69 - 18,805

KALLA, Mohammad Sa'id, 1924- THE ROLE OF FOREIGN TRADE IN THE ECONOMIC DEVELOPMENT OF SYRIA, 1831-1914.

The A m erican University, Ph.D., 1969 Economics, history Unl/ersity Microfilms, Inc., Ann Arbor, Michigan

(cT)Copyright by Mohammad Sa'id Kalla 1969 THE ROLE OF FOREIGN TRADE IN THE ECONOMIC DEVELOPMENT OF SYRIA, 1831 - 1914

by

Mohammad Sa'id Kalla

Submitted to the

Faculty of the College of Arts and Sciences

of The American University

in Partial Fulfillment of

the Requirements for the Degree

of

Doctor of Philosophy

in

Economics

Signature of Commit^tLtee:

Chairman:

f t 1 ( ' U , /f '? ~J ^ ctr-j ' ,______^ r rr . ....L - — -- — ------'T" V " 'if— f * -r ^ \ the College of Arts . ^ --- ~ / I CZ6(f' ) and Sciences 0 1 1.. _br\. 0 I

Date:

1969

The American University AMERICAN uh(\Zh.Rc?> Washington, D.C. LIBRARY M A Y 2 ? 1969

WASHINGTON. D. C

3170 ii

TABLE OF CONTENTS

PAGE INTRODUCTION vii

CHAPTER

I. THE FOREIGN TRADE OF S Y R I A ...... 1

The Role of Foreign Trade in Theory and Practice .... 2

The Scope of Syrian Foreign Trade ...... 10

The Growth of Foreign T r a d e ...... H

Direction of T r a d e ...... 22

The Balance of T r a d e ...... 30

Composition of Foreign Trade ...... 40

Conclusion...... 46

II. THE TERMS OF TRADE ...... 58 I Definition and Limitation of the Concept...... 59

The Terms of Trade of Aleppo ...... 65

Long-Run Price Trend ...... 73

Conclusion...... 84

III. COMMERCIAL P O L I C Y ...... 91

Ottoman Commercial Policy ...... 91

Free Trade vs. P r o t e c t i o n ...... 102

Appraisal of Ottoman Commercial Policy ...... 107

IV, THE ORGANIZATION OF FOREIGN T R A D E ...... 117

The Organization of the Export T r a d e ...... 119

The Organization of the Import Trade ...... 124

Financing Foreign Trade ...... 127 iii

CHAPTER PAGE

Transportation ...... 133

Conclusion ...... 140

V. THE IMPACT OF EXPORTS ON AGRICULTURE...... 152

The Impact on P a s t u r e ...... 156

The Impact on Agricultural Husbandry ...... 158

The Impact on the Land System ...... 171

The Rural Level of L i v i n g ...... 177

Conclusion...... 180

VI. THE IMPACT OF IMPORTS ON I N D U S T R Y ...... 190

The Decline of Handicraft Industries ...... 195

The Expansion of Processing Industries ...... 207

The Urban Level of L i v i n g ...... v~v . . . 217

Conclusion...... 221

VII. THE ROLE OF SYRIAN FOREIGN T R A D E ...... 234

APPENDIXES...... 250

Foreign Trade Statistics of Syria ...... 251

Population Statistics of Syria, 1784 - 1915 276

BIBLIOGRAPHY...... 290 iv

LIST OF TABLES "

TABLE PAGE

I. Growth in the Current Value of Foreign Trade and in the Population of Syria, 1780's - 1 9 1 3 ...... 13

II. Growth in the Current Value of Foreign Trade of the World and of Selected Countries, 1780 - 1913 . . . 20

III. Britain's and France's Shares in Syrian sea­ borne Trade in 1835-37 and 1 8 4 4-46...... 24

IV. Geographical Distribution of Beirut's Trade in 1844-46 and 1855 ...... 25

V. Geographical Distribution of the Trade of Main Syrian Ports, 1 9 1 0 ...... 27

VI. The Balance of Trade of Syria, 1825/27 - 1913 ...... 32

VII. Per Capita Exports and Imports of Syria and Selected Countries, 1913 ...... 34

VIII. Percentage Shares of Export Classes, 1835-37 - 1913 .. . 41

IX. Percentage Shares of Import Classes»-1836-37 - 1913 .. . 44

X. Export and Import Unit-Value Indexes and Terms of Trade oi Aleppo, 1891 - 1 9 1 3 ...... 68

XI. Average Unit-Values of Selected Syrian Exports and Annual Values of Selected European Imports, 1872 - 1913 ...... 75

XII. Average Values of Selected Syrian Imports, 1872 - 1913 ...... 79

XIII. Annual Unit-Values of Selected Exports of Industrial Europe, 1872, 1900, and 1913 ...... 80

XIV. Customs Revenue of the Vilayet of Suriya, 1869 - 1871 ...... 99

XV. Ruppin's Estimate of Syrian Agricultural Production in a Normal Season ...... 162

XVI. Average Size of Syrian Farm« Prior to World War I . . . . 178 V

APPENDIX/TABLE PAGE

I / I. Exports and Imports of Syria, 1776-87 - 1913 .... 254

II. Composition of Principal Exports, 1835-37 - 1 9 1 3 ...... 260

III. Quantity and Average Value of Selected Exports, 1874 - 1913 264

IV. Composition of Principal Imports, 1836-37 - 1 9 1 3 ...... 266

V. Quantity and Average Value of Selected Imports, 1866 - .1913 273

II / I. Sedentary Population of Syria, 1784 - 1915 ...... 277

II. Distribution of Population by P.eligious Creed, 1833 - 1915 279

III. Compound Average Annual Rate of Population Growth, 1833 - 1915 280

IV. Population/Land Ratio, 1909/10 ...... 281

V. Estimates of Non-Sedentary Population of Syria, 1784 - 1915 282

VI. Syrian Cities with Population of 5,000 and Over, 1833 - 1915 284

VII. Degree of Urbanization, 1833 - 1915 ...... 288

VIII. Occupational Distribution of Population, 1833 - 1915 289 VI

LIST OF FIGURES

FIGURE PAGE

1. The Terms of Trade of Aleppo, 1891 - 1 9 1 3 ...... 69

2. The Frontier of Settlement in S y r i a ...... 160

\ \ \ \ \ INTRODUCTION

Syria (and the term is used here In the broad, historical sense) is an ancient mercantile nation. Its geographical location at

the crossroads of three continents has long been one of its main assets. Lying on the major trade route between Asia and Europe, easily accessible to Europe by sea, it became for centuries a thorough­ fare for exchange of merchandise and ideas between East and West.

The rise of industry in Europe in the latter part of the Middle

Ages, followed by the discovery of a new sea route to India and the discovery of the New World, led to the decline of the Mediterranean basin. Trade between Syria and Europe did not cease, however. Turk­ ish concessions opened Turkish ports to European traders and enabled

them to engage in commercial activities. Competition with the sea

traders was keen, but Portuguese insistence on high, almost monopolis­

tic prices gave these traders in Syria their chance. Of all trade relations, however, French trade with Syria remained for a long time an economic reality of first importance.^

Limited as this trade might have been, it was, as long as it 2 lasted, very lucrative for the European merchant-houses and their 3 agents in the Levant. No enduring benefits accrued to Syria from 4 this trade, mainly because it was in European hands. It tended how­ ever, to increase the prosperity and strengthen the position of cer­ tain local communities that were touched by it. Many Aleppine Chris­ tians amassed great fortunes. Later, a number of them went to Italy vlli and established themselves in Leghorn, which was becoming the chief 5 center of the trade between Europe and the Levant. Europeans also supplied a good part of the coins in circulation, some of which con- tinued to circulate up to World War I.

The international transit trade was hindered during the eight­ eenth century, not only by internal political unrest and pressure of nomadic tribes,^ but also by the Turkish-Persian wars in the Near East g region. A comparable deterioration took place in the Mediterranean region, where the long series of wars among the European powers as 9 well as the OttomanrRussian wars frequently interrupted trade.

The end of the eighteenth and the beginning of the nineteenth centuries marked a low point in the-history of Syria. The Egyptian occupation from 1831 to 1840 temporarily arrested this decline, and in some cases reversed the trend.^ A good measure of order and security was established. Religious minorities were guaranteed pro­ tection and equality. Agricultural investment and production were encouraged. Nomadic tribes were forced to give up their predatory raids and pursuaded to settle on hitherto deserted arable land on the desert fringe. More significantly, during this short period, Syria was "opened" to a relatively large-scale penetration by foreign 11 traders, travelers and missionaries. Once more, the people of the eastern Mediterranean became oriented westward as in Phoencian, Roman,

Byzantine and Crusade days. The entire area was exposed to new forces springing from the industrialization of Western Europe. This x

The Egyptian rule lasted nine years. At first hailed as deliverers from Turkish yoke, the Egyptians soon made themselves gen­ erally unpopular to the vested interests by their reforms and to the 12 public by the establishment of military conscription. Anglo-

Austrian military intervention, in behalf of the Ottoman Sultan, term­ inated Egyptian rule over Syria. The whole structure of reforms in­

troduced by the Egyptians collapsed suddenly. Local representatives of the Ottoman Government attempted to reestablish the old order which they had been accustomed to. This proved an impossible task, and the country, particularly in Mount Lebanon, plunged into an agonizing period of feudal tension, sectarian strife, and economic deterioration.

As the British Consul, James Brant, reported in 1858, there were many, even among those who resented the Egyptian occupation, who could look 13 back to the Egyptian period as a "brief golden age." The communal strife in the Lebanon between the Maronite Christians and their former landlords, the Druze, fed and exploited by the rival foreign powers, culminated in the massacre of 1860. The disturbances soon spread to Damascus, resulting in further human bloodshed, damage to property, and disruption of trade.

The intervention of the European powers guaranteed as of 1864 an autonomous administration for Mount Lebanon. A period of tran­ quility and prosperity ensued for the enterprising, hardworking people of the mountain. Under the new regime, agriculture flourished, and the culture of silk was encouraged. Prosperity, however, brought along with it increased population growth in the already overcrowded mountain. At the beginning, the fast growing seaports absorbed the increase. Later on, pushed by the meager resources of their region and faced with limited opportunities in the neighboring districts, the

Lebanese began to emigrate first, to Egypt, and later, to the New

World. Things were concurrently changing in the Syrian area in gen­ eral. There was slow, sporadic, unequal, but nevertheless real improvement in the efficiency of the Turkish administration, particu­ larly as regards security. The Ottoman Government undertook several steps to reassert its authority over the feuding, corrupt, local chieftains. "Reforming" governors began to make their appearance in the provincial cities of the Empire. Colonization by indigenous peasants and landowners and by immigrant Circassians was encouraged, and special attention was paid to the areas bn the desert margin.

Considerable and better armed forces were sent on punitive expedi­ tions, or on expeditions to pacify hitherto unadministered areas and to subjugate rebellious tribes. Littl fots and police posts on the 14 desert fringe were established.

Economic progress was noticeable even by the early 1870’s.

"There can be little doubt," observed the British consul in 1872,

"that the country has progressed in wealth and prosperity. Agricul­ ture has extended in spite of fiscal restrictions, there is an increased amount of commercial transactions, and there is, I think, 15 more of wealth than could at the first glance be estimated." The imporvement in sea and land transportation intensified

European trade, which began to flood the country with cheap, machine- made goods as early as the 1830's. Locally, new roads and railways, running from the coast inland, were built, mostly with foreign capital, to tap the hinterland market. The inevitable decline of the home industries in the face of European competition hurt especially the active, skilled, and potentially industrial class of Moslem artisans.

The weakening of this vigorous middle class widened the traditional

Middle-Eastern socio-economic gap between the few and the many, a gap which was further accentuated by the Westernization of the Syrian elite class, particularly the Christian element which benefited most from the expanded contacts with Europe. Concurrently, other forces in rural areas worked to deprive the peasantry of their land and to con­ centrate agricultural land in the hands of a new class of landlords, which looked at land ownership as a financial rather than a productive investment.

Our goal in this study is to assess the developmental role of

Syria’s expanding trade relations with the West during the period,

1831 - 1914, in the light of relevant theoretical propositi ns. While

Syria during this period was politically part of the Ottoman Empire, it was administratively and economically an autonomous province, with natural geographical boundaries. 'The distinctive feature of this period is the rise of native commercial enterprise and increased 16 response to profit opportunities. xii

The method to be used in this study is best characterized as

"qualitative-historical." Lack of national income accounts rules out

any quantitative, in the sense of econometric, approach to the problem.

In any event, any attempt to analyze the origins and causes of eco­ nomic growth through the media of national income aggregates runs the

risk of obscuring the significant factors, because the experience of a pre-industrial economy does not fit naturally into the conventional income matrix.

Because the statistical and descriptive data for this study are widely scattered in the economic and literary literature of the period under study, the "archeological" nature of this effort should be noted at the outset. The British commercial, consular and diplomatic reports form the main source of the statistical basis for this work.

In order to clothe the bare bones of statistical fact with flesh and blood, recourse had to be made to a variety of additional sources that 17 range from the few, serious economic studies that are available to

the numerous travelog and descriptive accounts by foreign travelers and residents in the area.

The study will deal only with the welfare and structural impact of foreign trade. The balance-of-payment issue (which forms the third part of the theory of international trade), is tangentially discussed in Chapter I and only within a long-run context, as the issue of

short-run external equilibrium lies beyond the purview of this study.

Chapter I, based on our "archeological" findings of Appendix I, sets the stage for the analytical work in the following chapters. It xiii is mainly descriptive in nature, aimed at establishing a justification for the undertaking of this study. Intensification of international

trade relations during the nineteenth century and the rise of foreign demand for Syrian goods and service are emphasized in this chapter.

The chapter is prefaced with a brief, general statement of the trade- growth relationship. It is basically an eclectic view of trade and development that serves to raise the pertinent questions in the cur­ rent controversy over the developmental role of international trade.

More detailed treatment of these theoretical questions is given in the following chapters.

The welfare aspects of foreign trade are dealt with in the next

two chapters. The nature and extent of available data must, of neces­ sity, set limits to the usefulness of a study of Syria's terms of

trade. An attempt is made in Chapter II, however, and the effort proves to be not lacking in reward. Chapter III first brings together widely scattered material on the Ottoman commercial policy as it affected the Syrian situation, then appraises this policy against a set of relevant postulates dealing with trade and welfare. An attempt is made here at advancing a case for the preservation (through a pro­

tective tariff policy) of an existing, important, traditional indus­

try, faced with decline or even extinction after it has been exposed on a wide scale to foreign competition. We shall be guided in our

analysis not by efficiency considerations alone (i.e. scientific objectivity) but also by considerations of redistribution of welfare 18 or equity (which admittedly involve value judgments). xiv

The organizational problems and structural changes attendant

upon the "opening up" of a backward economy to the wide range of influ-

- ences emenating in the field of international'-trade are discussed

against the background of Syria’s economic, social, and cultural insti­

tutions. Chapters IV, V, and VI deal with the response of the Syrian

economy to the international demand forces discussed in Chapter I.

Chapter V discusses the extent to which the organization of foreign

trade hindered or contributed to the growth of trade, rise of an

entrepreneurial class, accumulation of commercial capital, and devel­

opment of banking and transportation facilities. Chapters V and VI

deal with the changes that occurred in the quantities and qualities of

factors of production in the agricultural and industrial sectors,

respectively, and the effects of these changes on the patterns of con­

sumption and general levels of living in rural and urban areas.

Finally, Chapter VII, in a few, concluding observations,

addresses Itself to the main questions raised in the theoretical pref­

ace to Chapter I. In addition to Appendix I on the foreign trade

statistics of Syria, demographic tables, based on a separate study

made by the author, are given in Appendix II to serve as a basis for

per capita computations. XV

Footnotes to Introduction

Paul Masson, Histoire du Commerce Francais dans le Levant au XVII siecle (Paris, 1896), introduction, p. ij; and Adel Ismail, Histoire du Liban (Beirut, 1955), I. 120.

^The heyday of the English trading houses in Aleppo was during the reign of Charles II, after the Restoration. The French trading* houses were more active in the eighteenth century, but their business, too, was ruined by the beginning of the nineteenth century. However, while all the English left the city of Aleppo after its trade had failed, the French and Italian communities, which were rather colonies than trading houses, stayed behind and were Levantinized. They bought houses and gardens, and carried on the local trade, depending on the remaining resources of the place. Cf. Andrew Paton, The Modern Syrians (London, 1844), p. 258. 3 Many wealthy Englishmen made their fortune in Aleppo. Service there as agent of a reputable London merchant was recognized as a gateway to a lucrative career, and "many a gentleman in the Restora­ tion period was ready to pay a premium of hundreds of pounds to pro­ cure the acceptance of a younger son as apprentice to 'some great mer­ chant of the Levant Company'." George D. Ramsay, English Overseas Trade (New York, 1957), p. 48. 4 Philip K. HItti, History of Syria (London, 1951), p. 673.

^Kamal Salibi, The Modern history of Lebanon (New York, 1965), p. 129. 6 Credit was common in trade transactions, and the discounting of bills of exchange according to rates prevailing in Constantinople was fairly in use, but It was not often possible to simply barter cloth for 3ilk and cotton, for the local exporter was "wont to seek some at least of his price in coin," Ramsay, loc. cit. Spanish pieces of "eight" were the accepted currency in Turkey until 1653, when with the introduction of French coins a period of disarray began. Ibid. The only coins struck by the Turkish government were small- change coins (cf. Masson, op. cit. , p. 493). These coins were subject to continuous tinkering, which led to their depreciation to one for­ tieth of their initial value between 1688 and 1844. Cf. John Barker, Syria and Egypt Under the Last Five Sultans of Turkey (London, 1876), I, 61. 7 For a good account of nomadic encroachment, see Norman Lewis, "The Frontier of Settlement in Syria, 1800-1950," International Affairs, XXXI (January, 1955), 48-60. XV1

8 F. Charles-Roux, Les Echelles de Syrie et de Palestine au XVIIIe siecle (Paris, 1928), pp. 7, 70. 9 Charles P. Issawi (ed.), The Economic History of the Middle East (Chicago, 1966), p. 206.

^William Polk, The Opening of South Lebanon, 1788-1840 (Cam­ bridge: Mass., 1963), p. 169. 11 Ibid., preface, p. vii; and Issawi, op. cit., p. 207. 12 Polk, op. cit., p. 169.

^Cited in Polk, ibid., p. 226. 14 Lewis, op. cit., p. 53.

^British Commercial Report (hereinafter referred to and to British consular and diplomatic reports as BCR), Vilayet of Syria, 1872. 16 The British consul in Beirut stated in his report, written before the withdrawal of Egyptian forces in 1840, "The internal trade of the country has increased within the same period, as native capi­ talists now venture to embark their fortunes in commercial specula­ tions, which formerly they did not venture to do." Cited in John MacGregor, Commercial Statistics (London, 1847), II, 148, extracts of which are reproduced in Issawi, op. cit., pp. 221-225. Emphasis added. 17 Two important works were done in the 1830’s: the first, by the French consul at Alexandria, covers the earliest period of Egyp­ tian rule, and is published in Commandant Georges Douin, La Mission du Baron de Boislecomte, L*Egypt et la Syrie en 1833, soci£te royale de geographie d'Egypte, publications speciales, Cairo, 1927; the second, by a representative of the British government, appears in abridged form in John Bowring, "Report on the Commercial Statistics of Syria," Great Britain, Parliamentary Papers, Vol. XXI, 1840, and covers the last years of the Egyptian rule. The first work was not available to the writer; the second was available only in the abridged form. In the 1890’s we have Vital Cuinet, Turquie D'Asie (Paris, 1891), and Syrie, Liban et Palestine (Paris, 1896). His figures, especially those attributed to official sources, are exaggerated. Another British report, done in 1909, appears in E. Weaklet, "Report on the Conditions and Prospects of British Trade in Syria," Great Britain, Accounts and Papers.(London, 1911). Immediately before the First World War a work was based on official sources, but is found wanting in many respects. This is Arthur Ruppin, Syrien als Wirtschafsgebiet. Beihefte Zum xvii

Tropenflauzen, Vol. XVI, No. 3/5 (Berlin, 1916). The English trans­ lation, in abridged form, by Nellie Straus, appears in Arthur Ruppin, Syria; an Economic Survey, (New York, 1918), Finally, there is the work done after the war, by a French group headed by the French scholar and professor Paul Huvelin, and appears in Paul Huvelin, "Que vaut le^Syrie?", L'Asie Francaise, (Paris; December, 1921), Supplement, No. 1. 18 Tibor Scitovsky, "The State of Welfare Economics," American Economic Review, XLI, No. 1 (June, 1951), 303-3i5. CHAPTER I

THE FOREIGN TRADE OF SYRIA

The economic growth of a country does not depend only on the size and efficiency of the factors of production within its borders; it depends also on the opportunities presented by the international environment in which it finds itself and on the ability of its human and natural resources to respond to these opportunities. This capacity to respond is of special importance to smaller countries, whose foreign trade sector represents a significant share of their total economic activity, and whose level of exports tends to have more influence on their aggregate demand than does private investment or government expenditure.^ It is, therefore, especially pertinent to examine the development of the Syrian economy in the context of its external environment.

The establishment of wider international contacts between Syria and Europe, In the wake of the Egyptian occupation of 1831-1840, opened up the country to a great deal of Western cultural and commercial influence that made Syria, comparatively speaking, one of the most 2 prosperous provinces of the Ottoman Empire., In other parts of the

Empire the impact of the West remained very limited.

The purpose of this chapter is to determine and analyze the salient features of Syria's foreign trade during the period of our study. It is prefaced, however, with a theoretical introduction, Sec­ tion I, outlining the main issues i»""lv?d in the continuing controversy over the extent to which trade can be a leading sector for development. Section II defines the scope of Syrian foreign trade as examined in this stud'^. Section III analyzes the growth of Syria's overseas trade. . Section IV is concerned with the direction of Syrian exports and imports. Section V attempts to explain the behavior of the

Syrian balance of merchandise trade during the period under considera­ tion. Section VI examines the changes that occurred in the composition of exports and imports. Finally, Section VII sums up the conclusions of this chapter.

I. THE ROLE OF FOREIGN TRADE IN THEORY AND PRACTICE

The aim of this theoretical introduction is to underscore the relevant factors in any discussion of what can and cannot be expected from trade as an agent of growth.

Under the conditions assumed by the classical and neo-classical 3 economists, trade could contribute to a country's growth by permitting it to increase its productive efficiency through specialization and by acting as a conveyor belt, transmitting growth from one expanding sec­ tor to the rest of the economy and from one expanding center to the rest of the world. A natural corollary of this view is to advocate a policy of universal free trade. There is no potential conflict in this view between the gains from trade (i.e. from specialization based on static comparative advantages) and the gains from growth.

The traditional view springs from the experience of countries that rank today amongst the most developed, whose trade, in the words 5 of Sir Dennis Robertson, acted as an "engine of growth." It was no doubt under the impression of his contemporary experience that Alfred

Marshall declared that "the causes which determine the economic progress of nations belong to the study of international trade." In the same vein, another neo-classicist observed.

It Is dangerous to assign to any single factor the leading role in the continuing economic revolution which has taken the modern world so far away from the world of a few hundred years ago. But is there any other factor which has a better claim to that role than the persisting search for markets? No other hypothesis so well unites economic history and economic theory.7

Three concepts of the gains from trade could be distinguished in the traditional and m o d e m literature on this subject. First, the fruits of specialization resulting from expansion of the market are the immediate and direct gains from trade. They are often referred to as the "consumption gains from trade" or the "terms-of-trade gains." They arise when two countries are enabled, by shifting their factors of pro­ duction to conform more closely with an optimal world distribution of such factors, to consume a bundle of goods and services not feasible in economic isolation. The size of these gains depends on the skewness of resources. Other things being equal, the more skewed the resources up to a certain limit, the greater would be the divergence of the terms of trade from the different domestic price ratios that would exist in the trading countries in the absence of trade, and therefore the larger the g gains from trade. These gains are divided among the trading countries in accordance with their respective reciprocal demands.

Gains based on International specialization are "static" in nature, as they derive from a once-over change in allocation of 9 existing resources. They ought to be distinguished, therefore, from

the indirect effects of trade, the so-called "production gains" or 10 "growth gains" from trade, which are dynamic in nature, and arise out of an enhancement of per capita power to produce goods and services desired by the community. Trade-induced forces of growth, though recog­ nized by the classical and neo-classical economists, do violate many of

their basic assumptions. International trade can result not only in

the alteration of the quantities and qualities of domestic productive

inputs, it can also lead to the international transfer of crucial pro­

ductive inputs, acceleration of technological change, and creation of

external economies.

A third concept of gains that partakes of the nature of the

above two concepts, and was also mentioned by classical and neo­

classical economists, especially by those who recognized the possibil­

ity of unemployment, is the "employment gains from trade." If a coun­

try has labor inputs that remain unemployed or underemployed because of

a conjunction of a skewed factor endowment and limited technological

choices, such a country would profit through trade, because trade in

changing factor price ratios calls forth and enlists for development

purposes resources and abilities that are hidden, scattered, or badly

utilized.^

Historically, trade played a substantial role in the development

of many countries in the nineteenth century. Britain developed as the

leading industrial center, from which growth was transmitted to Western

Europe and to other countries through trade. The United States, Canada, Australia, New Zealand, and other so-called Areas of Recent

Settlement In the temperate zone benefited from the European demand for their foodstuffs and raw materials. More importantly, there was a move­ ment of capital and labor from the European countries into these areas, which enabled them to meet the rising demand of the industrializing mother countries. Not only did demand expand, but the new producers were able to replace the domestic farmers in the industrialized centers.

Technological progress in supplying these materials was encouraged, while the institutional framework of the emerging nations was such that thidr internal economies were stimulated, agriculture was modernized, and industry developed in turn. In short, these countries possessed the essential ingredients for the beneficial role of trade, namely, an increasing and steady market for the products in which they had a com­ parative advantage, and an internal economic, political, and social situation that allowed the immediate or direct gains from trade to 13 spread to other sectors of the economy.

Modern critics of the traditional view of the beneficial role of trade turn their attention, instead, to the historical experience of tropical and semi-tropical areas that were also brought into the expanding network of international trade during the nineteenth and early twentieth centuries but failed to develop along the lines envi­ sioned by the classicists and neo-classicists. Indeed, they point to the backwash effects of international trade which were much stronger 14 than its spread effects in these countries. Foreign investment was attracted to export industries, but the rise of purchasing power of these countries had little effect on stimulating their domestic indus­

tries. The gains from trade were a once-and-for-all dividend, as the so-called international demonstration effect inhibited the growth of

their savings. In addition, foreign industries drove out what little domestic industry existed, forcing people employed in industrial activity into unproductive agriculture or speculative trade. Singer believes that the multiplier (spread) effects of foreign investment

took place actually in the investing countries.1"* These countries got

the added income, employment by processing the materials, capital,

technological knowledge, external economies of production, and so on.

Thus, the unequal gains that resulted from trade between advanced and underdeveloped areas tended to widen the gap between rich and poor

countries. Other economists have also noted that trade had brought to

the backward countries the phenomenon known as “economic dualism," i.e.

the rapid development of a modern sector of the economy, where foreign

capital was combined with local labor and land of unique quality,

accompanied by stagnation, or almost imperceptible progress, in the

traditional subsistence sector.1^

The heated controversy over the developmental role of trade has

shown the inadequacies of all theoretical formulations advanced to

explain this role. It is becoming increasingly evident that these

theories "are neither ’right' nor 'wrong' but simply partial, relevant

only to a particular set of circumstances, or to some aspects of all 17 situations." Accordingly, a more balanced, eclectic view of the

trade-growth relationship has emerged. In such a view, trade is likely 7

to assume a number of different roles in the development of a single

country, and may very well affect different countries differently.

This variability in the impact of trade should be attributed to the basic nature of the problem of development itself. Economic develop­ ment is primarily a domestic problem, and there is no reason why inter­ national trade should be expected to solve all problems of development, 18 in any and all circumstances. Indeed, according to this view, devel­ opment is possible in a closed economy, as the example of the Soviet 19 Union shows. The trade-growth relationship is not only varied and

complex; occasionally it is remote. As Kindleberger has pointed out,

"The impact of foreign trade is indeterminate over a wide range. Trade

can stimulate growth, when the demand is right abroad and the supply is

right at home. It can inhibit it when the demand is wrong abroad and

the supply is wrong at home. In the two intermediate cases, we do not ,,20 know,"

In a brief summary of the effects of international trade, Gerald

Heir observes that the stimulus from exports would normally be expected

to be stronger:

the higher is the growth rate of the export sector; the greater is the direct effect in the export sector on employment and per­ sonal income: the less the distribution of export income favors those with a higher marginal propensity to import; the more produc­ tive is the Investment resulting from any saving of the export income; the more exports expand through a change in production functions» rather than by a simple widening process; the more extensive are the externalities and linkages connected with the export s^tor; and the more stable are the export receipts retained at home.

The stimulus of exports, according to Meier, will depend not

only on the rate of export growth, but also on the character of the counc.ry’s export base. The penetration of the trade effects to other sectors will also depend on how receptive the economy is to the stim- 22 ulus from exports. Even with a strong stimulus from exports the transmission of growth from the export sector to the rest of the econ­ omy will still be contingent upon other conditions in the economy. The weak spread effects of exports in underdeveloped countries is to be explained not only by a possibly weak stimulus from a particular type of export, but also by a host of domestic impediments that limit the transmission of the gains from export to other sectors even when the stimulus may be strong. v The carry-over from exports is restrained by market imperfections-factor immobility, price rigidity, isolated mar­ kets^ ignorance of technological possibilities, and other characteristics of economic backwardness. As long as the domestic economy remains fragmented and compartmentalized, the transfer of resources to more productive employment is restricted, and the linkage of markets and 23 their subsequent extension are limited.

Moreover, many of these inhibiting factors are associated with the lack of political development and with socio-cultural customs and institutions that are inimical to progress and perpetuate the tradi- 24 tional society. In the absence of prior political development and changes in the social structure and the values of a traditional society, the secondary round of activities, induced by expansion in any sector, is cut short, and it is difficult to produce further transformative effects elsewhere in the economy.

Linking his analysis to Rostov's schema of the stages of 9 economic growth, Meier, concludes,

The failure of the export sector to have been a primary growth sector, setting in motion expansionary forces elsewhere in the economy, may be attributed in large part to the absence of the preconditions necessary for a take-off into self-sustained growth. While exports rise, many poor countries at the same time had not yet experienced the second stage of growth— a transitional era when the politics, social structure, and values of a traditional society are altered in such ways as to permit regular g r o w t h . 25

Accordingly, the growth and employment gains from trade for

these countries may turn out to be insignificant and (if imports also have an adverse effect on the home industry) even negative. On the other hand, developed countries today can choose between trade expan­

sion and expansionary fiscal and monetary policy if they want to utilize idle resources. In other words, exports could be for an

advanced country a sufficient, though not a necessary, condition for 26 growth, while for the underdeveloped country that lacks the flexi­ bility of modern economies, export expansion could be a necessary, 27 though not a sufficient, condition for growth.

Dissatisfied with their development records and disappointed with the results of their ad hoc national measures, the less developed

countries have retreated to the old view that foreign trade may solve

their problem, and have been pressing for relaxation of trade restric- 28 tions by the advanced countries. However, trade expansion alone is

only an invitation to gain, rather than a guarantee for gain. For

exports to lead to growth, the basic conditions for development, as

outlined by Meier, have also to be fulfilled. 10

II. THE SCOPE OF SYRIAN FOREIGN TRADE

On the eve of the Egyptian occupation, Syria's trade relations with the West were continuing their downward trend. Lebanese silk was still in demand by Lyons, but the European countries had for some time 29 lost political and economic interest in the area. Internally, the country, just before the occupation, was in a state of anarchy. What­ ever remained of Syria's foreign trade was carried mainly with neigh­ boring countries. In 1825, Damascus alone bought Asian goods, mainly brought by caravan from Baghdad, worth more than twice all Syria's pur- 30 chases from Europe. Even in 1833, its imports from Baghdad were 31 still 30 per cent higher than its imports via Beirut. It is diffi­ cult to assess the volume of overland trade, though, judging by the number of caravans arriving at or leaving Damascus and Aleppo every 32 year, it was enormous. Spices, coffee,, rice and sugar were among the principal objects of trade, but, by far, the major component of this trade, in those days of high transport costs, was fine quality cotton 33 goods.

The Egyptian invasion brought industrializing Europe into con­ tact with Syria. Syria's exports to the West immediately increased, to pay in part for the European imports which flooded the area. Since it was the pull of external forces rather than the push of domestic growth that linked Syria with the international economy, it is with this grow­ ing share of Syria's foreign trade that this study will be concerned.

The trade figures that will be used here are gross in the sense that

they include the important ransit trade, I.e., exports originating 11 beyond the geographical boundaries of Syria plus imports not destined

for local consumption. The figures also include, as of 1845, that por­

tion of Syria's trade with Egypt and Turkey which was carried by sea.

Syria's regional trade continued to be important, but it was Syria's

expanded trade and cultural relations with the West that acted as a

catalyst in bringing about economic progress, if not self-sustained

growth, to modern Syria. To this dynamic factor, therefore, we shall

turn our attention.

III. THE GROWTH OF FOREIGN TRADE

Much of the economic change that occurs in the process of eco­

nomic development is a matter of quality rather than quantity, and we

shall have something to say about the qualitative factors later on.

There are advantages, however, in focusing on the quantitative story at

this stage of our analysis. The first is that establishing the dimen­

sions of foreign trade growth is an essential prelude to systematic

exploration of its developmental role. The second is that the problem

of measurement of trade growth raises a related problem, namely, the

change in the general price level at home and abroad, which must

receive equal attention (see Chapter II). The third is that it is

easier to assess the significance of Syria's trade growth if it is seen

quantitatively in the context of world trade growth during the period

under consideration.

In order to eliminate the fluctuations and set the secular trend

in the growth of the gross value of Syria's overseas trade, three- or five- yearly averages, except for a few single-year figures, are cal­

culated in index form in Table X, below. The year 1875 is taken as the

base period, in relation to which percentage changes are calculated.

Further, a population index number, having the same base year, is set

alongside for comparison purposes.

The most outstanding general feature of the growth of Syrian

trade which emerges from Table I is the rapid increase of exports and

imports following the entry of the Syrian economy into wider contact with the industrializing economies of Western Europe. Whereas popula­

tion was declining and trade with Europe was stagnant after the 1780's,

exports and imports more than doubled in the 1830's. With the opening

of Syria's doors to European trade under the Egyptian rule, there was a

sharp increase in the commercial activity of Syrian ports, particularly

of Beirut. In the process of opening Damascus to European trade,

Beirut's imports doubled by 1833 and its exports increased by 50 per 34 cent. Direct trade with Europe was revived. Instead of receiving

British manufactures indirectly through Leghorn, Syria started to 35 receive such imports directly from Britain. Furthermore, colonial

goods that formerly reached Damascus and Aleppo by caravan routes,

began to be supplied by European countries via the ports of Beirut and

Alexandretta. European commercial houses opened their main offices in

Beirut, with branches in Damascus and Aleppo, The people of Damascus,

who would not allow the entry of a British consul in 1830, were patron- 36 izing 107 shops retailing British goods in 1838. Even the great

tribal groups in the desert were affected, as they found they could buy 13

TABLE I

GROWTH IN THE CURRENT VALUE OF FOREIGN TRADE AND IN THE POPULATION OF SYRIA, 1780's - 1913* INDEX, 1875 « 100

' Foreign Trade Population

Exports Imports Total Sedentary Total Trade

17.80's 10 78 74 1825-27 14 11 12 64 70 1835-37 31 28 29 62 68

1844-46 30 35 33 1857 93 53 66 74 78 1875 100 100 100 100 100 1883-87 168 147 154 1888-92 172 166 168 1893-97 214 156 175 122 118 1898-1902 224 150 174 1903-07 262 177 205 1908-12 268 217 234 1913 278 254 262 140 133

* Note: Trade figures for the 1780 s, 1825-27, and 1835-37 cover trade with Europe only. As of 1844-46, figures cover also sea­ borne trade with neighboring Turkish and Egyptian ports, a good pro­ portion of which, however, belongs to the main trade with Europe. The 1844-46 figure for Beirut and Alexandretta's figures (as of 1878-79) do not include specie flow (see infra, footnotes to Appendix I, Table I).

Sources: Except for the 1780's, computation of trade index numbers is based on Appendix I, Table I below. The 1780's index nura-~ ber is derived on the basis of a trade figure of L400,000 sterling, cited by Charles Issawi (ed.), The Economic History of the Middle East, 1800-1914 (Chicago: The University of Chicago Press, 1966), p. 208. Population index numbers are computed on the basis of Appendix II, Tables I and VIII below. For 1825-27, population is estimated at 1,400,000 for sedentary and 450,000 for non-sedentary population. 14 their headdresses and gowns more cheaply from factories at Liverpool than they could weave them. Britain's great drive for trade at the time w a s motivated by two coincidental factors. First, the most rapid rate of growth in British cotton textiles came in the 1820's and 30*s, 37 trailing off in the 1840's.. Secondly, after the Napoleonic wars, by reason of the increasingly protectionist policies adopted on the con­ tinent, Britain was forced to seek new markets for its manufactures and 38 new sources of supply of raw materials.

Revival of trade with the West resulted in a widening of Syria's

trade deficit. Its archaic production structure failed to respond immediately to the challenge of a rapidly industrializing Europe.

European, particularly British, preference for gold and silver in settlement of the trade deficit led to a grave specie drain in the

1830's and 1840's, which slowed the growth of trade during the latter decade. The growth rate of trade was also affected by the shortage of 39 shipping that developed, the reduced share of France in tlie Syrian 40 trade after the withdrawal of the Egyptian forces, the famine of 1846,

and the depressed and turbulent conditions in Europe during 1846-1848.

After establishing this new link with the European market, the Syrian

economy was becoming increasingly exposed to the financial and economic

crises abroad.

Syria's trade relations with Europe were favorably affected by

the developments of the 1850's, namely, the introduction of American

and Australian gold into Europe, the rapid expansion of French business,

and improvements of bank organization. There was a lessening of the pressure on Syria’s dwindling gold stock. Increased demand for

Syrian silk revived the stagnating silk industry. According to French consular reports, Beirut which experienced an average annual trade deficit of nearly L50O,QOO and a specie drain of L200,000 during the period 1841-1845, developed a trade surplus averaging approximately

L63,000 accompanied by a reversal of the specie flow during the years 42 1852-1857. The Syrian economy received strong boosts during the

Crimean War and the American Civil War. In 1860 there was a temporary stagnation of trade as a result of the bloody events in Mount Lebanon 43 and Damascus. The return of peace and security after the interven­

tion of the Great Powers, and the opening in 1864 of the first wagon

road in Syria from Beirut to Damascus revived Syria's foreign trade.

The 1870's witnessed stagnation of trade and depression of eco­

nomic conditions in Syria as well as in other parts of the world. The

opening of the Suez Canal in 1869 was detrimental to the remaining 44 overland® transit trade. Aleppo began to lose its "emporium" status

as a market for the sale of European manufactured goods. The general

fall in prices in Europe, and the Franco-German war in 1870 particularly

hurt Syrian silk exports to France. With the opening of the Suez Canal,

Syrian silk began also to face fierce competition from Chinese and

Japanese silk. Likewise, sesame, another major cash crop, had to com- 45 pete with Indian sesame on the European market. Cotton production

and cotton exports, stimulated by European demand during the American

Civil War, now languished after resumption of American exports and the 46 tremendous expansion in Egyptian cotton production and exports. 16

Locally, crop failures were frequent, while cholera and locust inva­ sions were ravaging. General conditions of insecurity and drain of all able-bodied men for the Turkish-Russian war depressed further agricul­

tural production and reduced vast numbers of people to near starvation, leading to bread riots in urban centers. Finally, the stoppage of interest payments on the Turkish Government securities produced indus- 47 trial and commercial stagnation. Exports increased by the end of the decade as good crops in Syria coincided with bad ones in Europe, but

the result, in the words of the British consul, "has, like other parts of the world, proved unsatisfactory, heavy losses having been sustained 48 by merchants in almost all the branches of imports and exports." The general decline in prices which had set in earlier in the decade was spreading all over the world.

Beginning in 1883, Syria began to recover from the long period of 49 depression. There was a gradual development of the nation's agricul­

tural resources, accompanied by increased population. "Population is growing fast," reported the British consul in 1886, "trade is increas­

ing with rapid stride, houses and business premises are springing on

every side, and each year fresh tracts of lands are brought under cul­

tivation.""^ Not before long, hotjever, Syria's wheat exports were to receive a new setback. Grain prices in Europe began to decline rapidly

after improvements in ocean transportation reduced ocean freight on bulk grain shipments, bringing the major grain-producing countries of

India, Russia, the United States and Argentina closer to the European market. Syrian wheat found it harder to compete in its traditional 17 markets with the superior-quality wheat of these countries. Further damage to Syria's exports followed in the wake of the increasingly pro­ tectionist tariff policies adopted in Continental Europe."’’*' On the other hand, the cost of transporting Syrian crops from the interior to

the ports remained very high, and in some cases prohibitive. Indeed,

the great differential in freight rates made it possible for Beirut and

Jaffa to rely more, for the supply of their needs, on superior-quality 52 flour imports than on native wheat.

The situation somewhat improved in the 1890's with the construc­

tion of Beirut Port and the building of railway lines. Improved eco­ nomic conditions in neighboring countries gave stimulus to exports of specialized Syrian handicrafts that appealed to local peculiarities of

tastes. But the increased flow of emigration during the two decades

that preceded the First World War led ultimately to the leveling off of

Syrian production and exports.

In contrast with the long-run fluctuations in the pace of export growth, imports grew at an annual compound rate of 2.2 per cent from

1875 to 1895 and again at the same rate from 1895 to 1910. While Syrian

imports from one year to another depended on the level of Syria's exports— and on the harvest conditions in the neighboring Ottoman provinces that procured their imports of European goods through Syrian

channels— , the long-run steadiness in imports growth must be explained by the fact that the increasing familiarity of Syrian and neighboring

consumers with imported goods made the latter so indispensable that a minimum level of imports had become necessary irrespective of local 18

economic conditions i.e., income elasticities were low downward. The

fact that exports, too, were growing made it possible to sustain the

_ rising home demand for imports. On the supply side, the decreasing

costs and prices of imports during this period made it within Syria's

reach to satisfy the rising requirements of resource development, the

increased wants of the growing population, the needs of the increasing

number of European pilgrims, tourists and Jewish immigrants, and the

new needs stimulated by increased contacts with these foreigners.

