supposedly marginal or obliterated because of the illusion of
proprietor’s egalitarianism, political groups and social strata were formed upon a “vertical segmentation” of
the social corps (and political groupings were based on “personal” clientalistic loyalties), instead of a
“horizontal segmentation” (grouping based on class antagonism). Political factional strife substituted for
class struggle, thus explaining the absence of class politics in Modern Balkans and in contemporary Greece.
Furthermore, it is thought that “asymmetric” credit relations between communal notables and the poorer
members of the population were the building bricks of hierarchic pyramids of political clientalism in
Balkan provinces and Greece, see G. DERTILIS, “Réseau de crédit et stratégies du capital”, in IDEM, (ed.),
Banquiers, usuriers…, p.33-41. For a differentiation between relations of political patronage and relations of
economic paternalism, see E. PAPATAXIARCHIS, “Εισαγωγή : πολιτική και αγροτικές σχηµατισµός στη
νεοελληνική κοινωνία”, in Κοινότητα, Κοινωνία και Ιδεολογία. Ο Κ .Καραβίδας και η bροβληµατική των Κοινωνικών
Εbιστηµών, Athens 1990, p.135-169.

6
 Table 1. The indebtedness of a small-owner in Milies, 1806-1811
debt of Yannis Argyrakis to Arghyris debit credit estimated
Philippidis interest rate
kuruş kuruş okka price
debt left in 1806 17,80
fiscal contribution paid 55,68
interest in 1807 8,05 81,53 11%
silk given in 1807 24,50 1,28 19,22
debt left in 1807 57,03
interest in 1808 7,50 64,53 13%
silk given in 1808 54,95 2,35 23,38
debt left in 1808 9,58
interest in 1809 1,3 14%
fiscal contribution paid 50
debt of his brother Stathis 15 75,88
silk given in 1809 61,75 2 30,88
debt left in 1809 14,13
new loan 30
interest in 1810 6,6 15%
payment of bedeat-i harir 6,53
payment of head tax (2 tickets) 12,5
new loan 16,73
fiscal contribution paid 50 136,49
silk given in 1810 99,38 2,825 35,18
debt left in 1810 37,11
payment of head tax (2 tickets) 15
payment of arrears owed to the commune 22,55
fiscal contribution paid 42,5
fiscal contribution paid 11,25
new loan 14
interest in 1811 7,5 149,91 15%
silk given in 1811 131,5 5,05 26,04
debt left in 1811 18,41

Credit to customers by local grocers was the standard way of conducting business
elsewhere as well. We have a relatively detailed example of the accounts of a grocery
(αργαστήρι) in Constantinople in the years 1811 and 1812 . The shop was “owned” by a 18

company of two partners, Hadji-Panayiotis and Hadji-Nikolas, and every year it was
financed in “capital” (sermaye) by a group of capitalists, which included the two partners
and other shareholders (Hadji-Nicolas’ sons and probably those involved in the
management). On April 25, 1911, and on April 7, 1812, the accounts were audited and
the net profit divided among the shareholders (see Table 2). The rate of profit was 19%
and 15% annually . The annual inventory has shown assets of 22.341 and 27.618 kuruş
19

18 Cf. V. KREMMYDAS, Αρχείο Χατζηbαναγιώτη, τ.Α’ Αρχείο Χατζηbαναγιώτη-Πολίτη, Athens 1973,

p.108-110 and 180-197. On εργαστήρια see IDEM, Εµbορικές bρακτικές στο τέλος της Τουρκοκρατίας. Μυκονιάτες
έµbοροι και bλοιοκτήτες, Athens 1993, p.28-33.
19
In the local grocery of Prastos, where Hadjipanayitis lived, KREMMYDAS (Αρχείο

7
respectively, of which short-term credit to the almost exclusively Muslim buyers was 87%
and 74% respectively! The grocery seemed to flourish, without facing any pressure from
this incredibly high percentage of short-term debits to a large number of clients: 122 (on
average 183 kuruş each) and 99 (on average 213 kuruş each) persons respectively. In 1812
less than 5% of the previous year’s credits were considered as a loss (χασούρα). Credit
relations were thus really stemming from everyday small-scale local transactions and
merchants and grocers were in the centre of a multitude of such relations.
Table 2. The annual accounts of a grocery in Istanbul (1811 and 1812)
in kuruş 1810-1811 1811-1812
In cash 112 0,4% 2.595,00 8,7%
In merchandise 220 0,9% 1.931,00 6,4%
In credit open to clients 22.332 87,1% 22.125,50 73,8%
given to shareholders in anticipation 2.978 11,6% 3.319,78 11,1%
Income 25.641 100,0% 29.971 100,0%
Outlays of capital 17.322 67,6% 15.738,00 52,5%
of "mercantile activity" 5.928,00 19,8%
Discounts 4.720 18,4% 5.474,75 18,3%
debt servicing 300 1,2% 477,00 1,6%
Expenses 22.341 87,1% 27.618 92,1%
profit or loss 3.300 12,9% 2.354 7,9%
% profit to capital 19% 15%

The general framework of tax-farming: opportunity or

impediment to the growth of credit markets?
It has also been argued that throughout the 17 and 18 centuries the privileged
th th

state elite had been increasingly involved in money lending and tax-farming activities, at
20

the expense of other groups, such as Jewish merchants and financiers . In fact, tax 21

farming (both on the level of central state and on the level of provincial treasuries) is
universally acknowledged as the major destination of disposable money (e.g. credit) in the
Ottoman Empire, thanks to the high interest rates and the political leverage it procured . 22

Χατζηbαναγιώτη…, p.108-109) has calculated a rate of profit as high as 44%.

20
Very few things are actually known about these moneylenders and their credit practices, other
than the fact that many of them were ulema or had an official askarî status (PAMUK, op. cit., p.80).
21 Cf. H. GERBER, “Jews tax-farmers in the Ottoman Empire”, Journal of Turkish Studies, 10 (1986),

p.154.
22
The earlier negative assessment by historians of the role of short-term (iltizam) and life-long
(malikâne) tax leases, as harbingers of economic and imperial decline, is now substituted by a more balanced
evaluation as contingent and adapted forms of improved fiscal administration, power legitimisation and

8
The Ottoman state was strong enough to use currency debasement, policies of
confiscation and an increase in the level of taxation in order to avoid direct indebtedness.
It had repeatedly used tax-farming (a politically-risky business) as its major and
sometimes only means of rapid anticipation of additional income and, as a result, tax 23

farming activities crowded-out capital from other productive uses, kept the interest rate
at a relatively high level, inhibited the creation of specialised credit institutions (banking)
and, finally, large-scale credit operations and agents were permanently linked to the
patrimonial power structure of the imperial administration . 24

In effect tax-farming activities evolved, during the 18 and early 19 century, in

th th

such a way (through the malikâne and esham systems) that they began to offer convenient
investment opportunities to a large scope of relatively prosperous ottomans, of every
religious confession . They also unintentionally produced a large quantity of “commercial
25

elite expansion (through the incorporation of the provincial notables into the state elite), cf. A. SALZMANN,
“An Ancien Régime Revisited: ‘Privatization’ and Political Economy in the 18th century Ottoman Empire”,
Politics and Society, 21/4 (1993), p.393-423, and L. DARLING, Revenue-Raising and Legitimacy. Tax Collection and
Finance Administration in the Ottoman Empire, 1560-1660, Leiden 1996.
23 Cf. GERBER, “Jews tax-farmers…”. p.144-145.

24
Cf. E. ELDEM, A History of the Ottoman Bank, Istanbul 1999, p.16-18. This is certainly verified in
the case of the late 18th century proto-industrial town of Ayia, where the companies producing red cotton
yarn for export, were routinely complaining about the high interest rate of the market (10%-12% and
sometimes more). In spite of their success in central European markets, high interest rates constituted a
real headache for these merchants, see M. STAMATOYIANNOPOULOS, Société rurale et Industrie textile : le cas
d'Ayia en Thessalie ottomane (1780-1810), unpublished Ph.D., E.H.E.S.S. Paris.1984, p.159-160.
25
Cf. A. SALZMANN, Measures of Empire. Tax-farmers and the Ottoman Ancien Regime, 1695-1807,
unpublished Ph.D., Columbia University, 1995, p.147-171 and 198-208, and M. ÇIZAKÇA, A Comparative
Evolution of Business Partnerships. The Islamic World and Europe, with specific reference to the Ottoman Archives, Leiden
1996, p.159-189. The esham tax-farming system has also produced a lucrative credit market for secure long-
term investment. Arghyris PHILIPPIDES (Τα bερισωθέντα έργα του Αργύρη Φιλιbbίδη. Μερική Γεωγραφία -
Βιβλίον Ηθικόν, Athens 1978, p.122), referring to Larissa (ottoman Yenişehir-i Fener) says : « The Jews of
the upper [“first”] class are money-changers [sarrafs] and thus they prosper, because all the imperial taxes
and levies of this province, as well as those of lands south of Larissa, are auctioned here [περνούν από δώ].
And they “take” them and offer against them very long-term bills of exchange [police]. They have also
partners in Constantinople who farm esham [ελτζήµια] and other [kinds of promissory notes] and sell them
at great profit. This occupation of moneychanger used to be held by Christians (in Larissa). But it gradually
fell into the hands of the Jews; this cruel nation [γένος] of humanity ». In this case we can almost talk of an
investment in long term public bonds, offered to the local owners of capital and savings. I have been
unable to locate the manuscript and examine the original spript but I believe that Th. Sperantzas, editor of
9
bills” and “promissory notes” (havale and tahvilat) that soared money circulation and
facilitated financial and commercial transactions. The rich provincial elite (ayan and
kocabaşı) routinely sought after such bills and notes, which provided a convenient means
of payment. The routine use of promissory notes (tahvil) as means of payment, along with
cash of any kind, is reconfirmed in the accounts of the small proto-industrial
mountainous township of Zagora. In the 1760s, the town notables would buy from
ottoman notables and askari, with whom they were on good terms, tahvilat promising
payment from tax-collection and use them to pay in instalments (taksit) part of their debt
to the Jewish moneylenders in Larissa. This kind of quasi-M3 money was used without
any kind of inhibition although sometimes the notables had to wait until the tahvil note
matured.
The secondary sub-contractors market of tax farming was very important and
widely used by both Muslim and Christian notables. In the late 18 century many cases
th

of Christian tax (sub)-farmers are attested, and offer more or less the same
characteristics. Merchants and other capitalists (an extremely convenient and literally
accurate term) were of course directly or indirectly involved in these activities. Local
notables or people associated with them were also prominent among Christian tax-
farming associations . Notables acting as sub-contractors assured the rapid and
26

unimpeded collection of taxes, due to the concrete knowledge of the locality and their
social prestige and influence . Political protection permitted them to overcome the
27

competition of local Muslim notables and other Christian merchants in the tax (sub)-

the manuscript, was most probably mistaken in reading “ελτζήµια” instead of the correct “εσχάµια”.
26
This is what happened in the known cases of the isle of Aegina in 1790, (S. ASDRACHAS,
“Στρατηγική των Κεφαλαίων και Γραφειοκρατικές λειτουργίες : µια περίπτωση µίσθωσης προσόδων στα
1790”, Ο Ερανιστής, 11 (1974), p.160-174), the proto-industrial townships of Ayia and Ambelakia in 1794-
98 (STAMATOYIANNOPOULOS op. cit., p.45-49), the group of small towns and villages of Argalast Mukataasi
on Mount Pelion in 1806 (S. PETMEZAS, Recherches sur l'Économie et les Finances des villages du Pélion, région
d'industries rurales, ca.1750-1850, unpublished Ph. D., E.H.E.S.S. Paris 1989, p.245-247; IDEM, “Christian
communities in 18th and early 19th century Ottoman Greece : their fiscal functions”, in M. GREENE (ed.),
Minorities in the Ottoman Empire: A Reconsideration, Princeton 2005, p.81-85).
27
Political protection and lordly favour also played a major role as in the case of P. Cordicas,
secretary to the translator of the fleet, in Aegina (ASDRACHAS, “Στρατηγική των Κεφαλαίων…”), and John
Kolletis, physician to the court of Ali Pasa Tepeleden and future Greek premier, in lowland Thessaly in
1815-19 (G. PROGOULAKIS “Στα εδάφη του Αλή Πασά. Παραγωγή, γαιοπρόσοδος κερδοφορία του
χρήµατος”, Historica, Athens, 17/32 (2000), p.73-88).

10
farming market . The negative aspect of this association of capitalists and notables was
28

that personal relations on a local level and favouritism were indispensable for the smooth
functioning of the sub-contracting groups. Any tendency towards the concentration of
capital and the geographic expansion of tax-farming activities thus produced “anti-
economies of scale”.
Tax farming might have attracted a large part of disposable capital and raised the
interest rate but it provided additional liquidity to the economy and did not monopolise
the attention of capital holders, at least in the regional markets. Those who disposed of
capital were – and still are – rarely inclined to invest it in only one operation or branch of
activities. Even when they had a principal domain of merchant and financial activity, they
rather spread the risk and constituted “portfolios”. When we are fully informed of the
activities of those notables or merchants and financiers, we observe that they are
simultaneously engaged in multiple and complementary credit operations . This of 29

course was a familiar case in 18 century Greece where merchants, did not usually
th

specialise in any particular branch of activities . Proto-industrial production and export

30

of goods was no exception.

For the merchants from Kalarytes and Jannina, competed in farming taxes owed to Ali Paşa
28

Tepeleden, see G. PAPAGEORGIOU, Οικονοµικοί και κοινωνικοί µηχανισµοί στον ορεινό χώρο: Ζαγόρι (µέσα 18 – ου

αρχές 20 αιώνα), Ioannina 1995, p.98-99. These same merchants, active in import-export activities between
ού

Thessaly, Epirus and (or though) the Italian peninsula, acted as personal merchants in the service of the
same Ali Paşa Tepeleden.
Doctor John Kolettis in Jannina was a tax (sub)-farmer and a merchant selling the tax product,
29

a moneylender and an investor in land (pasturages to rent out) and urban real estate. He was also a
shareholder in companies engaged in maritime trade, see PROGOULAKIS, op. cit., p.83-86. The Phlippidis
family of Milies, from a large and relatively prosperous village on Mount Pelion, was a family of merchants
and notables, but they also invested heavily in tax farming in the region, and petty money-lending through
a local grocer against buying in anticipation of their debtors’ cash crops.
Cf. V. KREMMYDAS, Αρχείο Χατζηbαναγιώτη… ; IDEM, Εµbορικές bρακτικές…; IDEM, Έµbοροι και
30

εµbορικά δίκτυα στα χρόνια του Εικοσιένα (1820-1835). Κυκλαδίτες έµbοροι και bλοιοκτήτες, Athens 1996. I think
that the expression “businessmen” fairly well describes this group of men who use their capital, relations,
information and knowledge to involve themselves in various mercantile and financial endeavours of every
kind and scale.

11
 Credit as a flexible way of financing trade and industry
Credit relations played a major role in all phases of regional proto-industrial
production. The development of dyed cotton yarn production in Ayia, for instance, went
hand in hand with the expansion of credit activities. The merchant-fabricant companies
bought raw material and sold their final product in credit . These companies were
31 32

almost exclusively engaged in dyed cotton yarn exportation. Their major source of profit,
in this time of rapid kuruş debasement, was their abundant Austrian currency, which
could be profitably “sold” as a bill of exchange with an agio . The early 19 century 33 th

predominance in the Constantinopolitan credit markets of Greek merchants as bankers

providing the valuable bills of exchange is certainly due to this profitable export trade
surplus of Greek Merchant Houses . Credit was also the major lubricant in the woollen
34

stuff weaving and itinerant commercialisation. The little we know about the funding of

31
The first generation of merchants, in the 1780ies, was extremely reluctant to buy spin cotton
with credit from intermediaries (matrapaci). They preferred to buy in cash directly from the producer (in the
villages or in the weekly Ayia market), believing thus in obtaining the best possible quality of spin cotton.
When they expanded their provisioning market from the nearby Thessalian plains to Smyrna, they still
made a point of sending an agent to buy directly from the producer. To do that he was financed with bills
of exchange drawn from Vienna and the Greek merchant firm of Smyrna which paid the money to their
agent took care of the transportation of the cotton to Ayia. Later in the early 1800ies, cotton provision in
Thessaly was made only in credit through intermediaries, cf. STAMATOYIANNOPOULOS op. cit., p.214-230.
32
The company’s agents sold their product to small-producers in Sternberg, Moravia, and at the
Leipzig fair in Saxony with a 4 to 6 month credit. It is of prime importance to notice that these clients
seem to be loyal to the Ayia exporters, which probably explains why credit relations are renewed and why
there seems to be no recalcitrant borrowers, cf. STAMATOYIANNOPOULOS op. cit., p.304-320, esp. p.315.
33
Cf. STAMATOYIANNOPOULOS, op. cit., p.169-191. For the extra profits of the Ambelakia
merchant companies from the commerce of bills of exchange see F. BEAUJOUR, Tableau du Commerce de la
Grèce, Paris 1800, (Greek translation Athens 1975) p.144.
34
Cf. N. PAPADOPOULOS, Ερµαθηνή and Ερµής Κερδώος Vienna 1815 (reprint Athens 1989), I,
,

p.160-165. On the Ottoman market of bills of exchange and the role of Ottoman bankers see see
E. ELDEM, “La circulation de la Lettre de change entre la France et Constantinople au XVIIIe siècle”, in
H. BATU, and J.-M. BACQUÉ-GRAMMONT, (eds.) L’Empire ottoman, la République de la Turquie et la France,
Paris 1986, p.87-97, IDEM, “The trade of precious metals and bills of exchange in Istanbul in the 2nd half of
the 18th century”, in 5. Milletlerarası Türkiye sosyal ve iktisat tarihi kongresi. Tebliğler (Istanbul 1989), Ankara 1990,
p.579-589, IDEM, “Structure et acteurs du commerce international d’Istanbul au XVIIIe siècle”, in
D. PANZAC, (ed.) Les villes dans l’Empire ottoman, I, Paris, 1990, p.261-267, and KREMMYDAS, Έµbοροι και
εµbορικά δίκτυα…, p.176-184.