Syria's several-fold expansion in foreign trade was realized in

the face of manifold obstacles and defective trade organization. The

foreign trade of Syria, during the period of our study, labored under

many handicaps: dependence of exports in a serai-arid land on unpre­

dictable weather conditions; competition with generally superior prod-

u< ta on the world markets; heavy inland transport costs; insecurity of

trade routes; inadequate harbor and port facilities; defective customs

system; and for a long time, lack of banking facilities. Looking again

V <«*T at Table I, we find that total trade increased roughly two times and a

half between 1875 and 1913, compared with only one-third rise in total

population. On the assumption that real output at least kept pace with

population growth, foreign trade may be said to have grown at a con-

■ slderably higher rate than real output, a phenomenon characteristic of

the experience of most countries in the early stage of their develop­

ment.

The fundamental explanation of the upward trend in Syria's trade

must be sought in the demand and supply conditions that prevailed 19 throughout the period. While on the supply side, it was the relative availability and efficiency of factors of production that governed the cost and rate of expansion of Syria's exports, on the demand side, it was the relative rate of growth of world income and trade that deter­ mined the relative increase of these exports. There was an unprece­ dented growth in world trade during the period of our study, stimulated by technological improvements in manufacturing, transportation and navigation. The supremacy of Britian as a world sea-power ensured relatively more peaceful conditions in the world during the one hundred years that followed the Napoleonic wars. Its early lead in industrial­ ization converted the British people to free traders, after which free trade became the norm for many countries during a good part of the 53 second half of the nineteenth century. The international gold stand­ ard assured the stability of international exchange rates, which favored the flow of foreign trade and foreign investments. The opera­

tion of the gold standard was accompanied by the development, primarily in London, of elaborate money markets by which international trade was 54 financed and payments were cleared.

To evaluate properly the relative magnitude of Syria's trade growth in the context of the world experience during the nineteenth and early twentieth centuries, growth indices of world trade and of the

trade of the leading commercial nations x r f Europe are given in Table II.

When compared with the latter table, Table I reveals that Syria's com­ mercial performance from 1820 to 1875 was comparable to those of France,

the United Kingdom, and the world in general. The current value of 20

TABLE II

GROWTH IN THE CURRENT VALUE OF FOREIGN TRADE OF THE WORLD AND OF SELECTED COUNTRIES 1780 - 1913 * INDEX, 1875 = 100

** The World Total Trade

Trade Population Britain Germany France Holland Belgium

1780 7 1800 11 1820 12 12 12 1830 14 18 13 8 1840 20 28 19 14 1850 29 45 25 26 18 1860 53 57 56 45 41 1870 78 84 77 69 67 1875 100 100 100 100 100 100 100 1880 110 107 95 115 118 120 1885 107 98 96 97 162 106 1890 122 114 124 110 195 129 1895 123 107 124 96 214 128 1900 146 133 172 119 299 172 1905 196 149 214 130 374 224 1910 254 185 273 180 482 318 1911 267 190 296 191 495 336 1912 293 205 327 202 551 370 1913 295 126 215 347 207 572 347

---- H—

The base year for the index number of world trade is 1872-73 and for world population is 1876-80. General Trade for Britain, and special trade for other countries.

Sources; World Trade; For 1780-1870 figures, see Michael G. Mulhall, Dictionary of Statistics (fourth edition; London; G. Routledge & Sons, Ltd., 1899), p. 128. For 1872/73 - 1913 figures, see Wladmir Woytinsky and E.S, Woytinsky, World Commerce and Govern­ ment (New York; Twentieth Century Fund, 1955), Table 13, p. 38. World Population; H.J. Habakkuk and M. Postan (eds.), The Cambridge Economic History of Europe (Cambridge: Cambridge University Press, 1965), VI, Part I, p. 53. Trade of Seclected Countries: Woytinsky and Woytinsky, op. cit., Table 21, pp. 50-51. Britain’s figure for 1850 is based otr figures in Brian R. Mitchell, Abstract of British Historical Statistics (Cambridge: Cambridge University Press, 1962)f'Table 2 (official values of overseas trade), p. 283. international trade increased eight times and a half in this period.

Between 1875 and 1913, the value of trade trebled for the world, increased two times and a half for Syria, and only doubled for Britain and France. In comparisons between Syria and the world, however, we should note the difference in the base of their respective trade and population indices. If Syria's overland trade were also included, it would be a fair guess that Syria's record matched, if not outperformed, the world's, on a total or per capita basis. On the other hand, it is clear that the performance of Syria, and even that of Britain or France, did not compare favorably with that of Belgium or Germany, and espe­ cially with Holland's. Compared with Britain and France, these coun­ tries started from a relatively lower initial level of trade, and their industrialization, and as a result their trade, blossomed at a much later date.

Viewing the world picture as a whole, we find that international trade accelerated fastest during the earlier period of 1820-1875, and that trade growth during the latter period of 1875-1913 was uneven.

The explanation of the early acceleration may be found in the statisti­ cal bias of the first period and of the later unevenness in the change in the general level of prices during the second period. In the early period, world trade Initially was so small that even modest increments appear proportionately large. In the second period, the growth of world trade slowed down in the 1870's and 1880's but quickened again at the end of the century and, especially, after 1900. The annual increase averaged one per cent in 1875-1895 and five per cent from 1895-1913. 22

This uneven growth in the value of world trade was partly due to fluc­ tuations in prices. Prices declined in the first two decades and sub­ sequently rose rather steadily. We shall discuss these changes in the price level in greater detail in the following chapter. Here we may mention that the general level of prices in Great Britain, the main center of world trade— where British merchants established world market prices for wheat, cotton, sugar and other staples— was still 10 per cent lower in 1913 than in 1875 and 18 per cent lower than its peak in 55 1872.

IV. DIRECTION OF TRADE

The most remarkable change in the direction of the Syrian for­ eign trade during the period of our study is the relative rise in the proportion of goods exchanged with Europe, and the relative decline of

Syrian trade with neighboring countries.

On the eve of the Egyptian occupation, Syria's foreign trade was primarily regional in character. With the reorientation of trade during the Egyptian occupation, Europe’s share in the Syrian trade 56 equaled that of Egypt and Turkey, Syria’s largest neighbors. In 1831, a British consul was for the first time installed in Damascus, and the first British ship direct from England arrived at Beirut with goods for 57 58 sale. Nine vessels came in 1833, eleven in 1834. In 1850, fifty 59 British ships visited the ports of Syria and Palestine.

The French, who stood to gain from their support of the Egyptian ruler, found their progress halted after the withdrawal of Egyptian 23

troops. In consequence, France's share, as seen In Table III, declined from 23.15 per cent of Syria's sea-borne trade in 1835-37 to 17.4 per cent in 1844-46. On the other hand, Britain's share, during this decade of fierce competition between the two European powers for polit­ ical and economic influence in the whole region, rose to nearly 26 per cent. British Imports were mainly cheap cotton and woolen cloths that suited better the taste and purchasing power of the Syrian people.^

Trade relations with Europe were greatly facilitated by the establishment of steam navigation in the Mediterranean. In 1859, the

British vice-consul at Alexandria listed eight regular monthly services, by French, Austrian and Russian lines, and six irregular ones, by

British, Turkish and French lines, calling at Syrian ports.^ In the meantime, Austria had become, as seen in Table IV, an important factor

in Syria's trade. Together with France, it was also active in Syrian

coastal shipping, which annihilated the local carrying trade but gave 62 impetus to coastal trade. Table IV shows that Austria ranked first

among Beirut’s customers and second among its suppliers. The figures, however, are misleading, inasmuch as they Include, for the major part,

transhipments to and from third countries, mainly Germany. Likewise,

goods in rransit through Turkish and Egyptian ports were credited to

Turkey's and Egypt's trade with Syria.

Table IV also shows the beginning of trade relations with the

United States, mostly in the form of Syrian wool exports. Yet, up to

1880 European trade with Syria was almost monopolized by three coun­

tries, England in the lead, with France and Austria competing for 24

TABLE III

BRITAIN'S AND FRANCE'S SHARES IN SYRIAN SEA-BORNE TRADE IN 1835-37 AND 1844-46 (In LOOO Sterling and Percentage Shares)

Exports Imports Total

Period Country LOOO (%) LOOO (%) LOOO (%)

1835-37 France 132 (30.70) 146 (18.94) 278 (23.15) Britain n.a. 189 (24.50)

1844-46 France 122 (18.00) 184 (17.00) 306 (17.40) Britain 80 (11.80) 372 (34.50) 452 (25.60) n,a. - not available

Sources: 1835-37: Calculated from Hassani, op. cit., pp. 177, 187, and 188; and Dominique Chevallier, "Western Development and East­ ern Crises in the Mid-Nineteenth Century: Syria Confronted with the European Economy," Beginnings of Modernization in the Middle East, The Nineteenth Century, ed., William R. Polk and Richard L. Chambers (Chicago: The University of Chicago Press, 1968), p. 214. 1844-46: Calculated from Wassel Catabi, Le Commerce Exterieur en Syrie (unpublished thesis, Sorbonne, Paris, 1945), pp. 48-49, quoting Henry Guys, Esquisae de L'etat politique et commercial de la Syrie (Paris, 1862), p. 237. 25

TABLE IV

GEOGRAPHICAL DISTRIBUTION OF BEIRUT'S TRADE IN 1844-46 AND 1855 (In LOOO Sterling and Percentage Shares)

Exports Imports Country 1844-46 1855 1844-•46 1855 LOOO (%) LOOO (%) L000 (%) LOOO (%)

Britain 70 (12.5) 155a ( 9.9) 229 (27.8) 455 (32.0) France 81 (14.5) 323 (20.8) 150 (18.1) 397 (27.8) Tuscany and Sardina 34 ( 6.0) 130b ( 9.0) 18 ( 2.2) 22 ( 1.5) Austria 3 ( 0.5) 597 (38.0) 27 ( 3.2) 411 (28.7) U.S. 75 ( 4.7) 2 ( 0.2) Egypt 199 (35.5) 120 ( 7.6) 260 (31.3) 133 ( 9.2) Turkey. 172 (31.0) 128 ( 8.0) 144 (17.4) 3 ( 0.2) Others 37 ( 2.0) 7 ( 0.4)

559 (100) 1565 (100) 828 (100) 1430 (100)

Index of Concentration ( 51) ( 47) ( 49) ( 51)

aIssawi gives L97,000. See Issawi , op . cit., p. 208.

The figure includes also Holland's and Greece's trade with Syria.

Sources: Appendix I, Table I; Hassani, op. cit., p. 194; and and Catabi, op. cit., pp. 48, 49. second place. Britain's comparative advantage was based partly on its earlier lead in industrialization and partly on its lower maritime 63 freight rates, made possible by its greater volume of trade. Compe­ tition among the three rivals was as much in the sale of goods as in transporting them. Russia acquired a limited role after the creation of its "Compagnie de Commerce et Navigation." Its exports to Syria, mainly of petroleum and, in years of crop failure, of flour, increased after the Turkish-Russian war with increased exploitation of Baku 64 petroleum deposits.

Before the turn of the century three new competitors appeared on the Syrian scene, namely, Germany, Italy, and the United States. The latter was mainly interested in buying Syrian wool and licorice roots.

On the other hand, Germany and Italy, through aggressive salesmanship and offers of long-term credit, were bent on challenging Britain's 6 5 virtual monopoly of the textile trade. For some time a change had been underway in Great Britain’s international position.

Table V presents the percentage shares of Syria's major trading partners in 1910, a normal year selected to represent pre-war condi­

tions. England was still the leading supplier, primarily of cottons, while France was still the leading customer, chiefly because of its special relation to the silk trade. The shares of other European coun­

tries and of the United States imports to Syria are understated, how­ ever. ^ A special difficulty is encountered in trying to evaluate

Egypt's and Turkey's shares, inasmuch as their respective shares include goods in transit. Ships, British vessels in particular, that 27

TABLE V

GEOGRAPHICAL DISTRIBUTION OF THE TRADE OF MAIN SYRIAN PORTS® 1910 (Percentage Shares)

Country Exports Imports Total

England 9.7 35.3 25.7 France 32.0 9.3 17.8 Italy 2.0 7.8 5.6 Austria-Hungary 1.3b 9.0 6.0 Germany l.lb 6.5 4.4 United States 5.9 0.9 3.0 Russia 1.8 4.8 3.0 Belgium 3.6 2.0 Egypt 22.4C 2.6 10.0 Turkey 22.7C 15.9° 18.5

Other Countries 1.1 4.3 4.0 100.00 100.00 100.00

Index of - Concentration 44.2 42.6

Alexandretta, Beirut and Jaffa.

bLow figures understate the actual shares of these countries; part of their Syrian imports were trans-shipped to them through Egyptian and Turkish ports.

£ Overstated shares (See Note b above).

Sources: Computed from British Consular Reports, 1910. stopped at Port Said or Alexandria, before or after transiting the Suez

Canal, or those ships that made their last stop in the Eastern Medi­ terranean at the Turkish port of Smyrna, usually picked up or unloaded cargoes originating from or marked for Syria. It is believed, however, that Egypt’s and Turkey's combined share had fallen by 1910 to under a third of the total.^ Syria's overland trade prior to World War I has been roughly estimated at one-fourth to one-third of its sea-borne 68 trade, so that it would be a fair guess to estimate that approxi­ mately 35 per cent of Syria's overall trade (sea-borne and overland) was still carried with neighboring countries of the Near East. This is certainly smaller than their relative share in the 1820's, when Syria's foreign trade was mainly an Asiatic trade.

The degree of trade concentration existing in Syria's external market is measured by an "index of concentration," given in Tables IV and V. The concentration of a nation's trade depends, of course, on the number of countries with which it trades and on the more or less equal distribution of its trade among these countries. In a pioneering study on the structure of foreign trade, Professor A.O, Hirschman advanced the hypothesis that "there is a greater tendency on the part of small under-developed countries, as compared with large and highly developed ones, to rely on imports from and exports to but a few coun- 69 tries, with such concentration particularly noticeable in exports."

In testing the hypothesis, he devised a formula for measuring the

"index of concentration," which is the square root of the sums of the squares of the percentage shares of n countries in the exports or 29 imports of a given country.^ The index has the maximum value of 100 when a country's trade is completely monopolized by another country.

At the other extreme, the value of the concentration index may be zero if the country trades in negligible amounts with an infinite number of other countries. From the construction of the index it is always higher than the percentage held by the largest importing or exporting country. Hirschman found that there is a positive correlation between the concentration of foreign trade according to countries and the con­ centration of foreign trade according to commodities.'71 "The existing pattern of world trade," he concluded, "tends to correlate dependence upon a few countries which in turn depend upon a few products; it also brings about conditions in which the availability of alternative mar­ kets is seriously impaired. Under the conditions of unchecked national sovereignties, this pattern therefore provides large opportunities for 72 the exercise of economic pressures."

Looking again at Tables IV and V, and assuming that Beirut's index of concentration in 1855 was representative of Syria's, we find

that the Increase in the number of suppliers had reduced the moderately high index of concentration of the import trade from 51 to 42.6. In simpler terms, Syria's dependence on a few countries for its supplies was somewhat alleviated after the appearance of new competitors. In practical terms, the greater degree of competition among the European countries resulted, as we shall see in Chapter II, in lower prices for

the Syrian consumer, although sometimes what he got was a cheap imita- 73 tion of a superior-quality product. Despite the greater diffusion of import sources, a good part of some consumption and intermediate com­ modities, known for their special quality or cheapness, continued to come from a limited number of countries. Indigo came from India, coffee from Brazil directly or through Mediterranean ports, Iron from

Belgium, marble from Italy, silk thread from China and Japan through

Marseilles, and aniline dyes and chemicals from Germany. The United

Kingdom preserved its lead in cotton fabrics and woolen yarns. Tobacco came from Turkey because of the prohibitive duty imposed on tobacco 74 Imported from other sources.

The index of concentration of exports also declined from 51 per

cent in 1844-46 to 47 per cent in 1855, and then to 44.2 per cent in

1910. France remained the leading customer of Syria, followed by Tur­ key and Egypt, granted, however, that an unspecified but important part of Syria's exports to the latter two countries was in fact in transit

to Western ports.

V. THE BALANCE OF TRADE

The purpose of this section is to explain the behavior of the

Syrian balance of merchandise trade during the period covered in this

study and to account for the persistence of the trade deficit which had been a permanent feature of the foreign trade of Syria, indeed of the

Ottoman Empire. Dearth of Information on the exchange of services and

the flows of capital makes it impossible to calculate accurately the

balance of payments, even for one single year. Yet an attempt must be made to explain how Syria managed to live with a chronic adverse trade 31 balance throughout the period.

Table VI brings together the data on the growth of exports and

imports, given in greater detail in Appendix I, Table I. Table VI shows that the proceeds from exports were at no time sufficient to cover the total cost of imports. Exports accounted for as low as 44 per cent (in the 1840's) and as high as 88 per cent (in the 1850's) of

total imports. While a trade deficit by itself is not necessarily a symptom of underdevelopment, Syria's persistent deficit resulted in part from the underdevelopment of its resources. Of more significance, however, is that the chronic feature of the deficit reflected the inter­ mediary role which Syria played within the Ottoman Empire. The free movement of goods from one part of the Empire to another caused each of

the administrative provinces to specialize in one form of economic

activity or another. Syria, with a locational advantage vis-S-vis the

other provinces, concentrated its limited capital and entrepreneurial

talent in the distribution of foreign imports. Because of the import

and export trade directly carried by her merchants, Syria came to be

regarded as the "market" of the Ottoman Empire.7"* One authority in the

1920's estimated Syria's exports and re-exports to Turkey proper in

pre-war years at L2,700,000 and its imports therefrom at one-third that

figure.7^ No statistics, however, are available to show what propor­

tion of Syria's imports was retained for local consumption and what

proportion of exports was of local origin.77 Similarly, it is diffi­

cult to estimate the other component of overland trade which did not

include internationally-traded goods. Because of this statistical 32

TABLE VI

THE BALANCE OF TRADE OF SYRIA, 1825/27 - 1913 (L’OOO Sterling)

(1) (2) (3) (4) Years Exports Imports Trade Balance ^ 100 (2)* (1) - (2)

1825/27 192 308 -116 62 1835/37 430 771 -341 56 1844-46 414 950 -536 44 1857 1280 1448 -168 88 1875 1370 2725 -1355 50 . 1883-87 2300 4012 -1712 57 1888-92 2360 4515 -2155 52 1893-97 2926 4261 -1335 69 1898-1902 3062 4085 -1023 75 1903-07 3569 4824 -1235 76 1908-12 3673 5920 *2247 62 1913 3810 6942 -3132 55

Source: Appendix I, Table I. 33 deficiency, Table VII which compares on a per capita basis the trade of

Syria with the trade of her neighbors and of a number of other coun­ tries, does not bring out clearly the statistical evidence needed to support the above claim about Syria's role as a distribution center.

Syria's figures, however, should be raised by the amount of overland trade, which was not included in these calculations.

According to Table VII, Syria's imports compare favorably with the imports of only one single neighbor, namely, Iraq, and they are lower than Egypt's. Egypt, of course, had embarked earlier on the building of her economic Infrastructure, received a much greater injec­ tion of foreign capital, and had a greater number of foreign residents than Syria. The considerably higher export figure of Egypt, indeed her favorable trade balance, reflects the situation of a debtor country that could service her foreign debt only through building an export surplus.i 78

To gain a wider prespective, Table VII lists also a number of other countries. When compared with her Western trading partners,

Syria comes at the bottom of the list. It falls even behind Algeria and Tunisia, two countries selected to show the trade effect of direct

European colonization and settlement. Only when compared with a third category of countries, such as Greece, Iran, Japan and Thailand, does

Syria look like a modestly commercial nation.

The comparatively low figures of the United States and of Japan, however, point up the difficulty of making comparisons among nations of different sizes and resources or at different stages of development. 34

TABLE VII

PER CAPITA EXPORTS AND IMPORTS OF SYRIA AND SELECTED COUNTRIES, 1913 (In British Currency)

Exports Imports

L. s . d. L. s. d.

Syria 1 2 0 2 0 0 Turkey 1 0 0 2 0 0 Iraq 1 3 0 1 7 0 Egypt 2 13 5 2 5 2

United Kingdom 12 2 7 15 8 7 Germany 8 4 7 8 15 2 France 6 7 5 8 0 5 United States 5 2 10 3 14 0 Italy 2 13 5 3 18 0

Algeria 3 10 0 4 14 7 Tunisia 3 10 0 2 17 7

Greece 16 5 1 4 7 Iran 16 5 1 4 7 Japan 1 4 7 1 8 10 Thailand 1 0 0 16 5

Sources: Syria: Sea-borne trade figures given in Table VI above divided by total population of 3.5 million, given in Appendix II, Table VIII below. Iraq: Computed for the year 1912/13 from figures given in M. Hasan, Foreign Trade in the Economic Development of Iraq, 1869-1930 (unpub1ished doctorate thesis, Oxford University, 1958), quoted in Issawi, op. cit., p. 132; population figure is given in excerpts from thesis reproduced in Issawi, op. cit., p. 155. Other countries: Computed from Woytinsky and Woytinsky, op. cit., Table 24, p. 64. Other things being equal, per capita trade is likely to decrease, as one goes from a smaller to a larger country, because the latter is likely to have a greater variety of natural resources and can develop within its boundaries a division of labor similar to the international 79 division of labor. Similarly, among countries about equal in popu­ lation, the more prosperous are likely to have more foreign trade than 80 those with a more primitive economic structure.

Let us now turn to Syria's role as an exporter. Generally, a country's exports are limited by (1) the ability and willingness of other nations to absorb its products at prices that make exportation profitable; and (2) by the ability or willingness of the exporting country to deliver its produce to other nations at prices acceptable to foreign buyers. While Syrian exports increased quantitatively after

the Egyptian occupation, the export-oriented sector remained, generally 81 speaking, passive until the early years of the 1880’s. Syria does not present a model case of a foreign export "enclave," created and developed for the purpose of supplying raw materials to the industrial­ izing Western countries. Aside from the silk of Lebanon, Syria could produce little that Europe wanted or could not buy cheaper elsewhere.

European traders came in quest of markets for their own manufactures,

and their purchases of Syrian goods were made only to the extent that specie was not forthcoming in return for their goods, or to avoid the

cost of return of their ships home in ballast. Put more technically,

in the early stages of Syria's opening to the West, the size of its

exports was a function of the size of its imports rather than vice 36

82 versa. The following dialogue related by a British visitor in the early 1840's, sums up the predicament of Syria after its opening to

Western commercial penetration.

A Damascus merchant spoke on the exchanges, and the importations of British manufactures. "Money becomes scarcer every year," said he, "The importations of British manufactures have increased frightfully; while you undersell the native Damascus manufacturer, you won't take our produce in exchange, and this cuts like a two- edged sword, for it drains the country of gold." "Make your silk short reel instead of long reel," said I, "and we will take more than your mulberries can produce. Then you can­ not expect us to take the bad cotton of Syria, when we can get good cotton of Egypt and America." "The balance of trade could easily be redressed by tiraback," said an old Baghdad merchant smiling, "every lady in Syria wears some article of British manufacture; now if every lady in England were to return the compliment by smoking a little timback, we could pay for our women's dresses with produce, and the exchange on England would fall to its normal level!"83

France and Italy, by virtue of their proximity and consequent lower freight, took the long-reel silk, the coarse cotton and the unwashed wool of Syria, while English imports were paid for primarily 84 in specie and bullion. Continued drain of specie impoverished the populace and gave rise to government manipulations with the currency.

In spite of government efforts at stabilizing the exchange rate, a free 85 exchange rate well above the official rate developed. With the cur­ rency reform of 1844, new coins were struck to replace the old ones, but the amount put into circulation was not sufficient to meet the need, and it was in vain that the government forbade the circulation of old Turkish coins and European currencies as well as the specualtion and fraud provoked by this circulation. 86 As noted earlier, the specie outflow reversed its direction in 37

the 1850's, which resulted in "French, English and Russian coins making 87 up at least half of the cash in circulation in Syria" in the early part of that decade. The consequent relative stability of the exchange

rate even in the depth of the depression of the 70's led the British vice consul to observe,

Although the opinion generally prevailing among the few who occupy themselves with such matters is that the balance of trade is generally against the country, I believe that such is not the case, and that much of such surplus is withdrawn from circulation by being buried or otherwise concealed. For instance, the foreign exchange in Beirut, the commercial and financial center of Syria, have stood with trifling and easily explained exceptions during the first seven years of the past decade, always at par, but those of the last three years show a balance of 2 1/2% against the country.88

The fact that private hoardings of Syria (exclusive of Palestine

and Transjordan) had risen by the end of the period of our study, 89 according to one estimate, to seven million Turkish gold liras

(Turkish lira was equivalent to .91 of the pound sterling), lead us to

concur with the British consul's impression that in the final analysis

Syria's balance of payments was probably active rather than passive.

In the long run a country has to pay for the goods and services

it acquires abroad with goods and services it offers to other countries.

A net balance in merchandise trade must be offset either by a balance

in invisible exports and imports, payment in gold, or transfer of capi­

tal. • How, then, did Syria cope with the chronic trade gap?

In the 1830's Aleppo was losing gold in its overseas trade at 90 the rate of L 120,000 per annum. There was a serious drain on the 91 gold holdings of Lebanon, too. The inflation created by the expenditures of the 90,000-strong Egyptian array of occupation con­ tributed to the rise in Syria's imports, but these expenditures may 92 have offset in part the drain on gold. While this currency drain continued in the 1840's, there was a beginning of European long-term capital inflow into the silk-industry of Lebanon, which accelerated in 93 the following decade. Short-term capital also was brought in by the newly opened foreign trading houses in Beirut. There were various foreign outlays, not to mention British and French gold that was passed 94 under the rug to rival factions in Lebanon.

In the 1830'a the outlays of foreign residents, missionaries and tourists increased. Christian pilgrims began to arrive in commercially organized parties; their number was estimated by the British consul in 95 1854 at over 5,000 a year. The annual Moslem caravan of pilgrims from Damascus to Mecca created a brisk trade activity in Damascus for three months every year and involved on the part of the Ottoman govern­ ment an annual expenditure of L 70,000.^

French aid to Lebanon continued after the massacre of 1860. Con­ tributions by European Jewry to the Jewish charitable institutions in 97 Jerusalem totaled L 70,000 in 1871. Emigrant remittances represented a new financial source to offset the widening trade deficit between

1875 and 1914. On the other hand, there was as of 1882 an increase in the number of Jewish immigrants to Palestine, some bringing with them their own capital. The opening of foreign commercial banks obviated the need for shipping gold in settlement of trade transactions. From an annual average of L 115,736 in the 1880’s, Aleppo's net outflow of QO specie declined to L 55,646 in the 1890’s. In the period 1900-1913, 99 there was a net Inflow of gold to Aleppo at the annual rate of L 9,600.

However, inflationary pressures set in after the turn of the century, which led to increased imports. Competition for markets among the

European countries, and the accompanying extension of commercial credit on easy terms, attracted into the import market a great number of spec­

ulators who lost heavily and along with them lost their European

creditors. Thus part of the trade deficit was offset through forced or

fraudulent bankruptcies.*^

The inflow of foreign capital accelerated during the twenty five years preceding the First World War. Most of it went to building the

port of Beirut and railways to facilitate commercial penetration into

the interior of the country. The increase in imports during this

period reflects, at least in part, the importation of equipment for

these projects. The Hejaz Railway from Damascus to Medina was built

with capital donated by the Moslem world.**** Thousands of Syrians were

employed in the construction of these projects, with an increasing

amount of cash being injected into the Syrian economy.

Pre-World War I data on the most important invisible items in

the current account and on capital flows may shed more light on the

means available to Syria for offsetting the deficit in her merchandise

account. Arthur Ruppin estimated annual emigrant remittances to

Lebanon at 30 million French francs (ten times their level in the 102 1890’s); expenditures of pilgrims and tourists at 10 million;

foreign assistance to benevolent, religious and missionary institutions 40 also at 10 million; finally, Jewish capital inflow and charity money at 101 10 million, giving a total of 60 million francs or L 2,400,000.

This inflow compared with a trade deficit that averaged L 2,247,000 during 1908-12,

VI. COMPOSITION OF FOREIGN TRADE

Composition of Exports. In order to show the broader changes in

the composition of the export trade, Table VIII gives the percentage shares of export categories. All data available were used in preparing

Table II, Appendix I, below from which Table VIII is drawn, but the

totals fall short of those in Table VI, above.

The most important change in the composition of the export trade,

from the point of view of general shifts in the economic and social structure of Syria, is the decline in the relative magnitude of grain exports after 1883-87, as a result of the international developments outlined earlier. On the other hand, the pacification of the desert

tribes and the substitution of trade for raids made exports of animal

produce an important factor in the export trade [nearly 20%]. The low

figure of 12 per cent during 1883-87 is, however, due to lack of

detailed information on Beirut’s exports during those years.

The rise in fruit exports absolutely and relatively made for

diversification of the export trade and led to greater stabilization of

the national income, inasmuch as fruit production depended more on

irrigation and received greater care than the traditional crops.

Exports of wild products, mainly of licorice roots, remained a small TABLE VIII

PERCENTAGE SHARES OF EXPORT CLASSES, 1835-37 - 1913

Agric. Pastoral Wild Cocoons & Processed & • Products Fruits Products Products Raw Silk Manufactured Total

1835-37 16.32 n.a. 1.07 2.33 69.00 11.38 100 1844-46 9.70 n.a. 13.72 16.55 26.56 33.47 100 1873-77 20.80 1.19 28.90 4.21 31.39 13.51 100 1878-82 30.74 5.06 18.96 2.83 22.69 19.72 100 1883-87 41.59 3.77 12.00 6.12 24.70 11.82 100 1888-92 20.36 4.87 19.39 4.02 33.34 18.02 100 1893-97 16.60 8.22 17.05 4.49 33.24 20.40 100 1898-1902 18.63 8.20 16.12 4.91 33.34 18.80 100 1903-07 19.39 7.73 18.90 3.46 33.15 17.37 100 1908-12 22.08 10.79 18.63 4.01 26.48 18.01 100 1913 18.88 16.13 20.41 2.39 24.55 17.64 100

n.a, *= not available

Source: Appendix I, Table II. element in the export trade, though of great consequence to the thou­ sands of people engaged in gathering and transporting the roots in the

Province of Aleppo. Sponge, on the other hand, lost rapidly its sig­ nificance after the 1880's. Cocoons and raw silk exports which accounted for 69 per cent of exports in the 1830's declined consider­ ably in absolute and relative terras in the following decade, reflecting lack of demand in consequence of the civil disturbances that took place in Lebanon. The fall in silk exports in the 1870's and 1880's was partly due to the malady which afflicted the native silk worm and to

Far Eastern competition following the opening of the Suez Canal. The application of Pasteur's curative methods and the adoption first of

Japanese and later of French silk worms rejuvenated the industry, but sluggish demand for Syrian silk as of 1908 reduced the absolute and relative magnitude of this major cash crop.

The relatively stable share of processed and manufactured products during the last 25 years of our study reflects the adjustment which the Syrian home industry finally made; it also points out the steady role of urban centers in the export trade. During the years

1908-12 the export share of the cities was almost equal to that of the pastoral sector and a little less than the share of the traditional rural sector. Indeed, the composition of exports truthfully mirrors

the social and economic structure of the country, and pointj up its predominantly agricultural character.

Composition of Imports. In analyzing import trade figures, one would like to find out whether there occurred over the years a shift in 43

the relative proportions of consumption and producer's goods. Available data do not lend themselves to a neat division into such distinct cate­ gories. Table IX is derived from Table IV, Appendix I, below. It

covers those principal articles of import recorded In the British Con­

sular Reports and other sources. It suffers from a greater degree of

statistical distortion than does the corresponding table on exports.

Consequently, it should be read with greater care, and its findings be

considered no more than a rough indicator of the general changes that

took place in the structure of the import trade. Some of the important

statistical deficiencies of this table are pointed out in the footnotes

of the original table In Appendix I. We shall bring out some of these

defects in the process of our analysis, however.

The most important change in the composition of the import trade,

according to Table IX, is the decline in the relative magnitude of Tex­

tiles & Clothing, which ranged from 50% to 80% in the earlier decades

but fell to 33% of the total value of imports by 1913. On the other

hand, there occurred a rise in the relative magnitude of Intermediate

Goods.

Let us examine the changing relative importance of each of the

import components in turn. In the first place, the category of Food,

Drinks, etc., rose in relative importance to account for nearly one-

fifth of the total value of the import trade. Lack of data for some

commodities or for some ports accounts for the occasional dips in the

figures of this category. The relative increase represents to some

extent the change that occurred in the sources of commodities included TABLE IX

PERCENTAGE SHARES OF IMPORT CLASSES, 1836-37 - 1913

Food Textiles Other Con­ Inter­ Drink & & sumption mediate Capital Tobacco Clothing Fuel Goods Goods Goods Total

1836-37 12.84 57.89 n.a. n.a. 29.27 n.a. 100 1844-46 4.97 56.28 n.a. 8.66 30.09 n.a. 100 1873-77 11.38 76.39 0.78 n.a. 11.45 n.a. 100 1873-82 8.32 81.74 1,18 n.a. 8.39 0.37 100 1883-87 8.19 79.13 1.58 n.a. 10.64 0.46 100 1888-92 6.33 75.99 1.22 0.31 15.67 0.48 100 1893-97 11.19 65.19 2.92 1.37 18.77 0.56 100 1898-1902 10.57 64.59 2.68 1.17 20.55 0.44 100 1903-07 12.70 47.60 4.16 2.34 31.66 1.54 100 1908-12 16.02 39.91 6.70 2.72 32.63 2.02 100 1913 19.06 33.68 8.70 2.00 34.68 1.88 100

n.a. ® not available

Source: Appendix, I, Table IV. 45 in this category;10^ to a greater extent it reflects the rising needs of a growing population and of the increasing number of pilgrims, tour­ ists, immigrants, and foreign personnel brought to work on public projects, such as railway construction.

Secondly, the category of Textiles and Clothing, for a long time the major component of trade, was also the most consistently and prob­ ably the most accurately reported category of trade. Aside from this statistical bias, the Import figures of this category given in Table IX include for many decades cotton yarn imports, which became more clearly identifiable in the last two decades of the period. The latter fact, together with the comparative revival of the native industry, accounts for the leveling off and ultimately the decline of Textile and Clothing imports after the turn of the century. It is instructive, however, to note that the Syrian industry was at no time in a position to challenge

the onslaught of foreign imports. The best it could do was to adjust

to the new circumstances. The Syrians, like their neighbors, remained up to World War I heavily dependent for their clothing on cheap, Euro­ pean imports.

Thirdly, better reporting accounts for the more accurate series of fuel imports. Starting from nothing in the 1860’s, Fuel imports

rose in value to account by the end of the period for approximately nine per cent of the total value of the import trade. How much of

these petroleum imports went for consumers' and how much went for pro­

ducers' use is difficult to estimate; probably, the former's share was much more than half the total. 46

Fourthly, the category of Other Consumption Goods, though admit­ tedly underreported, was an insignificant component of trade in view of the limited purchasing power of the masses, in rural areas in particular.

Fifthly, to the extent that the fourth category is understated, the category of Intermediate Goods is overstated. All metallurgical imports are included in this category, including some household goods.

One also gets the impression that the major part of machinery and other

"producers' goods" were lumped under such general tariff titles as hardware, iron, and ironware. Otherwise, how could one account for the insignificant share of Capital Goods, given in the last category? It could be also that the machinery which was not subject to tariff was not recorded in the trade reports. This reduces the last category to a few articles such as jute sacks for transportation of grain, soap, and silk, and timber for making boxes for the citrus industry. In view of this statistical deficiency, and because commodity Imports covered in both categories share the distinctive feature of being productive, in the sense of creating additional productive employment^the categories of Intermediate Goods and Capital Goods should be read together for the purpose of evaluating the investment share of the import trade.

VII. CONCLUSION

The stimulative effects of international trade on the national economy depend primarily on the nature of the export products, in respect to both demand and supply conditions, the economy's reallocative capacity, and the receptiveness of the country's institutions to change. 47

The opening up of Syria to greater contact with Europe after the

Egyptian occupation of 1831-1840 coincided with the period of early capitalist expansion in Europe and the search for markets, especially by the leading industrializing country, namely, Britain- Initially,

Syrian export expansion was dependent on, rather than determinant of,

the size of the import flow. External demand for Syrian products became more active during the Crimean War and the American Civil War.

With the increased tempo of industrialization in Europe, Western

countries became as much Interested in new sources of raw materials as in new outlets for their manufactures. Despite the depression of the

1870's, the Syrian productive base had, by the 1880's, expanded enough

to be able to respond more actively to the new demand forces at home and abroad. Improved security conditions and rapid population growth

stimulated internal demand. Externally, the loss in wheat export,

owing to increased competition from new sources of supply and the adop­

tion of increasingly protectionist tariff policies by the European

countries, was more than offset by the rapid rise in fruit export to

Europe and manufactured goods to neighboring countries. Lyon's old

Interest in Lebanese silk gave stimulus to this labor-intensive Indus­

try, but the malady which afflicted the native silkworm in the 1870's,

and increased Far Eastern competition in the French market following

the opening of the Suez Canal, jolted the progress of this major cash

crop.

The most important development in the composition of the import

trade was the decline In the relative magnitude of textile and clothing 48 imports, which made almost 80 per cent of total imports in earlier decades. On the other hand, productive imports, in the form of both capital and intermediate goods, expanded relatively as the pace of development of the Syrian economy was hastened in the last two decades of our study.

Finally, the rate of growth in Syria's sea-born trade kept in line with the growth of world trade in general and of Britain's and

France's trade in particular. It is the impression of the author that

Syria's chronic trade gap was more than offset by its trade surplus with neighboring countries and increased inflow of European tourists, pilgrims, aid, capital and emigrant's remittances. The several-fold expansion, in gross as well as in per capita terms, in the current value of exports and imports occurred in the face of a downward secular trend in the general price level during a good part of the nineteenth century. Since changes in the price level were glossed over in Chapter

I to simplify the presentation of our analysis, let us turn now to a

full treatment of the effects of price movements. 49

Footnotes to Chapter I

"''Gerald M. Meier, The International Economics of Development (New York, 1968), p. 6 . 2 Zvi Y. Hershlag, Introduction to the Modern Economic History of the Middle East (Leiden, 1964), p. 30, See also France, Ministeure la Guerre, Notice Sur la Syrie (Paris, 1916), p. 17, and Levant Trade Review IV, No. 1 (Constantinople, 1914), 20. 3 Among the conditions they assumed are: fixed resources, con­ stant tastes, given technical knowledge, perfect markets, and mobility of resources within (but not between) countries. 4 See for instance, J. Viner, International Trade and Economic Development (New York, 1952); and G. Haberler, International Trade and Economic Development (Cairo, 1959). 5 D.H. Robertson, "The Future of International Trade," Essays in Monetary Theory (London, 1940), pp. 214-240, reprinted in the American Economic Association's Readings in the Theory of International Trade (Philadelphia, 1949), p. 501.

^Alfred Marshall, Principles of Economics (eighth edition; London, 1920), p. 668.

^Allyn A. Young, "Increasing Returns and Economic Progress," Economic Journal, XXXVIII (December, 1928), 527. g Charles P. Kindleberger, Economic Development (second edition; New York, 1965), p. 313. 9 Geometrically, the new production and consumption mix can be identified with a movement along the same production transformation curve. 10 Geometrically, there will be an outward shift in the production frontier.

■'■'"For an interesting attempt to build a flexible economic model for analyzing the growth effects of trade, see Richard Bitner Wirthin, "International Trade and the Economic Development of the Underdeveloped Country: The Brazilian Case," (unpublished doctorate dissertation, University of California, Berkeley, 1964), chaps, iv, v, and vi.

■^I b i d ., chap. iii. 50

13 Bruce R. Morris, Economic Growth and Development (New York, 1967), p. 361, 14 See for example, Raul Prebisch, "The Economic Development of Latin America and Its Principal Problems," Economic Bulletin for Latin America, VII, No. 1, (Santiago, February, 1962); H.W. Singer, "The Dis­ tribution of Gains Between Investing and Borrowing Countries," American Economic Review, Papers and Proceedings XL (May, 1950), 473-85; Gunnar Myrdal, Economic Theory and Underdeveloped Countries (London, 1957); Ragnar Nurkse, Patterns of Trade (Oxford, 1961), and Equilibrium and Growth in the World Economy (Cambridge, Mass., 1961). For the experi­ ence of underdeveloped countries, see also Hla Myint, The Economics of the Developing Countries (New York, 1965), chaps, ii - v, and his cele­ brated articles, "An Interpretation of Economic Backwardness," Oxford Economic Papers (June , 1954); "The Gains from International Trade and the Underdeveloped Countries," Review of Economic Studies, XXII (2), No. 58 (1954-55); and "The 'Classical Theory' of International Trade and the Underdeveloped Countries," Economic Journal, LXVIII (June, 1958).

■^Singer, op. cit., p. 475.

^J.H. Boeke, Economics and Economic Policy of Dual Societies (New York, 1953); W.A. Lewis, "Economic Development with Unlimited Supply of Labour," frtanchester School of Economic and Social Studies, XXII (May, 1954) 139-91; and Benjamin Higgins, "The Dualistic Theory of Underdeveloped Areas," Economic Development and Cultural Change (Janu­ ary, 1956), pp. 99-115.

^ J o h n Pincus, Trade, Aid and Development, The Rlsh and Poor Nations (New York, 1967), p. 163. 18 Nurkse, Patterns of Trade, op. cit., p. 49. 19 Growth without international trade, however, requires special circumstances. The country must have adequate resources of most types, adequate entrepreneurship, labor, and a developing agriculture. 20 Kindleberger, Charles P., Foreign Trade and the National Economy (New Haven, 1962), p. 211. 21 Gerald Meier, op. cit., p. 245. 22 Ibid.