12
this branch of activities, points to the predominance of merchants who financed the
provisioning of wool to the women weavers and its sale by itinerant kepenekci to the
peasants with long-term credit . 35

Commercial capital fully dominated these industrial activities, in spite of the fact
that master-craftsmen were privileged because of the rare expertise they possessed.
Capitalists in Eastern Thessaly were actively striving to attract master craftsmen as
partners, in the second half of the 18 century . In many recorded cases profits and
th 36

losses were shared in such a way as to reduce the cost of wages, share the entrepreneurial
risk with the craftsmen and promote capital mobilisation. In Ambelakia , the notorious 37

centre of dyed cotton production for export, which served as an example and a centre
providing technological and accounting expertise, capital investment was rewarded by an
annual interest (12%). The net profit (or loss) after the deduction of labour and capital
rewards, raw material costs, overheads and other expenses was shared among partners
according to a pre-arranged ratio, possibly different from their capital share. Other
craftsmen, besides the master-craftsmen who where full-scale partners of the companies
and bore unlimited liability for eventual losses, where also rewarded taking a share from
the profits. This was of course both an inducement to labour intensification and a means
of reducing labour cost . Instead of paying a salary in cash (or kind), the company would
38

promise to pay a share of the profits (after the deduction of capital reward) . 39

35
Cf. PETMEZAS, Recherches…, p.678-682. This was also the case with the Bulgarian woollen stuff
production and commercialisation, see N. TODOROV, Η Βαλκανική Πόλη, (1st edition 1970) Athens 1986, II,
p.305 sqq., and M.N. TODOROVA, “Handcraft and guild Organisation in Bulgaria, (Textile production in
the sancak of Plovdiv)”, Actes du 2e Colloque International d'Histoire. Economies Méditerranéennes : Equilibres et
Intercommunications, XIII -XIX siècles, Athens 1986, II, p.275-284.
e e

36
Capital holders and merchants in proto-industrial rural areas enter into partnership with
experienced master-craftsmen to form companies destined to produce goods for export into the regional
and international markets. In Ayia in 1783, a merchant and notable like Magalios Hadji-Georghiou, was
looking for more than a year for experienced master-craftsmen as partners, while he had already sent his
commercial companion and future son-in-law to Vienna to prepare for the selling of the production. It was
not unusual that the merchant advanced as a loan to his craftsman partner the necessary capital for the
latter’s participation in the partnership, see STAMATOYIANNOPOULOS, op. cit., p.256.
37
On Ambelakia see I. NIKOLOPOULOS ∆οµές και Θεσµοί στην Τουρκοκρατία. Τα Αµbελάκια και ο
κοινωνικο-οικονοµικός µετασχηµατισµός του ελλαδικού χώρου, Athens 1988, and D. MAVROYIANNIS, L'Association
coopérative d' Ampélakia. Contribution à l'Histoire sociale du mouvement coopératif grec, 1780-1966, Athens 1975.
38 Cf. S. ASDRACHAS, “Παραδοσιακότητες και ανοίγµατα : η περίπτωση των Αµπελακίων”, Ελληνικη

13
 This kind of profit sharing and capital mobilisation was not unique in
commercial-industrial activities. Another extremely profitable and comparable branch of
activities, which showed the same tendency, was maritime trade, conducted by islanders
of the Archipelago. In this case, a group of capitalists (4-12 persons, of whom 1-3 were
the major shareholders) would form a company destined to finance the building and
commercial exploitation of a ship. The master ship-builder and the captain were usually
shareholders, the captain usually being responsible for the management of the ship. The
company lasted as long as the ship was active. Every commercial voyage (and there were
as many as 2-5 per year) was financed by a special venture capital (sermaye), which was
constituted by the ship shareholders (holding the majority) and other investors (as many
as 5-10). They were rewarded either with a share of the profits and losses or with a fixed
guaranteed profit on the capital (actually an interest rate). One might think of two
different credit and capital markets: one for long-term ventures in ship owning and
another for short-term investment on single commercial endeavours. Familial relations
and personal friendship and knowledge played an essential role in producing the
indispensable confidence needed for the constitution and reproduction of such
commercial and financial networks in a context of legal and socio-political uncertainty.
The crew was either rewarded individually with a fixed monetized salary per voyage,
relative to the origin and destination of the commercial venture, or as a group with a
share of the profits and losses. A guaranteed minimal reward, as part of the venture
capital was provided in the 1818 Communal Code of Commercial and Maritime Law of the
island of Hydra. Once again risk spread and capital mobilization was the main motive
behind the development of such business and credit practices . 40

Κοινωνία και Οικονοµία, ιη' και ιθ' αιώνες. Υbοθέσεις και Προσεγγίσεις, Athens 1982, p.145-152 and
STAMATOYIANNOPOULOS, op. cit., p.270-271.
39
STAMATOYIANNOPOULOS (op. cit., p.328-337) who computed the profit margin of two export
operations in Ayia was astonished to find out that net profit (before the deduction of capital rewards) in
both cases was 13%-14%. Given that capital reward was estimated at 10%-12% the net profit was maybe
as low as 1%-4%. Thus the small proportional share of the craftsmen to the profits was even smaller.
Furthermore, it is not certain that profits from the bill of exchange operations were fully incorporated into
the companies accounts.
40
Cf. V. KREMMYDAS, Ελληνική Ναυτιλία, 1776-1835, Athens 1996, p.58-61.

14
 The institutional impediments and legal constraints imposed
upon the merchant and craft “companies”
The major form of commercial partnership was the unlimited liability company
(syntrofia), which was especially well suited to this kind of protean mercantile activity . 41

Joint companies were formed from existing companies (called µερικές – “particular” –
companies), which themselves were usually constituted of groups of partners . Both in 42

Ambelakia and in Ayia, a clear tendency to concentrate capital and production is

observed in the late 1770’s and early 1780’s respectively, soon after the emergence of the
first dyed cotton yarn companies. All such organisational schemes were dominated and
supervised by the richest merchant financiers and were closely associated with the
communal administration and politics, since these same merchant financiers were
themselves related to the communal notables or fulfilling such obligations. In the long
run though, such initiatives were untenable, because of internal disputes and
competition. Communal factional politics were also an aggravating factor . Communal 43

strife frequently led to the splitting up of joint companies and attracted the burdensome
attention of the local ayan and ümera.
The major advantage of this flexible structure was risk diversification, capital
mobilisation and the reduction in overheads and the cost of credit and labour. Its major
and fatal disadvantage was moral hazard e.g. that each constituent group or particular
company had an incentive to use the opacity of everyday credit and trade operations and
the lack of a well-structured supervising administration to increase its particular
advantages at the expense of the larger group of partners . The absence of a universal
44

41
Companies were formed for a specific time-period for general trade or to produce and / or
trade in certain goods, or a company was formed in order to achieve only one operation, e.g. farming taxes
etc. On forms of business partnerships among Greek merchants, see D. VLAMI, Το φιορίνι, το σιτάρι και η
οδός του κήbου. Έλληνες Έµbοροι στο Λιβόρνο 1750-1868, Athens 2000, p.180 sqq.
42
In Ayia, companies always consisted of two groups : a group of merchants and a group of
master-craftsmen, such groups being the most coherent building blocks, see STAMATOYIANNOPOULOS
op. cit., p.111-117.
43
For the case of Ayia see STAMATOYIANNOPOULOS, op. cit., p.131-144.
44
This disadvantage was well known to all and was also included in the few Trade Manuals written
and circulating in Greece. See A. PSALIDAS, Θεωρείαι γενικαί του εµbορίου, § 21, written in 1808 and
published by G. PAPAGEORGHIOU, Ο εκσυγρονισµός του Έλληνα bραγµατευτή σύµφωνα µε τα ευρωbαϊκά bρότυbα,
Athens 1990, p.112-183. See also S. OGILVIE, State Corporatism and Proto-industry, Cambridge 1997, p.365.

15
system of commercial law further intensified the problem. Greek merchants and their
corporations tried to face this problem by translating into Greek the French Code de Droit
commercial in 1819. Efforts towards the concentration of capital in Eastern Thessaly
quickly reached a dead-end. In spite of relative abundance of capital (as depicted in the
relatively low interest rates charged) credit markets were segmented into many local
enclaves.

Local corporate entities involved in credit activities

The absence of banks and credit institutions in the Ottoman Empire has very
often been underlined as one of the serious impediments in its economic growth. Cash-
vakıfs had never developed into anything more than small-scale capital endowments
providing relatively cheap credit to the urban population . In that sense they certainly
45

seemed to be “in the service of the Muslim community”. Possibly the most promising
development is, to a large extent, due to the circumvention of the spirit of the founder’s
will. ÇIZAKÇA’s long-term research has shown that cash-vakıf administrators became their
most important debtors, and invested this low-interest money in Istanbul sarraf farming
public revenues . Nevertheless, corporate bodies like the vakıfs of all kind and other
46

Christian religious endowments and institutions, as well as the numerous territorial

communities and professional corporations, were very active in credit operations,
providing the population with opportunities for saving investments and a flexible vehicle
of capital mobilisation. Of course, the aggregate sum of capital mobilised was limited by
the size of each corporate body and its surrounding society and, most importantly, by the
fact that the engagement of a corporate body in, and profit from, credit activities was not
– and could not –constitute its main objective. The number of such collective agents and
operations, and their local importance, made them a major participant in the economic
life of regional societies. The productive capacity of every regional society, in its turn,
greatly conditioned the function of such institutions. I shall examine, in more detail these
kinds of corporate entities, using some concrete examples from Eastern Thessaly where
data and sources are available.

45 Cf. GERBER, Economy and Society…, p.139-140, and ÇIZAKÇA, A Comparative Evolution…, p.131-
132.
46
Cf. ÇIZAKÇA, A Comparative Evolution…, p.132-134. Unfortunately nothing is known about the
subsequent career of these individuals. In any case, tax farming emerges as the most lucrative and sought

16
 Our regional example: the eastern Thessalian proto-industrial
network ca 1750ies-1820ies
Eastern Thessaly is a mountainous region, extending from Mount Olympus and
Ossa to the North to Mount Pelion in the South, almost exclusively populated by a
Christian population of peasant small-owners, which had been specialized in various
cash-crops in the late 17 and early 18 century, the most important being silk (bought
th th

from the dynamic silk industries of Chios). In the second half of the 18 century theyth

developed into a very active, densely populated and prosperous proto-industrial area,
where various rural industrial networks produced woollen kepenek cloth, cotton and silk
stuff and dyed cotton yarn . The town of Ambelakia was probably the first village to
47

grow into a proto-industrial centre, in the 1750’s, when local dyers, formerly working in
the large Thessalian urban industries of Larissa and Tyrnavos, returned to Ambelakia.
The enterprising merchants and master-craftsmen of Ambelakia had been a source of
inspiration, advice and capital to those of other mountainous and hilly villages and towns
of Eastern Thessaly, like Ayia and Makrinitsa and their adjacent regions in Southern Ossa
and western Pelion respectively. A large part of the production of red-dyed cotton yard
was exported to Central Europe, while other products (cheaper imitations of well
established urban industrial originals) were commercialised on the imperial markets. The
woollen stuff, woven by local women, was processed into cloth and sold by itinerant
artisans established in Constantinople, as a “guild of kepenekci from Zagora” and travelled
to Thrace, Western Anatolia and the Archipelago. Cotton yarn and other stuff was
produced in many of the rural settlements of Eastern Thessaly and exported through the
established commercial networks of local merchants. These productive and commercial
networks successfully competed with the urban guilds, in the plains of Thessaly and
elsewhere, which produced and exported comparable products. A prosperous class of
local merchants and financiers, whose members were living in Eastern Thessaly or
temporarily established in Vienna, Trieste, Smyrna, Istanbul and other centres of export,
and who dealt in distribution and itinerary confection, rose to prominence and held in its
hands both economic power, social prestige and political influence. It was among these
families that communal notables were selected. Ever since the beginning of the 18 th

after credit opportunity.

47 See S. PETMEZAS, “Patterns of Proto-industrialization in the Ottoman Empire : The case of

eastern Thessaly, ca.1750-1860”, Journal of European Economic History, vol.19/3 (1990), p.575-603.

17
century, before the full rise of the proto-industrial network, it has been recorded that a
number of prominent local families whose members comprised rich merchants and well-
educated scribes and churchmen, resided in Istanbul and the Danubian principalities, and
that they greatly profited from their close relation with the archon Phanariot families and
the Church.
Contrary to what happened in almost all villages and small towns situated in the
thessalian plain, those on the mountains and hills of Eastern Thessaly (with 2 or 3
exceptions) were never transformed into çiftlik, not even in the first decades of the 19 th

century when the family of Ali Paşa Tepeleden came to dominate the Southern parts of
present day Greece. Ali Paşa and his sons, Muhtar Paşa and Velyuddin Paşa, were just
the most prominent of ayan and provincial ümera who profited from their position of
power and their disposable capital to transform the rural population into sharecroppers,
not only in the agriculturally fertile plains but also those living on the mountain slopes. In
this case the old peasant “primal fear” of indebtedness was wholly justified . Peasant 48

land expropriation was a structural contingency, and over-taxation and the subsequent
indebtedness to professional moneylenders or ayan was a strong incentive for the ayan
and provincial ümera (who decided on the regional distribution of – an even imposition
of additional – taxes, controlled armed bands and disposed capital and social influence)
to use their socio-political advantages and induce or force the villagers into “alienating”
their individual or communal rights on lands and their patrimony to disburse their debt.
The intra-communal faction struggle among notables, a widespread phenomenon in the
villages and especially in the small towns of the imperial heartland, could be used by tax-
farmers (voyvodas) and prospective çiftlik sahibleri to maximize their profits and augment
their chances of finally expropriating the commune. Only a handful of local people –
usually some of the factitious local kocabaşı – would find this development advantageous.
As a result the village notables, in their turn, were motivated to restrain their
intestine competition for power and – what concerns us in this paper – to avoid
excessive indebtedness to moneylenders and powerful ottomans. They were thus

On the landlords and sharecroppers of the thessalian plain, see D. TSOPOTOS, Γη και γεωργοί της
48

Θεσσαλίας κατά την Τουρκοκρατία, Volos 1912. On surplus extraction in the rural economy see S. ASDRACHAS,
“Le surplus rural dans les régions de la Méditerranée orientale : les mécanismes”, in Economies
Méditerranéennes. Equilibres et Inter-communications, XIIIe-XIXe ss. Actes du IIe Colloque Internationale d'Histoire
(1983), Athens 1986, II, p.29-57.

18
compelled to regulate the local credit market(s) and to control (as far as it was possible)
the flow of “external” funds. Being in command of sufficient economic and political
power they were usually able to finance strong local martolos militia and compete
efficiently against the military threat posed by bands of brigands and marauding irregular
ayan militias.

The communal finances of Zagora (1783-1822): a

periodization
In the case of Zagora, a small town of some 800 households on the north-eastern
slopes (540 m.) of Mount Pelion, the major centre of woollen cloth production and the
town that gave its popular name to the industrious Pelion peninsula, we dispose the full
series of communal accounts (income, expenditure and debt) for the years 1784-1822
and financial information on the communal debt and taxation going back to 1754 . All 49

sums are expressed in kuruş (henceforth k.), a fiat monetary unit, in a period of rapid
debasement and price inflation . From 1774 to 1822, the rate of devaluation relative to
50

the constant 1774 kuruş (expressed as a ratio to the golden Venetian ducat) was
calculated at 3% annually . In the mercantile economy of Eastern Thessaly, it is certain
51

that creditors were well aware that the real interest rate they enjoyed would reasonably be
lower than the nominal. We must assume that people deliberately introduced this
element into their estimations. The communal notables certainly did. The personal
contribution paid by every adult member of the community, according to his agricultural
property, was the main regular income of the commune and it was evidently tagged on
the local agricultural production (silk, wine, apples, olives, etc). It rose precipitously in

49
Communal library of Zagora, Register of communal finances of Zagora for the years 1754-1822, (un-
catalogued manuscript).
50
As a consequence, both the budgetary accounts and the communal debt, soar from 21.910 k.
(or 3.745 Venetian ducats) in 1787, to 39.729 k. (or 4.351 Venetian ducats) in 1801, and 82.850 k. (or 6.188
Venetian ducats) in 1813 (see Figure 2). The communal debt in its turn rose from 32.055 k. (or 5.478
Venetian ducats) in 1787, to 43.266 k. (or 4.739 Venetian ducats) in 1801, and 91.828 k. (or 5.271 Venetian
ducats) in 1821.
51
Cf. PETMEZAS Recherches…, p.774-779. The R2 fit of the known data of kuruş expressed in
Venetian ducats (of standard finesse) for the years 1770-1824 was 0.98 ! It was an exponential regression
where Y=aebx ; and b=0,0303971, a=1,66909 E–21.