23Ibid., p. 246.

2AIbid., p. 247.

25Ibid., pp. 247-248. 51

26 Robert M. Stern, Foreign Trade and Economic Growth In Italy (New York, 1967), p. 55, quoting Kindleberger. 27 Staffan Burenstam Linder, An Essay on Trade and Transformation (New York, 1961), p. 41. 28 Meier, op. cit., p. 255. 29 See Introduction above.

3 0 Polk, The Opening of South Lebanon, op. cit., p. 162, quoting Boislecomte. 31 Ali Hassani, The Economic History of Syria (Arabic) (Damascus, 1923), p. 203.

3 2 Urquhart lists 21 caravans that used to arrive in the course of the year at Aleppo. Cf. David Urquhart, Turkey and Its Resources (London, 1833), p. 151.

3 3 Ibid.

■^Polk, op. cit., p. 163. 35 Paton, op, cit., p. 265. See also Introduction, above. 36 John MacGregor, Commercial Statistics (London, 1847), II, excerpts of which are reprinted in Issawi (ed.) The Economic History of the Middle East, op. cit., p. 223.

"^Phyllis Dean and W.A. Cole, British Economic Growth, 1688-1959 (second edition; London: Cambridge University Press, 1967), p. 192. 38 Gordon L. Iseminger, "The Old Turkish Hands: The British Levantine Consuls, 1856-1876," The Middle East Journal, XXII, No. 3 (Summer, 1968),,p. 298. 39 Hassani, op. cit., p. 196.

4 0 See Table III, below.

^Dominique Chevallier, "Western Development and Eastern Crisis in the Mid-Nineteenth Century: Syrian Confronted with the European Economy," in Polk and Chambers (eds.), Beginnings of Modernization in the Middle East (Chicago, 1968), p. 213.! 42 Calculated from ibid., Table 1, p. 214, and Table 2, p. 215. 52

43 (Anon.)* Rambles in the Deserts of Syria (London, 1864), p. 245; and "Correspondence Relating to the Affairs of Syria," Great Britain-House of Commons, Sessional Papers, LXVIII (August 30, 1860), Part I, p. 120, and Part IX, p. 7. 44 British Vice Consul, Damascus, December 31, 1877. The opening of the Suez Canal also reduced the number of Moslem pilgrims going to Mecca via the Damascus-Medina overland route, and the brisk trade of Damascus that accompanied this annual event was hurt. 45 Hassani, op. cit., pp. 260, 284. 46 Ibid., p. 274. 47 Not only the interest-bearing Treasury notes of the Central government (Kaimeh mu'teberei nakdieh) became worthless, the investment in Damascus City local bonds also was almost lost. BCR, for the year 1875; and BCR, Damascus, March 13, 1880. 48 BCR, Damascus, for the year 1878, 49 Vital Cuinet, Syrie, Liban et Palestine (Paris, 1896), p. 375. The year 1883 may be considered as the point of upward inflection in Syria's economic growth.

"^BCR, Beirut, June 10, 1886. 51 See infra, Chap. Ill, Section II. 52 In the 184Q's Paton (op. cit., p. 56) noted that "Almost all of the corn consumed at Ghazir [Lebanon] is brought from Egypt and Jaffa, as the Hauran corn, although cheap and good, cannot stand the expense of land carriage. The construction of a road from Damascus to the sea would more than anything else cause the resources of the country to be rapidly developed." The cost of transporting corn (i.e., wheat) from Hauran to Acre was paid in kind at the rate of one sack of wheat for each sack transported. Cf. Hassani, op. cit., p. 239. Likewise, the cost of transporting wheat from Aleppo to Alexandretta, a distance of 77 miles, was 50 per cent of the initial price of the best wheat. Cf. BCR, Aleppo, March 6 , 1889, N. 500.- 53 See infra, Chap. Ill, Section II. 54 Stuart Chase, Tomorrow's Trade (New York, 1945), pp. 39-40. 55 Calculations based on the Rousseau Price Indices, 1800-1913, published in Abstract of British Historical Statistics, op. cit., Table 3, pp. 471-73. Prices used in construction of the indices are mainly wholesale prices and unit-value of imports. 53

"^Issawi, op. cit., p. 209. 57 Polk, op. cit., p. 166.

59 Great Britain - House of Commons, Sessional Papers, 1845-55, Vol. 52, p. 509. 60 Hassani, op. cit., p. 193.

61Farley, The Resources of Turkey, op. cit., p. 209. 6 2 The British Consul, N. Moore, reported from Beirut in 1856 that French and Austrian steamers were then stopping once a week at each coastal port and that they "have annihilated the local carrying trade." BCR, Beirut, July 19, 1856. Against this loss to local shipping, however must be weighed the new impetus given to coastal trade. Thus in 1872 the British consul reported, "The carrying trade of this coast has been completely revolutionized of late years. Steam here, as elsewhere, has driven off the sailing vessels, few of which now visit us. Merchants now profit by these facilities to export articles of produce which formerly, owing to their comparative insig­ nificance, were disregarded." BCR, Vilayet of Syria, 1872. 63 "The reason for the success of the British free-trade ship­ owner in the face of competition by liberally government-assisted foreign shipping is to be found largely in the excellence of the British merchant marine - ships and men - and the availability of ample outward cargo in British ports [to India]." Max E. Fletcher, "The Suez Canal and World Shipping." The Journal of Economic History, XVIII, No. 4, [December, 1958], 568. See also Noel Verney and Georges Dambmann, Les Puissance etrang&res dans le Levant, en Syrie et en Palestine (Paris, 1900), pp. 483-85. 64 Verney and Dambmann, op. cit., p. 485.

^Catabi, op. cit., p. 62. 66 The U.S. Department of Commerce believed that "our exports to Turkey are at least three times as great as they appear in Turkish returns, and our imports from Turkey we know to be about six times greater." Department of Commerce and Labor, Bureau of Manufacturers, Consular Reports, Annual Series, No. 1, Turkey (in Europe and Asia), Trade for the Fiscal Year 1907, April, 1908, p. 8 .

^Huvelin, op. cit., p. 41.

^ I b i d ., p. 40. 54

69 Albert 0. Hirschman, National Power and the Structure of Foreign Trade (University of California Press, 1945), chap. vi.

70Ibid., p. 98.

7^In underdeveloped countries, capital and labor skills are lacking. Therefore, these countries specialize in goods for which they are best accomodated by nature, and these are usually few. The,capital and skills at the disposal of advanced economies, on the other hand, qualify them for production of and specialization in a large variety of goods. 72 Hirschman, op. cit., p. 108. 73 "European powers struggled among themselves for foreign mar­ kets, including Turkey... In the bitter struggle for Turkish markets, competitors sought to gain an advantage notably by offering a lower price, by supplying goods of a better quality and by rendering better service, but in many cases resorted to competitive practices which have been branded as unfair. That type of competition involved the imita­ tion of the registered trade marks of competitors, the misrepresenta­ tion of the quality or measure of their goods, and the use of other questionable and unethical methods to injure rivals and secure their business." Leland James Gordon, American Relations with Turkey,1830- 1930, An Economic Interpretation (New York, 1932), p. 142.

74BCR, Damascus, 1907, No. 3917. 75 Sa'id B. Himadeh (ed.), Economic Organization of Syria and Lebanon (Beirut, 1936), p. 199.

^Calculated from Mustapha Shihabi, "Our Chief Economic Ills," Arab Academy Journal, VIII (Damascus, 1928), p. 733. 77 In describing the sources of Syria's exports and the destina­ tion of its Imports in the 1830's Bowring listed gum as originating in Turkey, gall nuts in Mesopotamia, yellow berries in Anatolia and saffron in Persia and Anatolia. Of Aleppo's imports, the following proportions were re-exported to the interior and Mesopotamia: one- third of sugar, cloves and indigo; one-half of pepper, pimento, cochineal, and copperas; and two-thirds of coffee. John Bowring, "Report on the Commercial Statistics of Syria," Great Britain, Parli­ amentary Papers XXI (1840), passim. In 1900 the British Consul at Aleppo observed, "The returns prepared every year by Vice Consul at Alexandretta do not refer solely to the district, but are a statement of the transit (import and export), of which roughly two-thirds are absorbed by the province of Aleppo, while the remaining third goes to or comes from the interior, and finds its proper record in other consular reports. Aleppo is the distribu- tln center of a rather extensive region," BCR, Aleppo, April 5, 1900, 55

No. 2404. A later source classified Syria's exports as being made of locally produced goods (44% - 52%) and of re-exported imports (56% - 48%). France - Uaut Commissariat, La Syrie et le Liban en 1921 (Beirut, 1922). p. 150. 78 By 1914 Egypt's liabilities to foreigners reached L 8.5 mil­ lion Egyptian per annum, or approximately 14s. per capita (cf. Issawi, op. cit., p. 365). 79 Woytinsky and Woytinsky, op. cit., p. 63.

81c , a See supra, n. 49. 82 In 1877, the British Consul at Aleppo commented, "Exportation cannot live without importation, because all the produce of this province is of inferior quality, and can only be dealt in as an accessory to importation, while there are no roads for its cheap con­ veyance to the shipping port to make it profitable." BCR, Aleppo, for the year 1876. 83 Paton, op. cit., p. 14. 84 Bowring, op. cit., p . 90. 83 "These efforts have no other result than to produce two rates— that published in the bazaars, which is called sagh and the other, the actual currency, which is called shuruk, or partnership. To show the scarcity of monies for 1838, as given in Dr. Bowring's report, in jux­ taposition with those current in 1843: British Sovereign - 103 plasters (1838); 135 Piasters (1843).... " Paton, op. cit., pp. 267-268. 86 Supra, p. 15. 87 Chevallier (op. cit., p. 213, n. 22), quoting a French consular report, dated November 14, 1852. 88 Report by Vice Consul Jago upon Revenues and Taxation in the Vilayet of Syria, Beirut, July 11, 1876, p. 213. 89 Gabriel Menassa, Plan for Reconstruction of Lebanese Economy And State Reform (Arabic)(Beirut, 1957), Appendix II, p. 465. As a result of war expenditures, Turkish gold coins were estimated at 15 million liras in 1918 (Ibid., p. 467). Himadeh quotes a higher figure, namely, 21 million liras. Himadeh, op. cit., p. 270. 56

90 Bowring, op. cit,, p. 16.

91Ibid., pp. 83, 123, 187. 92 The revenue of the Vilayet of Suriya (Damascus) for the fiscal year 1835/36 amounted to L 300,000 (cf. Report by British vice consul Jago, op. cit., p. 197), while expenditures for that year approximated 10 million French francs or L 400,000 (cf. Hassani, op. cit., p. 290). The budgetary deficit (which in some years exceeded L 100,000) was met from the Egyptian Treasury. 93 By 1861 there were 30 reeling factories with 1800 steam-driven - wheels. See Polk (op. cit., p. 293, n. 1), quoting BCR, Beirut, 1861. 94 The British Consul at Beirut, N. Moore, reported on Jan. 30, 1849, that Beirut imported yearly from Great Britain about L 150,000 worth of goods, paid for as followst L 50,000 in specie and bullion; L 40,000 in specie sent to Egypt to purchase bills on England; L 20,000 in silk reeled by English and French steam-reeling factories; L 20,000 in bills furnished on consulates, missionaries and travelers. See Polk, op. cit., footnote 20, p. 293. 95 British Consul, Jerusalem, quoted in Issawi, op. cit., p. 209, n. 24. 96 Ibid. The pilgrimage to Mecca was a religious as well as a commercial event. Pilgrims and traders from all over the Moslem world bought their goods and provisions in Damascus before the caravan started, and brought with them on their way back from Mecca other Orien­ tal goods. To promote their sales during the pilgrimage season, the merchants of Damascus in the early part of the nineteenth century accepted, on the advice of the Jewish money-changers, a 20 per cent seasonal currency devaluation. Shaikh Abdul Kader Maghrlbi, "The Jews of Damascus, One Hundred Years Ago," Arab Academy Journal, IX (Damas­ cus; November, 1929), 642.

9^BCR, Vilayet of Syria, 1872. 98 Computed from British consular reports, Aleppo. 99 Ibid.

^^Himadeh, op. cit., p. 230.

According to Issawi (op. cit., p. 210), the capital Invested in railways, including the Hejaz Railway, totaled slightly less than 300 million francs, i.e., about L 12 million. Other investments raised the total to L 16 million. 57

102 For the 1890’s see Verney and Dambmann, op. cit., p. 194. For pre-World War I figures, see Arthur Ruppin, Syriens als Wlrtschafts- gebiet, Beihefte zum Tropenpflanzen, XVI, No, 3/5 (Berlin, 1916), excerpts of which are translated and reproduced In Issawi, op. cit., p. 273. 103 Ruppin, loc. cit. 104 Verney and Dambmann, op. cit., p. 640. 105 Variation in the composition of trade of different countries reflects differences in their factor endowments. The majority of trade, up to the First World War, was induced by variation among coun­ tries in the availability of natural resources. Primary goods were about 65 per cent of the world trade in 1881, and 63 per cent in 1913. Variations among countries in the availability of capital and labor force, in general, and of particular human skills, were the main source of the other part of world trade. Cf. Michael Michaely, "Patterns of Trade," International Encyclopedia of the Social Sciences (MacMillan Co. & the Free Press, 1968), VIII, 108-113.

Colonial products, such as coffee, sugar and rice, which were only partly imported through European countries before 1820's, were mostly imported through these countries afterwards. CHAPTER II

THE TERMS OF TRADE

In the last two decades professional research and debate have focused on the existence and direction of long—term trends and cycli­ cal swings in the terms of trade on which primary products and manu­ factures have traded against each other. The terms on which under­ developed and developed countries have traded with each other also has been, of comparable interest.

There are two reasons for the widespread interest in this topic. First, the terms of trade have great importance to the balance- of-payments and national-income positions of countries whose foreign trade is large in relation to their total economic activity.'*' Second, a group of economists have chosen the terms of trade to explain the 2 growing differences in levels of real income between countries.

The justification for treating this topic in our study is also twofold. First, the movement in the terms of trade is significant for the underdeveloped country of Syria, whose foreign trade, prior to

World War I, represented approximately one third of its national 3 product. Second, since the growth of Syria's foreign trade was dis­ cussed in Chapter I in the context of the nineteenth-century world experience, a discussion of the price movement of Syria's exports and imports might shed some light on the terms-of-trade controversy. Sec­ tion I of this chapter defines the alternative concepts of the terms 59 of trade and discusses their limitations. The terms of trade of

Aleppo for the limited period, 1891-1913, will be dealt with in Sec­ tion II. In Section III additional series of export and import prices are given to supplement or modify our computation of Aleppo's terms of trade. The conclusions of our findings are summed up in

Section IV.

I. DEFINITION AND LIMITATION OF THE CONCEPT4

A number of economists interested in the development of under­ developed countries have followed the classical tradition in using the terms of trade as a measure of trade gains. The controversy they stirred by contending the existence of an unfavorable secular trend of primary products prices relative to the prices of manufactured goods has disclosed the limitations of the concept used, and alternative definitions were offered. It has become customary, therefore, to dis­ tinguish between several types of such terms of trade.

In most statistical calculations, and in nearly all public and professional discussion, it is the simplest concept, namely, the mer­ chandise, or commodity, or net barter terms of trade that Is involved.

The commodity terms of trade may be defined as an index or Indicator of the average price of a country's commodity exports in terms of its commodity imports. Like all index numbers, which try to synthesize a mass of data in a single average, it suffers from Iosb of concreteness.

As will be explained below, a movement of the index may mean different

things in terms of the original data. Furthermore, the index can only 60

determine the pathway but not the details of the relations between export and import prices. It gives a measurement from year to year,

a relative order of magnitudes rather than exact magnitudes.5 In the

long run, changes in the commodity terms of trade result from changes

in productivity and demand shifts.

It is the commodity terms of trade of primary products that has

been the center of controversy. With only a few long time-series

available, the controversy cannot be finally settled. It is becoming

clearer, however, that there has been no long-run trend in the terms

of trade between primary and manufactured goods.^ Earlier views^ were

based on an uncritical interpretation of a particular estimate of the

commodity terms of trade of the United Kingdom for the particular g period 1876-80 to 1948. It is now recognized that the behavior of

the United Kingdom's terms of trade during the period was not typical

of the behavior of the terms of trade of industrial European countries;

nor was it even in the pattern of its own earlier nineteenth-century 9 behavior. The index, like any long-run series, is also subject to an

element of uncertainty due to weighting and qualitative changes. More­

over, the index used suffers from the common technical weakness of

including freight charges in import prices while excluding them from

export prices. Freight rates were, on the whole, declining after 10 1875. Hence, considered as an estimator of the British commodity

terms of trade, the index suffered from an upward trend bias, and its

inverse, which has been used to measure the long-run trend in the

prices of primary products, from a downward bias.^ While the view that there has been a downward drift in the terms on which primary products exchange against secondary manufac­ tures has been discredited, Kindleberger has produced evidence in support of the related hypothesis that in the long run the terms of trade has tended to move in favor of those countries that were devel­ oping most rapidly and against stagnant or slowly developing coun- 12 tries, regardless of the stage of development attained by the latter.

Hence, while there is no necessary trend in the terms of trade between manufactures and raw materials, the terms of trade seem to favor de- veloped and run against underdeveloped countries. 1 3 The apparently contradictory statements become reconciled if we consider that many developed countries export foodstuffs and primary materials while some underdeveloped countries export manufactures. The basis for the ten­ dency of the terms of trade to deteriorate for underdeveloped coun­

tries, according to Kindleberger, is to be found in their poor reallo- cative capacity and immobility of supply: "Bad terms of trade are a result of ba&Jluck and inflexibility, or incapacity to enter other industries or to withdraw resources from existing lines." 1 4

Criticism leveled at the commodity terms of trade as an indica­

tor of gain from trade or of national welfare has resulted in resur­ rection of the classical definition of the terms of trade and in the development of several new definitions.^

T^e single factoral terms of trade measures the quantity of

Imports bought by a unit of factors. It is derived from the commodity

terms of trade by correcting the latter for changes in the 62 productivity of the export industries. The adjustment allows for the possibility that a decline in the commodity terms of trade produced by greater efficiency in the export industries might yet be associated with an improvement in both total welfare and gain from trade. The double factoral terms of trade corrects the commodity terms of trade for productivity changes in both the domestic and foreign-export industries. A change in the commodity terms of trade might be offset, in its effect on factor real earnings, by an inverse change in factor productivity. This is the classical definition, implicit in Ricardo’s example of exchanging Portuguese wine for English cloth and explicit in Marshall's "representative bundles of bales of commodities."^* In effect, the double factoral terms of trade measures the terms on which factors or resources are bartered. Thus, its chief purpose is to serve as an indicator of the international division of the world gain

from trade.

The factoral terms of trade, whether single or double, is

extremely difficult to calculate in practice, because the concept of a productivity index is almost impossible to define operationally and to measure statisticallyIts chief weakness, perhaps, along with the

commodity terms of trade, is that it fails to allow for variations in

the international division in the volume of world trade. The income

terms of trade adjusts the commodity terms of trade for changes in the

volume of exports, but the resultant index measures the "earned

capacity to import" (i.e., the imports obtainable in exchange for the 18 exports sent out), rather than the "export gain from trade." As an 63 indicator of changes in welfare or trade gains, it, also, is quite unreliable. For any change in export quantities and prices that leaves unchanged the value of exports will also leave undisturbed the income terms of trade. But it is not a matter of indifference, from

the viewpoint of welfare or trade gain, whether export prices increase or decrease. In this case the commodity terms of trade would seem a better indicator of the welfare implications of trade.

Finally, there is the gross barter terms of trade, defined as

the ratio of an index of the quantity of commodity imports to an index

of commodity exports. A rise in the index indicates that a given

quantity of exports exchanges for a larger quantity of imports. Like

ells income terms of trade, the gross barter terms of trade allows for

changes in the volume of trade. It also allows for unilateral trans­

fers, such as immigrants1 remittances and indemnity payments. But

such payments rarely arise from trade. Further, a country's gross

barter terms of trade would show increased gain whenever the country

engaged in foreign borrowing. In contrast to the factoral terms of

trade, however, the latter two concepts are more easily amenable to

statistical measurement; and the gross barter terms of trade is used,

in conjunction with the net barter terms of trade or, where services

is an important item, with the terms of trade on current account to

analyze the overall effects of the terms of trade on the balance of

payments.

As Viner has pointed out, however, none of the suggested modi­

fications of the commodity terms of trade can be regarded as an adequate and unequivocal indication of the gain which a country derives 19 from trade or even of the amount or direction of change in such gains.

The reason is that changes in the terms of trade, however defined, are almost always associated with changes in other variables (e.g., employ­ ment, volume of exports and imports, wage rates) having independent welfare significance. And- how these other variables correlate with the terms of trade depends on the nature and initial impact of the disturb­ ing factor. Generally speaking, any improvement in the commodity terms of trade that stems from a disturbance of foreign origin will be asso­ ciated with enhanced well-being. If, however, the adjustment to the disturbance is slow and accompanied by severe local unemployment, the 20 employment losses might outweigh all other considerations. Similarly, any deterioration of the terms of trade of foreign origin usually will be associated with a deterioration of welfare. When the change is of local origin, however, the welfare outcome cannot be inferred from the movement of the terms of trade alone. It is necessary to know, in addi­

tion, the nature of the disturbance. As noted earlier, a deterioration of the commodity terms of trade arising from cost-reducing technolog­ ical changes in the export industries may or may not be associated with an improvement in welfare or in the gain from trade. In consequence of

these limitations, the terms of trade must be interpreted cautiously.

Some criticism could be met by disaggregation; by taking separately

individual commodities and groups of homogenous commodities. Because

of the diversity of historical experience, attention should be concen­

trated more on the particular influences that for a particular 65

21 commodity, country and time are relevant.

II. THE TERMS OF TRADE OF ALEPPO

Of all the consular trade statistics available, only those of

Alexandretta, port of Aleppo, could be used for computing a rough index series of the terms of trade, and only for a short span, namely, 1891-

1913, Both quantities and values of exports and imports over the period are available, without break.

Of the various concepts of the terms of trade, the "commodity" or "net barter" terms of trade will be used here. It defines the price of exports in percentage of the price of imports for each year in relation to the selected base year, 1902, or

P e T =■ ----- , 100 Pi

in index number form with the year 1902 as 100. T measures the real

cost of imports in terms of exports. Changes in T represent the vary­

ing volume of imports which could be obtained, on the basis of price

relations only, in return for a given volume of exports. A rising value of T shows that imports are becoming relatively cheaper than

exports or more imports can be got from a unit of exports, and the

terms of trade are said to move in the favorable direction.

The year 1902 has been chosen as the base to relate to all the

other years in the run of the Index, because its prices, particularly

of textiles, a major item in the import list, are deemed to have been 66 normal compared to other prices over the period. It also happens to be the midpoint of the period.

There are many measures of the commodity terms of trade as there are combinations of export and import indices. Each combination has its own field of relevance. Most available indices, however, are of the Paasche type, with weights proportional to current quantities.

Aleppo's index numbers are current-weighted, derived by the 22 Paasche formula,

2 Pn ^n P * ------

z p0 qn

where p and q stand for prices and quantities, subscripts o and n denote 1902 and the current year compared, and I extends over all items in the total trade aggregates. Because of the limited number of commodities listed in the consular trade reports, almost all items were

selected, with a value of approximately 95 per cent of the total trade aggregates. E' is written for the sum over these selected items. The

index number thus formed from the partial coverage is

To arrive at the price index number P, a correction factor must be

used. Assuming that quantity changes for the items not covered are the

same as those for the items included in the calculation, then 67

V P at V'

E * d a where n "n which in general differs from Z Pn *Jn V' - V *

Because of the high degree of coverage in this case, V and V' are very close, and the correction factor made only for a very slight

change in P'.

Table X gives Aleppo's terms of trade index, derived by dividing

the import unit-value index into the export-unit value index. Again,

the year 1902 has been used as a comparison base. The limited number

of items reported by the British consul and their composite nature may

have affected the results. Aside from these statistical deficiencies,

the index series, as noted earlier, gives us only a measurement of

change from year to year, a relative order of magnitudes rather than

exact magnitudes.

The index fluctuated from one year to another, but, as seen more

clearly in Figure 1, the long-term movement of the index, approximated

by the successive peaks, indicates an upward trend. This trend is dom­

inated by changes in the export unit-value index, as the import unit-

value index seems to have lacked any discernible trend. On the basis

of other available data, however, we are inclined to question the

accuracy of the statistics from which the latter index is derived.

Import prices generally rose after the turn of the century, whereas in

Table X the unit-value index of imported cotton goods, a major 68

TABLE X

EXPORT AND IMPORT UNIT-VALUE INDEXES AND TERMS OF TRADE OF ALEPPO, 1891 - 1913 (Index, 1902 - 100)

ALEPPO Terms of Trade of Index of Terms Cotton Maritime Export Import of Goods Freight Industrial Year Lndex Index Trade Imports Rates England France Germany Europe

1890+ 153 94 99 106 1891 93 112 83 115 147 93 95 104 1892 89 102 87 101 125 92 94 104 1893 83 101 82 95 122 92 104 104 1394" 93 102 91 98 115 96 95 105 1895 i 96 101 95 97 108 97 97 104 1896 101 114 89 99 118 96 95 108 1897 95 102 93 93 121 95 96 106 1898“ 97 96 101 92 136 95 100 105 1899 98 99 99 95 126 99 100 105 1900+ 100 112 89 113 145 106 96 104 104 1901 100 109 92 111 105 105 97 104 104 1902 100 100 100 100 100 100 100 100 100 1903 105 113 93 120 103 99 99 101 100 1904“ 106 107 99 102 104 99 102 100 99 1905 108 103 105 97 105 99 104 98 98 1906 115 104 110 98 105 100 101 99 98 190 7+ 115 97 118 91 107 101 94 98 97 1908 121 102 118 91 92 102 98 104 99 1909“ 125 102 123 91 97 97 98 95 94 1910 128 106 121 92 101 94 95 94 92 1911 124 105 119 92 115 98 94 94 93 1912 118 101 117 82 155 99 91 93 92 1913+ 123 101 122 86 137 101 88 95 92

Peak of the business cycle in Britain. Trough of the business cycle in Britain.

Sources: Aleppo: British Consular Reports, Aleppo. Maritime Freight Rates: Kindleberger, The Terms of Trade..., op. cit.. Table 2-2, p. 19, adjusted for change in base year. Terms of Trade of European Countries: Ibid., Table2-1, p. 1 2, adjusted roughly for change in base year. 1902 - 100 69

130. Export Unit-Value Index 120

110 .

100 .

90 .

80 -

130 Import Unit-Value Index

120

110

100

80

130 The Terms of Trade 120

110

100

90

oo in vo rv oo ON r-t oo .H FIGURE 1 THE TERMS 0E TRADE OF ALEPPO, 1891 - 1913 70 component of Aleppo’s (and, Indeed, of Syria's) imports, resumed its earlier downward trend. It is doubtful that it actually did. Other things being equal, prices of cotton goods should have declined if export prices of European, particularly British, cottons moved lower; if there was substitution of cheaper, even though inferior, class of goods for Manchester's superior-quality cottons; or if maritime freight rates continued to decline.

Export prices of textiles, as we shall see, reversed after the turn of the century their downward trend. The deterioration of the quality of cotton goods during the decade preceding the First World War, when economic conditions were improving, cannot be substantiated for 23 the whole decade. And as for maritime freight rates, an index of which is given in Table X, they rose after 1902, declined in 1908, then began to rise fast in the years preceding World War I.

As the figures stand in Table X, the terms of trade of Aleppo improved 20 per cent between 1891 and 1920 and by a comparable percent­ age between 1902 and 1913. For comparison purposes, the terms of trade of selected industrial countries of Europe are also given in Table X.

Over the first half of the period, the terms of trade of Britain improved 7.5 per cent, those of France, five per cent, while the terms of trade of Germany deteriorated by four per cent. During the second 2 A half of the period, Britain's index did not change, France's deteri­ orated by 12 per cent, and Germany's by five per cent. For Industrial

Europe the terms of trade declined by eight per cent.

Over the longer period of 1872 to 1952, there was little change in the terms of trade of Industrial Europe with the world, though com­ parisons over long periods of time should be viewed with suspicion. At any rate, the merchandise terms of trade of Industrial Europe differ as between various parts of the world, so that the world total is not rele­ vant to our discussion. Using 1913 as a comparison base year (index **

100), Kindleberger found that the terms of trade of Industrial Europe with underdeveloped countries, mainly those in the tropical zone, declined very little, from 123 to 122, between 1872 and 1900, fell to

100 by 1913, then rose to 119 by 1928, to 176 by 1938, and fell again 25 to 155 by 1952, Kindleberger, however, considers his figures for the 26 earlier years of dubious reliability. It is also unfortunate that he uses 1900 as one of his key years, for its figure is affected by the high freight rate during the Boer War (cf. Table X, above). If allow­ ance is made for the sudden rise in freight rates, the index number for

1900 would be higher, and if we were to use the current-account terms of trade, as a more appropriate measure for Europe's gain from trade, the index number would be even much higher.

Although we are concerned in this study with long-run changes, we may touch briefly on the cyclical movement of the terms of trade.

The integration of the Syrian economy into the world economy meant from the beginning that the cyclical fluctuations in the European economy would be felt in Syria through the transmission belt of foreign trade.

The swings in the terms of trade of Aleppo (see Figure 1) parallel inversely those of the import unit-value index, while the latter coin­ cide with the turning points of the business cycle in Europe, 72 represented in Table X by the peaks and troughs of the business cycle in

Britain. The index also parallels in some years, particularly during the first half of the period, the marked changes in the index of mari­ time freight rates. This is of special relevance and importance for the year 1900. Parallel changes fail to appear in the second half of the period; this is due to the dubious accuracy of Aleppo's import sta­ tistics in those years.

Kindleberger found no simple, hard and fast generality about the relations between the business cycle and the merchandise terms of trade 27 of Industrial Europe. Before the First World War, the terms of trade favored Europe during the booms, turned adverse during depressions.

Afterwards the volatility of raw-materials prices among imports and the stability of manufactures in Industrial European exports produced a con- 28 trary pattern. The cyclical behavior of the terms of trade of Aleppo seems to have run against the European pre-war pattern and to have followed the post-war pattern, i.e., improvement during the downswing, and deterioration in the upswing. This is, perhaps, because the price index of British exports had a strong procyclical pattern before the 29 war, while the price index of Aleppo's exports tended to fluctuate with less amplitude. 30 F.D. Grahamview that the terms of trade do not change in the short run does not gain empirical support either from this or from

Kindleberger's study. They do, whether as a result of changes In com­ mercial policy (note in Table X the effect of France's increased agri­ cultural tariffs on its terms of trade in 1893 and on Syria's export 73 index and terras of trade), of exchange-rate adjustment, or of cyclical 31 variations in income at home and abroad.

III. LONG-RUN PRICE TREND

In Europe as well as in most countries of the world, the nine­ teenth century was marked by a protracted, sharp price decline stretch­ ing from the end of the Napoleonic Wars to 1896, with only short inter­ ruptions during the upswings of the business cycle, especially In the 32 third quarter. This was a period of peace, of unprecedented increase in numbers and rapid economic expansion. Given the commercial and mone­ tary communication that prevailed under the International gold standard, a synchronization of price trends among the European countries and

their trading partners was inevitable. The explanation for this pro­

tracted phenomenon seems to lie in the productivity gains that stimu- 33 lated and made possible this economic growth. Thanks to increased

investment and technological improvements, real costs during the cen­

tury dropped steadily, at first mainly In manufacturing, and then—

after a revolution in transportation that opened lands to commercial 34 cultivation— in food production as well.

The economy whose career the course of prices fits best is that

of Britain, being the first country to industrialize and the bellwether

of the international economy throughout the century. Between 1822 and

1851, both low points on the British index of prices, prices dropped 35 21 per cent. The drop was temporarily arrested by the gold discoveries

and bank credit xpansion which resulted in "a marked upward heave of 74

36 general prices" in the 1850's and 1860's. Prices broke down after

1873, and the downward drift continued until the 1890's; by 1895 they 37 were a further 21 per cent below the 1851 level. Then began the rising trend which characterized the two decades before the First World

War, The average index value of the years 1901-13 was about seven per 38 cent above the average level for the years 1887-1899.

To guage roughly the Syrian export price trend, Table XI is

intended to give, in index form, the average unit-values of selected

commodities. The averages cannot be aggregated for lack of a common

starting point or of proper volume weights. Table XI also gives, for

comparison purposes, the annual values of selected import categories as well as of total imports of Industrial Europe from underdeveloped

(mainly tropical) countries for the three yearB, 1872, 1900, and 1913.

According to the table, the price index of European imports dropped one

third before 1900, then rose in the following years only 26 per cent.

The fall and rise in prices would have been more accentuated if Kindle­

berger, the author of these figures, had chosen for a key year the year

1896, the turfting point in the price trend, instead of 1900, Prices of

the year 1900 are distorted also by the relatively higher shipping

costs of that year in comparison with those of 1896 and 1913.

One difficulty encountered in comparing Syria's export prices

with Industrial Europe's import prices is that the former are f.o.b.

while the latter are c.I.f. (i.e., they include transportation costs).

It is known that shipping costs declined 60 per cent between 1872 and 39 1908. Commodity prices were also on the decline; one can see in 75

TABLE XI

AVERAGE UNIT-VALUES OF SELECTED SYRIAN EXPORTS AND ANNUAL VALUES OF SELECTED EUROPEAN IMPORTS, 1872 - 1913 (Index, 1898 - 1902 - 100)*

1874 1877 1881 1883 1888 1893 1898 1903 1908 1913 -77 -79 -82 -87 -92 -97 -1902 -07 -12

A. Syrian Exports Agricultural Products Cereals 168 158 129 106 100 102 130 130 Barley 126 131 125a 100 105 153 221 Sesame 174 119 111 102 86 100 108 145 143 Cotton 168 152 132 108 100 122 171 149

Fruits Oranges 51 80 89 112 94 100 98 92 71 Pistachio 93 100 105 169 188

Pastoral & Wild Products Wool 134 80 85 91 100 99 169 186 Hides and leather 68 69 85 95 100 120 160 208 Samne'(butter) 88 100 108 153 179 Licorice roots 107° 94 91 100 96 97 97

Manufactured & Processed goods Textiles 122 113 102 99 100 117 121 121 Silk thread 110 104 103 82 100 109 84 84 Olive oil 85 91° 79 91 85 100 112 Soap 125 141° 125 121 104 100 108 141 133

B. Imports of Indus­ trial Europe Food, Drink, & ^ Tobacco 100 115 Raw Materials 135. 100 132 Textiles ^63, 100 132 Total 149 100 126

Notes: a. 1888-1897 b. 1887 c. 1878-1882 d. 1872 Sources: Syria: Appendix I, Table III Industrial Europe: Derived from Kindleberger, op. cit., Table 3- 11-11, p. 50. 76

Table XI the general slide before the turn of the century, and the partial or complete recovery afterwards.

The variability of price changes among the different commodities or categories in Table XI springs from the variability in their demand and supply conditions at home and abroad. The rapid price decline of agricultural products, for instance, is due, on the one hand, to inelasticity of European demand, and, on the other, to elasticity of supply in the major grain-producing countries. Expansion of agricul­ tural production on the newly opened virgin lands of those countries continued, thanks to diminishing real costs of production, despite the fall in prices. When the limits of fertile land were exhausted by

1900, agricultural production was pushed, in response to the increas­ ing demand of rapidly growing populations, to less productive land, and higher marginal costs thereafter pushed prices upwards.

The price of Syrian wheat followed the world price pattern.

The excellent showing of Syrian barley after the turn of the century is the result of increased demand by the rapidly expanding brewing industries of England and Northern Europe for the excellent-quality j _ 40 product of Gaza.

Orange prices were generally on the rise; oranges at the time were in the nature of a luxury product on the European market for which a favorable shift in taste was developing. There is no explana­

tion why prices stopped rising after 1900; the price for citrus fruit

imports to Europe, according to Kindleberger, rose 84 per cent between 41 1900 and 1913. It is known, however, that conditions of 77

42 overproduction in Syria developed in the decade preceding World War I, and competition from Spanish oranges was increasing. Another fruit product listed in Table XI is Aleppo’s pistachio nuts, x^hich, like oranges, benefited from the income-elasticity of foreign demand.

Wool export prices followed the price pattern of agricultural products, for the same reasons. Prices of hides and leather were on

the rise throughout the period, probably because of increasing foreign

demand. Samn& (refined butter) followed the course of wool prices.

Licorice roots, a wild product, had its price fixed by the monopson-

istic buyer.

The price pattern of textiles, though of less amplitude, resem­

bles that of agricultural products, because demand for both is income-

inelastic. The decline of raw silk prices appears to have been due to

the inelasticity of demand and some reduction in cost. The 1900

import price of rax?, silk in Europe was 35 per cent of Its level in 43 1872. Prices of olive oil show a discernible trend only during the

last two decades, while the pattern of soap prices Is more in line

with that of agricultural products. Syrian industrial products were

based on agricultural raw material.

If we assume on the basis of the sketchy data given in Table XI

that the general price level of Syrian exports had by 1913 almost

recovered its 1870's level, we may conclude that the volume growth of

Syrian exports over this period parallels their value growth which was 44 shown, in Chapter I, to have considerably exceeded population growth. What about price changes before the 1870’s? The fragmentary data that are available may serve to confirm the earlier observation about the rise of prices in the third quarter. Cotton exports, for 45 instance, which fetched a price of L 40/ton in 1838, more than doubled in price during the American Civil War. Although the price declined after the War, in 1871 it was still higher than its level in 46 1838. Likewise, the price of wool in 1870 was L 50/ton, double its 47 price in 1838. The price of dried silk cocoons in 1871 was quoted 48 as 30 - 40 piasters/ oke compared to 11 - 12 piasters in 1840.

Olive oil rose in price from a range of 1.25d. - 1.40 d./ lb. in 1838 49 to a range of 4.4 d. - 6.4 d./ lb. in 1871.

Let us turn now to examination of the trend of import prices.

Table XII gives the average values, in index form, of selected Syrian

imports, while Table XIII gives annual values of selected European ex­

ports and of total exports to underdeveloped (mainly tropical) coun­

tries, for the key years 1872, 1900, and 1913. Syria's import prices

reflect changes in shipping freight rates, while export prices of

Industrial Europe are f.o.b. This explains the greater relative fall

in Syrian import prices before 1900. The fall is greatest in the

prices of sugar, rice and coffee, which must be considered among the

imports of Industrial Europe, too. According to Kindleberger, the

price of sugar imports in 1900 stood at 42 per cent and that of rice

imports at 49 per cent of their respective levels in 1872. The pre­

cipitous fall in the price of these commodities must be attributed to

the tremendous productivity gains achieved in their production. 79

TABLE XII

AVERAGE UNIT-VALUES OF SELECTED SYRIAN IMPORTS, 1872 - 1913 (Index, 1898 - 1902 - 100)

1866 1868 1873 1881 1883 1888 1893 1898 1903 1908 -67 -72 -77 -82 -87 -92 -97 -1902 -07 -12 1913

Food, Drink. & Tobacco Sugar (A) 273 257C 188 154 100 93 110 115 IT (J) 283a 243 172 144 109 100 105 126 136 Rice (A) 208 20 7C 173 101 100 96 96 98 11 (J) 173a 177 143 160 110 100 112 129 95 Coffee (A) 162° 162 159 100 72 97 105 1 6 2 h II (J) 3G8a 193° 167 193 205 100 114 143 152 Tobacco (A) 87 102 100 100 100 100

Textiles British cotton manufactures (A) 161 149 128 95 100 99 89 84 (B) 98 109 91 91 105 100 84 100 101 117

Fuels Petroleum (A) 171 139 107 85 100 102 105 122 (B) 246 137 128 92 105 100 106 106 127

Intermediate Goods Raw Silk (A) 113 132 129 100 89 83 76 Indigo (A) 144 128 119 98 100 91 89 93 Chemical Colors (A) 122 104 100 78 76 69 Hides and leather(A) 158° 131 126 118 100 116 122 94 Drugs and chemicals(A) 112 100 109 173 151 Copper (A) 134 134 117 93 100 106 106 105 Iron (J) 99e 100 100 96 103 84

Producers1 Goods Jute Sacks(A) 100 117 135 135 Timber (J) 95 100 112 143 185 Notes: (A) Aleppo (B) Beirut (J) Jaffa a. 1874, 1875, 77 b. 1879, 81 c. 1883, 87 d. 1878, 79, 81 e. 1891, 92 Source: Appendix I, Table V 80

TABLE XIII

ANNUAL UNIT-VALUES OF SELECTED EXPORTS OF INDUSTRIAL EUROPE 1872, 1900, 1913 (Index, 1900 - 100)

1872 1900 1913

Food, Drink, Tobacco 110 100 112 Metals, Manufactures 128 100 103 Machinery 94 100 122 Chemicals 400 100 55 Textiles 167 100 122 Other Manufactures 154 100 74 Total 152 100 104

Source; Derived from Kindleberger, op. cit., Table 3-II-i, p.49.

Because Aleppo's import statistics after the turn of the century are,

as noted earlier, of dubious accuracy, import prices of Jaffa and Beirut

are added along with those of Aleppo in Table XII. The main outstand­

ing feature of the long-run movement of Syrian import prices that

emerges from the table is that, unlike export prices, import prices in

1913 were still much lower than their initial levels before 1900. This

is equally true of the price movement of European exports. The unit-

value index of Industrial Europe's exports fell 34 per cent between 51 1872 and 1900, but rose only four per cent afterwards (see Table XIII.)

On the basis of this general observation, one may conclude that the

volume change in Syria’s imports between the 1870'a and 1913 exceeded

the value change, while both changes outstripped the rate of popula­

tion growth. Furthermore, by examining Tables XI and XII we find that,

compared with export prices, import prices before 1900 were falling at a more rapid rate, which would indicate a favorable change in the

terras of trade of Syria. As the price trend reversed its direction

thereafter, export prices seem to have risen faster than import prices, which also would indicate a favorable change in Syria's terms of trade in the two decades preceding World War I. The improvement in the

Syrian terras of trade, if correctly postulated, must be attributed in

the earlier period to the precipitate fall in maritime freight charges

(which entered into import prices), and in the later period to the slower rise in European relative to Syrian export prices. Syria must have benefited also from the productivity gains of European industry.