19
nominal terms but, expressed in real terms (e.g. deflated), it shows a normal cyclical
fluctuation around a stationary trend (see Figure 1).
15.000 50.000

14.000 45.000

13.000 40.000

12.000 35.000

11.000 30.000

10.000 25.000
R2 = 0,6595

9.000 20.000

8.000 15.000

7.000 10.000

6.000 5.000

5.000 0
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
17
17
17
17
17
17
17
17
17
17
17
17
17
17
17
17
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
constant nominal polyonymal (consant)

Figure 1. The contribution on agricultural production in k. in nominal and real terms

Looking at the budgetary and financial accounts of the town of Zagora between
the years 1784-1821, one can easily discern three discrete periods, each displaying its own
characteristics. It should be stressed that in all three periods the ordinary income was
more than enough to cover the predictable ordinary expenses and debt servicing, due to the
fact that the latter was in great part expressed in lump sums and eroded from inflation.
This balance was temporarily reversed during the war years 1788-1792, 1799-1802, 1806-
1812 and 1820-1822. The eventual annual deficit was covered by the treasurer himself
and this short-term personal loan was included in the expenses of the following year and
disbursed in that following year. The eventual surplus was, of course, transferred and
included in the following year’s income. Communal debt was regularly and diligently
serviced and, if necessary, local creditors were ready to loan the money needed to pay any
unpredictable rise in expenses.

20
We observe that during the first sub-period (1784-1798) the average rate of interest fell
(see Figure 6), surpluses were usually left and income, expenditure and debt, expressed in
real terms, were falling (see Figure 2). In the next sub-period (1799 to 1807/1809), the
wars destabilised the balance of income and expenditure, and every other year a deficit
was observed. The rate of interest and the aggregate figures in real terms stopped falling
and began to fluctuate around an average. Until that time the unexpected extraordinary
fiscal contributions (avariz-i divaniye ve takalif-i ürfiye) were the prime and only reason for
expenditure growth (see Figure 3).

200.000 30.000
gürüş (current) gürüş (constant)
Revenues (current)
180.000 Expenses (current)
Debt (current)
Revenues (constant) 25.000
160.000 Expenses (constant)
Debt (constant)
140.000
20.000

120.000

100.000 15.000

80.000

10.000
60.000

40.000
5.000

20.000

0 0
84

86

88

90

92

94

96

98

00

02

04

06

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17

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18

18

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18

18

18

Figure 2. Income, Expenditure and Debt in nominal and real terms

Then, in the third sub-period (1808/10-1821), when Velyuddin paşa, the
sancakbeği of Tirhala (Trikkala in Thessaly), took over (as deruhde or malikâneci) most of the
ordinary fiscal contributions, both the extraordinary contributions and the lump sums of
ordinary taxes grew rapidly. Expenditure soared and it was covered through internal
indebtedness (see Figure 4). Debt servicing started becoming a growing part of ordinary
expenses. The average rate of interest grew once again, as well as all the aggregates
expressed in real terms. In spite of all this, the local credit market was able to provide the
necessary sums of money. A second credit market grew side by side with the old one, as
the communal treasurer began to seek monthly loans (see Figure 7). Something of a

21
monthly floating debt developed in years of high demand for loans, especially during the
1806-1812 war years.
Table 3. Major aggregates of the communal debt of Zagora (1784-1822)
year Nominal Real debt Balance Ratio of debt Average Standard Coefficient deflator
debt account to expenses deviation of variation
1784 35.010 26.331 15.254 1,73 714 867 1,21 1,33
1785 33.158 24.157 unkown 1,37
1786 31.306 22.089 unkown 591 667 1,13 1,42
1787 32.055 21.910 14.979 1,46 553 651 1,18 1,46
1788 32.720 21.663 16.627 1,51
1789 33.384 21.416 16.789 1,28 530 654 1,23 1,56
1790 34.384 21.371 16.944 1,26 555 670 1,21 1,61
1791 34.688 20.884 14.979 1,39 609 738 1,21 1,66
1792 34.736 20.253 16.627 1,22 609 800 1,31 1,72
1793 32.316 18.258 16.789 1,09 621 730 1,17 1,77
1794 32.594 17.839 18.961 0,94 627 641 1,02 1,83
1795 32.354 17.155 17.031 1,01 588 760 1,29 1,89
1796 30.495 15.659 15.188 1,03 635 827 1,30 1,95
1797 29.445 14.648 15.334 0,96 640 839 1,31 2,01
1798 29.940 14.432 14.432 1,00 611 958 1,57 2,07
1799 35.600 16.620 18.961 0,88 636 917 1,44 2,14
1800 42.021 19.001 17.031 1,12 667 914 1,37 2,21
1801 43.266 18.956 15.188 1,25 676 907 1,34 2,28
1802 40.143 17.036 15.334 1,11 608 831 1,37 2,36
1803 42.918 17.642 14.432 1,22 704 915 1,30 2,43
1804 41.508 16.527 18.961 0,87 728 913 1,25 2,51
1805 41.408 15.971 17.031 0,94 726 914 1,26 2,59
1806 41.617 15.545 15.188 1,02 816 1.107 1,36 2,68
1807 40.745 14.741 15.334 0,96 755 1.066 1,41 2,76
1808 43.990 15.415 14.432 1,07 733 1.019 1,39 2,85
1809 45.000 15.277 18.961 0,81 726 1.007 1,39 2,95
1810 57.016 18.748 17.031 1,10 687 943 1,37 3,04
1811 56.464 17.985 15.188 1,18 689 950 1,38 3,14
1812 64.896 20.020 15.334 1,31 821 1.265 1,54 3,24
1813 66.849 19.972 14.432 1,38 846 1.269 1,50 3,35
1814 71.174 20.597 18.961 1,09 858 1.258 1,47 3,46
1815 78.039 21.872 17.031 1,28 867 1.222 1,41 3,57
1816 81.906 22.238 15.188 1,46 871 1.200 1,38 3,68
1817 81.694 21.480 15.334 1,40 860 1.199 1,39 3,80
1818 81.334 20.713 14.432 1,44 865 1.197 1,38 3,93
1819 89.700 22.127 18.961 1,17 854 1.172 1,37 4,05
1820 91.828 21.939 17.031 1,29 858 1.173 1,37 4,19
1821 91.132 21.086 15.188 1,39 868 1.181 1,36 4,32

The financial policy of communal notables

I have shown elsewhere that the financial policy of the Zagora notables, who
52

were in command of sufficient disposable capital, was to reduce the high-interest (15%-
20%) large communal debt, owed exclusively to Muslims and Jewish moneylenders (e.g.
what I have called “external debt”) in 1754 (69.835 kuruş or 18.100 Venetian ducats), to

Cf. S. PETMEZAS, “∆ιαχείριση των κοινοτικών οικονοµικών και κοινωνική κυριαρχία. Η

52

στρατηγική των προυχόντων : Ζαγορά 1784-1822”, Mnèmôn, 13 (1991), p.77-102.

22
a much lower total debt, owed in majority to members of the community (which part I
have called “internal debt”). To do so, they had resorted to a conscious policy of paying
off high-interest obligation bonds (omologies) and substituting them with others issued to
themselves or to other members of the commune, or to corporate bodies such as
churches, monasteries, schools or other endowments . A local credit market emerged, 53

obviously financed by the profits and income of proto-industrial activities. In doing so

they had been able to reduce the external part of their communal debt to below 15% and
to bring down the average interest paid to less than 10% (see Figure 6).