Table XIII shows the effect of cost-reducing innovation and organiza­

tion on the price trends of metals, chemicals and manufactures. The

rise in the unit-value of machinery is probably overstated. The unit- value index represents the declared value of machinery divided by its weight, but during this period machines typically were getting lighter

in weight, and more efficient in performance.

Let us now examine Table XII more closely. The great fall in

the price of rice, sugar and coffee before 1900 has already been dis­

cussed. Tobacco's price increased before 1900, then stabilized after

it was fixed by the Regie Cointeress£e des Tabacs de l'Empire Ottoman,

the Turkish tobacco monopoly. Unlike the price behavior of other

agricultural products, the price of tobacco Imports to Europe was 52 higher in 1900 than in 1872. As a luxury item, for which a favorable

shift in taste was developing, tobacco was income-elastic.

Comparing the prices of cotton imports by Aleppo and Beirut 82 with the export price of European textiles, we notice the divergence of

Aleppo's price trend after 1900 from those of Beirut and Europe. Since we know also that the unit-value index of British textiles rose 28 per 53 cent between 1900 and 1913, the statistical data on Aleppo's imports become of questionable reliability, and the terms of trade of Aleppo after 1900 must be corrected for their upward bias.

The expansion in the production of petroleum from the Batoum oil

field in Russia accounts for the rapid decline of petroleum prices before the turn of the century. In Europe the unit-value index of 54 petroleum Imports in 1900 stood at 38 per cent of its level in 1872.

The fall in the price of raw silk has already been discussed and

accounted for In our discussion of Syrian export prices. The downward

trend of indigo prices up to 1913 was caused by the development of syn­

thetic colors. Because of cost-reducing Innovations developed in

Germany, the price of synthetic colors followed a downward trend

throughout our period. The same is true of European chemicals exports

(see Table XIII), but not, it seems, of Syrian Imports of drugs and

chemicals (see Table XII). The divergence may be due to differences

in the composition of the Syrian and European categories, or to the

inaccuracy of Aleppo's statistics. The Syrian category Included a

variety of commodities, from pharmaceutical products to artificial

manure for mulberry plantations and ammoniated alkali for soap-making.

Unlike the price pattern of hides and leather exports, the

prices of hides and leather imports followed the general pattern of

first falling before, and then rising after, the turn of the century. 83

The import, unlike the export product, was tanned and processed and cost-reducing techniques were introduced in the European industry before 1900.

Copper and iron price patterns in Tables XII and XIII show parallel changes. The price rise after 1900 was negligible, again because this is an industry where a great deal of cost-reducing tech­ niques was Introduced.

Finally, the prices of jute sacks and timber behaved like those of agricultural products.

How did prices of Syrian imports behave in the earlier decades of the period covered by this study? Again the fragmentary data on the earlier sub-period can serve to substantiate our earlier observa­ tion on the rise of prices in the third quarter of the nineteenth cen­ tury. For example, the price of sugar in Aleppo in 1871 ranged from

L58 to L75/ton, compared with a range of L40 - L48 in 1837.88 Coffee prices in Aleppo rose from L62 - L66/ton in 1837 to L102 - Ll24/ton in 56 the early 70's. The price of cottons imports reached its highest 57 level during the American Civil War. Like other colonial products, the price of indigo rose and fell in the nineteenth century. The selling price in Aleppo of indigo imported through Britain was L720 -

L880/ton in 1837, while the price in Beirut in 1872 ranged from L848 -

L1228/ton.58 84

IV. CONCLUSION

To summarize, the nineteenth century was generally character­

ized by a downward price trend, brought about by the tremendous pro­ ductivity gains realized in manufacturing, transportation and agricul­

ture— particularly in the production of such tropical products as sugar, coffee and rice. The Syrian economy shared in the fruits of

these gains as its integration into the international economy through

the vehicle of foreign trade was speeded up in the second half of the period of our study. Syria's net barter, and possibly its single fac-

toral, terms of trade improved between 1870's and 1913. The same can­

not be said of the double factoral terms of trade. As we shall see in

Chapters V and VI, the only noticeable increase in agricultural pro­

ductivity occurred in the citrus industry, but this gain cannot be

equated with the productivity gains achieved in the production of

Syria's imports. In the handicrafts industry, there may have occurred

a modest improvement in labor and capital productivity, and if we were

to limit the comparison with the productivity gains in neighboring

countries, which absorbed most Syrian exports of manufactured goods,

it would not be surprising if the terms on which resources were

exchanged with neighboring countries might also have turned in Syria's

favor.

The deterioration in the net barter, but certainly not in the

factoral, terms of trade of Industrial Europe with underdeveloped

countries, and indeed with the world, resulted from the adoption of 85 cost-reducing innovations that expanded the supply of goods and ship­ ping services faster than they stimulated demand for them. Syria benefited from this development. But the terms-of-trade gains are only the immediate or direct gains from trade. The ultimate contribu­ tion of international trade to the development of new resources and productive forces in the national economy must be considered as gains of a higher order, and we shall discuss these gains (or losses) in the following chapters. 86

Footnotes to Chapter II

1Charles P. Kindleberger, The Terms of Trade, A European Case Study (New York, 1956), p. 2. 2 For example, Prebisch, Myrdal, Singer, and U.N. economists referred to infra, n. 7. 3 Syria's foreign trade (exclusive of overland trade) averaged L9,593,000 during 1908-12, and reached L10,752,OOQ in 1913. The national product in 1915, as estimated by Ruppin, totaled 882 million French francs, including 50 million in emigrants' remittances and grants-in-aid from abroad. The domestic product, therefore, is reduced to 832 million francs or L33,280,000. See Arthur Ruppin, Syria: An Economic Survey (New York, 1918), p. 12. 4 This section draws on several sources, the following two in particular: M.C.Kemp, "Terms of Trade," International Encyclopedia of the Social Sciences, 1968, under "international Trade"; and T. Morgan, "Trends in Terms of Trade, and Their Repercussions on Primary Pro­ ducers." International Trade Theory in A Developing World, eds. Roy Harrod and Douglas Hague, (London, 1963), chap. iii. 5 R.G.D. Allen, "Index Numbers of Volume and Price," International Trade Statistics, ed. by R.G.D. Allen and J. Edward Ely (New York, 1958), pp. 186-211.

^Kindleberger, op. cit., p. 263; Mohammed K. Atallah The Long­ term Movement of the Terms of Trade Between Agricultural and Indus­ trial Products (Rotterdam: Netherlands Economic Institute, 1958); Gottfried Haberler, "Terms of Trade and Economic Development," Economic Development for Latin America: Proceedings of Conference, ed. by Howard S. Ellis and Henry C. Wallich (London, 1961), pp. 275-297. 7 United Nations, Department of Economic Affairs, Relative Prices of Exports and Imports of Underdeveloped Countries (New York, 1949), pp. 21-24, 72. g League of Nations, Secretariat, Financial Section and Economic Intelligence Service, Industrialization and Foreign Trade (Geneva, 1945), p. 18. The main author is Folke Hilgerdt. 9 Kindleberger, op. cit., pp. 53, 233; and Albert H. Imlah, Economic Elements in the Pax Britannica: Studies in British Foreign Trade in the Nineteenth Century (Cambridge, Mass., 1958), pp. 94-98. Primary products had sharply rising relative prices in the U.K. from 1801 up to the 1860's or 70's, when the UN series began. 87

^Cf. post, Table X.

■^Leaving out the difficulty involved in trade with third coun­ tries, lowering freight costs between the United Kingdom and another country would make it possible for the terms of trade of both countries to improve simultaneously if each is calculated at the home port. Kindleberger, op. cit., p. 17.

12 Ibid., pp. 239, 263-264. 13 "Unweighted by quality, the terms of trade run against under­ developed countries,....but not against primary products." Ibid., p. 263.

14Ibid., p. 306. See also ibid., pp. 252, 253, 255, 256, 271. 15 For a brief, critical examination of the terms of trade, see G. Haberler, A Survey of International Trade Theory (Princeton Uni­ versity, 1961), chap. iv.

■^The bundles are chosen in such a manner that each contains a constant quantity of "productive resources." Cf. Alfred Marshall, Money, Credit and Commerce (London, 1923), pp. 157, 161-163.

^Haberler, A Survey op. cit., p. 25. 18 Ibid., p. 29, n. 8 . The total "capacity to import" also depends on net capital imports and interest payments. 19 Jacob Viner, Studies in the Theory of International Trade (New York, 1937), chap. ix. 20 On the other hand, as Haberler points out, a deterioration of the terms of trade may (but need not) be indirectly beneficial, if it reduces unemployment and improves the balance of payments. Haberler, op. cit., p. 27, n. 5. Japan's rapid economic growth in the post-war decade was supported mainly by an increase in exports and a serious worsening in the terms of trade. 21 Morgan, op. cit., p. 6 6 . 22 For the method of computation used, see R.G.D. Allen, op. cit., pp. 191-196. 23 Such substitution took place in bad times or in times of high prices. Cf. BCR, Aleppo, for the year 1864; Vice Consul's Report, Damascus, March 13, 1880; and BCR, Aleppo, July, 1912, No. 4942. 88

24 Morgan refers to two studies made by Keynes and D.H, Robert­ son showing, as in Table X, that Britain's terms of trade deteriorated between 1900 and 1911. The reason is found in diminishing returns in primary production abroad. Morgan, op. cit., Appendix I. 25 One complication in using Kindleberger's results for compari­ son purposes is that his study did not cover countries of Syria's type, i.e. underdeveloped but not tropical. The following table sums up the relevant results of his study. Table 10-2 Terms of Trade of Industrial Europe by Areas Key Years, 1872-1952 (dollar relatives; 1913 ■ 100)

Geographical Area 1872 1900 1913 1928 1938 1952

Industrial Europe 112 96 100 103 104 100 Other Europe 102 98 100 96 116 96 Total Europe 114 100 100 101 108 98 United States 137 114 100 101 114 82 Areas of Recent Settlement 108 115 100 104 144 120 All Other (mainly tropical under­ developed countries) 123 122 100 119 176 155 World (including Industrial Europe) 119 108 100 102 135 117 World (excluding Industrial Europe) 119 112 100 104 143 122

Source: Kindleberger, op. cit., Table 10-2, p. 234.

26Ibid.. p. 235.

27Ibid., pp. 155-156. 28 The general explanation for this variation in the behavior of the terms of trade between the two cycles is sought in the changing origin and intensity of the cycles involved, and the price - and income - elasticities concerned. Kindleberger, ibid., chap. vii.

29Ibid., p. 151. 30 F.D. Graham, The Theory of International Values (Princeton, 1948), quoted in Kindleberger, op. cit., pp. 74, 91. 31 Kindleberger, op. cit., p. 303. 89

32 Phyllis Deane and W.A. Cole, British Economic Growth, op. cit., p. 16; The Cambridge Economic History, VI, op. cit., p. 461; and W.II.Court, British Economic History (London, 1965), p. 6 . 33 The Cambridge..., loc. cit.

34Ibid. 35 Calculated from the Rousseau Price Indices, 1800-1913 (cited supra, Chap. I, n. (55). 36 J.H. Clapham, An Economic History of Modern Britain, II, 338, quoted In Deane and Cole, op. cit., p. 17. The expansion and contrac­ tion of the money supply and bank credit as an explanation of the price movement is now rejected by most authorities. Increased gold produc­ tion in the 1850*s and since 1890, however, facilitated this movement and Its effect had been to assist materially in the enlargement of world credits and in one way or another to stimulate the world buoy­ ancy during the third quarter and the two decades preceding World War I. Ibid., p. 32. 37 Source cited supra, n. 35.

38Ibid. 39 Falling freight rates reached their lowest level in 1908. Cf. Kindleberger, op. cit., Table 2-2, p. 19. 40 Even Beirut exported barley originating in central Syria. In 1906, the British consul reported exports of "15,000 tons of barley from Beirut alone, marking development of the grain trade," BCR, Beirut, 1906, No. 3569. 41 Kindleberger, op. cit., Table 8-4, p. 182. 42 BCR, Jerusalem, June, 1913, No. 5107, p. 9. 43 Kindleberger, loc. cit. 44 Supra, p. 13. 45 Bowring, Commercial Statistics of Syria, op. cit., p. 13. 46 The price spurted to L67/ton (1862), to L80 (1863), and to L112 (1865). It dropped to L68/ton (1867), and further to L52 (1871). See BCR, Vilayet of Syria, 1872, and BCR, Jerusalem, 1904, p. 6 . 90

47 For 1838, see Bowring, loc. cit.; and for 1870, see BCR, 1872. 48 BCR, Beirut, December 31, 1875. Soon after 1871 the effect of diminishing demand for silk in Europe and the United States and increased competition from Far Eastern silk began to be felt, and the same consul reported a price decline on the French market of 50 per cent, adding, "Prices are now thus touching the limits of forty years ago, when money possessed three times its present purchasing power in the country." Ibid. 49 For 1838, see Bowring, loc. cit.; and for 1871, see BCR, 1872.

"^Kindleberger, loc. cit.

3^As remarked earlier, the fall and rise in European prices would be accentuated if Kindleberger used the year 1896 instead of 1900 as the turning point for prices. 52 Tobacco's unit-value index in 1900 stood at 130 per cent of its level in 1872 (cf, Kindleberger, loc. cit.)

53Ibid., Table 3-lA-i, p. 33. 54 Kindleberger, op. cit., Table 8-4, p. 182. 55 Bowring, loc. cit.

56Ibid.

5^The British Consul in Aleppo reported that the general price level of Aleppo's cottons imports doubled in 1863 and, as a result, the volume Imported was cut in half. BCR, Aleppo, for the year 1864. 58 Sources cited n. 49, above. CHAPTER III

COMMERCIAL POLICY

The purpose of this chapter is to trace the historical develop­ ment of the Ottoman trade policy during the period of our study, and

to evaluate it critically on the basis of an established national wel­

fare criterion. Section I of this chapter presents the Ottoman com­ mercial policy as it developed during the period under consideration.

Section II discusses the relevant policy implications of trade theory

and the trade policies followed at the time by Syria's European trad­

ing partners. Section III evaluates the Ottoman commercial policy

against this theoretical and historical background.

I. THE OTTOMAN COMMERCIAL POLICY

The Turks, while not a trading people themselves, followed the

example of earlier rulers of the Near East in promoting commercial

relations with the West.^ The Arab-Islamic tradition honors trade as 2 a profession, and considers it a most profitable occupation. Moslems

were essentially a commercial people whose coimiw®ce~-sx£@sitded from the

Indian Ocean to the Atlantic. It was natural for the first Turkish

Sultans to invite foreign merchants to establish themselves in the

trading centers of the Empire. Freedom of trade was the offspring of

the sanctity of hospitality. Despite official corruption and malad­

ministration, "exchange of commodities was the only right respected, 92

3 hospitality the only obligation observed,"

How much the sanctity of hospitality influenced the commercial legislation of Turkey, may be inferred from a variety of declarations of commercial principles which were published in the official gazette.

One of these declarations, issued in 1832, after contrasting the com­ mercial freedom of Turkey with the restrictions of Europe, and the stability of commodity supply and prices with the fluctuations pro- 4 duced by the European system, proceeds as follows,

To the Sons of the West, who have confided themselves to the care of the Mussulman, hospitality has been granted, with these two companions, civil liberty and commercial liberty, according to the laws of nature and reason.^ Trade relations with the European countries were formalized in

conventions, better known as Capitulations. "Originally intended as privileges or concessions to a friendly nation from a strong sovereign state," these conventions deteriorated later on into "the semblance of

exactions from a weak power which had 'capitulated' to a more powerful 1.6 one. As the British accountant of the Ottoman Bank in Beirut had

occasion to comment on the situation at the time, "That Turkey is one

of the most abused countries in the world, her friends will not hesi­

tate to admit.

The commercial policy of Turkey, based as if seems on the

simple principle of free trade, was nevertheless maladminlstered, mis­

guided, and inconsistent. Until the nineteenth century no attempt

was made to stimulate local production by means of protective tariff.

The main objective was to raise revenue. After the Capitulations of 1673, both exports and imports were taxed at a uniform nominal rate of g three per cent ad valorem. The Sultan, however, issued Imperial decrees from time to time which completely or partially prohibited trade in certain commodities and restricted the manner of business.

Foreign merchants were not permitted to participate in the internal trade of Turkey or to purchase goods for export outside the ports of exit. The job of acting as intermediary between the local producer and the foreign merchant fell to members of the minorities, mainly

Greeks and Armenians. Individuals and firms bought from the govern­ ment the exclusive right to purchase the produce of a district or a province. One man had the monopoly of wheat, another of barley or tobacco, and so on. The monopolist fixed his price, and sold, either 9 to the retailers or to the exporters, at a large profit. The govern­ ment derived an important source of revenue from the sale of these monopolies. Likewise, imported goods were subjected to further imposts on sale or movement into the interior, and internal transport taxes were collected at bridges and gates of towns.

Until 1838 the commercial policy of Turkey, as applied by the government, obstructed rather than facilitated foreign trade. In the

1830's foreign, especially British, merchants complained of monopoly restrictions and export prohibitions, of very high duties on exports— amounting on certain items to 33 per cent— and of the fact that they were being subjected to some taxes as Ottoman subjects when they moved their merchandise into the interior.^ In 1838 a trade convention was concluded with Great Britain, and subsequently similar conventions 94 with the other major European powers, to regularize customs levies and to facilitate circulation of goods entering or leaving the Ottoman 11 Empire. The Convention set up the framework for Ottoman tariff policy that prevailed with some modifications until the First World

War. It removed all monopolies, allowed British merchants to purchase goods anywhere in the Empire, whether for the purpose of internal trade or exportation, and imposed uniform duties on imports, exports, and transit trade. Under British pressure, Imports were subjected to a low rate of five per cent— three per cent charged upon landing of goods, and two per cent upon the sale of goods in the port of disem­ barkation or on conveyance into the interior. In return for foregoing other inland imposts on imports and the revenue formerly derived from monopolies of local produce, Turkey demanded, and was granted, the right to levy a tax on exports at the rate of 12 per cent— nine per cent collected in lieu of all internal transport duties, and three per cent upon shipping of goods. Transit trade was subjected to a three 12 per cent rate.

The import tariff applied to foreign Imports of all descriptions, whether raw or manufactured. The burdensome export duty discriminated against the industry and enterprise of the country. Turkish officials were under the Impression that import as well as export duties were borne by foreign producers and consumers, respectively, and that the 13 terms of trade could, therefore, be manipulated in their own favor.

That Turkey lacked the monopolistic or monopsonistic power to engage 95

in such practices need not be emphasized. Indeed, this perverse policy was partly responsible for the chronic disequilibrium of its overseas trade balance and the instability of foreign exchange rates.

The Treaty was to apply to all territories under effective or nominal allegiance to the Sultan, including Syria, where Ibrahim

Pasha, following the example of his father in Egypt, had introduced a 14 system of monopolies. The system kept the exports of Syria away

from the European merchants. The latter had either to pay higher

prices or to cut down their purchases, which in turn limited the vol­

ume of goods they hoped to sell in the local market. In some cases

they were forced to send back empty ships and thus lost heavily on

transportation costs. Due to continued, particularly British, com­

plaint, most of the monopolies were abolished in 1836. The desire of

the European powers to extend the application of the Commercial Treaty

of 1838 to Syria provided them with a further incentive to assist the 15 Sultan in re-claiming Syria.

Once the Egyptians had been forced to leave in 1840, the Euro­

pean merchants and capitalists had a clear field. The 1838 Treaty was

put into effect and this gave a competitive advantage to foreign mer­

chants— as well as to their foreign machine-made goods— over their

local counterparts. The Syrian producer complained bitterly over the

12 per cent export tariff. "It was originally introduced," he pro­

tested, "to replace the monopolies which existed to so great an extent

in the Ottoman Empire; but as there were no monopolies in Syria,

except a very trifling one of salt, no excuse exists for levying this 96 tax... The speculators who buy silk and oil would wish to deduct 16 from their price the duties Imposed by the tariffs." The British consul, who related a similar complaint by the Maronite Patriarch of

Lebanon, added, "All my arguments to prove to him that the duties on

the staple commodities of Lebanon could not affect the producers to

the degree he asserted, but would fall on the foreign consumers of rich nations,...were to no avail.To the Syrian producer, it was

clear that the incidence of the export tariff was being shifted back­ ward to him rather than forward to the foreign consumer.

In still another dialogue between a Britisher who participated in negotiating the 1838 Treaty and a Lebanese gentleman, the English­ man defended the Treaty by stating, "The Turkish authorities gloried

in extorting from the trade of England a larger duty than formerly;

the English government gloried in having given liberty to the trade of

Turkey, whose well being it was ready to secure at any sacrifice. The

only conclusion the old Sheikh could draw was that England had cheated

the Sultan."*'®

Today, the leading idea of modern treaty negotiations is to

make a trade agreement advantageous for both parties. This was not so

in the past. The German scholar Von Justi was a spokesman for states­

men of the eighteenth century (and probably of the nineteenth century,

too) when he declared that "the main purpose of any commercial treaty

must be to obtain an advantage in the bargain and this is likewise the

aim of the country which is negotiating with us. Thus the whole 97

19 question is who can outfox whom,"

That England outfoxed the Ottoman government is evidenced by the fact that English officials were perfectly aware of the consequen­ ces of enforcing the Treaty. They prevented its relaxation by the

Turkish government, and intercepted the petition of people appealing 20 for relief. Mr. Alison, Secretary of the British Embassy in Con­ stantinople, admitted,

The indiscriminate ad valorem taxation at present enforced has had the effect, which might have been surely anticipated, of put­ ting an end to, or else choking in an important degree, the expor­ tation of many kinds of merchandise to foreign states, whilst in the home trade it has led the consumer to substitute for native manufactures, cheaper and more lightly taxed foreign goods.21

The rise in the export tariff rate should not have been applied

to Syria, since the Treaty stipulated the addition of nine per cent as

a compensation for Turkey's loss of revenue from monopolies. In Syria,

there were no monopolies in the period prior to the Egyptian occupa­

tion and, therefore, no claim for the additional nine per cent could

be justified. According to Urquhart, "The English merchants had urged

this right, and even the English government, which had imposed the

treaty, did not pretend that the claim was groundless, it answered, 22 'monopolies may be imposed some day.'"

Further, the 12 per cent rate was imposed on goods exported to

Europe, but the Turkish government applied it to all internal traffic.

Thus no production of the soil or manufacture could be transported by

sea from one town to another without being subjected to a charge.

This tax on domestic trade reinfored the Treaty's effect of encouraging 98

Imports and discouraging home production.

Inland duty on domestic trade was equally burdensome and had a similar effect on local production. Thus Lebanese silk paid before entry to Damascus an impost equivalent to 12 to 15 per cent ad valorem, 23 compared to one and one half per cent in the 1820's. This had a damaging effect on the manufacture of cotton and silkc.loth, which was a considerable industry in that city. As the French consul noted in

1859, "Under these conditions, it is easy to understand why many looms are abandoned. This happens daily.

Up to 1861, the tariff policy failed .of even achieving its objective of maximum revenue. Not only was the tariff policy unsound, the collection of Customs revenue was also inefficient and Customs 25 administration corrupt. The tax burden place the peasant under the mercy of the usurer, who often was the tax farmer. A novel system of abuse was introduced,- consequent to the Treaty, that of the tax farmers becoming merchants themselves. They bought the goods that 26 could not be exported because of the high export duty.

The realization that such a system put Ottoman producers at a disadvantage compared with foreign competitors, and the desire for more revenue, led the Porte to seek repeatedly to modify the rates.

While the above detrimental effects of the Treaty of 1838 were soon evident to the Great Powers, no new treaty could be negotiated before

1861. In 1861 and 1862, the 1838 conventions were replaced by similar ones with all European countries and the United States, raising the 99

27 import duty from five to eight per cent ad valorem, or a specific duty, fixed by common assent, equivalent thereto, and providing for the prompt reduction of t&e export duty from 12 to eight per cent, followed by annual reduction of one per cent until it was ultimately 28 reduced to a rate of one per cent, which took place in 1869. The

transit duty was fixed at two per cent, to be reduced to one per cent 29 after eight years. Table XIV shows the effect of the realized reduc­

tions on the customs revenue of the Vilayet of Suriya (Province of

Damascus), and gives an idea about the magnitude of the other imposts collected by the Customs House.

Table XIV reveals also the Importance of the revenue from domes­

tic trade duties. The British consul, who reported the table, added,

I regret I can give no statistics of the home export and import trade. I mean between Syria and other parts of the Ottoman Empire, but the Customs revenue derived from this branch will tend to bear out what 1 said of the general Increase in production and con­ sumption.^

TABLE XIV

CUSTOMS REVENUE OF THE VILAYET OF SURIYA (PROVINCE OF DAMASCUS), 1869 - 1871 (Pounds Sterling)

Year Foreign Foreign Home Tobacco ending Export Import Trade Export and Liquor Salt Total March 13 Duties Duties Duties Excise Tax Tax Tax

1869 10,759 85,836 68,123 78,965 1,434 7,715 252,832 1870 6,050 94,937 71,100 86,685 1,438 5,031 265,241 1871 2,877 75,184 58,147 80,648 952 3,872 221,680

Source: British Commercial Report, 1872. 100

Native produce and manufactures continued to pay a duty of eight per cent when carried by sea between one port and another of the

Ottoman dominions. No import duties were paid on foreign goods arriv­ ing from Turkish ports if they were accompanied by certificates prov- 31 ing payment of duty at port of shipment.

In 1874 land-cuetoms houses were abolished and with them the internal excise duty of eight per cent on native produce and manufac­ tures. These products were often taxed at each stage of conversion from raw material to manufactured articles. While its proceeds were small, the annoyances, delays, and waste of time in complying with the regualtions were legion. It acted besides to the serious detriment of home manufactures struggling for bare existence with European articles. • Its abolition, in the words of the British consul, "has been a great boon... the relief has been immense, and will be more so when the eight per cent duty upon native products passing by sea from 32 one part of the country to the other shall have been abolished.1'

The consul also recommended an upward revision of the import duty:

“An Increase in import duty upon foreign imports (now eight per cent) would put premium on resort to irregularities, but such a protective system would doubtless benefit native manufactures, now well nigh 33 ruined by European competition,"

Two attempts were made by the Ottoman Government in 1877 and

1883 to raise the import duty on European goods. Its demand was met with strong opposition from the foreign states, even after the seven- year treaties of 1861-1862 had lapsed. Things remained unchanged 101

until 1907, when, in return for certain concessions, Turkey was per­ mitted to raise its duties by three per cent ad valorem, the proceeds 34 to be allocated to the Ottoman Public Debt Administration. Import

duties were thus raised to 11 per cent, at which level they remained

until the outbreak of the Great War. This rate was levied on all

imports except for tobacco (which was subjected to a prohibitive duty

of 100 per cent if imported from countries other than Turkey) and for 35 some exempted goods. Exemption after 1880 applied to basic Indus­

trial machinery and equipment, agricultural machinery and implements,

and materials for construction of railways, roads, and other public

and municipal works. Diplomatic and consular representatives of

foreign states enjoyed total exemption, and schools, monastaries,

hospitals, orphanages, and other religious or charitable institutions 36 partial exemption. A rebate of most of the tax was allowed on goods 37 imported and then re-exported.

Until 1908 the value of imported goods was estimated by customs

officials, and the only check upon their valuations was that the

importer might, if he chose, pay in kind. After 1908 the value of the

goods was determined by the bill of lading. Payment in kind was re­

placed by cash payment, and the farming-out of customs duties was 38 abolished, the government itself collecting the dues. But the almost

complete reliance on the ad valorem tariff system proved to be unsat­

isfactory because it gave rise to the widespread practice of invoice 39 falsification. 102

The uniform export tax of one per cent on all article? shipped from the Turkish Empire to foreign countries, except for mineral pro- 40 ducts which paid five to 15 per cent, was kept. The transit duty which was reduced to one per cent by 1869 was also kept.^ The latter two taxes, however, were merely vexations, as they yielded little rev­ enue but required considerable machinery for administration.

Finally, the home export tax of eight per cent on goods enter­ ing one native port from another was reduced in 1900 to two per cent, and in 1909 it was abolished altogether. However, there was always a large number of important exemptions, e.g. cotton, wool, silk, flour, etc.. 42

II. FREE TRADE VS. PROTECTION

Our Interest in this topic, which attracted much attention in the nineteenth century and during the last two decades, is a limited one, namely, to find out whether a case could be made for a protective tariff policy, having as Its obvious purpose the shielding of an important traditional home industry from competition by European 43 machine-made goods. We shall also examine the trade policies of

Turkey's trade partners to find out whether they applied to themselves A A the same policies they recommended to or imposed on other nations.

The classic case for specialization under conditions of free trade rests on the theory of comparative advantage as developed by

Ricardo and Mill. Later on, the neo-classical economists refined the 103 doctrine and integrated it into the general equilibrium theory. Free trade among nations became simply a counterpart to laissez-faire within nations. Division of labor and specialization of human and natural resources would work for the harmony of interests among as within nations. Free trade would maximize the world economic efficiency as free enterprise would maximize national welfare. On the assumption that domestic policies pursued would prevent divergencies between mar­ ket and real prices and costs, world economic efficiency would be maximized through maximization of production with existing resources and an optimization of trade in the volume of goods produced.

The classical economists saw no conflict between the gains 45 from trade and the gains from growth. But their argument was based on static comparative advantages. Xt is possible that the require­ ments for maximizing national income in a single year are different from those of maximizing the rate at which national income grows.^

Furthermore, if prices do not reflect real costs, then free trade will not reflect the structure of comparative advantage, and the free trade 47 argument loses much of its force.

But free trade, even as a theoretical optimizing solution from a static point of view, i.e. if factor and product prices reflect real costs, will not benefit all countries equally (in terms of some meas­ urable criterion, such as equal per cent of absolute increases in per capita income), unless it is supplemented by a system of income trans- 48 fers to equalize gains. And there is no basis for determining the amount and appropriate distribution schedule for those transfers. Even a rise of per capita income levels is rejected by econo­ mists from underdeveloped countries as the relevant criterion for deciding in favor of free trade. They regard stability and diversifi­ cation of production and employment as the more important objective relative to abundance brought about by international specialization, and make a strong case for it by arguing that in the long run special­ ization cannot be maintained if it causes heavy fluctuations of domestic employment and income. They find it difficult, on the basis of standard welfare criteria, to accept a policy that gives rise to the extinction of the import-competing sector, even if it leads to gains in the aggregate. A shift in income from industrial wages to commercial profits, for instance, may redistribute income in favor of the small enterprising class, opening the way for more investment and 49 higher potential real income, but economic welfare may be reduced.

Since trade policy affects both the efficiency of the economic system and the distribution of welfare, it ought to be judged by standards 50 both of efficiency and equity. The criterion of equity is admittedly a subjective one, but if it does conform to public opinion it will be 51 more than an individual's value judgement.

Again the case for specialization assumes mobility of factors of production within countries. Backward economies, on the other hand, are characterized by lack of reallocative capacity, at least between the import-competing sector and the export sector. As Kindle­ berger has put it, 105

Incapacity to transform may lead to disaster at an earlier stage as a consequence of trade. When trade begins, cheap imports may impinge on a domestic sector engaged, as in early India, in the production of cloth. The price of cloth falls. According to the free-trade model, the factors engaged in cloth production should shift into other more remunerative occupations, with the country as a whole faring better as a result of trade. But they may know no other possibilities. For a time they go on producing at a loss, and finally they are wiped out.^3

Haberler, however, holds that a reallocation of factors of production

is not a necessary condition for reallocation gains from trade.As

long as factor price rigidity does not result in the underemployment of resources, certain— but always relatively smaller— gains can, with

the original allocation or resources, still be had from a reallocation of consumption. But if the factors engaged in the import-competing

sector do not accept lower remuneration, the import-competing products will be uncompetitive, i.e. unmarketable, and the factors of produc­

tion, to the extent they refuse lower rewards, unemployed. Zf such underutilization of capacity is great enough, the losses it entails will more than offset the terms-of-trade gains or the gains from a

reallocation of consumption, and a tariff in this case would be justi­

fied. Haberler's argument is of special relevance to our attack in

Section III, below, on the relatively free trade policy imposed on the

Ottoman Empire by the European powers, in complete disregard of the

fate of its important handicraft industries.

Finally, free trade requires universality of application among

the trading countries. If free trade is not universal then we are

left only with a case for trade instead of a case of free trade. This

leads us to examination of the European trade policies during the 106 period of our study.

Among the several reasons why Britain became interested in the

Ottoman Empire in the first half of the nineteenth century and there­

after, there was one of a commercial nature. After the Napoleonic wars, in the face of British industrial lead, continental European

countries adopted a policy of protection. Britain was forced to seek

new market outlets and sources of raw materials elsewhere. For the

first time in British history the Levant became important in the

British economic patterns. This explains the pressure that Britain brought to bear upon the Ottoman Sultan to accept the Commercial

Treaty of 1838.

In the 1840's, however, Britain was converted to a free trader,

as British ironmasters and textile manufacturers, who were far ahead

of the rest of the world, did not fear competition on finished goods,

but wanted their raw materials duty free. Other European countries were gradually converted to the free trade doctrine. A general sys­

tem of free trade was never achieved, however. Financial needs of

governments, strident nationalism, infant industries, and the economic

depression of the 70's stimulated a revival of protectionist policies.

Italy adopted a new high tariff in 1877; France denounced Its treaty

with England and gave plain indication of reverting to higher protec­

tion, which was partially accomplished by the law of 1881. The M£line

Act of 1892, which imposed average rates of 25 per cent ad valorem on 55 agricultural imports, is of special relevance to Syria's agricul­

tural exports to France. The commercial policy of Germany was 107 radically altered by Bismarck's tariff of 1879. The swing toward higher duties was manifested also in other countries, the network of

commercial treaties crumbled; and from 1880 onward most European fis­

cal policies were strongly protectionist. Hardly were the British

dominions given their independence when they proceeded to protect

themselves against the manufactures of the mother country. It became

clear that the controversy between free trade and protectionism

reflected the interest of different nations in different phases of

national economic growth. Especially significant for our considera­

tion is the resort by continental European countries to agricultural

protectionism in the face of competition from extensive and largely

mechanized agriculture overseas. Agricultural protectionism largely

served political purposes; it was invoked to preserve the stronghold

of conservative forces.5^

III. APPRAISAL OF OTTOMAN COMMERCIAL POLICY

The essential aim of the Ottoman tariff policy was the raising

of revenue for the treasury, not the stimulation of local production

by protection and exemption. In the fiscal year 1911/12, customs

revenue stood second in importance after the tithes among individual

57 revenues of the Empire, accounting for 14.7 per cent of the total.

The same was true of Syria, where the proportion reached 16.3 per cent 58 in the fiscal year 1909/10. Duty-free imports in the following year

accounted for 7.4 per cent of total imports while duty-free exports 39 were negligible.

\ 108

The 11 per cent Import duty was Insufficient to protect local industry* In addition* the impact of the duty on imported industrial

raw materials was equal to, and in some cases even heavier than, its

impact on manufactured goods, an obvious discrimination against home

industries. Thus, the tariff on imported cotton yarn, which fed the

Syrian weaving industry, was the same as the duty on printed cotton

fabric (11 per cent), but was higher than the duty on unbleached

cotton fabric, which was subject to a rate of 7.62 per cent.^

The tariff policy of Turkey was dictated by the interests of

the European powers. Indeed, according to the clauses of the 1838

treaties, local products were taxed when circulating within the Otto­

man Empire, while foreign imports required duty only upon entrance or

exit from the Ottoman territory. The low five per cent import duty

stipulated under those treaties forced the Ottoman authorities to

impose the rather high duty of 12 per cent on the exports of the coun­

try in order to meet the heavy and increasing financial needs of the

Empire. This clearly worked to the detriment of domestic production

and contributed to expansion of imports, even more so since all the

clauses pertaining to foreign trade were well defended by European

ambassadors and consuls. Urquhart even claims that Turkey did not

require reciprocity for her freedom of trade,

...it is very clear that the freedom of commerce, and those of immunities and rights, are granted and maintained of her own free will, and by reason of self-imposed obligations, and although restored, when violated - on the representations of our diplomats or commercial agents, her own rule of rights, not any compulsory power residing in them, is the ground of decision.61 109

What were the actual consequences of opening up the Ottoman

Empire to the flood of European machine-made goods? Urquhart expected a shift would take place from the domestic handicraft industries to agriculture, agricultural production would expand, and agricultural exports to Britain would increase. However, there was no immediate shift of resources from the import-competing sector to agriculture.

Whereas skilled labor in industrial economies is mobile between indus­

tries, and possibly between occupations, labor mobility in backward economies is restricted by the skill factor. As Urquhart, himself,

observed at the time,

...throughout Turkey, all manufactures have lately suffered a ruinous fall in wages, which has affected wages generally; but as the great mass of production is the result of domestic industry, filling the intervals of other work, the consequence of that fall in wages has not transferred to us, as yet, more than a small por­ tion of the supply of the c o u n t r y .

Because the majority of those workers living in rural areas were dependent for their living only in part on industrial production, 63 they accepted a cut in their remuneration, and profits were, accord­

ing to Urquhart, "reduced to one-half and sometimes to one-third, by

the introduction of English cottons... The people must go on working

merely for bread, and reducing their price, in a struggle of hopeless 64 competition." Thus, downward flexibility of wages mitigated the

impact of imports on handicrafts employment in rural areas, which, in

any event, were less accessible to foreign imports than urban areas.

In Syria, thousands of workers in the urban centers, as will be

seen in Chapter VI, below lost their jobs in the wake of opening the country to European trade after the Egyptian occupation. Some workers returned to their villages; others perished in the famine of 1846.

Many artisans lost their capital and had to turn to the overcrowded retail trading or peddling. Finally, when the doors of emigration were opened before the turn of the century, thousands of weavers moved to

New York, where they were employed in carpet-weaving, or to Brazil, where they assumed a leading role in the development of its textile industry. Since these developments will be discussed again in Chapter

VI, below, suffice it to say at this point that the Syrian textile industry was plagued up to the end of the period under study by recurrent strikes of weavers because of employer attempts, often suc­ cessful, at cutting their wages. Haberler did find a tariff in this case justifiable; even Adam Smith had earlier recognized that "human­ ity may require that the freedom of trade should be restored only by slow gradations, and with a good deal of reserve and circumspection," in the analogous situation "where particular manufactures... have been 65 so far extended as to employ a great multitude of hands."

The arguments advanced above in criticism of European exploita­

tion of Turkey’s vulnerability should not be mistaken for an advocacy of creating inefficient national industries behind permanent high

tariff walls. Underdeveloped countries, with scarce capital resources

that are too precious to be misallocated on inefficient enterprises, could ill afford such waste. Instead, they ought, as Linder has poin- 66 ted out, to preserve rather than to create. Besides, in the Ill nineteenth century, British and European techniques of production, particularly in the textile industry, were not yet so complex as to rule out any possibility of their adoption by an economically less- developed country.

From the viewpoint of reciprocity we may add that if protection of European agriculture was deemed so urgent by the European govern­ ments, a protective tariff to shield the immensely important Ottoman handicraft industries, in which, according to Urquhart, half of the population was engaged, would have been justifiable.^ Even in the field of agriculture, while Syria almost lost its European wheat mar­ ket, except in years of shortages oversea, it had no tariff on wheat, and foreign flour was able to compete with locally-milled flour in the Syrian ports.

In short, the Ottoman government was deprived of complete sovereignty in its customs legislation. When the First World War broke out, Turkey hastened to denounce the old conventions and capit­ ulations, and raised the import tariff rate in spite of protests by

European powers. 112

Footnotes to Chapter III

1 Issawi (ed.), The Economic History of the Middle East, op. cit., p. 10. 2 Ancient Mecca, where Islam originated, was a center for trad­ ing caravans. According to tradition, the Phrophet, who until the age of 40 was himself a trader, said, "Nine-tenths of ribh (profits) is gained through trade." 3 Urquhart, Turkey..., op. cit., p. 125. it Freedom of Turkey from these attributes of market economies is credited by Urquhart to the system of free trade under which shortages cannot arise and to "the perfect simplicity of barter and the absence of mystery, risks, and fluctuations." Ibid., p. 138. 5 Moniteur Ottoman, September, 1832, cited in Urquhart, ibid., p. 127. £ Philip K. Hitti, Lebanon in History (London, 1957), p. 363. 7 J.L. Farley, Turkey (London, 1866), p. 283. Q Issawi, op. cit., p. 38. 9 Farley, The Resources of Turkey (London, 1862), p. 19.

^Issawi, loc. cit.

^Ibid; and Farley, The Resources..., Appendix I. The text of the treaty is published in both sources. 12 Farley, The Resources..., p. 65. 13 "The Turks maintain that if you impose duties on commerce you should lay them equally, as a principle of justice, on exports and imports, indeed, that a state should rather burden the exports than the imports, to make the pressure fall on foreign consumers: so that imposts might be levied on any article in proportion to the advantages the country possessed In producing it." Urquhart, op. cit., p. 188. 14 It is true that, prior to the Egyptian occupation, local rulers, e.g., Al-Jazzar of Acre, did monopolize commerce in certain items, but only in coastal areas. Silk, which was the major export of Mount Lebanon, was never under the control of the government until the Egyptian period. See Polk, The Opening of South Lebanon, op. cit., pp. 107-108. 113

15 Ibid., quoting a report by British Consul Wood, Damascus, to Aberdeen, June 27, 1842.

*6Great Britain - House of Commons, "Affairs of Syria - Part I," Sessional Papers LX (London, 1843), 9-12.

17Ibid., p. 45. 18 David Urquhart, The Lebanon (London, 1849), I. 39. "The English Treaty has closed to the Lebanon its ancient foreign markets, fettered its internal commerce, and totally ruined its local industry..." Ibid., p. 353. The following quotation from Urquhart considers the Treaty within the context of the Eastern Question,

The Treaty has been my occupation for years...By a quiet, peaceful, commercial operation, I expected to cause to cease the interference of Russia in Europe as well as in Turkey; for trade being suffered to return to its natural channels, she should be deprived of the fictitiously created financial means by which she is enabled to disturb the world. The measure had been accepted on these grounds, and as realizing these ends, by the English govern­ ment; it is, at the moment of signing, by the alteration of a paragraph and the insertion of a clause, changed into an instru­ ment for the dismemberment of the Ottoman Empire, and transfers to Russia the monopoly of the supply of grain for Europe. Ibid., II, 298-299.

That Britain's aim was to counteract Russian influence over Turkey is emphasized by R.L. Baker, "Palmerston on the Treaty of Unkier Skelessi," English Historical Review, XLIII (January, 1928), 83-89. 19 Quoted by Woytinsky and Woytinsky, op. cit., p. 250. 20 Urquhart notes that the Blue Books show the English officials to have been perfectly aware of the consequences of enforcing the treaty. The Lebanon, II, op. cit., p. 423. 21 Ibid. The following exchange of correspondence in the 1840's (quoted by Urquhart, Ibid.) shows that the big powers were aware of the effects of the Treaty.

Metternich: "..., they [the Turkish government] would see themselves no longer exposed to the reproach of having contributed, by the Convention of the year 1833, to the ruin of several branches of the industry of the country, and the misery of the manufacturing class." 114

Gladstone: "Her Majesty’s government shares entirely the opinion that the considerable charges Imposed on exportation are impolitic, and that they place the production of Turkey on a footing very disadvantageous with respect to their competitors in the market of the world."

An 1845 French consular report equally admitted the deleter­ ious effect of the 1838 Treaty on domestic production:

Presently these two large cities (Damascus and .Aleppo) con­ sume a greater quantity of these cloths (English and Swiss) than Beirut Itself; and of the twelve thousand looms which existed in these two cities, there are but little more than a thousand in Damascus and one thousand five hundred in Aleppo. The 1838 Treaty thus wielded a fatal blow to these two industries which were con­ tinually hampered by Customs, whose collecting of duty was more often than not performed in the most arbitrary fashion.

See Archives du Ministere des Affaires fitrang&res, Correspon­ dence Commercial, Beirut, 5 fol. 83, despatch of Poujade, September, 10, 1845, quoted in Chevallier, "Western Development and Eastern Crisis in the Mid-Nineteenth Century: Syria Confronted with the Euro­ pean Economy," Beginnings of Modernization in the Middle East, Polk and Chambers (eds.), op. cit., p. 218. 22 Urquhart, The Lebanon, II, op. cit., p. 441. 23 Ibid., p. 135. Urquhart cites examples of the several-fold Increase in internal and external duties on home production: Ibid., pp. 288-290. 24 Quoted in Chevallier, op. cit., p. 220. 25 The Lebanese peasants complained that "the government, it is true, does not receive this [the tax], but we pay it nonetheless, much is smuggled, and much expended in custom-house guards and customers' [tax farmers] profits, for they do not farm for nothing." Urquhart, ibid., p. 136.

26Ibid., p. 290. 27 Issawi, op. cit., p. 38. 28 Farley, The Resources..., op. cit., p. 20. For the text of the Treaty see ibid., Appendix III, pp. 279-288.

29Ibid., p. 20. 115

30BCR, 1872, 31 Vice Consul Jago, BCR, Beirut, July 11, 1876, p. 202.

32Ibid., p. 208.

33Ibid., p. 210. 34 Sa'ld Himadeh, The Economic System of Iraq (Arabic)(Beirut, 1938), excerpts of which are reproduced in Issawi, op. cit., p. 189. 35 Ibid.; and BCR, Damascus, 1907, No. 3917. Turkish tobacco was admitted duty free and Syrian tobacco was exported duty free.

3^Himadeh in Issawi, ibid., p. 189, n. 8. 37 Great Britain, Admiralty, Navy Intelligence Division, A Handbook of Syria, op. cit., p. 248. 38 Himadeh in Issawi, ibid., p.189. 39 Gordon, American Relations with Turkey,.., op. cit., p. 168. 40 A Handbook..., loc. cit.

^3E,G, Hears (ed.), Modern Turkey (New York, 1924), p. 397. 42 A Handbook..., loc. cit. 43 Our analysis is based in part on Staffan Burenstam Linder, An Essay on Trade and Transformation (New York, 1961), pp. 20-21, 27-28; and also Trade and Trade Policy for Development (New York, 1967), pp. 75-80, 143-149. 44 Examination of European trade policies is based on Woytinsky and Woytinsky, op. cit., pp. 268-274, and Stuart Chase, Tomorrow's Trade (New York, 1945), pp. 22-30. 45 Cf. Gerald Meier, International Trade and Development (New York, 1963), Chapter 7. 46 John Pincus, Trade, Aid and Development (New York, 1967), p. 123. 47 Opposition to free trade based on the divergence between pri­ vate and social costs is represented particularly by Mihail Manoiles- co, Theory of Protection and International Trade (London: P.S.King, 1931). 116

48 Pincus, op. cit., p. 150. 49 A.C. Plgou, "Some Aspects of Welfare Economics," American Economic Review, XLI, No, 1 (June, 1951), 298.

^Tibor Scitovsky, "The State of Welfare Economics," American Economic Review, XIL, No. 1 (June, 1951), 315.

51Ibid. 52 Linder, An Essay..., op. cit., p. 24. 53 Charles P. Kindleberger, Foreign Trade and National Economy (New Haven, 1962), p. 103. 54 G. Haberler, "Some Problems in the Pure Theory of Interna­ tional Trade," Economic Journal, LX, No. 238 (June, 1950).

55Stuart Chase, op. cit., p. 27. 56 Woytinsky and Woytinsky, op. cit., p. 252. 57 E.G. Hears (ed.), Modern Turkey (New York, 1924), p. 397. 58 Moutran, La Syrie De Demain (Paris, 1916), p. 139. 59 Calculated from official figures (which understate foreign trade), as quoted by Ruppin, op. cit., p. 56.

^Cf. Woytinsky and Woytinsky, op. cit., Table 103, p. 275.

^Urquhart, Turkey..., op. cit., p. 209.

62Ibid., p. 146. 63 Cf. ante, Haberler's similar thesis, p. 105. 64 Urquhart, loc. cit.

^Quoted by Condliffe, The Commerce of Nations, op. cit., p. 767, 66 Linder, An Essay..., op. cit., p. 81.

^Urquhart, op. cit., p. 143. CHAPTER IV

THE ORGANIZATION OF FOREIGN TRADE

The terms-of-trade gains of the foreign sector are the immediate or direct gains from trade. For a given gain, however, the ultimate gains for the whole economy depend on the extent of trade-induced capi­ tal formation, technical change, and capacity to transform.

In backward economies characterized by a large, almost self- sufficient rural sector, foreign trade plays a more dynamic role than domestic trade. Indeed, the most remunerative branch of domestic trade becomes the distribution of foreign imports. Trade plays a strategic r^le in moving the economy from the subsistence stage to an export-oriented phase and ultimately to a more complex stage of eco­ nomic development. Expansion of trade serves as a vehicle for expan­ sion of the market sector which it dominates. Improvement in the terms of trade or the inflationary forces which it creates may lead to a redistribution of income in favor of those economic groups who are more apt to transform their gains into the types of saving that are more readily available for investment.

Furthermore, improvements in business organization and marketing may lead to greater efficiency in the economy. Marketing in particular is noted for its ability to develop a managerial and entrepreneurial class capable of organizing economic effort, investing accumulated profits, and transforming latent into actual resources.1 While the 118 neo-classical theory lays much emphasis on capital accumulation as the basis for economic development, Schumpeter gives prominence to the creative role of the entrepreneur. In marketing the economy's surplus or searching for new sources of supply, foreign trade entrepreneurs may become agents of growth, transmitting the gains from trade to other sectors of the economy.

In addition, in the process of moving away from the subsistence

to the market stage, the economy is provided with a network of trans­ port, financial and banking services, that are initially intended to serve the foreign sector, but which eventually would serve the needs of the whole economy. These benefits that derive from international

trade are in the nature of external economies that help to provide the developing economy with greater flexibility and capacity to transform.

In sections I and II of this chapter we shall discuss the organization of the export trade and import trade, respectively, to assess the ability of marketing agencies to accumulate and invest profits. Section III deals with the methods used in finaneing foreign

trade with the establishment of financial and banking services. The

construction of ports and transport network to serve foreign trade is

discussed in section IV, Finally, section V summarizes the conclu­

sions of this chapter. 119

1. THE ORGANIZATION OF THE EXPORT TRADE

Grain cultivation was the core of Syrian agriculture since it required lees water and certainly less capital and care than horticul­ ture. For the same reasons, however, it was less productive, and its land tenure system less equitable. Although large landowners predom­ inated, large-scale farming was the exception. Under the crop-sharing system which regulated the landlord-tenant relations, peasants paid

their rent in kind. They were generally exploited by absentee land­ lords and speculators. Poor transportation, which meant heavy trans­ portation costs from one region to another, resulted in fragmentation 2 of the national market into several isolated, local markets. Only after the construction of railroad lines towards the end of the period of our study, was there partial, not complete, integration of these markets. In the European market, whenever there was demand for them,

Syrian crops enjoyed the marketing advantage of reaching maturity before the comparable European crops. At home, however, the main eco­ nomic institutions of land tenure, credit system, organization of

product and factor markets remained resistant to change. As a result,

the farmer received a small part (half or even less) of the f.o.b.

price of his produce. Thus any gains that accrued in the grain trade were absorbed by the speculator or wealthy exporter, who, compared with the poor peasant, had a higher propensity to save.

The orange industry was in the hands of brokers in England, with 3 their representatives and native agents in Jaffa, Prices in the British market, the only one where the fruit was admitted free of duty, were subject to wide fluctuation, as the state of the crop in Spain and other countries nearer to England was the most important factor in governing orange prices. To protect himself from losses, the orange- grower sold the fruit while on the trees for a fixed sum to specula*-

tors, or contracted for delivery in Jaffa of a stipulated number of cases at a fixed rate per box. This system of sale had certainly the advantage that the grower received a quick return for his produce, but naturally he did not realize the full value. Growers, who in many

cases were orchard owners, learned in time to deal directly with the outside markets and pack and ship the produce themselves. Bowever, while the orange industry on the coast was free from the inland trans~

port cost with which grain exports were burdened, it continued to be handicapped by frequent rough water at Jaffa, which prevented the

entrance of vessels, thereby causing delays in shipment of the fruit

and rendering it unfit for long voyages. This was a major source of

loss for shippers. Furthermore, the growth of speculative methods

among orange shippers before the World War and the first signs of

overproduction led to a good deal of suffering and loss incurred by 5 merchants and growers. This situation, perhaps, accounts for the

stagnant price level of Jaffa orange exports in the pre-war decade

while the price of other foreign citrus fruit imports to Europe rose

appreciably between 1900 and 1913, ** The tremendous growth of demand,

on the other hand, and the ploughing back of profits from what the

British consuls considered a highly remunerative business,^ should 121 account, however, for the increase in the number of Jaffa orchards

from 350^ in the 1890's to 1000 by 1913.^

Another major caBh crop, which was linked earlier to the world market and, consequently, became as susceptible to sharp price fluctu­

ations, was silk.1^ Hie demand by Lyons for the good-quality Syrian

silk depended on the demand by America for French silk manufactures.

In the French market, Syrian silk had to compete first, with French

and Italian silk, and, later on when the European supply contracted,

with Chinese and Japanese silk. Far Eastern silk became more access­

ible to Europe after the opening of the Suez Canal. The silk industry

of the country as far north as Antioch was more or less controlled by

foreign and native merchants and by local agents of Lyon’s firms, all

located in Beirut. A great deal of silk which was exported from other

ports was also for the account of these merchants* The emergence of an

active class of money-lender merchants and entrepreneurs was the main

feature of the silk industry.1* The number of these merchants was

limited while the number of peasant producers was great. Beirut's

silk speculators made fortunes in this trade, although not infrequently 12 they suffered high losses. There were also times when high prices of

raw silk in Europe benefited only Marseilles and Lyons as the Syrian

crop, the first always to arrive on the market, was usually sold at 13 prices regulated by lower prices of the previous year,

The important wool export trade was dominated by a few merchants

in Aleppo who bought their stocks indirectly through small tradesmen 14 in preference to dealing directly with the desert Arabs, while the 122 export trade in licorice was monopolized by a single American agency at Alexandretta which, by 1914, had absorbed or driven out of the mar­ ket all foreign and native competing firms. ^ As a result, the price was fixed at a stable level by this monopsonist.^ However, as a contemporary American trade journal commented at the time, "The

(licorice) industry is a great blessing to this comparatively poor region employing as it does many hundreds of natives and bringing cash into the country instead of taking it out as many foreign enter­ prises d o , " ^

This reference to money leaving the country indicates the presence of foreign capital and foreign enterprise engaged in the exploitation of Syria's trade and resources. The export trade with

Europe was mainly in the hands of a few foreign merchants and native agents of the minority groups. On the other hand, export of soap and native textiles to neighboring countries was carried by native export merchants, commiaaion agents, or the manufacturers themselves. The number of these intermediaries was much greater, but their size much smaller than thos '. specializing in the export trade with Europe,

The supremacy of minority groups was to characterize the Syrian foreign trade until the end of the period of our study. Moslem mer­ chants specialized In domestic trade, particularly in the cattle and grain trade, though they were also active in re-exportation of 18 imported goods to neighboring countries. We also learn that in

Damascus they were able to establish their supremacy In the trade of that city by 1880.^ 123

While changes in the number of export firms over the years or their exact number in pre-war years are unknown, their average size tended to be large. Of the foreign firms in 1914, Ruppin mentions only one large export house as being a joint-stock company, namely, 20 Etablissement Orosdi-Back, which had its headquarters in Paris.

The British consul reported the formation of the Anglo-Syrian Trading 21 Co., in Aleppo to promote trade with England. The export firms, however, did not confine their trading activity to one commodity, and for the most part also engaged in the import trade. Thus, it becomes difficult to assess the degree of concentration in the export trade.

Information is also lacking on the effects of increased moneti­

zation of the Syrian economy on the saving-consumption schedules.

Hence, the effect of short-term shifts in the terms of trade cannot be 22 ascertained, Probably the poorer classes suffered more in times of 23 lower export prices and benefited less in times of higher prices,

It Is not surprising, as we shall see in the next chapter, that the

alternation of inflationary and contractionary periods resulted In the

concentration of the wealth of the land in the hands of a few people.

On the other hand, whatever subjective evidence we have points to the 24 frugality of the Syrian in general, except for his traditional pat­

tern of conspicuous consumption on such occasions as feasts and

weddings. But savings outside the business community were in the

nature of hoardings or postponed consumption expenditures. The con­

version of inactive into effective savings was retarded by lack of

political and economic stability as well as by the absence of 124

financial and banking institutions during most of the period under study.

II. THE ORGANIZATION OF THE IMPORT TRADE

Here again, before examining the main features of the market

organization of the Import trade, we may dwell more specifically upon

the different nature of imports in the manufactured consumers* goods market, and in the capital goods market.

In the imports of consumers' goods, mainly of colonial and

textile goods, there was a fairly large number of native merchants in

this trade, many of whom started initially as commission agents. By

the 1830*s, the Jewish merchants of Damascus, former agents of British manufacturers, had become merchants on their own. In 1834, the French

consul, speaking of the merchants of Beirut, observed; "The Arabs are

enterprising; nothing proves this better than the extension they have

given to their speculations by establishing relations with the mer- 25 chants of London." A similar observation was made by the British 26 consul in 1854. In 1866 Farley noted, "Instead of native houses working on credit furnished by Houses in Manchester and London, the

Syrians are beginning to establish branches of their firms in the man- 27 ufacturing centers of Europe,"

European capital and enterprise began to flow into Syria after

1840, In 1858 Farley observed, "The French merchants of Beirut are

of the very highest standing; and it is believed that the English mer- 28 chants have all realized handsome fortunes." The main interest of 125 foreign trading houses lay In the import business, but they had also

to engage In the export trade, too, to maintain an active market for 29 their Imports. It was not long, however, before they were eased out of their prominence in the import trade.

There are many reasons why a sizeable share of Syrian foreign

trade, particularly in Manchester cottons, passed into the hands of native merchants or commission agents. In the first place, "Of all

the Turkish subjects, the Syrians [were] the most active and success­

ful in commerce, and for that reason there [was] less of the European 30 element in Beirut and other Syrian cities than in Asia Minor,"

Secondly, while this development started in the 1850'b it was accel­

erated by the depression of the 1870's, which limited the growth of

trade and made the export as well as the import trade less profitable

for foreign merchants. Thirdly, the opening of the Suez Canal reduced

the international transit trade which passed through Aleppo and

Damascus.

The entry of native firms Into the import trade injected an

element of speculation and instability to the market. In explaining

the Syrians' tendency for adventure, the French consul pointed out,

"The dogma of predestination, on the one hand, and the natural aver­

sion of Orientals for the severity of our precepts of wisdom, have 31 rendered them more enterprising than we are," With the revival of

trade in the 1880's and rising challenge by Italy and Germany to

Britain in the Levant markets, this tendency towards risky specula­

tion was stimulated by the easier credit terms extended to Syrian Importers by Continental business firms. The domestic market became clogged with importers, petty traders and peddlers. Founded on small, inadequate capital, and precariously dependent on credit, in times of crises many a trader had to sell his Imports at a loss to repay his bills. In the disorganized market that developed, price fluctuations whetted rather than restrained the appetite of speculators. It became

the common practice to grasp, if necessary, and run; to substitute trickery, sharp practices and deception for integrity and straight­ forward dealing, Cut-throat competition reduced profits to a minimum and frequently turned profits into losses. This was particularly

true of Beirut, which made that city "a by-word in European markets 32 for its bankruptcies and failures," Some of the bankruptcies were

forced, others were fraudulent, with the eventual loss falling on the

European exporter, but many reputable native trading houses also suf- 33 fered in consequence. Competitive and speculative practices spread,

though on a smaller scale, to a conservative city like Damascus, bound 34 more by custom than by a greedy, acquisitive spirit. The three

decades preceding World War I were marked by unreasonable speculation 35 in commodities and even in foreign securities. This was a period

of growing trade, increased inflow of foreign capital, greater inte­

gration into the world economy, and consequently greater exposure to

financial crises abroad, « t < : *1 Unlike the markets for imported consumers' goods, the import

of capital goods remained under the control of a comparatively small

groups of large firms. This was due partly to the Bmall size of the 127 market> and partly to the specificity and complexity of these Imports.

There was a greater need here for direct representation and presence of technical men for demonstration purposes. There was more Conti­ nental than British representation) however. With the exception of

three British firms represented in Beirut by technical men, the rep­ resentation of British firms, in the pre-First World War years, was

in the hands of native commission agents or merchants, who, as a rule, 36 had no technical knowledge.

III. FINANCING FOREIGN TRADE

The main change that occurred in the finance of trade during

the period of our study was the abandonment of actual transfer of 37 specie, and the development of bills of exchange and credit, through

the financial operations of the branches of foreign banks that were

set up for this purpose in the major Syrian trading centers.

Let us start with the finance of the export trade. The export

trade was financed by the importing countries, and payment was made in

cash. Credit, in some cases, was extended to importers in neighboring

markets. Thus, in-discussing the financing of soap exports, Weakley

notes that, ''Transactions with these markets are conducted as much as

possible on a cash basis, but local soap merchants, as distinguished

from soap manufacturers, give long credit to their customers, which 36 sometimes extend to twelve months." Otherwise, foreign merchants

or their agents normally paid cash and, for some crops, in advance.

This gave buyers a bargaining advantage reflected in a usurious 128 interest rate or a cut in price. In the 1850’s, European commercial houses in Beirut sent their agents to the villages to purchase raw 39 materials, silk thread in particular. Where the feudal lord under­

took this task, he often had borrowed the loans he extended to his metayers (sharecroppers) from European or local merchants,^ In the latter part of the period of our study, we find British houses in

Jaffa advancing money to orange orchard proprietors,^ or the latter 42 selling them their crop in advance. Licorice roots were sold for

cash. So were wool exports, which were generally bought by local

export commission agents in Aleppo for the account of American 43 importers through confirmed credit opened In their behalf.

Since European exporters and importers had their salesmen and buyers in Beirut and Aleppo, they drew upon each other, but as the

British consul observed, "there are not, as there ought to be, two

parties to their bills; if the drawer fails, the drawee may stop pay- 44 tnent and vice versa." The use of bills of exchange, at least where

native exporters were involved, was limited before the introduction

of foreign banks. This might be attributed to the difficulty of the

local exporters in ascertaining the financial standing of foreign

importers, and the difficulty of discounting foreign bills evidencing

credit. The rate of foreign exchange was continuously manipulated by

the local jeraffs (money changers and merchant bankers), who also

charged high rates for discounting bills. In pleading for the estab­

lishment of a British bank at Aleppo in the 1860's Farley argued,

"The trading community must be rescued from the fangs of the native 129 seraff who makes his enormous but unholy gains he a fictitious rais­ ing and lowering of the exchange, hy elsewhere unheard-of-usury, and in cases not a few, by 'sweating* the coins which pass through his 45 hands." All of these evils of the local seraff system were brought about by the scarcity of coins in circulation, and worsened by the

outflow of specie to pay for imports. Manipulation of exchange rates

hurt exports as much as imports. Expanding on the same theme, Farley added;

I have mentioned the seraff system. It is the most absurd thing in the world. About ten or twelve seraffs, mostly without capital of their own, hold all the cash of the merchants, and issue cheques, nominally payable at sight, but rarely paid at all, except by an exchanging of cheques with other seraffs, and when paid in cash, or even at 15 or 20 days after sight, a discount of at least two per cent is charged, These people thus rule the trade of Aleppo by an unsound system of credit, a currency unrep­ resented by security, while they carry on all sorts of illicit traffic, usury, etc,, for their own advantage, with the money belonging to the merchants, to whom they pay no interest and offer no guarantee. I do not mean to say anything against a sys­ tem of bank cheques, which is excellent; but let it be a solid system, such as a regular bank would establish to its own greater advantage and that of trade, acting and re-acting on each o t h e r . 46

Without a banking system, a good part of the profits derived

from trade, or for that matter, from any other line of business

activity, flowed into the pockets of the moneylender, to the impover­

ishment of the native trader and producer. The profession of seraff

was followed by many, owing to the practice of native traders of dis­

counting immediately three-and four-month bills given them by pur- 47 chasers. Because Islam enjoins its followers from usury, the

seraffs were mainly Jews and Armenians in Aleppo, Christians in Beirut,

and Jews in Damascus. 130

49 With the gradual establishment of branches of foreign banks, the native seraffs limited their business to personal loans and loans to peasants, landlords, and domestic traders. Foreign banks took over the financing of foreign trade and trading in foreign exchange.

The discount rate charged by those banks ranged between seven and nine per cent. It fell in some years to six and even to five per 50 cent, which is significantly below the legal maximum rate of earlier 51 decades. The Interest rates charged by these banks were generally aligned with those of their European head offices. Since foreign bank branches were mainly interested in short-term financing of the foreign sector, the peasant producers and other small borrowers in domestic trade and industry did not derive much benefit from the

"elasticity” which these commercial banks imparted to the local money supply. The native moneylenders, therefore, continued their usurious practices, and the two sets of lenders, the modern institutional and the traditional non-institutional, remained until 1914 more or less non-competing groups, giving rise to a system of financial dualism, akin to the system which developed in other economically backward 52 countries under the impact of Western economic penetration.

Turning now to the development of the finance of the Syrian import trade, we also notice the changeover from actual transfer of money to the use of commercial credit. With the founding of foreign banks, bills of exchange became more and more the financial instru­ ment of payment for Imports, Before a branch of the Ottoman Bank was established at Aleppo in 1893, bills of exchange were bought at 131

Beirut, Alexandria, and Smyrna, in many cases not by those requiring to remit money overseas, but by a class of interlopers in trade who derived a large profit from this unprededented line of business in 53 large commercial cities. The system was very precarious, exposing 54 foreign trade at times to great distress. Bills of exchange were generally drawn in pounds sterling because of the low discount rate charged in London,

In order to meet bills arriving at maturity, especially If presented through a bank, import merchants frequently deposited goods with the Imperial Ottoman Bank branches in Beirut or Aleppo and obtained advances of 75 per cent of their value. This method of obtaining credit on warehouse receipts was much practiced by the large importers of Manchester cotton goods and yarns. Importers of copper,

Austrian and Russian sugar, jute sacks and petroleum also availed themselves very largely of this financial facility, which materially 55 assisted the development of trade.

Generally speaking, imports were financed directly or indi­ rectly by foreign commercial credit, Local importers depended to a considerable extent on this arrangement. The predominance of agri­ culture in the life of Syria necessitated the use of credit domesti­ cally for financing farmers and planters during the growing season, and retailers purchased their supplies from wholesalers on credit,

too, In time of crises, the whole system was subjected to great strain as foreign banks and importers, or their branches and agents, suddenly tightened their credit facilities. Failures and bankruptcies 132 followed as a result or, at times, In consequence of overextension of credit to traders speculating with small amounts of capital of their 56 own.

To what extent did foreign banks contribute to the monetary and economic stability of the country? Having recourse to their Head

Offices if an increase in money was required, foreign banks were able

to break down the monopolistic position of local money changers.

This in turn promoted stability of exchange rates in the major com­ mercial centers, thereby facilitating growth of trade, although the old differential in exchange rates between one city and another con­

tinued to reflect the compartraentalization of the Syrian market.'’7

Apart from this stabilizing influence, the operation of foreign banks led to the lowering of the discount rate and to the increasing use of 58 checks and bank deposits. banks also acted as conduits for the

investment of individual savings In foreign securities. Here, the depositors' preference for absolute safety of their assests was

essentially comparable to the peasantsr hoarding of their savings in

the form of gold and jewelry. Such assets were not only easier to hide, they also served as a hedge against inflation.

It is very difficult to estimate the size of the assets and

liabilities of banking operations, as all the large financial institu­

tions conducted business throughout Turkey and issued no special

reports concerning Syria, Furthermore, there was no supervisory cen­

tral monetary authority to report to. An arbitrary estimate made by

Ruppin puts the total assets cf Syrian banks (excluding the small 133 native private bankers) before the war at LI,840,000 - LI,960,000 and total liabilities at L920.000 - LI,400,000,^ an insignificant sum for a country of three and a half million people. With limited resources available to them, foreign banks confined their operations to the financing of foreign trade and to trading in foreign exchange.

In view of their relatively low interest rate charges, it is under­ standable why these foreign institutions did not venture beyond the confines of tSeir legitimate field of short-term finance into the realm of longer-term investment in the development of Syria's resources. The Head Office of the Ottoman Bank, however, invested in the Syrian railway network.

XV. TRANSPORTATION

Trade has always been associated with transportation. In early days, production, trade and transportation were often integrated, the producer himself taking his goods to market as he still does in areas with a primitive economy. Only at a comparatively high level of economic development did transportation become a specialized economic activity, separated from both production and trade, though still inex­

tricably geared to the working of the entire economy.

Very early traders discovered that long-distance trade was the most profitable and that they could cover great distances with the 60 primitive means of transportation at their disposal. High trans­

port costs, however, meant that trade in those days was limited to

exchange or luxury goods. Improved means of transportation in modern 134 times widened the range of merchandise exchange, bringing necessities within the economic reach of the greatest number of people at home and abroad.^ Moreover, through such market enlargements, improved transportation brought numerous small isolated economic units Into a wide exchange economy, thus stimulating specialization and Increase

in output and efficiency.

Aside from leading to fragmentation of the Syrian national mar- 6 2 ket into isolated, local markets, lack of rapid and economical means of transport in Syria hampered the development of the export trade and 63 retarded the full exploitation of natural resources. Since it was practically Impossible to move any surplus production from the interior to market there was no incentive for the farmers to produce 64 more than enough to meet their own and local needs. In the case of such commodities as could bear the expense of transport, especially when high prices ruled on the European markets, much of the economic

gain was lost by the slowness of the facilities available,

Aleppo, the province with the greatest industrial and agricul­

tural potential, was provided with the most crude and least safe net­ work of roads. Cuinet warned in 1891 that "Aleppo's industry, which

has no equal in Asiatic Turkey, not even in Damascus, is doomed if a 65 good network of roads is not established." A year earlier, the

British consul in his annual report described the detrimental effects

of poor transportation on agriculture;

Two hundred years ago, according to the archives of this con­ sulate, merchants had precisely the same difficulties to contend 135

with in transporting their goods between Aleppo and the sea as at the present day. Paucity of animals at times, damage by rain and mud, breakage, and delay on the road by bad weather and freshets in the Afreen River which has to be crossed, are complained of with the same monotonous regularity as now. In this direction nothing has changed. Thirty years ago her Majesty's consul at Aleppo, in his commercial report, in enlarging on the necessity of roads for the development of the country and its resources, stated that the cost of transport of a quarter of wheat from Aleppo to Alexandretta was equivalent to its prime cost at the former place. Things have not altered since then, save that the exportation of cereals has well nigh ceased....The competition of India and Russia has no doubt much to answer for, but not all,.. As camel hire often varies 2s. -3s. per quarter within a week, and as especially during spring, through pasturing along the road, the camels often take 15 - 20 days to reach Alexandretta, it will be apparent that no contract can possibly be made for delivering cereals at Alexandretta at any given time or rate. Merchants decline export orders because of uncertainty of transport costs two months hence.66

Similar conditions were reported in other parts of the country.

Thus it was said that in the District of Deir Zor, east of Aleppo, the

"crop [in 1879] was not gathered because of high cost of gathering and 67 transportation; therefore it was abandoned on the fields." Also,

"In the north-western part of the [plain of] Hauran, that nearest to

Damascus, the best wheat fetched from Is. lOd. - 2s,/bushel, and in the south-eastern part from Is. - Is. 2d./bushel, and no buyers in this latter case. In Beirut the same wheat commands at the end of the year As. - 5s./bushel....Exports were necessarily confined in the face of low prices abroad to those districts whose vicinity to 68 the coast diminished the cost of transport,"

Rivalry among the European powers for political and economic influence in the Ottoman Empire, at a time when the return on capital 69 loans in Europe was declining, pushed European capitalists to seek 136 governmentally-guaranteed higher returns in road and railway construc­ tion in Syria and other Ottoman provinces. The source of capital invested was almost exclusively French and German. A few roads were built by the Government and local interests, while the Damascus-

Medina (Hejaz) Railway was built by the Government for political and religious reasons, with part of the capital contributed by the Moslem world at large. By the First World War, Syria was provided with a railway network that was poor compared with that of European countries, but far more developed than that of any other part of Asiatic

Turkey.^

The first modern transport facility introduced was the Beirut-

Damascus wagon road, started in 1859 and completed in 1863 by a French

concessionary company. The road established Beirut as the main port

on the eastern seaboard of the Mediterranean, a supremacy that was

confirmed when the first modern and, until 1914, the only adequately

equipped harbor in the region, was built there in the early 1890's by

another French company.

The success of the wagon road brought forward the idea of

replacing it by a railway, especially in view of the constant growth

of importance of Beirut. The granting of a concession to a Beirut

concern for a railway line from Acre to Damascus— which was begun in

1892, but abandoned in 1898 after completion of eight kilometers—

presented at the time a danger to the French interests in Beirut.^

A French Company obtained after great difficulties a concession to 72 build lines connecting Beirut with Damascus. In 1894, a spur connecting Damascus with the grain-producing plain of the Hauran, at

Muzairib, was opened, and one year later the main line between Beirut and Damascus was completed, Although the new line enabled Beirut 73 merchants to export part of the Hauran grain, a large proportion of the Hauran cereals continued to go to Haifa and Acre by camel rather than to Beirut by the circuitous and costly route over the Anti- 74 Lebanon and Lebanon mountains. The railway line was of narrow gauge

(1,05 meters), over-capitalized, and served better for passengers than for merchandise, Because of its steep gradients in Lebanon, it had to carry an unusual amount of coal for consumption. While it reduced the freight rate to Beirut from 56 centimes per ton/km. by road to 20 cen- 75 times by railway, it suffered great losses in the first decade of operation. As a result a new company by the name of Damas-Hama et

Prolongements (D.H.P.) was organized in 1900 to take over the existing line and to build a standard-guage (1.435 meters) extension from Rayaq

to Aleppo, this time with a governmental kilometric guarantee. The new extension reached Hama in 1902 and Aleppo in 1906, By 1910, ten per cent of Aleppo’s imports and 30 to 40 per cent of such exports as wool, samnti (refined butter) and native cotton goods were diverted

through Beirut.^ However, the great expense entailed in handling

goods at Beirut port, and change at the Rayaq junction from one line

to another, kept Alexandretta as the main port for northern Syria.

On the other hand, the new extension gave stimulus to agricultural

and industrial production in central Syria.^ Central Syria benefited also from the excellent Tripoli-Homs coach road that was built in 1883 by the National Company of Tripoli, 78 with a capital of L21,000. In 1896 a road between the port of 79 Latakia and Hama was built by the local people. On the other hand,

the Beirut-Damascus wagon road, which was at one time one of the best highways in the east, lost to railway competition,' and fell into utter disrepair after it lapsed into the possession of the govern- 80 ment, A similar fate befell the Tripoli-Homs coach road when a railway line connected the two cities in 1911,. The modern road, which was built by the government from Jaffa to Jerusalem in 1869, was similarly replaced in 1892 by a French-built narrow-gauge railway, the first to be Inaugurated in Syria. Both facilities were designed for

transporting Christian and Jewish pilgrims and tourists; they also 81 served to increase the trade and population of Jaffa and Jerusalem.

The narrow-gauge Hejaz Railway, serving Moslem pilgrims, was built by the government with the technical help of German engineers.

Its Damascus-Muzairb line, which was opened in 1901, competed with the

French line in the Hauran, while its Damascus-Haifa extension, opened

to traffic in 1906, competed with the Damascus-Beirut line. It suc­

ceeded in reducing the cost of moving the Hauran crop to Haifa from 82 one-half to one-sixth the initial price of grain. Presenting an

even greater competitive threat to the French railway system was the

Berlin-Baghdad-Bahn (B.B.B.) which was approaching northern Syria.

German interests also obtained a concession to build Alexandretta

port. However, the Ottoman Bank, which had interests in both railways, 139 brought about a secret agreement under which the B.B.B, would build a standard-guage line connecting Aleppo with Alexandretta and also with

Mesopotamia line, while the D.H.P. would build a standard-guage line 83 connecting Tripoli with Horns,

While the Syrian road system, with the exception of Lebanon's routes, remained very backward, there is no doubt that the railways 84 network, which cost L12 million sterling to build, helped stimulate 85 agricultural production, expand foreign trade and increase population.

Since most of the equipment needed was imported from abroad, the mul­ tiplier effects of railway construction on the local economy were limited. On the other hand, thousands of skilled and unskilled 86 workers gained income from employment in railroad construction.

The use of different gauges on various lines, and the lack of a central administration resulted in high capital-income ratios, which raised transport costs much above their levels in Europe. This enabled four-wheeled vehicles and caravans of camels, mules and don­ keys to stay in the transport business and to compete in some cases 87 favorably. Because modern transport facilities were introduced by foreigners to serve more their interests than domestic needs, "trains often traveled empty, while peasants unable to make contact with the 88 new systems of transportation continued to transport grain on camel."

European interest lay mainly in building railway lines from the coast eastward to tap the hinterland market. As a result Syria failed to get the north-south railway network demanded by its topography and location, i.e. a line connecting the Anatolian and Egyptian railways, 140 with branches to the main ports and a long extension to the Jezirah 89 and Mesopotamia. Despite the progress made in building roads and railway lines the tonnage transported by animals in Syria in the pre- 90 war years was at leajt equal to that sent by rail, A form of tech­ nological duality, comparable to the financial duality already dis­ cussed in section III, characterized the transportation field.

V. CONCLUSION

Foreign trade played a more active role in the economic life of Syria than domestic trade. In the first place, the commercial treaties concluded with the Western powers in 1838 and subsequently granted certain concessions to foreign merchants that were not enjoyed by domestic traders. Secondly, foreign trade received more direct stimulus from the foreign banking and transportation facilities that were established to serve the needs of the foreign sector. Finally, the most enterprising native elements were attracted to this sector first, as employees or commission agents of foreign trading houses, and later, as independent businessmen with their representatives or branches in the major European centers of trade.

The tendency towards economic concentration in the organiza­

tion of the export trade, especially among the foreign firms, helped to confine the investment of commercial profits to the processing industries, auxiliary to exports, such as citrus-paeking, licorice- and wool-processing, silk-reeling, soap-making, etc. This tendency was of course enhanced by the government's commercial policy, which 141 emphasized more the objective of revenue maximization than the encour­ agement through protection of domestic industry. Thus, although the organization of trade and commercial policy did not seem to have hampered the growth of trade in general, they tended to Induce the small capital accumulated out of commercial profits to stay in this field of economic activity or to turn to speculative portfolio invest- 91 ment in government or foreign securities, or to engage in usurious 92 money-lending. This was due to the relatively higher returns on capital traditionally made in such activities, and to the great risks involved in industrial investments.

On the other hand, the market organization of the import trade was characterized by a fairly large number of importers in the mar­ kets of manufactured consumers' goods, despite the presence of several large and long-established native firms in Beirut, Damascus, and

Aleppo. The easy credit terms granted by Continental exporters and manufacturers enabled many traders with small capital to enter the field, with consequent financial losses to. themselves and to others.

The relatively greater number and smaller size of the predominantly native import, in contrast with the predominantly foreign export, firms, and the speculative fever which gripped their spirit must have led to lower import profits, if not to outright losses. This charac­ ter of trade organization and the relatively free trade policy of the

Ottoman government provided neither the necessary means— profits— nor the required incentive-— protection-— for industrial development. 142

Before the establishment of a banking system, a good part of the profits derived from trade were appropriated by the usurious moneylenders. The establishment of branches of foreign banks less­ ened the actual transfer of specie in the financing of foreign trade and led to the development of bills of exchange and credit. It also restricted the abuses of the native seraff system to the domestic sector. This resulted in a dual financial system in which the credit facilities and lower credit cost of the modern institutions con­ trasted with the abuses and usurious practices of the traditional credit system.

The construction of new, modern transport facilities led simi­ larly to a form of technological duality, as the new systen succeeded only partially in meeting the needs of the whole economy. While it served its main purpose of linking the hinterland with the major ports, it failed to equip the country with a north-south railway net­ work that would have led to greater integration of the segmented national market. 143 Footnotes to Chapter IV

3For the role of marketing, see Peter F. Drucker, "Marketing and Economic Development," The Journal of Marketing, XXII, (January 3, 1958 2 Cf. post, p. 135.

3BCR, Jaffa, 1898, No. 2050.

4BCR, Jaffa, 1908, No. 3974, p. 12.

3BCR, Jerudalejn, June, 1913, No. 5107, p. 9.

6Cf. ante, p. 76.

^See, for instance, BCR, Jaffa, 1908, No. 3974, op. cit., p. 13. 8 Cuinet, Syrie, ...., op. cit., p. 13.

^BCR, Jerusalem, July 1, 1914, No. 5339, p. 11.

^Issawi (ed.), Economic History of the Middle East, op. cit,, p. 227.

33Ibid. A contemporary author cites the name of Michael Tobia from Amsheet, near Jbail, Lebanon, as one who made a fortune through the silk traue with Marseilles and money-lending to peasants, and adds, "In the person of Elias Boghos (Ghazir) we see another instance of the triumph of the enterprising Middle Class, through commerce, over feudal­ ism." See Charles Henry Churchill, Mount Lebanon (London, 1853) pp. 71- 75, 87. See also I.M. Smilianskaya,"The Disintegration of Feudal Rela­ tions in Syria and Lebanon in the Middle of the Nineteenth Century," reproduced in Issawi, op. cit. , p. 234. 12 The British consul reported a profit of L150,000 in 1897, a loss of L48,000 in 1900, and a lesser loss in 1901, extraordinary profits in 1904, a loss of L140,Q00 In 1909, another loss In 1910, and big profits in 1913. Price decline was caused by increased importation of Chinese and Japanese silk to France. China and Japan which together formerly produced 30% of the world silk supply were in pre-First World War years producing 60% of the silk thread. Cf. BCR, July, 1911, No. 4746, p. 7. 13 British Vice Consul, Damascus, December 31, 1877. 14 Weakley, op. cit., p. 204. 144

15 By the First World War, the trade was practically in the hands of Messrs. McAndrews, Forbes, & Co., an off-shoot of the Ameri­ can Tobacco Trust. In 1886, when the licorice trade first received increased attention from foreign importers, there were several pur­ chasing dealers. Cf. BCR, Aleppo, April 24, 1899, No. 2362; BCR, April 8 , 1901, No. 2587; and BCR, Aleppo, April 14, 1905, No. 3363.

ante, Table XI. 17 Levant Trade Review, op. cit., 11, No. 4 (March Quarter, 1913), 320. 18 Issawi notes that The commercial activity of Muslim Arabs has always been confined within narrow bounds while Christian Syrians succeeded in securing for themselves a certain position in the whole­ sale trade in some localities." Issawi, op. cit., p. 121. Bowring in 1838 considered the Moslems to be "the most backward as a group since they accumulate little capital and fail to practice the arts progressively," whereas "most of the commercial establishments were in the hands of Christian or Jewish populations. The merchant is rarely an honored being. The power of the sword and the authority of the Book— the warrior and Ulema (religious leadership) are the two really distinguished races of society. All usefully employed capital is regarded as belonging to something mean and secondary." Bowring, op. cit., p. 80. 19 As early as 1838, Bowring himself found in Damascus "66 Mohamedan commercial establishments which trade with Europe. The whole amount of their capital is estimated at 20 to 25,000,000 of piasters— L200,000 to L250,000 sterling....29 Christian merchants at Damascus engaged in fcreign trade, the whole of whose capital is estimated at 4 1/2 to 5,500,000 of piasters...As a class the Jewish foreign mer­ chants of Damascus are the most wealthy. There are 24 Hebrew houses in foreign trade, and their capital is estimated at from 16,000,000 to 18,000,000 piasters making an average of L6,000 to L7.000 sterling each...Most of the Jewish foreign houses trade with Great Britain." Bowring,op. cit., quoted in John MacGregor, Commercial Statistics (London, 1847), II, excerpts of which are reproduced in Issawi, op. cit., p. 223. By 1880, however, the supremacy of Moslem merchants in Damascus was uncontested. The British consul wrote in 1879, "The capital of the Christian and Jew is sunk in the local treasury, and that of the Moslem is invested in real estate or in carrying oh the export and import trade, of which he has almost the monopoly." Vice Consul, Damascus, February 20, 1879. Emphasis added. 145

20 Ruppln, Syria; An Economic Survey, op. cit., p. 55. 21 BCR, Beirut, May 22, 1899, No. 2286. The consul added that "its objective being to develop both export and import trade with the home country [England], and with particular idea of fostering trade with Manchester." In 1901, he reported, "This new company Is now three years old, but its operation, In so far as they affect the British trade, has been most satisfactory, the business having lately increased considerably." BCR, Aleppo, April 8 , 1901, No. 2587. 22 The structural effects of long-term changes in the terms of trade will be discussed In Chapters V and VI below. 23 BCR, Beirut, 1876. As a result, "the wealth of the poorer classes is certainly not increasing proportionally to population." BCR, Beirut, 1888, No. 290. 24 The British consul in 1875 wrote of the Syrian peasant as a "diligent and frugal" worker. In 1908, describing the peasants of Gaza, the British consul remarked, "Hie Oriental peasant is inclined to exaggerate his distress and to hoard his savings in years of plenty; even grain is kept for several years and remains good and sweet." BCR, Jaffa, 1908, No. 3974. Speaking of the Damascus people, Weakley (op. cit., p. 32) observed, "Many of the Moslems are land­ owners or owners of gardens and orchards, and, being extremely frugal are content to live on the revenues they receive from such proper­ ties". Only in Beirut the consumption habits of the rich class pre­ sented an exception to this general characteristic. 25 Cited by Charles Issawi, "Economic Development and Liberalism in Lebanon," The Middle East Journal, XVIII, No. 3 (Summer 1964), 282. 26 Cited by Issawi (ed.) Economic History..., op. cit., p. 207, n.3. 27 Parley, Turkey, op. cit., pp. 200-201. 2q Farley, Two Years in Syria, op. cit., p. 26. 29 The British Consul noted that Aleppo’s exports were not a desirable objec for foreign merchants to engage in, except when their prospects were promising. BCR, March 26, 1875, p. 1674. 30 Charles M. Pepper, American Foreign Trade (New York, 1919), p. 32. In 1872 the British consul reported, ‘‘The number of British merchants in Aleppo was eighty, but this number has diminished as British manufactured goods have been Imported in a more economical way by native merchants, who have driven the English competitors by under­ selling them." BCR, Aleppo, 1872. 146

31 Cited by Issawi, "Economic Development and Liberalism in Lebanon," loc. cit.

"^BCR, Damascus, May 8 , 1894, No. 1411.