25.000
gürüş
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
20.000
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
15.000 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
10.000

00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
5.000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
0

00 00 00 00 00 00 00 00 00 00
84

86

88

90

92

94

96

98

00

02

04

06

08

10

12

14

16

18

20
17

17

17

17

17

17

17

17

18

18

18

18

18

18

18

18

18

18

18

Ordinary Taxes Usual Levies & Gifts Extraodrinary Levies Communal Expenses Interest & Debt amortizing Profit

Figure3. The communal expenditure of Zagora in real terms (1784-1822)

They had been able to achieve this not by force, but through the sound
administration of their communal accounts. One can use the anachronistic and
exaggerated expression of fundamental macroeconomic stability to illustrate the reason why
local creditors trusted them. Communal notables fully paid their fiscal and financial
obligations, diligently serviced their debt, cared for the financial assistance of the poorer
members of the community, spent time and money cultivating good relations with
powerful Ottomans in Larissa and in Constantinople, avoided unnecessary expenses and,

On the form of obligation bonds see PSALIDAS, op. cit, p.134, and Αρχείο Ιωάννη Κωλλέτη, 1788-
53

1824, Athens 1999, passim. The net capital and the interest rate were clearly indicated. Bonds were either
payable at demand or on a specific date and they could be transferred to a third party.

23
finally, carefully audited the financial accounts of the communal treasurer every year. The
regular communal income – which was normally enough to cover regular expenses – was
based on the taxation of agricultural property and it wasn’t in any way directly related to
the actual sum paid to the fiscal overlord. In case of unpredicted expenses, due to
extraordinary fiscal contributions – usually in war years – or to the unpredicted rise in
regular taxation (mostly expressed in terms of lump-sum, maktuye), the communal
notables resorted to loans from the local market. Their conscientious effort was to float
the new debt in their community at the lowest possible interest rate, mainly among
corporate bodies. The fact that these communal notables were themselves the
administrators of these corporate bodies helped this development of course.
Table 4. The debt composition of the entire period 1784-1822.
total debt (in total sum of interest mean duration of mean
1784-1822 n k.) % interest paid (in % rate obligation bonds loan (in
k.) (in years) k.)
Muslims and Jews 15 87.350 4,9% 12.875 7,7% 14,7% 4,8 1.213
Men 90 424.517 23,7% 47.056 28,3% 11,1% 8,1 490
Women 42 130.210 7,3% 14.938 9,0% 11,5% 6,9 449
orphans and children 32 83.240 4,6% 9.481 5,7% 11,4% 6,8 382
corporate bodies 68 1.067.066 59,5% 82.004 49,3% 7,7% 14,8 1.063
Total 247 1.792.382 100,0% 166.353 100,0% 9,3% 9,3 731
Notables 26 145.132 8,1% 16.015 9,6% 11,0% 9,1 408
men of notable families 12 59.393 3,3% 6.454 3,9% 10,9% 8,9 479
other men 52 219.992 12,3% 24.587 14,8% 11,2% 7,2 568
women of notable families 9 61.650 3,4% 7.607 4,6% 12,3% 11,4 599
other women 33 68.560 3,8% 7.331 4,4% 10,7% 5,7 367
orphans of notable families 5 13.804 0,8% 1.582 1,0% 11,5% 4,2 657
other orphans and children 27 69.437 3,9% 7.898 4,7% 11,4% 7,3 352
of notable families 52 279.979 15,6% 31.658 19,0% 11,3% 9,0 464
Others 112 357.988 20,0% 39.816 23,9% 11,1% 6,8 464
Endowments 25 219.124 12,2% 16.224 9,8% 7,4% 14,6 600
other corporate bodies 43 847.942 47,3% 65.779 39,5% 7,8% 14,9 1.327

Interest rate and demand for credit: a direct correlation.

It is not surprising to observe that, when extraordinary and unpredicted taxation
soared the communal expenditure and the demand for credit (on a yearly basis) grew.
The interest rate correlated well with the annual communal debt expressed in real
terms (R =0.83) . Accepting that the ratio of debt to the aggregate communal income
2 54

expresses the intensity of the need for credit, and correlating it with the average interest
rate, one can note that a strong correlation is observed: R =0,63 for the years 1789-1822.
2

54
See PETMEZAS, Recherches…, p.400-404, for a stepwise extrapolation on the possible
determinants of the volume of communal debt (among whom the interest rate).

24
 Figure 4. The communal income of Zagora in real terms (1784-1822)

30.000
gürüş

25.000 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
20.000

00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
15.000

00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
10.000

00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
5.000

0
0000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
84

86

88

90

92

94

96

98

00

02

04

06

08

10

12

14

16

18

20
00 00 00 00
17

17

17

17

17

17

17

17

18

18

18

18

18

18

18

18

18

18

18
Agricultural contribution and tithes Windfalls, cizye etc. Debt contracted Transfer Loss

These statistical estimations are easily confirmed by observation. In war years,

when expenses and the budgetary deficit soared and were covered either by new
communal loans or by the communal treasurer himself, new creditors offered money at a
higher interest rate. Other creditors, who held obligation bonds of the treasury (omologies)
coming to maturity, renegotiated them at a higher interest rate. At least this is what one
can assume from the fact that in the years of growing (or shrinking) demand for credit
and consequently rising (or falling) interest rates, the specific interest rate of the bonds of
some – and not of all – of the bondholders rose (or fell). The only way, communal
notables could mobilise the disposable local capital was by offering higher interest rates.
It seems that many obligation bonds were either renewed after maturity or were
contracted in the form of an endowment for a longer period of time (or in “perpetuity”).
It is possible that some of the “bonds” were simply contracted with an inscription in a
special register . Anyhow, people could renegotiate their rate of interest once the bond
55

See Register of communal finances, f.10 r : the descendant of a bondholder, appealed to the
55

Metropolitan Court and asked that the communal notables disburse to him the debt of 2500 k. owed to his
deceased father. The communal leadership had to look at its register to find out whether the bond was

25
had matured. Thus we see that for certain individual creditors, the respective rate of
interest changed. It is also clear that when the commune had decided to pay-off part of
its standing debt, a number of bonds were proportionally disbursed, so that all creditors
suffered a proportionally equal reduction in their investment. These are probably bonds
that were maturing during that year, and the communal treasurer felt free to negotiate
lower interest rates and/or reduce the sum of the new bond.
Notables themselves were not insensitive to the possibility of making a good
profit by advancing money to the community at a relatively high interest rate. Sometimes
they advanced money on a monthly basis, at an interest 1%-2% higher than the mean
rate (see Table 3 and Figure 6). In general, they readily advanced money when the
communal treasury needed it, and then withdrew it. Corporate entities and income or
saving seeking persons took their place. In general, already in the first sub-period of
stability (1784-1798) the greatest part of the communal debt was held by lower interest
paying obligations to corporate bodies (see Table 5). Notables and those men and
women and children of notable families offered more than the others (of the same age-
sex group) in aggregate and per capita terms and invested for a longer time-span. This
difference is clearly observed in the case of women of notable origin.

00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
100.000

90.000
00000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
80.000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
70.000

60.000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
50.000 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
40.000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
30.000 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
20.000
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00 00
00000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
10.000

0 00000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000000
00 00 00 00 00
4
6
7
8
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
0
1
2
3
4
5
6
7
8
9
0
1
8
8
8
8
9
9
9
9
9
9
9
9
9
9
0
0
0
0
0
0
0
0
0
0
1
1
1
1
1
1
1
1
1
1
2
2
17
17
17
17
17
17
17
17
17
17
17
17
17
17
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18

Muslims and Jews men women orphans and children corporate bodies

actually granted, as a post-mortem legacy, to the town community. It seems that the plaintiff did not have in
hand any written document.

26
 Figure 5. The Communal debt by category of creditor, in nominal terms
In the next sub-period of uncertainties (1799-1808/10) we observe, for the first
time, that the part held by those of notable origin (all sex and ages amalgamated) shrunk.
The mean sum of individual debt, especially that of men, fell. On the contrary the
interest rate for those of notable origin was higher (see Table 6). This tendency is
56

confirmed in the next sub-period (see Table 7). We can thus say that notables, while
always offering money when necessary, now preferred the monthly market, and left those
of non-notable origin to invest in the communal debt. They thus secured higher interest
rates for themselves. Women and children of notable origin did not follow the same line.
They tended to invest higher sums of money for longer periods. They had, I believe, a
different objective than men of the same class: these women were saving their disposable
cash and securing a steady income

The creditors and their motives

In fact, it is time to deal with the various groups of creditors and their
motivations and attitudes. Jewish moneylenders of Larissa charged a standard high
interest rate: 20% during the observation period (1754-1774) . They expected to be
57

disbursed soon, and their main motive was a high interest rate. Muslim ayan and rical and
their families charged lower interest rates (usually 15% and, in two late cases, 12%). It
seems that in three cases Muslims “bought” the bonds from Jewish moneylenders . 58

Some of the Muslims were women, who kept their bonds for a longer period, like the
sister of Abdin Beğ of Larissa, the overlord of Zagora. In the 1780’s, the probability of
heavy communal indebtedness to an external agent (Jewish moneylender or ayan) was
very low and it seems that communal notables were not concerned with disbursing the
remaining Muslims who, since 1784, had held less than 15% of the total debt.