^ Ibid. Failures in Beirut in 1900 totaled L60,000. See BCR, Beirut, June 24, 1901, No. 2662. 34 In 1903, the British consul in Damascus reported, "Increasing competition amongst those who still come crowding into the ranks of traders tends to reduce profits to a minimum, a state of things which is advantageous only to the consumers. The explanation, of course, is the long credit allowed by nearly all Continental manufacturing firms." BCR, Damascus, July 6 , 1903, No. 3059. One-third of the cotton goods imports was handled by four chief firms, while the remain­ ing two-thirds by about 110 smaller dealers, who purchased their stock monthly from Beirut cheaper than if they had placed their modest orders directly with foreign suppliers. See BCR, Damascus, 1907, No. 3917. 35 There was no government regualtion of the commodity exchanges that developed. For a vivid picture of the contemporary scene see Prdtre Sherrill Lusan, Jesuit, "Commercial Speculation," A1 Mashriq, VIII, No. 24 (December 15, 1905), 1114-18. In 1901 the British consul reported the loss of very large sums "by imprudent speculations in cotton, wheat, coffee, etc., on future contracts, and many brokers were ruined in paying debts incurred by their clients, for which they were responsible. The total losses were from L350,000 - L4Q0,Q00." BCR, Beirut, June 24, 1901, No. 2662. In 1902 L75,000, lost in sugar speculation, led to a considerable number of bankruptcies (BCR, Beirut, June 9, 1902, No. 2836). In 1941, L150,000 was lost in cotton and sugar speculation (BCR, Beirut, June, 1914, p. 51). In Damascus, the British consul wrote of the unusual fluctuation of coffee prices, "as speculators buy up stocks in hand on occasion and control the market." BCR, Damascus, November, 1914, p. 5.

Weakley, op. cit., p. 133. 37 Cf. ante, Chap. I, p. 37. 38 Weakley, op. cit., p. 64. 39 I.M. Smilianskaya, loc. cit.

40 Ibid. 41 Verney and Dambmann, Les Puissance etrangeres dans le Levant, en Syrre et en Palestine, op. cit., p. 645. 147

42 Supra, p. 120. 43 Levant Trade Review, VII, No. 1 (June Quarter, 1917). 44 BCR, Aleppo, 1865. 45 Farley, The Resources of ...., op. cit., p . 70.

4 6 Ibld., pp. 241-242.

4 ^BCR, Vilayet of Syria, 1872. 48 Farley, Turkey, op. cit., p. 195. 49 The Ottoman Bank was founded in Constantinople in 1856. A branch was opened in Beirut the same year, while Aleppo had to wait for its branch until 1893. In 1910 the Imperial Ottoman Bank had branches at Beirut, Damascus, Aleppo, Tripoli, Homs, Jaffa, Jerusalem, with some agencies at Aintab and Haifa. Credit Lyonnais had agencies at Jaffa and Jerusalem; Deutche Falestina Bank had agencies at Beirut, Haifa, Jaffa and Jerusalem, Beirut and Haffa. There were also Banque d' Athenes and Banque de Salonique at Beirut, and the Deutche Orient Bank at Aleppo. See Weakley, op. cit., p . 22. 50 Weakley, op. cit., p. 23. Ruppin (op. cit., p. 6 8 ) gives the following rates of discount agreed to be the Beirut Banks under the leadership of the Ottoman Bank in 1910; 6 1 /2% for bankers of the first class. 6 3/4% for bankers of the second class. 7% for business men of the first class. 7-8% for other businessmen. 51 The legal maximum rate in the 1830*s was 20 per cent (Folk, op. cit., p. 226). In the 1850's and following decades it was 12 per cent (Issawi, Economic History ...., op. cit., p. 211). By the turn of the century it declined to nine per cent. 52 Myint, The Economics of Developing Countries, op. cit., Chap. V.

^"*BCR, Aleppo, July 1873, p. 573,

**4For example, "One of the greatest speculators in bills of exchange stopped payment in the latter half of the year 1874, declar­ ing a deficit of L180,00Q without assets. This incident put a stop to the system of bill speculations, remittances could afterwards be effected only in bullion....All mercantile operations were thus cur­ tailed." BCR, Aleppo, May 26, 1875, pp. 1658-1659. 148

55 Weakley, op. cit., p p . 19, 23.

*^As a result of the events of 1860, foreign creditors "with­ drew credits formerly opened for commercial operations in Syria. This state of matters is not only exceedingly injurious to the general prosperity of the country, but it threatens with ruin all those who were trading on capital of the consigners, and this is the usual manner in which the importation of manufactured goods is carried on." (Anon.) Rambles in the Deserts of Syria (London, 1864), p. 266. In 1895 the British consul in Damascus reported, "Business in general is depressed. The effect of competition makes itself felt, and bank­ ruptcies in Egypt and Syria have affected the stability of many mer­ chants here few of whom have any large capital to fall back on." BCR, Damascus, 1895, No. 1589.

“^The exchange rate of the British soverign in 1914 was equiva­ lent to 135, 138, 143, and 156 in terms of local "shuruk" (or defec­ tive) piasters of Beirut, Aleppo, Damascus and Jaffa, respectively. Weakley, op. cit., p. 21. The "shuruk", in contrast to the "sagh" (sound), piaster was an unofficial, accounting unit that had no coin as its equivalent and no legal sanction, which came into being be­ cause the old Turkish gold lira introduced in 1844 did not permit for uniform division. See Ruppin, op. cit., p. 18. 58 Surprisingly, however, according to Ruppin, bank deposits were derived from individuals rather than from industrial or commer­ cial circles. Ruppin, op. cit., p. 67.

60 Woytinsky and Woytinsky, World Commerce and Governments, op. cit., p. 4. 61 On the average, freight rates of modern means of transporta­ tion fell 95 per cent or more between 1850 and 1914, passenger rates about 50 per cent, and service improved greatly. Ibid., p. 309.

^Cf. ante, p. 119. 63 In 1898, the British consul in Aleppo reported, "In distant parts of the Vilayet crops remained unsold because of high cost of transportation." BCR, Aleppo, April 15, 1898, No. 2083. See also BCR, Aleppo, March 27, 1895, No. 1539. 6 A BCR, Beirut, August 16, 1877; and Hassani, op. cit., p. 241, quoting Belgian consular report, 1897.

^Vital Cuinet, La Turqui D* Asie (Paris, 1891), II, 149. 149

66BCR, Aleppo, May 26, 1890, No. 745.

**7BCR, Aleppo, 1880. In 1874 the government tithe share at Orfa was burned on orders of the Governor of Aleppo to save storage costs. See Hassanl, op. cit., p. 239. See also supra, n. 63. 6ft BCR, Vilayet of Syria, December 31, 1875, p. 1016. 69 "The rate of interest fell, too, to the point where economic theorists began to conjure with the possibility of capital so abundant as to be a free good. And profits shrank, while what was now recog­ nized as periodic depressions seemed to drag on interminably." The Cambridge Economic History...., op. cit., p. 458.

7^In 1905 the British consul in Damascus noted, "By the end of this current year this province will be better off as regards railways than any other in the Ottoman Empire." BCR, Damascus, June 16, 1905, No. 3437. In 1916 Syria had 2032 kilometers of railway lines (Hassanl, op. cit., p. 247), or 580 kms. per million inhabitants. This figure compares with 199 kms. for Asiatic Turkey, 356 kms for Egypt* 199 kms. for Japan, 786 for United Kingdom (excluding Southern Ireland), and 1,021 kms. for France in 1913. Cf. Charles Issawi, "Asymmetrical Development and Transport in Egypt, 1800-1914," Beginnings of Modernization in the Middle East, The Nineteenth Cen­ tury, ed. Polk and Chambers, (Chicago, 1968), Table 1, p. 394, based on League of Nations, International Statistical Year, 1928.

7*As early as 1879 the British consul reported Beirut's fear of losing its supreme position: "The [native] Beirut capitalst has thrust aside the antipathy and distrust, which are shown by his absence from the stock-books of the Beirut and Damascus Road Company [French] and the Beirut Waterworks Company [English], at least to subscribe towards a railway which should have its terminus at Beirut." BCR, Damascus, February 20, 1879. 72 For more details on this and other railway concessions see excerpts from M. Hecker, "Die Eisenbahnen in der aslatischon Turkei," Economic History...., ed., Issawi, op. cit., pp. 249-257.

73BCR, Beirut, May 1898, No. 2116.

74BCR, Beirut, June 9, 1902, No. 2836.

73Cuinet, Syrie...., op. cit., p. 361; and Hassanl, op. cit., p. 240. 76 Weakley, op. cit., p . 89. 150

BCR, Damascus, July 6, 1903, No. 3059; BCR's Beirut, July 3, 1905, No. 3459, and April 9, 1906, No. 3569. In 1906, 200 wagons and 10 locomotives were imported by D.H.P. to meet rising need(BCR, Beirut, 1907, No. 3798). The Rayaq-Rama section succeeded in reduc­ ing freight rates by two-thirds (cf. Al-Mashriq, op. cit., 1902, p. 905) 78 Hassani, op. cit., p. 243. 79 Ibid.

OQ BCR, Damascus, July 6, 1903, No. 3059. 81 Cuinet, Syrie...., op. cit., p. 613. The same is true of Syrian ports connected with the interior by new roads or railway lines. Cf. post. Appendix I, Table I, and Appendix II, Tables VI and VII. 82 Hassani, op. cit., p. 240. 83 Issawi (ed.) Economic History...., op. cit., pp. 248-249. 84 Ibid., p. 210.

85 "Since the railways have been built, there has been a very great increase in the land brought under cultivation; many of the villages which previously were deserted have been reoccupied and the population of many others has been nearly doubled. Difficulties of transport previously crippled the industry, and in years of heavy crops much grain was allowed to go to waste." Great Britain, Admir­ alty, Naval Intelligence Division, A Handbook of Syria, op. cit., pp. 577-578, 86 For example, in the Aleppo province about 40,000 were employed with an annual payroll of over L500,0G0. Levant Trade Review, II, No. 3 (December Quarter, 1912), 284. The Hajaz Railway spent an average of L100.000 annually between 1901-1906, BCR, Damas­ cus, 1907, No. 3917. 87 "In the transport of heavier goods which are relatively cheap, the railway can defy competition, but goods which are costly for their bulk (e.g. silk, jewelery, etc.) are more cheaply sent by camels." BCR, Damascus, 1896. The rising volume of trade made it possible even to increase the number of carriages on the Damascus- Beirut road from 42 in 1900 to 82 In 1902 and to 90 in 1904, though they transported only 13,500. tons of goods per annum, whereas the railway company carried 110,000 tons. BCR, Beirut, June 16, 1905, 151

No. 3437. On bad roads, caravans of camels, mules and donkeys charged lower rates than carts. BCR, Aleppo, June 1909, No. 4230, p. 3. 88 William Polk and Richard L. Chambers, Beginnings of Moderni­ zation. ..., op. cit., p. 13, citing viewpoint of Shimon Shamir. 89 Issawi (ed.), Economic History op. cit., p. 249. Dur­ ing the First World War the B.B.B. reached Aleppo, and in Palestine the British forces laid a line linking the Egyptian railways with Haifa. Through traffic between Turkey and Egypt was finally estab­ lished by the construction of the Beirut-Haifa line by the British army in 1942, and the B.B.B. line reached Baghdad only in 1940. Ibid. 90 Great Britain, Foreign Office, Syria and Palestine, op. cit., p. 68. 91 During the 1870's, according to the British consul, "In Beirut and Damascus, the native Syrian Christian and Jewish capital­ ists had of late, in the absence of any sound means of Investment in this country, largely employed their capital in foreign securities, notably Turkish [and Egyptian]. Local government bonds at 18 per cent annual interest held by Christians, and Jews of Damascus and Beirut, chiefly of the former place, amount to nearly half a million sterling." BCR, Beirut , 1876. Further, there occurred "heavy remittances to cover purchases of stock in Europe by local capitalists as invest­ ments." BCR, Beirut, December 31, 1875. 92 In the absence of industrial enterprise, native capital in agricultural centers was almost solely employed in usurious loans to the peasantry on their growing crop to meet the tithes and other taxes, giving an interest varying from 18 to 30 and, sometimes to 40 per cent, a rate of profit which no commerce in the world could yield. Large fortunes were made in this way, chiefly by native Christians and Jews enjoying foreign protection. See BCR, Vilayet of Syria, 1872. CHAPTER V

THE IMPACT OF EXPORTS ON AGRICULTURE

While peasant export expansion is not likely to offer a satis­ factory basis for a continuous and self-sustained type of economic development,^ production for the foreign market, at low levels of eco­ nomic activity, is usually the turning point which sets a country on 2 the road of economic growth. Foreign trade for such a country is fre­ quently much cheaper and easier than domestic trade, and adherence to international specialization is often much easier than specialization 3 among regions within the country. The obstacles to a start on the road of economic development in a closed economy are legion and in most cases insurmountable. As W. Arthur Lewis puts it,

To make an upward movement by pi educing for the home market is at this stage extremely difficult. Unless some innovation is involved, merely to produce more for the home market is unprofit­ able, since extra receipts will not equal extra outgoings unless some demand is captured from some other producer, and this requires innovation. At low levels innovation for the home market is unusual. Not only does innovation require new techniques, which at these levels usually come from abroad, but more important is the fact that the social atmosphere is usually at these levels not very favorable towards some people trying to grow rich by ’steal­ ing' some part of the markets of their fellow producers. Innova­ tion comes therefore usually first of all in foreign trade, partly because it is foreigners who bring the new ideas, and partly because the community would not be well disposed towards a struggle for markets at home.^

These difficulties explain why it usually falls to foreign trade to give the economy that push which sets it on the road of devel­ opment. Development of export crops has historically played a role 153 similar to industrialization in that it broke into the low-income equilibrium trap, initiating changes that affected the entire struc­ ture of production.

Even an economy which has no chronic tendency towards defi­ ciency of marginal demand, and which is well disposed towards innova­ tion and competitive struggle in the home market, has yet another hurdle to jump, namely, that the various sectors of the economy must grow in the right relationships to each other, or they cannot grow at all. Agriculture and industry, in a closed economy, must in the long run grow "in balance," or "at appropriate rates," i.e., at rates determined by the community’s relative income elasticities of demand for agricultural and manufactured products. In this case, again, foreign trade is capable of assisting a developing country out of this impasse created by the need for sectoral and vertical balance of investment.'’ With foreign trade, the rate of growth of exports will set the tune for internal expansion, and domestic growth in this case will require only that a proper balance be kept between production for home consumption and production for export.**

There are forces that work on both the demand and supply sides of the market to expand production for export of foodstuffs and raw materials. On the demand side, expansion is induced by the growth of richer countries. The main function of international trade, therefore, is to create effective demand and link up the world market demand for the type of things which the peasants can produce with the surplus pro­ ductive capacity that peasant families usually have locked up in the 154 subsistence sector. The existence of unemployed or underemployed resources explains why, on the supply side, production for export gen­ erally grows faster than any possible rate of increase in the working population.^ Over the long run, the main contribution to an expansion of exports usually comes from an increase in factor supplies and tech­ nological progress.**

On the strength of the foregoing analysis, some of the orthodox economists were inclined to assume too readily that the expansion of international trade would automatically transmit economic growth to the underdeveloped countries, and that "specialization" in the production of those primary products most suited to their resources would auto­ matically raise their general level of skills and productivity and

lead to a more productive combination of resources. And this would pave the way for further economic development.

What is more likely to occur, however, is that the expansion of exports may make only limited technical demand upon peasant producers

and workers, with resultant specialization at relatively low and/or

comparatively fixed levels of productivity. This is particularly true where the traditional average size of farms is so small that the

internal economies of scale associated with Adam Smith's concept of 9 specialization will not arise.

Moreover, even if the expansion of exports had the advantage of being the easiest means of starting the economy on its growth, it may

lead to over-concentration upon exports, which is just as disadvan­

tageous as ovei-conceo.tr at ion on any other sector. For the greater 155 the specialization and concentration, the greater the need for occu­ pational mobility and capacity to transform, which is the best insur­ ance against changes in demand.

Finally, the export sector will have negligible spread effects on other sectors of the economy if its expansion occurs by a simple widening of production along existing lines without any change in pro­ duction functions. Without the use of different input coefficients there will be little "backward linkage" effects, and without the use of modern processing techniques to lower cost of production, there will be little "forward linkage" effects.1* Singer argues that link­ ages and factor contribution (e.g. provision of skilled labor, or dif­ fusion of organizational and administrative skill to other sectors) are tied with manufacturing industry which is generally the iraport- substitute industry in the underdeveloped country, and are peculiarly 12 absent from the primary industries which are associated with exports.

The international forces on the side of demand that led to the expansion of Syrian exports have been discussed in the Chapter 1. In

Chapter IV we dealt with forces on the side of supply such as market­ ing, as well as financial and transportation agencies and facilities that assisted in the growth of exports. In this chapter our main con­ cern will be with long-run changes in the size and quality of factor supplies in the agricultural sector that were induced by trade and which in turn made it possible for the output of exports to expand.

More specifically we shall deal with the impact of exports on pastoral 156 and agricultural husbandry, on the land system, and finally on the rural standard of living.

I. THE IMPACT ON PASTURE

Aside from its major component of Arab bedouins, the floating segment of the Syrian population contained Kurdish and Turcoman ele­ ments still in the pastoral stage of development. Table VIII, Appen­ dix II, is based on the assumption that this non-sedentary portion of the population remained stable, balanced against the limited resources of the desert, with any occasional increase in it leading to sedentar- ization of the weaker elements of the nomadic groups. Since the seden­ tary component of population grew in numbers while the non-sedentary component remained stationary, the latter's proportion of total pop­ ulation dropped from 25 per cent in 1833 to 22 per cent (1857), 17 per cent (1875), 14 per cent, (1895), and finally to 13 per cent in 1915.

While the Ottoman government generally failed in its efforts to settle the nomadic tribes, it met with greater success in checking their raids before the end of the century. Gradually., trade substi­ tuted for raids in their relations with the sedentary population, and 13 commercial production and exchange reduced their self sufficiency.

The expanding foreign trade of Syria during this period facilitated the process of integrating the desert tribes at least partially into the economic life of the country.

Table VIII, Chapter I, shows that pastoral exports rose in sig­ nificance to approximately 20 per cent of sea-borne exports by the First World War. The major part of commercial animal produce originated in tribal areas, as commercial animal husbandry was not a profitable business for the peasant. Quite often local production was

supplemented by imports from South Anatolia and east of the Euphrates

to meet local needs and export requirements. The method of cultiva­

tion helped to preserve the traditional structure of livestock, distinguished by its large number of sheep and goats as against a

relatively limited number of cattle. The total value of the country's

livestock in 1914 was estimated at approximately Lll million, and the 15 annual receipts from the animal industry at L 4 million, which would

give a capital-output ratio of a little less than three to one. The

value of Bedouin trade dealings with the urban centers is estimated by

Ruppin at LI,800,000, including that part of produce which was exported

abroad.^

Though the animal husbandry in the short run suffered fre­

quently from the vagaries of weather conditions, pastoral production,

stimulated by improvement in the prices of pastoral products, increased

considerably over the period of our study, as shown by the increase in

pastoral exports. The rise of the export trade in pastoral products

brought pastoral tribes in touch with city merchants, who turned them

in many cases into hired shepherds. This process of commercialization

of pastoral production and exchange developed side by side with the

growth of foreign and domestic trade in general. On the other hand,

modern methods of animal husbandry hardly played any role in the rise

of pastoral production. ^ Nor was tribal cultural life affected by 158 any modernizing influences of greater contacts with the urban centers.

The material level of living may have improved over the years, if only because the tribes were subjected to lesser exactions than the peasants. They also had a supplementary income springing from their participation in the transportation business.

XI. THE IMPACT OH AGRICULTURAL HUSBANDRY

Of greater importance, perhaps, was the impact of the growth of

Syria's export trade on the development and structure of agricultural production. This impact may be characterized by the growth of rural population, expansion of cultivated land areas and the increasing pro­ portion of commercial agriculture relative to subsistence agriculture.

Rural Population. Rural population doubled during the period of our study, but its ratio to total population remained stable, about 18 60 per cent. The causes of population growth are by no means asso­ ciated solely or mainly with forces that originate in the field of international trade. Establishment of peace and order and improvement of health and sanitary conditions can serve to reinforce the cultural determinants of family size. If, in addition, trade changes relative factor prices in favor of the abundant factor of production, namely, labor, and if the Malthusian relationship holds, higher real income would induce a higher fertility rate in the rural sector. This was more true in Lebanon than in any other part of Syria. In Lebanon the silk industry was the most labor-intensive activity, as mulberry plan­ tations and silk-worm rearing required greater care than cereal 159 cultivation. Under the stimulus of foreign demand for Lebanese silk, the desirability of larger families became more firmly entrenched.

Though there was less need for child labor than in the case of Egyp- tian cotton, the outcome was the same, namely, rapid population growth that served to swell the population beyond the immediate need for agricultural labor. Between 1860 and 1914 migration first, to the bustling seaports and, later, abroad relieved Lebanon of the mounting population pressure on its limited arable land. In the seaports, it was the increasing tempo of foreign trade that made possible the absorption of incoming rural migrants. Beirut received the greatest number from Mount Lebanon. As most newcomers were Christian, the

Moslem element which was dominant in the 1830’s, became vastly out­ numbered by the growing Christian element. Out of an estimated popu­ lation of 120,000 in 1895, 70,000 was Christian.^

Expansion of Land Cultivation. The development of the agricul­ tural sector of the national economy was stimulated as much by the growth of home demand, particularly in the growing urban centers, as by the expansion of foreign demand. As a result, not only was the degree of under-utilization of land and labor reduced, Syrian agricul­ ture became increasingly more of an "export-propelled" sector of the economy. The adjoining map in Figure 2 shows the extent of cultiva­ tion expansion. The Jezira region in the northeastern corner of Syria beyond the Euphrates River belonged to Mesopotamia before 1914, and development of its vast land began only in the 1930’s. Otherwise, 160

TURKEY

Euphrates R.

Alexandretta Aleppo-' "‘Jezira

Latakia ^ama Deir ez-Zor IRAQ floms Tripoli Palmyra

Beirut

Haifa

FIGURE 2 THE FRONTIER OF SETTLEMENT IN SYRIA The stippled areas represent very approximately territory in which were few or no permanent inhabitants and little culti­ vation in 1800, and which is now cultivated and inhabited by a sedentary population. The map is based on one accompanying an article by Norman Lewis, "The Frontier of Settlement in Syria," in International Affairs, XXXI (January, 1955). 161 most of the extension of the frontier of settlement occurred between

1850 and 1914, Cultivable land doubled, but not more than one third 20 was put to agricultural use. In addition, under the prevailing crop-rotation system, one third to one half of this land lay fallow every year. Since most of the land brought into cultivation was on the desert margin, it was planted to grain, wheat in particular. Lack of easy communication with the Syrian ports often acted as a deterrent to cultivation expansion in the interior, and grain export from these areas was possible only in years when high prices ruled in foreign markets.

Cereals were the main crop in cultivation. According to official statistics for the year 1909/10, 83% of cultivated land was 21 planted to cereals: 46.5 wheat, 30.3 barley, and 6.5 others.

Table XV below, gives the volume and value of agricultural produce in a normal season, as estimated by Ruppin. Since the value of annual 22 produce represented about 72 per cent of total domestic product, agriculture was the major sector of the national economy, and all other

sectors depended for their progress and prosperity on agriculture.

Increased Commercialization of Agriculture. To show the extent

of responsiveness of the Syrian agricultural sector to changing market

forces, and the long-run adjustments which Syrian agriculture made,

let us turn to an examination of the production and exports of the

principal agricultural commodities. Grain production, as Table XV

reveals, formed the core of Syrian agriculture. The first impetus to 162

TABLE XV

RUPPIN'S ESTIMATE OF SYRIAN AGRICULTURAL PRODUCTION IN A NORMAL SEASON (Values in L'000 pounds Sterling)

Product 'Eons L ’000 Total L ’000 (%)

Crops for Food and Fodder

Wheat 1 ,000,000 8,400 Barley 500,000 3,000 Maize 200,000 1,200 Millet 50,000 240 Legumes 500,000 2,600 Sesame 30,000 480 Potatoes 200,000 720 Vegetables 1,000 Other plants 360 18,000 (75.00)

Industrial Crops

Tobacco 2,500 200 Cotton 3,000 140 Hemp 1,500 48 Others 12 400 ( 1.70)

Fruits

Olives 1,200 Vines 1,200 Mulberry (silkworm rearing) 1,000 Oranges and lemons 600 Pistachios, figs, etc. 400 4,400 (18.30)

Other Agricultural Products 1,200 ( 5.00)

Total 24,000 (100.00) >

Source; Arthur Ruppln, Syria; An Economic Survey, op. cit,, p. IS. 163 expansion of grain cultivation came in the 1830's in response to the needs of the 90,000-strong Egyptian army of occupation. Because in the short run even the smallest pressure of demand in agrarian econ­ omies soon reaches the limits of output, inflationary pressures 23 developed in Syria. High prices, coupled with government encourage­ ment helped to expand agricultural output.

The withdrawal of Egyptian forces in 1840 led to decline of n / wheat prices from 26 piasters to 11 piasters per bushel. Surpris­ ingly, however, the area cultivated did not contract. To meet the government's increased tax demands, peasants were instead forced to extend their cultivation, which led to further slump in prices. How­ ever, foreign demand in the late 1840's replaced Egyptian demand. In the 1850's, when grain exports from the Black Sea region ceased because of the Crimean War, demand for Syrian grain rose, and northern 25 Syria and Palestine increased their wheat crop. Hew demand created new supply and even new crops sprang up, e.g. sesame, in place of others that declined, such as cotton. These changes in specialization resulted from the response of the Syrian economy to the requirements of the foreign market. They also testify to the rapid reorientation of agriculture to market production.

A more stable internal grain market developed in response to specialization in the production of industrial crops among the various regions and to growing urbanization. Capital, accumulated through trade, was used by city merchants and dealers to acquire land, mainly 26 for grain cultivation. Compared to horticulture, grain requires 164 less capital investment and less care per acre, needs less rain to grow, is more difficult to steal, and is easier to store, transport and sell. Many of these financial investments in land met with disa- 27 ppointment when grain prices began to fall in the 1880's.

Barley exports continued to increase, particularly from Gaza and other coastal areas, where transportation costs to seaports were not prohibitive. As the wheat-barley price relationship began to change in favor of the latter, barley cultivation substituted for wheat in some areas. On the other hand, sesame, which was produced mainly for exportation, and which received stimulus from European 28 demand when sesame oil became increasingly used in soap-making, lost its European market after the opening of the Suez Canal enabled cheaper Indian and Far-Eastern sesame to capture that market. Only when sesame prices began to rise in 1899 was sesame cultivation 29 revived,

The tobacco plant which was introduced from Europe to Syria in the second half of the eighteenth century more than doubled its pro­ duction under the stimulus of foreign demand between the 1840's and

1870's, but the French Tobacco Regie Monopoly which was set up in 1880 not only fixed the price but also restricted the areas of tobacco cul­ tivation and encouraged tobacco imports to Syria from Turkey. For this reason tobacco production which increased from 1,427,000 kgs. in the

1840's to 3,072,000 kgs. in the 1870's dwindled to 1,310,968 kgs. in 30 1911. Another industrial crop which lost was cotton. In 1857 the

British consul at Aleppo noted, "Twenty years ago three times as much 165 cotton was cultivated here, primarily for local consumption, but

English imported yarn ruined the cotton industry, since local plant owners found it cheaper to use imported raw materials for their 31 weaving.” The American Civil War revived cotton cultivation in northern Syria and Palestine to meet increasing British demand. The

British consul distributed American and Egyptian cotton strains to

improve the quality of Syrian cotton, but the experiment failed, mainly because the imported seed required irrigation and greater care

to succeed. With the end of the Civil War, cotton prices and foreign demand declined. Vice Consul Jago wrote in 1876, "Cotton, which aver­

aged in production between 1868 and 1872, 20,000 bales is now neglected, and the present quantity raised suffices only for local 32 wants." Before the first World War, serious attempts by Beirut mer­

chants and land-owners were made to introduce the Egyptian cotton

strain to the Jordan Valley. The results were excellent, but the cost

of production, due to shortage of labor in the area, was prohibitive.

Meanwhile, the rise in prices of other agricultural products, e.g.

sesame and oranges, contributed to the neglect of cotton.

Horticulture, which was retarded initially for lack of capital

and security, was expanded considerably during the period of our study

to meet rising demand at home and abroad. Compared to cereals, tree

orchards require greater care and capital during their long gestation

period; more significantly, during the nineteenth century, they

required protection from destruction by wandering tribes or revengeful

neighbors. These conditions were more or less met before the turn of 166 the century. The orange culture was able to respond to profit oppor­ tunities presented by high orange prices in Europe, thanks to the sup­ port it received from trade-induced native capital and from foreign 33 (Jewish and German) capital inflow. The opening of foreign bank branches and the establishment of foreign export agencies also 34 assisted in this development.

Plantation of white mulberry trees for silkworm rearing is an old culture steeped in the history of Syria since the time of

Justinian. During the Egyptian occupation, investment by Beirut merchants in mulberry and silk crop was stimulated by the government's encouragement to this major cash crop. As a result, a share-cropping system developed between the capitalists and peasants in this culture.

The British consul, Mr, N. Moore, reported that "native capitalists now venture to embark their fortunes in commercial speculations, which 35 formerly they did not venture to do." City money came out of lock 36 boxes and off women's wrists into land. While silk exports received stimulus during this period, the native poor reeling method resulted in setbacks to the market toward the end of the period. In the 1840's silkworm rearing began to assume special significance with the intro­ duction of foreign capital and power-driven machinery. In the early years of the decade the value of Beirut's sea-borne exports were esti­ mated at L30,0Q0, or one third of total production of the region of 37 Beirut, which averaged L90,000. A few years later, out of 1800 bales produced, 1400 were exported abroad, 200 went to Damascus and

Aleppo, and only 200 were consumed locally, i.e., the peasants 167

38 themselves processed only slightly over 10 per cent of the silk.

Hence In the region of Beirut nearly all raw silk, which was the pri­ mary product of local farms, was for sale. In addition, exports in 39 1857 rose to L308,715, These facts, although estimates at best, indicate both the tremendous increase in export of raw silk from the country in a period of less than two decades, and the significant growth of the market share of silk culture. They also reveal the parallel ruin of the domestic production of silk fabrics and the reduction of silk weaving in Damascus and Aleppo. In other words,

Syria was becoming a supplier of silk for European industry.^0

Stagnation in the silk industry set in after the opening of the 41 Suez Canal depressed prices of silk. However, two decades later the

British consul observed, "Mulberry plantations for silkworms are spreading beyond the limits of Lebanon, where they have hitherto been chiefly cultivated, and on the whole the area of cultivated land is increasing, though very slowly, in porportion to what might be (out- / O side the Lebanon) under a more equitable system of land taxation."

This expansion was assisted by the allocation as of 1882 of mulberry tithes to the Public Debt Administration, which set out to encourage silk production by sending young men to France to learn modern methods of silkworm rearing. The Public Debt Administration was influential in introducing Pasteur's methods of curing the silkworm disease which afflicted the native silkworm in 1872 and in adopting first, Japanese and, later on, superior quality French silkworms. The fall in silk 43 prices in the 1890 s hurt cultivators of mulberry trees in Lebanon. 168

This situation could not last long, however. The outflow of emi­ grants from Lebanon which was spurred by the slump in the silk trade, in turn adversely affected this labor-intensive culture. The greater profits realized in the faster growing citrus industry led after the turn of the century to substitution of citrus, and even of grain, for 44 mulberry cultivation.

Agricultural Productivity. The relative expansion of commer­ cial production in agriculture, and the corresponding decline in the subsistence economy, do not seem to have significantly affected agri­ cultural productivity per man or per acre in general. The area of 45 46 cultivable land almost doubled; so did the rural population. On the other hand, the proportion of population engaged in agricultural 47 activity did not decline. Since agricultural tools and methods of production were not modernized, the production function in peasant agriculture did not change. Only in transportation of agricultural products was there real improvement, and this occurred towards the end of the period under study. Except in areas where land was the limited resource as in Lebanon, or where irrigation made horticulture or truck- farming possible, agricultural growth was mainly due to an extension of the cultivated area than to more intensive cultivation. £n Mount

Lebanon, where soil erosion was a real threat, peasant investment took the form of clearing the land and terracing the mountain ridges in order to preserve the soil and facilitate Irrigation. One may say that land in Lebanon was created. Development of mulberry plantations 169 required long-term Investment; Beirut's merchants were willing to invest in mulberry plantations as well as in fruit orchards as far as the Biqa1 plain. In the Jaffa region also, orange orchards were devel­ oped on reclaimed land on the sandy coast. Elsewhere, investment in the rural areas did not go beyond the duplication of the primitive tools of the peasantry. Though peasants were frugal, their savings, 48 if any, were in the nature of postponed consumption expenditures.

There occurred very little agricultural investment whether in farm machinery, irrigation works, marsh drainage, or even in clearing the basalt-strewn tracts of land that were put to cultivation. In the absence of a production series over the period of our study, one can only guess that the marginal yield per acre may have declined with the extension of cultivation to marginal land on the desert fringe. Impov­ erishment of soil on communally-held land and on abundant land, where a "shifting" type of agriculture was practiced, must have led to reduc­ tion in average yield.

Except for the irrigated fruit orchards of Damascus, Jaffa,

Tripoli, Horns, and a few other cities, dry farming was the typical practice of cultivation. Chemical fertilizers were hardly known; only 49 a few hundred tons were used each year on Irrigated land. Animal manuring was wasted as fuel. Green manuring was unknown. A great proportion (one-third to one-half) of cultivated land had to be left fallow every year in order to rebuild soil fertility. A sparse; popu­ lation living in comparatively economic isolation and employing very primitive methods mined rather than farmed the land without use of 170 manure until the land was exhausted and then abandoned until a meas­ ure of fertility was recovered. The divergence between private and

social costs was enormous. Ignorance and inherent conservatism of

farmers inhibited any improvements in the traditional patterns of crop

rotation or primitive implements of production. While the country

outside the mountainous regions was not densely populated relative to

land, there was a "high density" of peasants relative to capital, and

this determined the low productivity of farmers.

Though modern implements involved certain changes in agricul­

tural methods, e.g.,more thorough clearing of the land from stones,

importation of such implements occurred, though on a limited scale, in

the decade preceding World War I. Among those that proved useful were

the European ploughs, reaping machines (on cleared and even soil),

harrows, sub-soil ploughs and chaff cutters.^ The Government estab­

lished depots of agricultural machines at Aleppo, Horns, Dera' and

elsewhere for sale to farmers at cost price on the Installment plan.

Generally speaking, the few rich land-owners who could afford to

experiment with such machines were either indifferent or too conserva- 51 tive to adopt new ways of doing things or a novelty of any kind.

This attitude did not, of course, apply to the proprietors of orange

orchards, where a new industry attracted a new, energetic class of

merchant-landowners that adapted to new conditions. In 1898 a German

firm Introduced into the Jaffa area oil-engines of three or four 52 horsepower to replace the water wheel. At first no one would try

these engines, but when one of these engines was tried by the agent of 171 the firm on one of the gardens by way of experiment and was found to work so well and to cut costs of drawing water by 50 per cent, several 53 orders were at once placed with the firm. In 1907, 500 motor en­ gines of an average 5-horse power were reported operating on petroleum in the Jaffa district for purposes of irrigation, coating an average of 54 L24Q each. There were also nine gas engines, with anthracite coal 55 used as fuel. With the introduction of electricity to Damascus by a Belgian company in 1907, 150 electric motors (of - 2 h.p.) were introduced into its gardens for raising water.

III. IMPACT ON THE LAND SYSTEM37

The rising Western need for foreign raw materials and agricul­ tural products during the period of rapid industrialization placed pressure on the Ottoman Empire to regularize the land system. The view was Impressed upon the government that encouragement of private ownership of land would promote agricultural production and expand exports. Newly-found interest in Syrian produce is well exemplified by the following quotation from a British consular report in 1854:

Syria is a country rich in every natural production even in a greater degree than Egypt. It could supply England with grain of almost any kind, silk equal to the Italian, cotton not inferior to that of the United States of America, when raised from American seed, as recent experiments have proved, castor, olive, and sesame oils, wool, dry fruits, wines, etc. The obstacles which have hitherto impeded the development of these resources are want of security to capital, and the prohibition to the inhabitants to hold government land, or to farm them for more than a few years upon a very precarious tenure. The Lebanon is an exception.58

The Ottoman Land Code of 1858, introduced after the Crimean War 172 to Increase government revenue and to encourage land settlement and development, regulated, with some slight amendment, land use in Syria up to the end of World War I. All agricultural land in Syria was recognized as miri land, or state land whose tasarruf,or usufruct was granted to farmers but whose raqaba.or ownership,was retained by the 59 State, Doreen Warriner has pointed out that the object of this grant was an attempt on the part of the Ottoman Government to central­ ize power and restrict the power of large landowners and the tribal

Shaikhs,^ By destroying the old semi-feudal relationship, the new

Land Law sought to insure the land occupiers stability of holding in the hope of increasing their interest in the land and to safeguard them against oppression by the tax farmer. Though the officially- abolished ruinous system of iltizam, or tax farming, was retained and tax farmers remained as rapacious as ever, the new law provided greater security to occupiers of Crown and Government waste lands

(hitherto cultivated by peasants upon sufferance) by having their title deeds issued by the Tapu (Land Registration) Department upon payment of five per cent of the assessed value of land. If this could not be paid, the land was sold in public auction. To discourage communal and promote individual ownership of land, the new law pro­ vided against registration of the whole village land in the name of one person or a number of persons of the villagers. Any land reclaimed could be, with the permission of the State, registered freely in the name of the reclaimer. Contrariwise, if the land remained uncultivated for three years without duly established reasons 173 it automatically reverted to the State, If the farmer occupier wished to recover it, he could do so only by paying again its Tapu value.

Most of the occupiers, however, were too ignorant to realize the benefits of such registration. Thinking its real aim was to enable the Sultan to impose new taxes and to facilitate the conscrip­ tion of men in periods of war, they either refused to declare their properties or registered them in the names of influential persons who had promised them protection against oppression from the State, the tax farmers or the money lenders. Sometimes in the hope of evading taxation, they made faulty declarations, thus creating confusion in the land registers. This confusion was increased by the inefficiency and lack of experience of land registration officials and especially by the inherent weakness of the system of registration itself.

The gradual evolution of the Syrian agrarian economy from a barter to a market economy, which had been going on for some time before the Land Laws of 1838, was accompanied by dispossession of peasants and their transformation from owners of allotments and small proprietors or partners in communal land to metayers or sharecroppers.

Production for the market meant exposure to price fluctuations, which often led to indebtedness and loss of land. Because of the require­ ment of paying the "malmiri" land tax according to the lunar calendar, which often did not coincide with the harvesting season, peasants had 61 to borrow to meet the tax requirement. It was the custom for each village to confide its interests in the hands of a subashi, who was generally a monied man, resident in Damascus, or some other center, 174 and who was responsible to the authorities for the taxes and other obligations due from the peasants. He usually collected back, his debts at harvest time with a bonus of 30 per cent. As the money was loaned normally for three to four months, the effective, usurious rate was enormous. In this way, Raphael Farhi, the head of the Jewish community in Damascus and reputed to be the wealthiest man in Syria in 62 the 1840's, advanced money to 200 villages.

The Law of 1858 imposed direct taxation to replace the old, semi-feudal system, which had constituted the source of the notables' 63 social and economic powers. The "malrairi" tax was replaced with two onerous taxes, the "ushr" or tenth of the produce leviable in kind, and the "werko" or "impost f oncier" By 1880, the Tapu system was applied to the whole of the settled districts, except for portions of

Hauran and other regions in Transjordan, where villages continued to pay a lump sum tax, leaving the inhabitants thereof to settle individ­

ual assessment among themselves. Where the peasantry were not wealthy

enough to pay the five per cent of assessed land value or to pay the

new tax, they were dispossessed by wealthier buyers, or had to yield a

portion of their land to speculators for the sum necessary to pay the

tax on the whole. Thus a village of over 3,000 acres parted with half

its lands for the insignificant sum of L450, for the tax and other 65 expenses. There were instances where the peasant lost not only his

land but also his implements of production. In districts exposed to

Bedouin raids, such as Acre, Haifa, and Horns, vast tracts of land, the

original cultivators of which had been driven away and dispersed, 175

reverted to the Government* They were usually put up to auction, and 66 bought In by wealthy and daring purchasers for a trifle. The most outstanding example was that of Marj Ibn Amer (the plain of Esdraelon), which was purchased by the usurer, Sursuk. As related by Oliphant:

Esdraelon plain was formerly raided over by Beni Sakhr, who claimed a sort of prescriptive rights to it and were rapidly reducing it to the condition of the valley of the Jordan and the country around Beisan, when it fell into the hands of Hr. Sursuk, a Greek banker, in 1872, who now owns 70 square kilometers of some of the finest land in Palestine, He paid L18,QQ0, of which only L.6,000 found its way into the Treasury of the Government. He is making enormous profits from his twenty villages and four thousand peasants. Peasants pay one tenth of the crop to the government, one tenth to him and ten Mejidis per feddan of land besides (feddan is as much as a yoke of oxen can plough in a day, and the mejidi is equal to 4s. 6 d.) Besides he lends them money at interest. He also farms the tithe for L2O,O0Q a year. The sum extracted from this plain in one form or another, by this fortunate speculator is, I once heard, L40,000.^7

The destruction of the eubashi agricultural credit system,

encouraged a new group of petty money lenders, generally connected with

or under the protection of some foreign consulates, to move in and 68 replace the big-time moneylenders. They lent money at high rates

but did not give peasants the protection from tax-gatherers afforded

by their former creditors. In many cases, to avoid payment of loans

and exorbitant interest, a family moved to another area where it could

bring into cultivation hitherto-uncultivated land, "Shifting" farming

which had been practiced for decades on "no-rent" land at the desert

fringe, spread to other areas, with disastrous consequences for agri­

cultural land development and improvement.^

The uncertainty of land ownership rights in consequence of the

bad administration of the Tapu system and lack of protection of life or property discouraged foreign capital from moving into Syria, as it did into Egypt, for the purpose of land reclamation and development.^0

The field was left open to native capitalists only. With capital accumulated from trade, many city merchants sought investment in agri­ cultural land, not for productive purposes, but for financial or pres­ tigious reasons. Though farming was not considered an honored pro­ fession, and was therefore left to those in the lowest social class, land proprietorship enhanced the social prestige and influence of landowners. Much of the land of Baalbeck passed into the hands of

Lebanese capitalists, and the Moslem cultivators were gradually ousted,^ There were other instances reported by the British consul in the 1870's where capitalists from Beirut invested in agricultural 72 land in the interior, reaping handsome profits. In the vicinity of

Damascus, however, land passed into the hands of a dozen Moslem fami­ lies, the majority of whom formed part of or were connected with the 73 official entourage of the local government. Conservative Moslem capitalists, mindful of their religion's ban on usury, found in land their only investment outlet.

All these forces led to the concentration of agricultural land in the hands of a new class of landlords. In 1875 the British vice consul In Beirut wrote; "Forty years ago the wealth of the land was more equally divided than at present, and consequently less poverty and misery existed. At this moment, while the wealth of the country had undoubtedly increased, it has .... become centered in the hands of the few, leaving the mass much worse off than before, with a large 177

74 increment in the amount of want and misery." According to Auhagen,

the percentage of land that was the property of actual peasant occu­ piers was about 20 - 30 per cent in Northern Syria, 15 per cent in 75 Transjordan, 20 per cent in Northern Galilee and 50 per cent in Judea.

A later official report on the Vilayet of Damascus put the correspond­ ing ratio in that province at 25 per cent.^ Fruit plantations such as Jaffa orange orchards often belonged to large landowners, while the 7 7 silk cultivators of Lebanon were small, independent proprietors.

Although large proprietors predominated, farming on a large scale was the exception. In 1872 the British consul reported that the majority of farm plots in the Province of Damascus were 11 - 16 hec­

tares, the next most numerous were 27 - 40 hectares, and only a few 78 were found to be more than 66 — 100 hectares. Forty years later, it was estimated that 59 per cent of the farms in the same province were five hectares or less. Table XVI shows the situation as it existed in pre-First World War years.

IV. THE RURAL LEVEL OF LIVING

The rural population of Syria struggled at best of times for bare subsistence. The developments that took place after the appli­ cation of the Land Code of 1858 reinforced long-run historical factors that kept the peasant population in a precarious position. The trans­ fer of land to the hands of commercial and usurious capitalists was not accompanied by a basic change in the conditions of the peasant.

The more successful reforms initiated by the government in the fifty 178

TABLE XVI

AVERAGE SIZE OF SYRIAN FARMS PRIOR TO WORLD WAR I (Area In Hectares)*

Average size Per Cent Province or of farms in Under 1 - 5 over 5 District ha. 1 ha. ha. ha.

Damascus 4.3 15 44 41 Aleppo 2.9 11 38 51 Beirut 3.7 20 25 55 Jerusalem 4.9 67 33

& Hectare * 2.47 acres

Source: E.G. Mears (ed.), Modern Turkey (New York: Macmillan Co., 1924), p. 296.

79 years preceding World War I benefited only the urban population.

On the other hand, the Syrian peasant remained burdened by an oppres­ sive military draft system, a bad land tenure system, an archaic tax­ ation system and a usurious credit system. What the peasant needed, therefore, to improve his productivity and raise his level of living was a major change in his institutional environment, which destroyed his incentive for introducing better crop-rotation system, improved seeds, fertilizers, insecticides and water. Expansion of agricultural output was achieved simply by the addition of more labor and cultivat­ ing more land without inducing any changes in the percentage of popu­

lation employed in agriculture and, consequently, in the real share of 179

labor. Ignorant and backward as he might have been, the Syrian 80 peasant was industrious and hardworking. He only lacked the means

and the incentive to expand his production, for within the prevailing

institutional framework the fruits of his industry went to the gov­

ernment, the tax-collector, and the owners of the critical factors of

production, namely, capital and land.

While hired agricultural labor was not unknown by the mid­

nineteenth century, the money-wage system of employment in agriculture

remained of limited application, despite the growth of agricultural

production and exports. Small-scale agriculture rested on family

labor, and the peasantry continued generally to pay the tithes and the

landlord's share in kind. Therefore, no figures for comparative pur­

poses are available to substantiate the impression by contemporary

observers of the deterioration of the rural level of living in the 81 fifty years following the application of the Land Act of 1858.

The deterioration of the condition of the peasantry must have

been caused by the growth of population and the passage of land into

the hands of the new class of merchants and usurious townsmen. Rural

population growth during the period of our study, largely due to

improved security conditions, was a major cause of the great increase

in the number of landless peasants. Offsetting this increase was the

breakup of large estates under the system of mugharasa, by which

peasants were allotted plots of uncultivated land in which they

planted olives and mulberries and, when the trees matured, divided the 82 plot with the landlord. 180

Concentration of land wealth in the hands of the new class of merchants and wealthy townsmen did not in all cases result in the worsening of the peasant's share of produce, but the peasant certainly became exposed to eviction whenever a higher rent or any other favor­

able opportunity presented itself to the absentee landlord, who felt

less personally responsible for the welfare of his tenant than did the

traditional feudal landlord. In some cases the peasants became merely 83 serfs. In others they were evicted and as a result the Syrian- 84 cities received great numbers of dispossessed peasants.

Only under the autonomous administration of Mount Lebanon, most

land property remained freehold after the destruction of the old

feudal system. As a result of this and of the less onerous, fixed-

base tax system, improvements on land could be made without fear of 85 attracting attention of the tax-gatherer. But even in Lebanon what

the farmer wanted most was not merely greater output, but higher

prices. With increased dependence on foreign markets, however, the

peasant could no more relate changes in the prices of his products to

changes in local conditions, and this was an additional source of

anxiety to him.

V. CONCLUSION

Although demand by the European countries was sluggish in the

earlier decades of our study, their rapid industrialization afterwards

forced them to increase their dependence on foreign sources of supply

of primary products. 181

Increased demand for Syrian produce in the 1850's and afterwards pushed the extensive margins of land cultivation into the semi-empty hinterland. Rural population expanded as a result of increased security, and, as in the case of Lebanon, in response to rising foreign demand for the labor-intensive silk product. Foreign capital was drawn into Syria to meet increased French demand for Syrian silk.

Even the pastoral sector benefited from the newly-found interest

in Syria's primary production. Commercial production and exchange reduced the self-sufficiency of nomadic tribes, as expanding foreign

trade facilitated the process of their partial integration in the eco­ nomic life of the country.

On the other hand, the relative expansion of commercial produc­

tion in agriculture and the corresponding decline in the subsistence

economy were not accompanied by a significant change in agricultural

productivity. Modern agricultural implements were either unsuited for

the land topography or were not appreciated by the conservative

absentee landlords. Likewise, better seeds, insecticides, fertilizers,

improved farming practices, were hard to introduce, because of social

resistance to change and because of the distorted incentives created

by the land-tenure system. Where the farmer's share was not propor­

tionate to his contribution in productive resources, agricultural out­

put could not be optimized.

The attempt of the Ottoman government to reform the land system

failed because of the inefficiency of the Land Registration Department

created for the purpose, and because of ignorance and suspicion on the part of the rural population. Failure of this attempt led to concen­ tration of agricultural land in the hands of a new class of absentee landlords who were interested merely in reaping high returns on their investment. While this development did not improve the condition of

the farmer, the appropriation of a larger part of the agricultural produce by the new class of absentee landlords, in the form of a pro­ portional rent in kind, contributed to the growth of exports. 183

Footnotes to Chapter V

Hlyint, The Economics of Developing Countries, op. cit., p. 52. 2 W. Arthur Lewis, The Theory of Economic Growth (Homewood, Illinois, 1955), p. 275. 3 K, Berrill, "International Trade and the Rate of Economic Growth," The Economic History Review, XII, No, 3 (April, 1960), 352. 4 Arthur Lewis, op. cit., p. 275.

^Kindleberger, Economic Development, op. cit., p. 304.

^Lewis, op. cit., p. 283.

^Myint, op. cit., p. 42. Cf. ante, Chap. I, Tables I and II. 8 For more detail, see Gerald Meir, International Trade and Eco­ nomic Development (New York, 1963), p. 161. 9 Productivity on small-sized plots of land may Improve if there is population pressure on land, as in the case of Lebanon, or where the peasant, under an equitable land tenure system or through land ownership, has the incentive to Invest his time and effort to improve his plot. 10 In the view of Arthur Lewis, this has been one of the dis­ advantages of tropical countries: "The result is that their exports have been available on terms favorable to the industrial countries." Lewis, op. cit., p. 281.

■^"Backward linkage" refers to investment in prior stages of production, while "forward linkage" refers to investment in more finished stages (cf. Albert 0. Hirschman, The Strategy of Economic Development (New Haven, 1958), p. 100.) 12 H.W. Singer, "The Distribution of Gains Between Investing and Borrowing Countries," American Economic Review - Papers and Pro­ ceedings , XL (May, 1950), p. 475. 13 Thus in 1880, Laurence Oliphant, who visited the growing city of Salt, east of the Jordan River, wrote, "The merchants here trade with Bedouins, who are acquiring commercial instincts, for nothing civilizes a man so rapidly as teaching him to borrow money and run into debt." Laurence Oliphant, The Land of Gilead (Edinburgh and London, 1880), p. 200. 184

14 The value of such exports by then exceeded 1600,000. See Infra, Appendix I, Table II.

^Ruppin, Syria; An Economic Survey, op. cit., 21. Annual receipts, according to this estimate, amounts to 12 per cent of the domestically produced national product. In my view, this percentage is overstated, because Ruppin's estimates of the contribution of trade and industry to the national product seem to be very low. He estimated the national product at 882 million French francs, distrib­ uted among the different economic sectors as follows (in millions of francs): animal husbandry (103), agricultural husbandry (597), silviculture (5), fishery (10), mines and quarries (2), industry (30), trade (30), transportation (45), pilgrims and tourists (10), plus the following remittances from abroad - to Lebanon (30), to Palestine (10), to benevolent and religious institutions (10). Thus the domestic product amounts to 832 million francs, or, at the rate of 25 francs per pound sterling, to L33,280,000. Cf. ibid., p. 12,

~^I b i d ., p. 65.

^There are a few exceptions. Among the things which the British consul in Aleppo, John Barker, introduced in the vicinity of Aleppo during a lifetime which he spent there, was fine large cattle, a breed he introduced in the 1830's. Cf. BCR, Aleppo, 1882.

^8See infra, Appendix II, Table VIII. 19 BCR, July, 1895, No. 1626. 20 The stippled area in Figure 2 (excluding the Jezira region) is estimated at 30,000 square kilometers (Lewis, op. cit., p. 59). Prior to World War I, 6,000,000 hectares (or 60,000km^) were considered cultivable (Hears, op. cit., pp. 284-285), out of a total area roughly estimated at 200,000 km2 (Foreign Office, Syria and Palestine, op. cit., p. 89). The latter source also estimates the area put to agricultural use at 20,000-24,000 km2, or one third of cultivable area. 1 ,000,000 - 1,200,000 hectares were actually cropped in a normal year (cf. post, Appendix II, Table IV). 21 Calculated from Mears, loc. cit. 22 The percentage seems to be overstated (cf. ante, n. 15). 23 Polk, The Opening of South Lebanon, op. cit., pp. 169, 173, quoting Bowring, op. cit., Appendix C. The increase in the prices of food, wages and rents varied between 100 and 300 per cent. Cf. Report by Vice Consul Jago, loc. cit. 185

24 Faton, The Modern Syrians, op, cit., p. 271. 25 See Urquhart, The Lebanon, op. cit., I, 192, 363. The British consul in Aleppo reported that the sum for which the tithes were farmed rose steadily from 6,000,000 piasters in 1846 to 14,000,000 in 1856 (quoted in Issawi, The Economic History...., op. cit., p. 227. 26 Hassani, op. cit., pp. 234, 279.

^BCR, Aleppo, 1884. 28 Jaffa's exports of sesame increased fourteen-fold between 1841 and 1851 (cf. Hassani, op. cit., pp. 210-211). 29 Haifa's exports, for instance, increased from 250 tons in 1895 to 2784 tons in 1903, and exports from the whole coast of Pales­ tine increased from 4000 tons in 1902 to 8000 tons in 1905. Ibid., p. 285. 30 Ibid., p. 273. 31 Great Britain, House of Commons, Abstract of Reports on the Trade of Various Countries (London, I860), p. 433. In Palestine, cotton cultivation remained in a relatively better condition until 1869 when it also lost to American and Egyptian competition. Hassani, op. cit., p . 150. 32 ‘‘'Report by Vice Consul Jago, op. cit., p. 211. 33 Hassani, op. cit., p. 264.

35 Quoted in Bowring, op. cit., Appendix C.

Polk, op. cit., p. 172. 37 Calculations from Henry Guys, Relation d'un sejour de plusiers armies £ Beyrout et dans le Liban (Paris, 1847), I, 55, 58.

38Ibid., p. 55. 39 Farley, The Resources of ...., op. cit., p. 41. 186

For more details on the process of moving from a subsistence to a market economy in the 1850's, see I.N, Smillanskaya in Issawi, op. cit., pp. 227-247. 41 Vice Consul Jago reported in 1876, "Prices of silk and sesame have declined as a result [of the opening of the Suez Canal} from one- half to two-thirds...., and little sale exists even at this reduc­ tion." Jago, op. cit., p. 211. 42 BCR, Beirut, 1893, No. 1279. Most of the mulberry tree plan­ tations outside Lebanon were in the vicinity of Antioch and Alexand- retta (cf. BCR, Aleppo, April 14, 1904, No. 3154.) 43 "Lebanon is affected by the silk crisis, seeing that the rapid development of the silk industry had diverted almost all the available capital into the planting of mulberry groves and the estab­ lishment of spinning factories...." BCR, Beirut, July 23, 1895, No. 1626. 44 Hassani, op. cit., pp. 260-261. 45 See supra, n. 20.

^See infra, Appendix II, Table VIII.

48 Cf. ante, Chap. IV, n. 24. In the rural areas as well as in the cities, the safest form of saving was in gold and jewelry. In 1859 Farley wrote, "Of late years the export of grain from this coun­ try to Europe had been opened up. As a result the peasant women of Bethlehem and Bet Jala wear gold instead of silver coin on their heads and their dresses improved.... Money in coin, is accumulating daily like heaps of manure over the country, but is employed in no whole­ some condition." Farley, Two Years...... op. cit., p. 228. Emphasis added. 49 Himadeh, Economic Organization of Syria, op. cit., p. 92. 50 According to Cuinet, (Syrie ,op. cit., p. 339), some Lebanese landowners in the plain of Biqa' Abdul Aziz, because of labor shortages and low labor productivity, introduced reaping machines which cut down the high harvesting cost from 10 to 3.5 per cent of gross revenue. The British consul (BCR, Damascus, July 6 , 1903, No. 3059) reported the importation of two reaping machines in 1902. Two threshing machines were imported into Damascus the next year, one British and the other American (Weakley, op. cit., p. 130). Another 187 machine was imported in 1904 (BCR, Damascus, June 16, 1905, No. 3437). According to Ruppin (op. cit., p. 30) several threshing machines were in use in the Jewish colonies.

^BCR, Damascus, May 8 , 1894, No. 1411; and Weakley, loc. cit.

52BCR, Jaffa, April 11, 1901, No. 2584. 53 Ibid.

"*SiCR, Jaffa, for the year 1907, No. 3974. 55 Weakley, op. cit., p. 126.

56Ibld., p. 127. 57 This section draws in part on Paul J. Klat, "The Origins of Land Ownership in Syria," American University of Beirut, Middle East Economic Papers, 1958, pp. 51-66. 58 Consul Moore, Beirut, December 19, 1854, quoted by Charles Issawi, "British Consular Views on Syria's Economy in the 1850's- 1860's," American University of Beirut Festival Book (Festschrift), Centennial Publications, 1967, p. 107. 59 Himadeh, op. cit., p. 53.

^Doreen Warriner, Land and Poverty in the Middle East (London, 1948), p. 17. 61 Abdul Kader al-Maghribi, "The Jews of Damascus, One Hundred Years Ago," Arab Academy Journal (Arabic), Damascus, November, 1929. 6 2 Paton, op. cit., p. 40. In cooperation with corrupt local officials big-time moneylenders sought through other devious means to enrich themselves. Ibid. Cf. post, n. 68. 6 3 lioshe Ma'oz, "The Impact of Modernization on Syrian Politics and Society During the Early Tanzimat Period," Beginnings of Modern­ ization in the Middle East, op. cit., p. 342, 64 BCR, Damascus, March 13, 1880. In the past the tithe varied from ten to fifty per cent.

65Ibid.

66Ibid. 188

67 Laurence Oliphant, The Land of Gilead, op. cit., p. 329, 68 Report by British Vice Consul in Damascus, December 31, 1874, p. 400. The wife of the British Consul relates that when she arrived with her husband in Syria in 1868 she found the Jewish moneylenders of Damascus, many of whom were '’British protected subjects, or proteges of other foreign countries....rough riding all the land," and adds, "One man alone had ruined and sucked dry forty-one villages." See Isabel Burton, The Inner Life of Syria (London, 1875), I, 331-39. 69 Report by Vice Consul Jago, op. cit., p. 211.

^Hassani, op. cit.. p. 234.

7301iphant» op. cit., p. 446. The same fate befell the peas­ ants of the plain of Esrdraelon when it was later sold by the Sursuk family to the Jewish colonists. 72 BCR, Damascus, March 13, 1880.

73Ibid. 74 Report by Vice Consul upon Education in the Vilayet of Syria and Economic Conditions of Christians and Moslems, Beirut, April, 1875.

73Herbert Auhagen: Beitraege Zur Kenntnis der Landesnatur und der Landwirtschaft Syrien (Berlin, 1907), p. 171, quoted in Hassani, op. cit,, p. 235, and in Ruppin, op. cit., p. 22. The same year, the British consul in Aleppo gave an even lower percentage for that province: "Scarcely 15 per cent of the villagers are owners or lease­ holders. A large number people the Imperial domain, the rest are either partners or tenants of city men." BCR, Aleppo, 1907, No. 3838, p. 6 . 76 Foreign Office, Syria and ...., op. cit., p. 107.

77Ibid. A source in the 1920's put the proportion of land owned by peasants and medium-income groups at 50 per cent, the other 50 per cent being owned by the State and a limited number of families. Mustapha Shihabi, "Our Chief Economic Ills," Arab Academy Journal, IX, Part I (1928), 80-94. 78 Figures calculated from BCR, Vilayet of Syria, 1872, p. 861. One hectare = 2.47 acres. 79 Hassani, op. cit., p. 228. 1 8 9

8 0 "The mass of the peasantry, men and women, have to work hard, for they work for bare life, and one had frequent occasion to admire their starved patience and unblessed industry." Sir George Adam Smith, Syria and the Holy Land (New York, 1918), p. 40.

81Cf. ibid., p. 39. 82 Issawi, The Economic History...., op. cit., p. 227. 83 Already in 1886, wrote Oliphant, the peasants of Esdraelon and the maritime plain were "rapidly losing proprietorship in the soil and becoming serfs." Quoted in Sir George Adam Smith, op. cit., p. 39. 84 Issawi, op. cit., pp. 226-227. 85 BCR, Beirut, December 1874. CHAPTER VI

THE IMPACT OF IMPORTS ON INDUSTRY

Imports, like exports, affect the size and quality of factor supplies. They also widen the range of human choice, as consumption combination possibilities become no more limited by home production possibilities.

It is probable that the rate of saving might be adversely affected by the so-called ''international demonstration effect."*' On the other hand, the development of new tastes and new wants can in the long run, as the classical economists emphasized, stimulate new ener- 2 gies for work. A new willingness to make the best of available resources may lead to adoption of more advance techniques of produc- 3 tion, so that extra income may become available to buy the new goods.

Often cash crops are developed to pay for the foreign imports. This movement, from a barter to a monetized economy, stimulates the propen­ sity to save and enhances the rise of financial and banking institu­ tions. In other words, the demonstration effect may tend to stimulate the "aspiration to consume" as well as the "propensity to consume," and as long as it affects the former more strongly than the latter, the greater productive effort would lead to higher per capita income and saving.^

Of major significance, however, is the opportunity that trade offers for the exchange of goods with less growth potential for 191 goods that are more productive, thereby quickening the progress that results from a given effort on the savings side. Many kinds of sophisticated capital equipment can only be acquired through import.

In addition, exchanges of consumer for producer goods through inter­ national trade is of strategic importance for a country whose factor endowment is usually highly skewed toward unskilled labor resources.

However, if the underdeveloped economy has an important domestic handicrafts sector, the inevitable destruction of native capital and the impoverishment~and possibly the annihilation— '’of the artisan class of workers facing competition from cheaper foreign imports might considerably outweigh any consumption gains from trade.

Such an economy usually lacks the flexibility needed to reallocate resources between the declining handicrafts and the growing agricul­ tural sectors. Besides, the benefits of specialization in agriculture are hard to obtain in a sector where the traditional average size of individual farm plots is so small as to rule out economies of scale.

Under certain conditions, foreign imports may have spread effects in other sectors of the economy. The creation of a home mar­ ket for imported consumer goods can trigger, to use the terminology of

Hirschman, "backward linkage effects," as modern organization and new kinds of institutions emerge. With an assured market for the imported goods, gradual import substitution might follow, if the indigenous economy is endowed with all the necessary raw materials. Furthermore, importation of foreign machinery for processing indigenous raw mater­ ials, an activity that would otherwise have to be performed entirely 192 abroad, can give occasion to a series of "forward linkage effects."

The union of an abundant endowment of raw materials with modern proc­ essing techniques has historically played a crucial role in initiating growth in several countries now developed.

The inflow of foreign capital and foreign techniques of organ­ ization and production, which accompanies international trade, has historically led to the creation of the so-called "dual economy," in which a well-developed foreign sector coexists with a primitive domes- 7 tic economy. Yet, as Nurk.se has pointed out, "This lopsided develop- g ment was surely better than no growth at all." Of more deleterious effect, however, on the economically underdeveloped economy, is the

"backwash effect" of perverse flight of domestic capital from the capital-scarce economy to capital-rich economies that offer more 9 profitable or safer investment opportunities.

Not only do imports affect rates of saving and capital forma­ tion, they also affect the ratio of population growth. If exposure to foreign commodities sufficiently reorients the domestic labor-leisure preference pattern, by generating new wants among the populace, the possibility exists that this international demonstration effect may alter the rate of population growth in the long run. The fall in fer­ tility rates, caused by the so-called "internatlonal-standard-of- living effect,"^ may take, however, two to three generations of steady economic growth to materialize. If the fertility rate does eventually fall, not only would it favorably affect the level of liv­ ing, the per capita capital requirements to sustain a given per capita 193

Income would be reduced.

International trade forces exert their Influence not only on the size of factor supplies, they play an equally important role in changing the quality of these factors. The really fundamental prob­ lems of economic development are "non-economic” in nature;^ these have been referred to by the classical economists as the "qualities" 12 of the productive factors. Economic growth essentially means increasing efficiency, for that is what enhances the per-capita power to produce more or better goods and services. And what makes an econ­ omy more efficient involves efficiency of business organization, improved technology and Improvement of the human factor.

Imports affect the efficiency of the economy In several ways.

Foreign merchants that come along with imports bring with them new ways of organizing business. After a time, native merchants and entrepreneurs learn and grow in number, and with the advantage of the lower cost of operating from one's home base are able to drive the 13 foreign entrepreneurs out. The increased monetization of the form­ erly barter economy creates the kind of environment in which indig­ enous entrepreneurship prospers.

There is, however, the possibility that the "backwash effects" of international contacts may corrode, misdirect or discourage pro­ ductive entrepreneurial activity. Indigenous entrepreneurship, repre­ sented by the energetic class of craftsmen in the import-competing sector, may be weakened and even eliminated simultaneously with the destruction of the home industry. This could In turn retard the 194

development of modern industrial entrepreneurship. The precarious position of the home industry could, in addition, drive displaced arti­ sans, along with other enterprising elements, into the only remaining lucrative field where they could put their energy and entrepreneurial talent to best advantage, namely, the foreign sector. In this way, the small active class of society will be absorbed in distributive activity, or what Leibenstein calls "zero-sum enterprise," to distin- X A guish it from productive, or "positive-sum activities."

Foreign trade can improve the productivity of land if it leads to the importation at least of better seeds, fertilizers and pesti­ cides. Wider international contacts through trade and migration can open new horizons for the people of the underdeveloped country, which may lead to better educational and training opportunities for the human factor of production. The opening of foreign financial institu­ tions and the construction of a network of transportation and communi­ cation to service foreign trade serve also to enhance the skills of the cadre of a new professional class and to Increase the flexibility and mobility of the economy as a whole. As pointed out earlier, these benefits are in the nature of external economies, that obtain along 15 with other gains from trade.

The growth of the Syrian import trade played a significant role in the decline of the "medieval" handicraft industries and in the rise of a few modern processing industries required by the expansion of the export trade. These two impacts on industry, which will be 195 discussed in Sections I and II, respectively, affected the urban pop­ ulation and their level of living. This will be dealt with in Section

III. Section IV sums up the findings of this chapter.

I. THE DECLINE OF HANDICRAFT INDUSTRIES

The decline of the once-renowned Syrian industry began with the deportation to Samarkand in 1401 by Tamerlane of the Syrian master artisans and with the rise of industry in Europe in the latter part of the Middle Ages.^ The only industrial goods that continued to be exported to Europe were special kinds of silk cloth and of cotton yarn and cotton cloth. Because it was a necessity for which there was a wide market, the Syrian textile industry was able to survive until the advent of foreign machine-made goods.

The growth of machine spinning and weaving in Europe struck a heavy blow at the home and export markets of the Syrian industry.

European, particularly British, goods began to conquer foreign markets in the period of early "capitalist" development, following the Napole­ onic Wars. A British consular report from Syria in the 1830's vividly describes the flooding of the local market with imported textiles; it also points out the effect of imports of cotton yarn, which destroyed local cotton spinning, but enabled hand weaving to survive for another hundred years:

The articles of British manufacture forming the bulk of trade are long cloths or gray domestics, cotton yarn, muslins and some nankins. The first two are of large Importation for consumption; the former Interferes with the manufacture of similar goods form­ erly made in Syria, and has entirely superseded the importation 196

via the Persian Gulf of a similar quality from the East Indies. "Cotton yarn in its application for the manufactures of the coun­ try is, like a two-edged sword, cutting both ways; it being of great consequence as an article of production by the British manu­ factories, at the same time furnishing the manufactures of cotton alone, and of cotton and silk goods of this country, with an article in general consumption.^

The influx of European machine-made goods was greatly aided by the Anglo-Ottoman Commercial Convention of 1838 and similar trade agreements signed subsequently with other European powers. While for­ eign goods were admitted under these agreements almost free of duty, home products and exports were subjected to exorbitant internal and 18 external duties. The industry most affected by these duties, the textile industry, was one whose products were shipped to other parts of the country and to other provinces of the Ottoman Empire, that is, an industry of mass consumption, which produced manufactured goods over and above local needs, and which thus could have lent itself to a good deal of modernization under more favorable circumstances.

The "international demonstration effect" assisted in the growth of foreign imports, as a shift in tastes took place first in military and later in civilian dress. People in urban centers began to discard the big native turban in favor of the Austrian-made fez, and the cum­ bersome baggy garb in favor of the more practical European dress.

They also gradually showed preference for European furnishings and stuffs which Syria was unable to manufacture at a competitive low price.

One, nevertheless, could argue that neither the capitulations nor the changing wants nor the external and internal customs duties 197 were the basic factors necessitating the decline of the old Syrian

industry, for the old European industry also declined despite the

absence of these factors. The old industrial methods could not have withstood the march of the machine age under any circumstances. The

difference, however, was that whereas in the European countries it had been possible to replace the old declining industrial forms with an

advanced system, in Syria, with the decline of the old forms of indus­

try modern methods did not develop in their place. The lack of cus­

toms protection of native industry certainly acted to retard this

development, but more important was the lack of industrial capital,

industrial entrepreneurship, and skilled labor, three main prerequi­

sites for the establishment of modern Industry. The native middle

class of artisans did not develop, as it did in Europe, into a class

of industrial worker, for it was hit hard by foreign competition.

Craftsmen who survived in specialized lines were subordinated to mer­

chants, who supplied them with credit or raw materials and bought their

output, a mode of relationship which diminished the former's Incentive 19 to improve and modernize. Moslem commercial capital, whose lot was

bound up with the fortunes of the handicrafts, turned, after the

decline of these industries and the disintegration of the old feudal

system, into investment in agricultural land, which offered, aside

from considerations of prestige, a return on capital of 15 to 20 per 20 cent per annum. Members of native minority groups, who were the

main benefeciaries of trade with the West, could have undertaken the

task of industrial modernization, but they were too Insecure to invest 198

In long-term enterprises. More significantly, they were diverted from investment in industry by the attractions of rival fields that prom- 21 ised quick returns, such as lending to the government, or to local farmers and businessmen, investment in foreign securities, trade, spec­ ulation, or the purchase of real estate in the rapidly growing towns, activities which can be characterized as distributive rather than pro­ ductive pursuits. Finally, foreign investment in local industry was deterred by the narrowness of the local market, caused by the low purchasing" power of the majority of exploited peasantry.

Long-run Adjustment of Syrian Industry. Let us now examine more closely the kind of long-run adjustment which the Syrian industry seems to have made in its long-drawn struggle for survival, for the Syrian industry,like the Syrian agriculture, proved capable within limits of reallocating its resources to meet the changing conditions.

There is no doubt that the Syrian textile industry, particularly the smaller enterprises of urban centers, met with serious difficul­ ties in the first major encounter with the flood of cheaper machine- made cotton goods in the 1830’s. The rural cottage industry survived the first shock because it was insulated from foreign competition by lack of easy communications in the interior, because tastes changed more slowly in rural than in urban areas, and because the village artisan, whose family depended only partly for its living on industry or whose opportunity cost in the off-agricultural season was zero, could accept lower remuneration. In the cities, an estimated 10,000 199 workers were thrown out of work in Damascus and Aleppo alone in the 22 year 1833. Generally, some of the workers who lost their jobs moved

back to their villages, others migrated to the growing coastal trading

towns or were absorbed in the growing silk-spinning industry, and a 23 few perished in the famine of 1846. In the long run, a relatively

smaller number of craftsmen handed down their old techniques to their

children.

While figures cited at the time to show the decline of Syrian 24 industry are exaggerated, there is no doubt that the Syrian industry

suffered a serious setback in the 1830's. "From the manufacturing

point of view," noted the British consul at the time, "Syria has lost,

in proportion to her importation of foreign goods, as well as on

account of her diminished population, and the gradual impoverishment 25 of the country."

At its apogee, Syrian industry marketed its wares not only at

home but also abroad. External markets helped to promote development

of manufactured products in those branches whose products were widely

marketed. Cheaper European cotton imports adversely affected the

Syrian industry externally as well as internally. In the 1820's,

80,000 pieces of alaja (silk with little cotton stuff) were shipped

from Damascus to Salonika and were profitably marketed at fairs in

Rumelia; in the 1840’s. 100 pieces were sold annually throughout 26 Rumelia. At home, where "formerly there was no person who did not 27 wear some article of silk," cheaper, imported dyed cottons substi­

tuted for locally manufactured silks in daily dress, which led, in 200

turn, to a significant decline of the silk-weaving industry about the middle of the century. Key luxury imports from the farther East, such 28 as the Cashmiri shawl also went out of fashion. The rise in the

price of raw silk, which was increasingly exported to Europe, accounted 29 for this shift in taste and stagnation of the silk industry.

The major casualty, however, was the cotton spinning industry,

which was formerly as Important as cotton weaving. Because technolog­

ical advance in the English textile industry was much more pronounced

in the development of the spinning "jennies" than in the mechaniza­

tion of the loom, cotton spinning in Syria and subsequently cotton

cultivation were considerably curtailed. A modern cotton spinning

factory driven by hydraulic power was established by Moslem capital­

ists in Damascus in 1860, After leading for two decades a profitless

existence, it was called into more active life by the initiative of

Medhat Pasha, who arrived as Governor General in November, 1878. Its

old English machinery was renovated and added to by British mechanics,

and a foreigner and a native Christian were named managers, with a

view to manufacturing native twists and calicoes. The attempt failed

owing to the short staple of native-grown cotton, the little cultiva­

tion of cotton in the neighborhood of Damascus, and the great cost of

transport on camels and mules of cotton from Nablus in the South or 30 Idlib in the north, the chief cotton-growing centers of Syria. The

factory remained in existence, but was of little significance.

On the other hand, because the power-driven loom was not much

different from the hand loom, a good number of cotton looms remained 201

In operation, gaining a new lease on life by feeding on cheap cotton yarns, imported mainly from Britain, Aleppo saw a temporary revival of the textile industry during the Crimean War in 1856, There were

5,560 looms working, with an estimated production of 69 million pias- 31 ters in that year. The number of looms in operation rose in 1861 to 32 10,000, but the increase proved to be temporary, for it was stimula­ ted by the destruction of Damascus’ looms in the events of 1860. Thus, in 1865, the British consul at Aleppo observed:

As ideas of civilization and Europeanization are becoming more common in Turkey, and the European costume is adopted in lieu of the native, the demand for the native stuffs is naturally dimin­ ishing..., and the native industry here is declining daily. Barely two-thirds of the looms formerly at work are now employed. About 5,000 bales sent to Egypt this year for the annual fair..., found, with the exception of the richer stuffs worked with gold, but a tardy and unprofitable sale; and it is to be feared that this industry, once the most flourishing in Turkey, will dwindle away, and perhaps cease to exist.^3

Impact of Imports. The Impact of imports was unevenly distrib­ uted, and varied according to the market conditions for the product concerned. The handlooms of Aleppo, for instance, continued to supply Bedouins and the poorer classes with the striped woolen and cotton garments they wore, while the calico, required for their under- 34 clothing, was imported from England. The introduction of cheap

European cotton imitations of native cloth very sensibly affected the 35 cotton-weaving branch of the Syrian industry. For obvious reasons, women preferred fancier European fabrics. With the development of native tastes for purely European goods, the European overcoat dis­ placed the home-made cloak, 'Aba, in the cities, and was fairly common 202

In rural areas by the turn of the century. European wool cloth was imported for making European-style clothing. Even ready-made clothes were imported in increasing quantities prior to World War X. The

Syrian industry, which was essentially a home industry, intended for supplying home needs and to suit special native tastes, continued to produce certain articles of clothing that catered to the peculiarities of local taste in Syria and neighboring countries. Such articles were either of superior quality or of inimitable motifs. Otherwise, the

Syrian weaving Industry stood helpless in the face of foreign competi­ tion. In 1871 a cotton mill was built near Antioch with machinery from Manchester, but did not succeed as the quality of its production 37 was inferior to that of England. In that same year, the number of 38 handlooms operating in Aleppo was only half that of 1861. The open­ ing of the Suez Canal in 1869 opened up the market of Mesopotamia for

European manufactures on a wider scale. As a result, the handicraft industries of Aleppo and Damascus lost in^their export markets, too.

Damascus, the starting point' of the annual Moslem pilgrimage caravan to Mecca, suffered an additional loss when pilgrims began to take the 39 easier sea route.

Partially offsetting these deleterious effects of international trade and of the new waterway was the abolition in 1874 of the inter- 40 nal customs tax (kara gumruk) on local manufactures. Further, lower prices of raw silk and of woolen and cotton yarns in the 1870's, coupled with stronger demand for exports in 1878, gave stimulus to the 203 textile industry of Damascus and Aleppo, In the former city, a hand­ ful of expert artisans achieved modest success in improving the proc­ esses of production in certain lines, and in imitating the European 41 texture and design of dima (pure cotton) weaving. By 1880 the num­ ber of looms operating in Damascus had risen to 4,000, exceeding the 42 number of looms that existed before 1860. Before the turn of the century, the izar (a veil worn by women, and made of white British- manufactured calico) was replaced by the melayeh and habara, made of 43 local silk fabric. By 1899, the industry of Damascus had recovered from the doldrums of the early 1890’s. The British consul noted that year, "There are some 5,000 hand-looms in this city for cotton, wool, and silk weaving, fully double the number of those existing here some 44 few years since. Earlier, in 1895, the British consul at Aleppo had reported a decline in the importation of British cotton goods and cloth as a result of the "revival of native industry in the manufacture 45 of cotton and woollen stuffs." The reduction and eventual abolition of the export duty on exports passing by sea from one Turkish port to 46 another stimulated native manufactures. This new upward swing in weaving is evidenced by the rising volume of Syria’s imports of cotton yarn. From an average annual value of L60,000-L70,000 in the period

1888-1902, cotton yarn imports rose to L4O0,OOO (1903-07), to L650,000

(1908-12), and to L9G0,000 (1913).^ Likewise, the silk-weaving industry was revived on cheap, Far-Eastern silk thread imports. From an average annual value of approximately 1.95,000 in the period 1888-97, raw silk Imports rose to more than L250,000 in the following years 204

48 prior to World War I. The improvement in weaving spread out to related industries. In 1908, the British consul in Damascus reported that "the dyeing factories here already produce various colours and perhaps will end by preventing the Importation of dyed yarn alto- 49 gether."

Horns, the third major industrial city located in Central Syria, overtook Damascus in the cotton-weaving industry after it was linked by road and railway with the ports of Tripoli and Beirut. Almost two- thirds of its textile production was exported to neighboring coun­ tries,^ compared with half of Aleppo’s . ^ The exact number of looms operating prior to World War I is subject to widely varying estimates.

Weakley in 1909 put the number at Aleppo and Homs at 10,000 looms, each; that of Damascus at 2,500 (the British consul's figure is twice 52 as much); and that of Mount Lebanon at 2,000. There were a few thou­ sand more looms in other Syrian cities.

The looms, which were of wood and of primitive construction, cost 6s. 8d. to 10s. and were generally located in houses occupied by the weavers, but a great many were set up in khans (caravan inns) or 53 small workshops, called kaiserliks. They were mostly owned by the weavers themselves, small weavers possessing perhaps two or three, and those working in the kaiserliks from 10 to 15. In Homs, some 54 employers had as many as 200 weavers. Besides the ordinary looms, there were in 1909 50 jacquard looms in Aleppo, 20 - 30 in Damascus and 10 in Beirut, which were made locally, and which cost L5 - L8 per 55 loom. Those in Damascus were driven by electric power. Damascus 205

also Imported seven more looms of an Improved type from Switzerland,

Generally speaking, experimentation with power looms in Damascus and elsewhere was unsuccessful because of the lack of reapiring facilities 56 and deficiency of skilled personnel.

A rapidly growing branch of the textile Industry prior to World

War 1 was the knitting industry. European (mainly German) knitting machines, using imported cotton yarns, and operated by women, were introduced around the turn of the century in steadily increasing num­ bers. Ihe moderate-sized machine, which was the most in common use, cost L7 - L9. In 1909 there were 5,000 to 6,000 machines at work in

Aleppo, the chief center of this industry, and only about 1,500 to 57 2,000 in Damascus. Like the embroidery industry, which flourished about the same time, also in North Syria, it was essentially a cottage industry, but many shops were located in the bazaars, fitted with two to three and sometimes more machines, where the work was carried on 58 regularly. Another machine that was becoming a household gadget was the sewing machine. With the shift in taste, dress-making had to give up its archaic techniques.