56
It should be stressed that some notables hold more that one bond. Thus the personal loan of
notables is constantly underestimated.
57
Only in 1784, is the “Jewish” [sarraf] Sitoglou content with 15%.
58
This is not an unheard of situation. Obligations were bought (discounted ?) by Christian
notables and capital holders like John Kolletis, see Αρχείο Ιωάννη Κωλλέτη p.12-13.

27
 Table 5. The debt composition in nominal terms, 1784-1798.
total sum of mean duration of mean
1784-1798 total debt (in k.) % interest paid (in % interest rate obligation bonds (in loan (in
k.) years) k.)
Muslims and Jews 47.750 11,3% 6.935 16,7% 14,5% 2,9 1.110
men 119.576 28,3% 11.896 28,7% 9,9% 2,6 423
women 27.220 6,4% 2.689 6,5% 9,9% 2,0 320
orphans and children 14.643 3,5% 1.452 3,5% 9,9% 2,1 222
corporate bodies 213.448 50,5% 18.494 44,6% 8,7% 3,3 944
Total 422.637 100,0% 41.465 100,0% 9,8% 2,7 601
notables 57.592 13,6% 5.744 13,9% 10,0% 2,9 501
men of notable families 24.143 5,7% 2.368 5,7% 9,8% 3,4 503
other men 37.841 9,0% 3.784 9,1% 10,0% 2,2 315
women of notable families 10.800 2,6% 1.070 2,6% 9,9% 3,1 386
other women 16.420 3,9% 1.619 3,9% 9,9% 1,7 288
orphans of notable families 4.000 0,9% 400 1,0% 10,0% 1,6 500
other orphans and children 10.643 2,5% 1.052 2,5% 9,9% 2,1 184
persons of notable families 96.535 22,8% 9.582 23,1% 9,9% 3,0 485
others 64.904 15,4% 6.455 15,6% 9,9% 2,1 276
Endowments 60.362 14,3% 4.952 11,9% 8,2% 3,9 616
other corporate bodies 153.086 36,2% 13.541 32,7% 8,8% 3,0 1.196

Since 1785 the internal part of the debt had covered more than 85% of the total.
Four groups of creditors are observable. First of all, there were those who were willing to
invest in communal bonds in order to make a good profit, while advancing money to
their community. They were often acting kocabaşı or members of notable families . They 59

always tended to receive as high an interest rate as possible (10%-12% and sometimes as
high as 15%). When the commune had found itself in a cash crisis (1808-1813) they
advanced money on a monthly basis with an interest of 1% monthly. Those who
invested in this way were predominantly men. Some of them rapidly liquidated their
bonds, while others kept them for longer periods. This last group probably saw it as an
opportunity to save their disposable cash.

A notable is defined here as anyone who had once in his lifetime been a kocabaşı, that is one
59

who has occupied a communal office.

28
16%

15%

14%

13%

12%

11%

10%

9%

8%

7%

6%
84

87

90

92

94

96

98

00

02

04

06

08

10

12

14

16

18

20
17

17

17

17

17

17

17

18

18

18

18

18

18

18

18

18

18

18
Muslims and Jews men women orphans and children
corporate bodies kocabaşı non-kocabaşı average

Figure 6. The average rate of interest by category of creditors

Another category of local creditors, which was very important for the smooth
functioning of the local credit market, was the one comprised of those who seek a steady
annual income. This was especially the case with orphans and widows or other lonely
women (nuns, etc.). They themselves, their relatives or a notable would invest their
relatively modest savings in communal bonds of relatively low interest (8%-10%) and
they would keep the bonds for longer periods. The orphans would normally keep them
until their adulthood and then liquidate them. This kind of medium-term investment by
women is not an exclusive phenomenon of Zagora. At roughly the same time, in the
township of Ayia, women were investing in the financing of companies that produced
red cotton yarn and exported it to the central European markets . These women, related 60

to the merchant families of the town, trusted their dowries to these rising merchant
companies in much the same way that women in Zagora entrusted their savings to the
communal treasury. One should not forget that women formed a large part of credit
providers in the known cases of early 17 century Kayseri and in 17 century Bursa.
th th

60 Cf. STAMATOYIANNOPOULOS, op. cit., p.154.

29
 Table 6. The debt composition, in nominal terms, 1799-1810.
total sum of interest mean duration of
1799-1809 total debt (in k.) % paid (in k.) % interest rate obligation bonds meank.)
loan (in
(in years)
Muslims and Jews 22.600 4,9% 3.390 8,8% 15,0% 1,3 1.189
men 100.089 21,9% 9.603 24,8% 9,6% 1,9 500
women 29.397 6,4% 2.940 7,6% 10,0% 2,1 330
orphans and children 8.677 1,9% 832 2,2% 9,6% 1,4 189
corporate bodies 296.951 64,9% 21.900 56,6% 7,4% 4,4 1.000
Total 457.713 100,0% 38.664 100,0% 8,4% 2,5 703
notables 32.390 7,1% 3.219 8,3% 9,9% 2,0 410
men of notable families 10.800 2,4% 1.080 2,8% 10,0% 1,4 568
other men 56.899 12,4% 5.304 13,7% 9,3% 1,9 558
women of notable families 12.200 2,7% 1.220 3,2% 10,0% 3,6 381
other women 17.197 3,8% 1.720 4,4% 10,0% 1,7 302
orphans of notable families 204 0,0% 20 0,1% 10,0% 0,8 51
other orphans and children 8.473 1,9% 811 2,1% 9,6% 1,6 202
persons of notable families 55.594 12,1% 5.539 14,3% 10,0% 2,0 415
others 82.569 18,0% 7.835 20,3% 9,5% 1,8 411
Endowments 73.141 16,0% 4.847 12,5% 6,6% 4,6 631
other corporate bodies 223.810 48,9% 17.052 44,1% 7,6% 4,2 1.237
A large category of credit providing institutions, which were normally
administered by local notables, were the various formal or informal corporate bodies of
the commune, like the churches, monasteries, schools and temporary or perpetual
endowments (aphierômata). These corporate entities were not profit-maximising agents.
Churches and Monasteries simply looked for a short or medium-term savings investment
for their disposable cash. In consequence, they were functionally not different, in the
short-term, from women and children saving their liquid patrimony.

30
 Figure 7. The monthly debt of Zagora in nominal terms

14.000 1.000

900
12.000
800

10.000 700

600
8.000

500

6.000
400

4.000 300

200
2.000
100

0 0
1789 1793 1802 1806 1807 1808 1809 1810 1811 1812 1813 1814 1815 1816 1817 1818 1819

Total sum average sum per creditor

The endowments had other objectives according to the purpose of their founder.
The annual interest, as mentioned in the obligation bond, was “dedicated” to financing
specific activities. The income was earmarked either for the specific needs of a section of
the population (for the expenses of the students of the communal school, for paying the
taxes of impoverished taxpayers, etc.) or for the symbolic needs of the founder himself
and his family, (e.g. a commemorative church office, mnemosyno). Thus the endowments
were simply fixed income-seeking creditors, who accepted a low interest rate against the
assurance of a perpetual (“as long as our commune exists”) income.

31
 Table 7. The debt composition in nominal terms, 1811-1822.
total sum of interest mean duration of mean loan (in
1810-1821 total debt (in k.) % paid (in k.) % interest rate obligation bonds k.)
(in years)
Muslims and Jews 17.000 1,9% 2.550 3,0% 15,0% 0,7 1.700
Men 204.852 22,5% 25.557 29,6% 12,5% 3,6 533
Women 73.593 8,1% 9.309 10,8% 12,6% 2,8 634
orphans and children 59.921 6,6% 7.197 8,3% 12,0% 3,3 565
corporate bodies 556.667 61,0% 41.610 48,3% 7,5% 7,1 1.157
Total 912.032 100,0% 86.224 100,0% 9,5% 4,2 831
Notables 55.150 6,0% 7.053 8,2% 12,8% 4,2 340
men of notable families 24.450 2,7% 3.006 3,5% 12,3% 4,1 429
other men 125.252 13,7% 15.499 18,0% 12,4% 3,1 759
Women of notable families 38.650 4,2% 5.317 6,2% 13,8% 4,8 899
other women 34.943 3,8% 3.993 4,6% 11,4% 2,2 479
orphans of notable families 9.600 1,1% 1.162 1,3% 12,1% 1,8 1.067
other orphans and children 50.321 5,5% 6.035 7,0% 12,0% 3,6 519
persons of notable families 127.850 14,0% 16.537 19,2% 12,9% 4,0 472
others 210.515 23,1% 25.526 29,6% 12,1% 2,9 628
Endowments 85.621 9,4% 6.425 7,5% 7,5% 6,0 567
other corporate bodies 471.046 51,6% 35.186 40,8% 7,5% 7,7 1.427
The communal treasury and the other corporate bodies could turn themselves
into occasional creditors. This happened only rarely in Zagora, but it seems to be more
widespread in other communities like Ayia, where the local mercantile and industrial
companies found in the communal treasury a convenient creditor . Churches and 61

monasteries could also offer credit at a relatively low interest rate . n° 62

An example of a Church endowment: Rapsani

We have numerous cases of religious foundations, other than the churches and
monasteries of Zagora, which offered such credit facilities in Eastern Thessaly. Some of
them were of regional while others were of local importance. The register of income and
expenditure of the church of Saint Athanasios of Rapsani, a woollen weaving village on
Mount Olympus, has been preserved . We thus dispose a relatively detailed picture of its
63

financial and credit activities. The treasurer administered the church patrimony,
composed of a mill, workshops, shops (of bakkal and hassap) and land that annually 64

provided rents. Interests were another (modest) source of income. This income was

Cf. STAMATOYIANNOPOULOS, op. cit., p.177.

61

62 Cf. ASDRACHAS, “Η Ελληνική Οικονοµία…”, p.22.

63 Cf. S. SPANOS, “Το κατάστιχο του Αγίου Αθανασίου Ραψάνης", Θεσσαλικό Ηµερολόγιο, Larissa,

n° 2 (1981), p.65-108 and n° 3 (1982), p.131-162.

The church endowment, in April 1806, comprised at least 20 small pieces of land ibidem, p.144-
64

145.
32
sometimes inadequate to cover expenses (for the church and the
maintenance/restoration of church property) and the treasurer had to borrow money,
usually from other villagers at 15% per annum. This debt was promptly disbursed. In
1801 out of a total expenditure of 1.782 kuruş, almost 34% (600 kuruş) was debt
disbursing and servicing. Nevertheless, that same year the treasurer closed its accounts
with a small profit (excess income) of 72 kuruş. This was repeated in the following years.
To cover the year deficit or to answer to unexpected expenses, the administrator
borrowed money against the issuing of obligation bonds. In the few cases we observed,
these debts were disbursed after 11 months at an annual interest rate of 15%. Other
bonds had longer maturing deadlines. In January 1806, the endowment was indebted for
484, 5 kuruş to 5 different local creditors to whom obligation bonds were issued. It seems
that 50 more kuruş were taken as a “loan”, probably without issuing a formal bond. The
Church could also give loans to the communal treasury as it did in March 1807 (300
kuruş) . The Church endowment was self-described as a vakıf, which can simply mean
65

that it was a religious endowment . Its main purpose was to administer the Church
66

property and provide for the needs of the Church and its ministers. Credit operations
were a routine part of this greater economic activity.

How deep a market and why it did not expand?

The sums engaged in these credit operations involving corporate entities in
Rapsani or in Zagora are not important in themselves, but if we aggregate the number of
corporate entities and their credit operations, the global figures were large enough. A
town like Zagora with a population of 800 households in the first half of the 19 century th

included at least 40 churches, monasteries and other corporate entities (observed through
the annual lists of communal debt), each having its own small financial administration. If
we take the contemporary Saint Athanasios of Rapsani to be an average Church
endowment, then 4 or 5 persons were creditors to this endowment, while 1 or 2 others
were debtors. Furthermore, I estimated that in Zagora 25-30 persons were yearly
creditors to the commune. We may compute that every year 250-300 persons in total

65
Ibidem, p.145.
This is not a unique case, on the contrary. The Church of the Transfiguration of the Saviour
66

was also described as a vakoufi in contemporary local Greek documents, see D.Th. SIATRAS, Οι
αγορο?ωλησίες ακινήτων στην Τουρκοκρατούµενη Ελλάδα, Athens 1992, p.154.
33
were engaged directly or indirectly in credit operations. Maybe one out of every three or
four households was every year engaged in local short- or medium-term credit operations
in Zagora.
In this respect one might be tempted to think that the communal credit market
was able to mobilise a relatively important part of the township’s disposable cash, and
that, as a consequence, capital was disposable and (offering the necessary interest) could
be pooled and concentrated on this economy. This overlooks a very important negative
aspect of the credit system. Namely that, the multitude of legal standards and regulations
and the insecurity of property, so characteristic of the late modern Ottoman empire,
damaged the confidence that was necessary for investors to place their limited capital on
“out of reach” markets where relations were impersonal. It was difficult to “trust”
communal treasuries managed by strangers. The political factor evidently played a major
part in the massive mobilisation of capital on a local level. In the 40 year period only one
Christian creditor was not a member of the Zagora commune and the neighbouring
villages. Another kind of collective agent or credit institution, larger than the local
community, was needed to pledge its reputation and pool the disposable local capital, in
view of a further concentration. Merchants and financiers had been trying to do so but
the relatively small size and scope of the specific merchant or financial operations they
were involved in limited their efforts.

Conclusion
Various individuals, merchant companies and corporate bodies in the ottoman
regional society supplied and demanded credit (and capital) either to finance their
productive activities or because they were in need of money to answer to fiscal or
consumptive needs. The treasuries of collectivities (either that of territorial and
confessional communities or of professional and religious organisations) were some of
those corporate bodies that were obliged and induced to actively and constantly
participate in fiscal and financial activities. The prosperous merchants and experienced
notables, who were usually in charge of these corporate bodies, were themselves engaged
in credit activities and had woven durable credit relations with the local population in the
area and productive sphere where they operated.
These corporate bodies did actually more than just look after the interests of
their members (in the case of territorial communes or professional organisations) or fulfil
the aims depicted in their chart (in the case of benefactor endowments and religious
34
bodies). Large corporate bodies (like the communal treasury of the proto-industrial town
of Zagora) could offer the opportunity for the creation of a complex credit market where
different types of local “investors” could invest their disposable monetary capital in
various “credit products”. Some would invest their money in long-term bonds that
provided a fixed but secure income. These steady income-seeking investors were usually,
on the one hand, corporate endowments and institutions and, on the other hand,
unprotected members of the commune – mostly widows and orphans – who needed an
additional steady income. Others were looking for a reliable savings opportunity for their
meagre monetary surplus. Finally, others would simply seek relatively short-term
opportunities of investment in search of high interest rates. This short-term investment
might even take the form of monthly loans, renegotiated every month and offering extra
high interest. The commune was thus able to mobilise both its prominent and rich
members, as well as the disparate small savings of the peasant and artisan population.
Communal treasuries and other corporate bodies offered the opportunity for
credit operations, and their power was founded upon the trust and confidence (i.e. credit)
their administrators (notables and merchants) could mobilise. These credit markets seem
to have functioned freely and uninhibited from any kind of “political” rationale, precisely
because it was impossible to put constraints upon the entry and departure of creditors.
The rate of interest and the reputed solvability of the relevant institution were the main –
if not only – variables through which the communal leadership could influence the
credit market.
These communal institutions were of course not primitive banks. Their ulterior
aim was not profit maximisation or capital accumulation. They were unable (and
unwilling) to discount commercial bills and print money or promissory notes. They
nevertheless injected credit flexibility into the system and could mobilise sufficient capital
for their needs. They certainly show that the ottoman regional economies were
sufficiently sophisticated to provide the necessary capital to small- and medium- scale
financial operations. Their main disadvantage was that they were part and parcel of the
small local and regional economies. The credit markets were as large (and flexible) as the
regional societies in which they were embedded. The interest rate was locally determined
not only through the interplay of local supply and demand for money, but also relative to
the ability or inability of small-owners and small-scale savers to access the larger regional
and metropolitan credit markets. The relatively under-developed transport and
communication network and the legal uncertainty concerning commercial law and the
35
security of property gave both a premium to the local informal and secure markets and
another premium to the liquidity of investments.
The structure of regional credit and capital markets had been helpful in the
mobilisation of capital and the spread of risk on a local level, but one has the impression
– it is only an unproven hypothesis up to now – that the flexibility of such markets and
the rigid constraints imposed on credit markets by the political and legal system of the
empire, set formidable barriers to the integration of empire-wide credit markets, in the
absence of structural reforms that would permit the formation of an impersonal and
homogenous credit and capital market.

36