Emphasis has been placed so far on the Syrian weaving industry, 59 because it was the most important traditional industry. Time was when the loom was a standard household equipment. In the 1830's, according to Urquhart, almost half the population engaged in weaving 60 on a part- or full-time basis. An equally significant factor is that weaving is an industry that has forward and backward linkages with several related industries. Some of these linkages are destroyed or

weakened under the impact of the import trade. Cotton spinning— and

as a result cotton cultivation— is an example of an industry that

almost vanished. The dyeing industry, on the other hand, was able to make an adjustment, parallel to that of cotton weaving, on the basis

of imported synthetic indigo and chemical dyes. The shift from total

dependence on vegetable dyes, such as natural indigo and cochineal, to

the use of cheaper synthetics did not, however, result in improvement

of the method of production. Small workshops predominated, each

usually dealing in one color. While Aleppo had in the 1830's 100 dye- 62 ing and print shops, employing about 1,500 persons, reduced to 200 63 dyers in 1856, in 1909 according to Weakley, there were 130 dye-

houses.u 64

Other traditional handicrafts that felt the impact of the shift

in tastes were leather tanning and pottery-making. With the gradual

Westernization of the native attire in urban centers, the form of

native shoes changed shape and that of European make took place.

Cheap, treated ^eather from Germany, made of goat-skin, was found to be a very good substitute for the native make. However, the native

tanning industry, which was a very large one before the introduction

of European leather, remained important despite its crude method of

production. Aintab in the north and Zahleh in Lebanon, using both

local goat and sheep skins and buffalo hides from China and India, were the most important centers of this industry. Leather was also

needed for the native saddlery industry, which certainly was affected 207 by the Introduction of modern modes of transportation. In Damascus saddlery and shoe-making were still flourishing prior to World War I; in other towns shoe-making showed signs of decline, owing to the grow­ ing taste for the European article.^**

Imports of chinaware and glassware equally affected the widely- spread important earthenware industry. There was an ancient, primitive glass industry in Hebron. Damascus, which had two small, native glass factories, tried but failed in setting up a modern factory in 1910-11, despite the money and effort that went into this attempt; the working capital was not sufficient to tide the venture over the initial diffi- culties. This example was typical of other abortive attempts to modernize. ^ As the British consul at the time observed, "There are new ideas now fermenting in this country toward promoting native industry, and replacing foreign articles and commodities consumed here by those of home manufacture; still at present there is little antici­ pation of these ideas being actually realized in such a manner to 68 diminish the value of imports." Thus, the Syrian Industry remained essentially a home Industry of the pre-Industrial Revolution type.

II. THE EXPANSION OF PROCESSING INDUSTRIES

Introduction of foreign machinery for processing native raw materials raises the efficiency and improves the quality of production.

It also obviates the need for exporting the produce of the land in unprocessed form, which would in turn lead to greater employment and higher income. 208

The sericulture of Syria is an example of an industry which benefited from and thrived upon the new contacts established with

Europe in the wake of the Egyptian occupation. In the fifty years preceding the Egyptian occupation, the silk culture, along with other industries, was on the decline. Mulberry cultivation was encouraged and silk exports were expanded by the Egyptian authorities, but the method of silk reeling remained crude. This led to decline of silk exports by the end of the Egyptian period. The application of the

Anglo-Ottoman Commercial Treaty to Syria after the withdrawal of the

Egyptian forces in 1840 raised the tariff duty on Syrian exports to

12 per cent. This added to the difficulties which the silk culture of

Syria was already experiencing.

About the same time, however, steam engines were introduced into silk-reeling in Syria. New enterprises in rural areas, close to sources of cheap raw material and cheap labor, were set up by foreign capitalists and local tradesmen. The earliest proprietors were French and English merchants living in Syrian coastal cities. In 1841, the first such factory, a medium-sized one, was opened at Batatir in 69 Lebanon by Fortune Portalis, a French merchant who lived in Beirut.

It was soon followed by two British factories, one— which was to remain for several decades the largest silk factory in Lebanon— was established at Shimlan by Mr. Scott, a Scotchman,^ and the other in

the region of Latakla, where cheap, female labor was equally abun­

dant. Native capitalists soon participated in these ventures or 72 established their own. 209

The number of these privately-owned silk factories began to increase, fi* t, gradually, and then at an accelerated pace. This occurred at a time when the native silk-weaving industry, which formerly depended on native silk, was rapidly declining in the face of competi- 73 tion from cheap imports of British cotton manufactures. This devel­ opment facilitated the expansion of Syrian raw silk exports to Europe, particularly to France, where silk production was expanding at a much faster pace to meet the growing demand of the United States market for 74 silk piece manufactures. Then, in 1849, the silkworm disease appeared in France and later spread to Italy. French dependence on the superior-quality silk of Syria increased in the 1850's, The fifty per cent rise in silk price attracted fresh commercial capital into the 75 revitalized silk industry. Thus forces operating on both sides of the market worked to stimulate the production of silk in Syria. The basic force on the side of supply, however, was the favorable cli­ matic conditions of Lebanon and the quality of its mulberry trees.

The Syrian silk was prized for its superior qualities of strength, elasticity, brilliance of color, chiefly of golden yellow, and ability to absorb dyeing colors. It was therefore used by Lyons for the mak­ ing of laces, and other high-class silk articles. Not all Syrian silk was exported in manufactured form, however. For lack of working capi­ tal, or because it was found more profitable, part of Lebanon's silk crop and almost all that of the Province of Aleppo were exported in the cocoon state to Europe.

The silk mills of Lebanon rose in number from 9(5 French-owned, 210

76 2 British-owned, and 2 owned fay natives) in 1852. to 12 large mills

(equipped with 1000 power-driven reels) and 40 small ones (equipped with 500 reels) in 1858,^ According to Farley, capital investment in these firms was highly profitable, and the rate of profit was calcula- 78 ted, on average, at not lesB than 25 per cent net. In addition, there were 1700 native hand reels (wheels), kept at home or carried by 79 itinerant silk reelers. Native reelers engaged mostly in spinning silk from ruptured (pierced) cocoons and other waste silk, while the big mills, called "filatures," used unruptured cocoons to produce a semi-processed silk thread, generally called "sole grege" or "raw 80 silk, which commanded a much higher price than the native-spun silk.

Syrian silk was exported in this form to Europe, where it was converted, through the additional process of "throwing," to commercial yarns of the required size. In 1859 Messrs. Abela Bros, established the first 81 silk factory upon the European system. The experience of a few years showed, however, the futility of endeavoring to compete econom­ ically with the European factories in the field of spinning. In 1864 the same enterprisers opened a factory for weaving the silk fabrics of

Damascus, using the silk spun in their mill. The competition of Euro­ pean imitations, however, soon forced them to stop working.

In 1871 there were 85 filatures (containing 4,000 pans) in the 82 whole country. Of these factories, about a dozen were still in the hands of foreigners (10 owned by Frenchmen), while the remainder were established and operated by natives, who according to the British con­ sul, "have thus shown themselves apt to learn and ready to profit by 211

83 the Instruction conveyed into the country by European enterprise."

Three-fourths of the silk output was done in these factories and only

one-fourth was spun in the coarse native way on home wheels. Tart of native-spun silk was exported to Europe, and part was retained for

home consumption.

The upward trend of silk production and silk prices was re­

versed in the 1870's by new forces that developed on the side of

supply as well as on the side of demand. The silkworm disease

appeared in Syria in the 1860's and became very serious in the follow­

ing decade. The disease destroyed completely the excellent indigenous

silkworm. Experimentation with Chinese and Japanese breeds gave lower

yields. Prices declined on the French market during the depression

years of the 1870’s. In 1875 the British consul observed, "Prices of

cocoons and silk are now touching the limits of forty years ago, when

the money possessed three times its present purchasing power in the 84 country," Greater accessibility of Far-Eastern silk after the open­

ing of the Suez Canal depressed further the price level. The price of

silk which rose from 62 francs/kg. in 1856 to 140 francs/kg. in the 33 years preceding 1871 dropped to 67 francs by 1875, and continued its

slide in the following decade.

The silk industry recovered only after the acclimatization of 86 the French silkworm breed had succeeded. In Lebanon the rapid

development of the Industry diverted almost all available capital into

the planting of mulberry trees and the establishment of spinning fac­

tories. According to the British consul in 1895, there were in Lebanon 212

87 no less than 126 factories. Competition from Far-Eastern silk in the French market continued, however. The price of Syrian silk was only 43 francs/kg. in 1897, and this was considered a good price, com- 88 pared with previous years.

Expansion of mulberry groves spread out beyond the limits of

Mount Lebanon in other parts of Syria, stimulated by the high prices obtained on the French market at the peak of the upswing phase of the business cycle, which averaged seven years in duration between 1892 89 and 1913. No less disturbing than the cyclical price fluctuation was the intra-year wide range of silk prices at Lyons, which made the whole 90 industry a speculative one. Importers of silkworm seed became active in this kind of market, both as seed sellers and cocoon buyers. Silk spinners bought from these intermediaries or directly from farmers.

French capital played an important role in financing the silk season to tide farmers over the long gestation period of silkworm raising and 91 cocoon steaming and drying. Thanks to the greater security of

Lebanon, credit was advanced on relatively easy terms, which was an important factor in the expansion of this industry in that region. By the First World War, Lebanon had 155 spinning factories (containing

8,669 pans), out of a total of 194 factories (containing 10,866 pans), 92 for the whole country. The number employed by the industry was said 93 to be 10,000 - 12,000 workers, five-sixths of them women and children.

The volume of the cocoon crop can be used as another indicator of the recovery of the silk industry from its depression of the 1870's. One source puts the output of green cocoons for the year 1872/73 at 94 6.410.000 kgs. By the end of th 2 1870’s the output had fallen to 95 2,307,600 kgs. In the following decades, the average annual crop

climbed to 3,200,000 kgs. (1880’s), to 4,780,000 kgs. (1890's), to

5.230.000 kgs. (1900’s), and to over 6,000,000 kgs. during the years 96 1910-1914. Thus, by the First World War, the industry had recovered 9 7 to its earlier peak of the early 1870's. At this level of produc­

tion, some 2,000,000 kgs. of dry cocoons could have been obtained, 98 which, if entirely spun, would have given 529,000 kgs. of raw silk,

a figure that is, surprisingly enough, only 11.47 per cent above the

estimate given by Bowring in 1838, when all silk was spun on the hand 99 wheels.

In the pre-war years the condition of the Syrian silk industry was not so brilliant as the above figures seem to indicate. Altogether,

the spinning industry just before the war was in a critical position.

In 1912, 25 Lebanese spinning factories (out of the 155 mentioned

earlier) closed down.^^ Low yields of the cocoon crop was one cause

the competition of Chinese and Japanese silk thread in the French mar­

ket was another; a third cause was the loss of female labor in Lebanon

due to emigration. More significantly, however,was the failure to keep

up with improved techniques of production. The mills were small, em­

ploying 30 to 100 persons. They had 56 pans per mill, on average; 89 102 mills had 50 or more pans; and only 20 plants had 100 pans or more.

It also appears that it was sufficient to have a capital of L320-L400 103 to have a factory with 40 pans. These mills had archaic installations 214 and primitive methods of production. Almost everywhere, the mills spun only double-fold silk thread, producing uneven, lumpy, silk thread, which absorbed much moisture. Only two or three plants, belonging to French capitalists, and equipped with modern machinery, spun up to six-fold and eight-fold silk thread, following the European 104 pattern of producing fine silk. The home spinning wheels continued to spin the injured and inferior cocoons, but their coarse product was mostly consumed in the domestic silk-weaving industry. This was the condition of the Syrian silk industry when Japanese and Chinese mills were Introducing the most up-to-date machinery and methods of produc­ tion.10^ The Syrian industry lacked the long-term capital needed to catch up with the times. There was even a deficiency of short-term capital, and that was one reason why, with the expansion in the cocoon production, a greater percentage of the crop was shipped unprocessed X Q 6 in pre-war years. However, the decline in raw silk exports which set in before the war caught off the indsutry at the peak of its expan­ sion.

We have dealt at great length with the silk-processing industry because of its enormous significance to the economy of Syria, in gen­ eral, and to that of Lebanon, in particular. According to Ducousso, the cash value of the output of silk rearing and spinning in a normal year was equivalent to LI,112,000,10^ which puts the silk-spinning X08 industry next in importance to the weaving industry.

The introduction of modern machinery into other processing industries was equally slow in pre-war years. The oleaginous industry, 215 which comes next in order of importance after the textile industry, was btill using rudimentary techniques by 1914. Of 600-800 oil fac­ tories, only 100 had iron-screw or hydraulic presses .^^ach factory employed 12 workers on average, and the value of their total output was estimated at LI, 000,000.^^ Their product was of second-grade quality, which had to be refined again in Europe before it was put into human consumption. Soap-making was still organized along traditional lines.

There were less than 150 factories in 1914, each employing 15 workers, 111 on average. About one third of their pre-war output of 20,000 tons was exported to neighboring countries.

Flour-milling was relatively more advancedin organization.

Besides the old stone mills run by human or hydraulic power, the num­ ber of those on steam or petroleum was steadily increasing in number.

But even these mills produced flour of mediocre quality, because of the hardness of Syrian wheat.

Mention should be made of the licorice-processing industry, which was located at Alexandretta. The American firm which monopolized the trade established two steam-powered factories in Alexandretta for pressing the root brought from the interior. A small factory for mak­ ing licorice paste was opened at Alexandretta by a native of Aleppo.

Licorice was exported raw to the United States, crushed to Egypt and in sticks to France and Germany.

There were a few other industries but they were of little sig­ nificance. One important raw material that was exported unprocessed for lack of spinning plants was wool. It was exported half washed or 216 unwashed, which called for further treatment by European importers before it was re-exported to the United States.

In general, the industrial activity in Syria could hardly be termed industry in the modern sense of the word. Such industry as did exist was in an intermediate stage between the domestic handicraft and the modern factory system. It was carried on either at home or in primitive workshops, employing a few workers, each. According to

Ruppin,

In all Syria there are not 100 industrial enterprises employing more than 50 laborers in a single factory, hardly one dozen employ­ ing more than 100, and not one employing more than 300. Only a very few mills, machine factories and silk spinning establishments may be considered factories in the technical sense.

Industrial Productivity, Did industrial productivity improve during the period of our study? As a result of the intermittent efforts at keeping the Syrian industry alive, some improvement in efficiency may have occurred. In the absence of statistics on the growth of Industrial employment and industrial investment, the growth of productive imports relative to the growth of urban employment can be approximated by the ratio of import inputs to the urban population at large, and used as a rough measure of the increase in industrial productivity. The urban population grew from 269,000 in 1833 to 113 546,000 in 1875, and then to 1,004,000 in 1915. In the meantime, productive import inputs (intermediate and capital goods) increased in value from L1Q3,571 in 1836-37 to L213,934 in 1873-77, and then to 114 L2,290,107 in 1913. In other words, productive imports per head of 217

urban population Increased from 7s. 8d, In 1836-37 to 7s. lOd. in

1873-77— not much of a change In the first half of the period, and

then to L2 6s. in 1913— an almost six-fold increase during the second half. The import figures, however, are gross, in that they do not

allow for the portion of import inputs that was re-exported or employed

outside urban centers, nor do they allow for the substitution of

imported inputs for locally-produced productive inputs. But they do

sufficiently indicate the direction, if hot the magnitude, of change.

Syrian industrial productivity per worker improved but remained below

that of European countries. In the silk industry, for instance, pro­

ductivity in pre-First World War days was still half that of France 115 and Italy, whereas wages were less by only one-third.

III. THE URBAN LEVEL OF LIVING

Aside from the small but rising number of public functionaries,

professionals and absentee landlords, the cities and towns were mainly

commercial and industrial centers. A large portion of the working

class, particularly in Aleppo, Damascus and Horns, worked In industry,

the term being here used in the Oriental sense of the word. This was

true in 1913, and certainly more true in the 1830’s. A French trav­

eler who visited the country in 1833 described Aleppo and Damascus as

"vast factory towns.Though manufacturing activity continued to

have the attributes of a cottage industry and compensation was paid

according to piece work done, the money-wage system was already in

practice in the 1330's. Changes in wages relative to the cost of 218 living thus can be used here in discussing the direction of change in the urban level of living.

While the general condition of the mass of people in urban centers imporved moderately over the long run, there is no doubt that the condition of some skilled workers whose products could no longer sustain the competition of machine-made goods deteriorated. In the

1830’s and even in the 1840's the relative price of labor to wheat and food in general was considerably higher in Syria than in Europe. Such differences had to do with the relative scarcities of labor and land in the two areas. Food in England was dear; in depopulated Syria labor was the dear factor. While the cost of living, measured in

English currency, was three or four times higher in England than in

Syria,the hand-loom weaver, who was already on the retreat in

1.1.8 England, was earning only 6s. a week in England, but 8s. - 9s. in 119 Damascus. In time, however, food prices in England dropped rela­

tively after the abolition of the Corn Laws in 1846 and later as a result of massive flows of grain and other food staples from the so-

called Areas of Recent Settlement and tropical and semi-tropical areas.

In Syria, wages declined immediately after the introdution of machine- 120 made Manchester cotton goods, while the price of food staples rose

under the pressure of rising home and foreign demands. The inevitable squeeze on income resulted in social unrest in the 1840*s and 50*s.

Bread riots in Syrian cities, caused by attempts of merchants and

grain exporters to corner wheat, were as common as strikes by Damascus 121 silk weavers, who resisted attempts at reduction in their wages. 219

The Syrian industry owed its survival and revival, despite the decline

of the guild system, to this spirit of solidarity among urban indus­

trial workers. This social body saw in its Indus trial heritage and

organization "the expression of its tastes and cultural traditions, as

it perceived this organization through the world values making up its

personality, and as it felt disarmed when faced with Western strength and wealth.

The rise in the general level of living in urban centers can be

seen in several ways. Improved productivity in those industries that were able to adjust to changing conditions led to relatively higher

compensation to those who were engaged in these industries, though the

gains were sometimes appropriated by the speculator who supplied the 123 working capital and material to the worker. Progress can also be

seen in improved health and sanitation conditions. The rise in imports

of drugs and pharmaceutical products, along with the rise in the level

of education and social awareness, especially among the Christian com­

munity, should account for this development. But while small pox

vaccination was introduced into the country by the British consul as 124 early as 1803, cholera remained as a recurrent scourge to urban

areas as locusts to rural areas. The rise in the general level of

living is also evidenced by the greater consumption power of the

masses. Evidently, we cannot use here the ratio of consumption imports

to urban population as a true measure of the rise in urban consump­

tion, for, unlike "input imports," a good portion of consumption

imports went to rural areas ox was re-exported to neighboring- countries. 220

However, even after generous allowance for this leakage in imports, consumption imports per head of urban population would still show a rise over the period of our study. Consumption imports (categories A,

B,C and D of Table IV, Appendix I, below) rose from L250,000 in 1836-

37 to Ll,656,000 in 1873-77, and then to L3,974,000 in 1913. Assuming that only half of these imports remained in urban centers, consumption per head of urban population at the above dates would still show a 125 rise from 9s. 5d. to Ll 9s. 10d., and then to Ll 19s. 7d. No less significant than this rise in the consumption power of the masses was the greater variety afforded by imports with the progress of time.

It was in the cities that emulation of Western habits of con­ sumption and mode of living took place. It was in the cities also that a good share of commercial profits was spent on the construction of modern residential and business buildings. The maritime cities, in particular, converted their cactus-lined alleys into streets and over- 126 leaped their medieval walls. Gas and water systems were introduced into a few cities, while Damascus and Beirut got also electricity and tram lines.

However, the urban picture that emerged by 1914 showed growing signs of modernism side by side with the well-entrenched forces of traditionalism. One could still see the camel or mule being led along­ side the tram line in the streets of Damascus. Such anomalies were 127 numerous, but they did not represent the marked degree of "economic dualism" of colonial economies. Certainly, there was a slowly expand­ ing capitalist sector developing alongside and encroaching upon the 221 traditional subsistence economy, but it was more a case of uneven growth, typical of other Mediterranean countries and inherent in any process of uncontrolled or uncontrived development. The polarization of wealth between the few and the many and the contrast that developed between the bustling cities, on the one hand, and the stagnant vill­ ages, on the other, was the inevitable product of this process.

IV. CONCLUSION

The flood of cheaper, machine-made textile goods had their greatest impact on the home textile industry during the early decades of the period under study. Syria's backward economy lacked, at least in the short run, the reallocative ability between the import-competing sector and the agricultural sector. Textile workers in urban areas were hardest hit. Rural workers were initially insulated from cheaper foreign imports by poor communications; they also depended only partly for their living on industrial work.

The impact of imports also varied among the different branches of the industry. Hardest hit was the cotton spinning industry, which led to the decline of cotton cultivation (a negative backward linkage effect). The rise of French demand for Syrian silk revived the Syrian silk-reeling Industry, which was of vital importance to Lebanon, and attracted European capital and technology into it. As Syria became a supplier of raw silk and cocoon, domestic silk-weaving, which was formerly a very important industry, was deprived of its local source of raw material. In addition, the government's tax policy discriminated against local production. Only when the overland- and sea-transport tax were abolished was this industry able to revive on cheap imports of Far-Eastern silk. The cotton weaving Industry suffered, too, but was able to adjuBt much earlier, feeding almost completely on cheaper, imported European, particularly British, yarn.

From the social point of view, the impact of foreign trade on the social structure of urban centers was a source of great tension that plagued Syrian society, especially in the 1850's and 1860. There was polarization of wealth not only between rural and urban centers, but also within the urban centers. While on the one hand, the gains from expanding trade relations with the West benefited mostly European^ traders and members of the minority groups who enjoyed the protection 1 of both European consuls and Ottoman commercial legislation, on the other, the decline of native handicraft industries hurt especially the more numerous class of Moslem craftsmen and with them the class of

Moslem merchants, whose fortunes were tied up with the state of the home industry. There was a shift in the distribution of income not only from wages to profits, but also withing profits from one group to another in the commercial sector. These developments had deep reper­ cussions on Syrian Moslem urban society, whose backbone had for a long 128 time been the middle class of artisans and traders.” 223

Footnotes to Chapter VI

■^Ragnar Nurkse, Problems of Capital Formation in Underdeveloped Countries (Oxford; Basil Blackwell, 1953), pp. 58-59. 2 See for Instance John Stuart Mill, Principles of Political Economy (W.J. Ashly edition, reprinted by A. Kelly, New York, 1961), p. 58, 3 W. Arthur Lewis. The Theory of Economic Growth, op. cit., p. 280. 4 Gerald Meier, International Trade and Economic Development, op. cit., p. 174. 5 Recall for instance the fate of 'Indian Weavers.nearly . eighty years after the conquest of Bengal a reforming Governor-General, Lord William Cavendish-Bentnick, reported that 'The bones of cotton weavers are bleaching the plains of India.' ...What was having this deadly effect was simply the impact of machine-made Lancashire cotton cloth which undercut the Indian handloom weavers." J. Strachey, The End of Empire (London, 1964), p. 52. 6 Cf. ante, p. 105.

^Myint, The Economics of Developing Countries, op. cit., p . 64. O Nurkse, Patterns of Trade (Oxford, 1961), p. 18. 9 Gunnar Myrdal, Economic Theory and Underdeveloped Countries (London, 1957). pp. 51-53.

"^Harvey Leibenstein, Economic Backwardness and Economic Growth (New York and London, 1957), p. 161.

■^N.S. Buchanan and H.S, Ellis, Approaches to Economic Develop­ ment (New York, 1955), p. 406. 12 Myrdal also emphasizes the need to include consideration of qualities of the productive inputs in a growth-trade model. He argues that the two notions which have isolated international trade theory from the facts and the dynamic problema of underdevelopment are: (1 ) the equilibrium assumption; and (2) the failure to include "non­ economic" (i.e., quality) factors in the analysis. Cf. Myrdal, op. cit., chap. 10. 13 Cf. Chap. IV, Section II above and Section II below. 224

14 Lelbenstein, op. cit., p. 1X3. Also, Cf. ante. Chap. IV, Section II. 15 Cf. ante, Chap. IV, Sections III and IV. 16 Hassani, The Economic History of Syria, op. cit., p. 213.

"^MacGregor, Commercial Statistics, IV, op. cit., p. 156, quoted in Issawi (ed.), The Economic History of the Middle East, op. cit., pp. 41-42. 18 Cf. ante, Chap. Ill, Section I. 19 In 1872, the British consul In Aleppo noted, "The weavers hardly earn more than day laborers in the fields, but the speculators who give them the raw materials and receive the manufactured goods for sale, realize a good profit." BCR, Aleppo, 1872. In a speech on "The Causes of Industrial Backwardness in Syria," delivered at the Indus­ trial Society, Hr. Khalil Shaoul cited the same cause, adding to it (1 ) technological backwardness, (2) low regard in which Industry is held by native dignataries and capitalists, (3) lack of initiative, risk-taking, and perseverence, (4) social bias in favor of trade and government jobs. See Al-Muqtataf Journal (November, 1884), pp. 85-88. 20 British Vice Consul, Damascus, March, 1880.

^Reduction of the rate of interest in October, 1875, on the Ottoman debt at Constantinople caused heavy losses to local Christian and Jewish capitalists by the depreciation of all Turkish securities, and the Sergalin, or Damascus local government bonds held by Damas­ cenes , were reduced to nominal values. See Vice Consul Jago, Damascus, December 31, 1877. In 1892 the British consul reported the repudiation (by the local government) of the Damascus treasury bonds, which was a "heavy blow to Jews and Christians who held the majority of these bonds.: BCR, August 18, 1892, No. 1121. 22 Polk, The Opening of South Lebanon, op. cit., introduction, p. xix. 23 Smillanskaya in Issawi, op. cit., p. 247. 24 Of 40,000 looms working in Aleppo earlier (Farley, The Resources of Turkey, op. cit., p. 236), only 4,000 looms employing 4,800 men and children were reported in operation by Bowrlng in 1838 (MacGregor in Issawi, op. cit., p. 221). In Damascus, of 34,000 looms reported earlier (Urquhart, The Lebanon, op. cit., I, p. 71), only 4,400 looms were operating in 1838 (MacGregor in Issawi, op. cit., p. 224). 225

Urquhart cites the complaint made to him (in the 1840's) by Pere Francisco Amaya, Superior of the Lazarlsts at Tripoli: "This country is weighed upon by Europe; its industry is extinguished, its character degraded, and it is exposed to peril. At Damascus there were a few years ago, 34,000 looms making their own beautiful stuffs; now there are 4000; they go and see in the shops cheap imitations, and as they are poor, they lose their money, and cease to be industrious, which is the first of qualities.1' Urquhart, loc. cit. 25 MacGregor in Issawi, op. cit.> p. 225. 26 Smilianskaya in Issawi, op. cit., pp. 244-45. 27 Farley, The Resources..... op. cit., p. 60. 28 Polk, loc. cit. 29 Cf. post, p. 209. 30 British Vice Consul, Damascus, March 13, 1880. 31 Farley, The Resources..... op. cit., p. 236. The number of dyeing workshops also rose to 200 (twice the figure of 1838). Ibid., p. 235,

32Ibid. 33 BCR, Aleppo, 1865, Part I, p. 432. According to another source, "only 150 out of 300 cotton-textile factories were operating in Aleppo in 1864; only 80 out of 100 print-handkerchief factories remained; out of 200 establishments manufacturing fabrics of silk mixed with cotton, only 150 were active." Omer Celal Sarc, "The Tanz- imet and Our Industry," in Issawi, op. cit., p. 51,

34BCR, Aleppo, 1872. 35 As late as 1397 the British consul in Aleppo was still advis­ ing his government, "1 enclose samples of the class of native stuffs which British houses must imitate if they wish to do business here. German commercial travellers come here every year and carry away sam­ ples of all native work which is possible to imitate, and which are promptly worked-up and sold here at a lower price than native mater­ ials." BCR, Aleppo, June 16, 1897, No. 1952. Switzerland had earlier gained a share of the Syrian market, by excelling in cheap imitations of local designs. BCR, Aleppo, May 26, 1875. 226

36 Silk cloaks and jackets, wool cloaks, brocades (silk fabrics with gold and silver thread), silk and cotton girdles are some examples of such articles. Cf. Verney and Dambmann, op. cit., p. 467.

3?BCR, Aleppo, 1872. 38 Of 5000 hand looms, 4000 were employed "in weaving the winter and summer clothing of the lower order of people, and 1000 in manufac­ tures of cloaks and girdles." Ibid. Emphasis added. 39 The annual pilgrimage was a religious and commercial event. Pilgrims bought their provisions and manufactured goods in Damascus on their way to Mecca. 40 Cf. ante, p. 100,

^Nu'raan Kasatli, Damascus (Arabic) (Beirut, 1879), p. 123. 42 British Vice Consul, Damascus, March 13, 1880. Of 3436 looms working in Damascus in 1859, nearly 3000 belonged to Christians. In the events of 1860 most of the latter were destroyed, and there were only 550 looms in operation in 1861. The number was gradually restored by 1864, but of the 3156 looms working in that year more than 2000 belonged to Moslems. Farley, Turkey, op. cit., p. 212. 43 BCR, Damascus, June 15, 1899, No. 2306. 44 Ibid. 45 BCR, Aleppo, March 27, 1895, No. 1539. In 1900 Verney and Dambmann observed that "the Indigenous industries [were] on the road to prosperity." Verney and Dambmann, Les Puissance Etrangeres..., op. cit., p. 455. 46 „ Cf. ante, p. 102. 47 See Appendix I, Table IV, item 24, below. 48 Ibid., item 25. Shanghai silk, which was of inferior quality, coat Aleppo importers 37 francs/kg., on average, during 1887-1897, while the price of native silk f.o.b. Beirut averaged during the same period 45 francs/kg. (computed from Verney and Dambmann, op. cit., pp. 649-650). 49 BCR, Damascus, op. cit., p. 6 . In 1909, Weakley noted that "Two new dyehouses with modern machinery have been started in Aleppo within the last 18 months to use chemical dyes (aniline) tun by Arme­ nian artisans, trained by Germans. The success of native dyers in the 227

red crimson cotton yarns, has affected the imports of foreign red yarns very considerably." Weakley, op. cit., p. 72.

”*^BCR, Damascus, July 6 , 1903, No. 3059.

BCR, Aleppo, April 14, 1904, No. 3154. The total value of cotton, silk, and woolen cloth produced in 1906 was estimated at L500,00Q (BCR, Aleppo, for the year 1907, p. 5). The average annual value of textiles exported in 1904-1907 was L262,800, Great Britain, Admiralty, Naval Intelligence Division, A Handbook....., op. cit., p. 301. Compare this with the value of L35,000 in 1876 when production sank to its lowest level in the nineteenth century. A few years back, Aleppo's production was ten times greater. BCR, Aleppo, 1877. 52 Weakley, op. cit., p. 67; and BCR, Damascus, 1907, No. 3917. Other sources put the number of weavers in Damascus at "5000 normally employed, including 1000 wool weavers." See Great Britain, F.O., Syria and ...... op. cit., p. 114. 53 Weakley, loc. cit. 54 F.O., Syria and ..... loc. cit. These employers were making handsome profits from 15 to 20 per cent. Ibid.

■^For figures on the jacquard looms, see Weakley, op. cit., pp. 67-68.

In Damascus the power-driven looms stopped work after the departure of the foreign technicians who installed them. A small power loom was bought second-hand by a weaver of Aleppo and set up, but the owner was not able to use it for lack of technical skill. Four small power looms were bought by the Government in 1906 for use in Aleppo's industrial school. In Horns, which was becoming the chief center of the textile industry, to offset the shortage of labor resulting from emigration of skilled weavers, an attempt was made "on the part of several wealthy merchants to introduce French power looms but the cost and lack of enterprise made it discouraging for the pro­ moters." BCR, Beirut, 1908, No. 4142, p. 6 .

"^Weakley, op. cit., p. 73.

58Ibid., p. 74. 59 Ruppin estimated the value of the annual output of the tex­ tile industry at 30 to 40 million francs (or Ll,200,000 - Ll,800,00). Cited in A Handbook....., op. cit., p. 286.

88Urquhart, Turkey op. cit., p. 143. 228

61. The British consul in 1903 remarked, "It has been calculated that twelve other trades are closely connected with the silk and silk and cotton weaving industries, so that their prosperity or the reverse are matters of considerable moment.” BCR, Damascus, July 6 , 1903, No. 3059.

^MacGregor in Issawi, op. cit., p. 222. 6 3 Farley, The Resources op. cit., p. 235. 64 Weakley, op. cit., p. 69. Damascus in 1909 had 125 dye-houses. Ibid. 65 F.O., Syria and .... . op. cit., p. 118. A factory for making children's shoes was established by the shoemakers of Damascus, who numbered 200 - 250, and who formed a syndicate to buy leather directly from European manufacturers, thus saving sommission and getting dis­ count. Weakley, op. cit., pp. 172-175.

^Ruppin, op. cit., p. 48.

Another example is the paper factory which was established near Beirut. After a brief success it succumbed to European competi­ tion.

A Q BCR, Damascus, 1909, No. 4293, p. 4. 69 Hitti, History of Lebanon, op. cit., p. 427.

70Ibid.

7^Smilianskaya, in Issawi, op. cit., p. 243. Female labor con­ sisted of Christian women and girls in Lebanon and of Christian and Alawite women and girls in the Latakia region. Moslem female labor did not participate.

7^Xhus, Sheikh Yusuf "Abd al-Malik invested his capital in Por- talis' silk mill. Other local investors included Asfar Bros., and the usurers, Sursuk Bros. Ibid. 73 For example, the output of Damascus and Hasbeya fell by one third during the 1840's. Urquhart, Lebanon, op. cit. II, p. 363. 74 The silk cocoon crop of France rose (in millions of kilograms) from 10 (1821-1830) to 26 (1853), then dropped to 17.5 (1856) and ultimately to 4 (1865). See Aspir Shukair, "The Silkworm," Al-Muqtataf (March, 1884), pp. 329-336. 229

75 Dominique Chevallier, "Western Development and Eastern Crisis in the Mid-Nineteenth Century: Syria Confronted with the European Economy," Beginnings of Modernization...... op. cit., p. 220.

78The most important of these mills had an annual production of 10,000 kgs. of silk cocoons and 50,000 kgs. of yellow silk. Sarc in Issawi, op. cit., p. 57. 77 Farley, Two Years in Syria, op. cit., p, 224. The large fil­ atures were mostly foreign-owned. A French source put the number of silk plants in 1862 at 11 foreign-owned (equipped with 850 pans) plus 33 owned by natives who controlled 1350 pans (cited in Issawi, op. cit., p. 207, n,3). On the other hand, a British commercial report in 1861 noted the existence of only 30 reeling factories with 1800 power- driven wheels (cited in Polk, The Opening .... . op. cit., p. 224, n.l). 78 Farley, loc. cit.

79Ibid. 80 The process of reeling involves degumming (or boiling off) the cocoons in pans of warm water to dissolve the sirlcin (silk gum) that binds the silk together, and the filament is then would upon reels. 81 BCR, Beirut, March, 1872, p. 872.

82Ibid., p. 843. 83 Ibid. Of 56 steam-operated plants operating in Lebanon in 1875, containing 2,662 pans and employing 3,500 workers, 48 plants were run by natives. BCR, Beirut, May 10, 1875. 84 BCR, Beirut, December 31, 1875. 85t, , , Ibid. 86 Thus the number of silk mills in Lebanon, if the vicinity of Beirut is included, rose to 67 in 1881 (Uassani, op. cit., p. 256), and the number of workers in Mount Lebanon to 6,000, aside from the agricultural labor involved in the growth of mulberry trees, the pick­ ing of leaves, and so forth (Oliphant, op. cit., p. 350). 87 BCR, Beirut, July 23, 1895, No. 1626.

88BCR, May 18, 1898, No. 2116. 230

89 Raw silk prices on the world market hit their peaks in 1892- 1893, 1900-1901, and 1913-1914. Cf. Levant Trade Review (September Quarter, 1913), p. 194, and (December Quarter, 1915), p. 308.

90 The British consul in 1898 noted, "As this trade is monopo­ lized by one foreign country, prices are liable to serious fluctua­ tions, and success depends directly on the state of the French market." BCR, May 18, 1898, No. 2116. See also Weakley, op. cit., p. 55. 91 In 1914 credit up to 45 fra./kg. was advanced. The working capital was supplied either directly by the French houses or through local banks. See A. Latron, "La Production et le Commerce de la Soi au Levant," L'Asie Francaise, 1935, pp. 78-82. 92 Gaston Ducousso, L'Industrid de la Soie en Syrie (Paris, 1913), pp. 142-144, quoted in Huvelin, "Que vaut la Syrie?", op. cit., p. 20. 93 A Handbook op. cit., p. 283, quoting Ruppln. In the busy season, following the cocoon harvest (July - August), extra hands were recruited. Ibid. 94 Verney and Dambmann, op. cit., p. 649. 95 Ibid. The British consul gives an average equivalent to 1,923,000 kgs. Earlier, the average harvest of Mount Lebanon alone was estimated at the equivalent of 2,560,000 kgs. (cf. BCR, Beirut, May 10, 1875).

96 Computed from A. Latron, op. cit., p. 79. 97 This is on the assumption that the figure given for 1872/73 is reliable. 98 For the conversion factor see Weakley, op. cit., p. 54.

99 A quantity of 1200 cantars (or 307,680 kgs.) of raw silk was produced in Mount Lebanon, 400 cantars (or 102,560 kgs.) in Tripoli and vicinity, and 200 cantars (or 51,280 kgs.) in Aleppo province, for a total of 1800 cantars (or 461,520 kgs.). Cf. Bowring, op. cit., p. 15. Another source puts the raw silk output in 1840 as high as 3000 cantars (or 768,000 kgs.). Cf. Smilianskaya, in Issawi, op. cit., p. 229.

^^Himadeh (ed.), The Economic Organization of Syria, op. cit., p. 120, quoting Ducousso; and A Handbook..♦.., op. cit., p. 283. 231

Despite the more favorable climatic conditions in Syria, a box of 25 grams of eggs gave 25-30 kgs. of fresh cocoons, on average, compared with 60 kgs. in France, which had a better-educated, more- skilled silkworm breeder. Cf. Beriel, "Le Sericulture au Liban," L'Asie Francaise, Supplement No. 5 (September-October, 1922), p. 126. See also Weakley, op. cit., p. 54, and the article referred to in supra, n. 92. 102 Himadeh, loc. cit., quoting Ducousso.

"^Huvelin, loc. cit. In 1871, the capital value averaged L847-L965 for a factory with nearly 50 pans (computed from BCP. Vilayet of Syria, 1872, p. 843). This decline in the capitalizatio; jf silk factories may be due to the displacement of foreign capitalists by smaller, though more numerous, native spinners. 104 Huvelin, loc. cit.

105BCR, Beirut, May 1912, No. 4863, p. 6 .

^ ^ I n 1910 the proportion of cocoons exported from all Syria was 35 per cent (cf. A Handbook op. cit., quoting Schulman). Northern Syria continued to export most of its harvest in the dry cocoon state.

^"^Ducousso, op. cit., quoted in Hassani, op. cit., p. 263. A few years earlier, Weakley gave a lower estimate of 1500,000 - L8Q0,Q0G, which seems unrealistic in view of the higher export value at the time (cf. Weakley, op. cit., p. 55, and Appendix I, Table II, below). 103c See supra, n, 59. 109 Huvelin, op. cit., p. 22.

"^Ruppin, op. cit., p. 50.

m ibid.

112Ibid. 113 See Appendix 11,Table VIII, below. 114 See Appendix I ,. Table IV, below. 115 August Bernard, "La Syrie et lea Syriens," Annales de Geo- graphie XXVIII (Paris, 1919), 36. 232

116 Quoted in Polk, op. cit., introduction, p. xviii.

^■^See Urquhart, The Lebanon, op. cit., I, 286; and Isabel Burton, The Inner Life of Syria, Palestine, and the Holy Land, op. cit., p . 62. 118 The weekly wage of the cotton hand-loom weaver in England fell from 20s. at the beginning of the nineteenth century to 6s. by 1830 as a result of mechanization of the textile industry. Deane and Cole, British Economic Growth, 1688-1959, op. cit., p. 20.

119 Computed from MacGregor in Issawi, op. cit., p. 224. 120 Urquhart, Turkey and Its Resources, op. cit., p. 146, 121 Serious bread riots erupted in Damascus and Aleppo as late as 1910. Examples of strikes staged by the silk weavers and workers of Damascus were those that occurred in 1878 and 1902. Strikers won in the first and failed in the second. 122 Chevallier, op. cit., p. 221. This social solidarity was also based on the close interdependence of the various stages of the textile industry. 123 For example, in Aleppo, as reported by the British consul, "Weavers of alaja and cotnl hardly earn more than day labourers in the fields, but speculators, who give them the raw materials and receive the manufactured goods for sale, realize good profits," BCR, Aleppo, 1872. 124 John Barker, Syria and Egypt Under the Last Five Sultans of Turkey, op. cit., I, 89, 125 No allowance has been made, however, for substitution of foreign goods for locally-produced goods. X26 In Tripoli, for instance, "Building operations have increased to such an extent that the lime-burners cannot supply the demand. Hence a grand demand for Portland cement and hydraulic lime developed last year." BCR, Beirut, 1909, No. 4329. 127 The great differential in the wage system that developed is a case In point. In Jerusalem, for instance, the field laborer earned Is. per day, while the skilled artisan earned 5s. per day (BCR, Jer­ usalem, April, 1886). In Damascus, the unskilled worker employed by the company which constructed the Tram line was paid Is. 3d. - 2s. per day, while the mason received 5s. 8d. per day (BCR, Damascus, August 2, 233

1906, No, 3699). In Aleppo, the worker on the jacquard loom earned 10-15 piasters per day, while the weaver of tchaktchaks (the cheapest kind of cotton cloth) earned only 5 - 6 piasters per day (Weakley, op. cit., p. 68). 128 Moshe MAoz , Ottoman Reform in Syria and Palestine, 1840-1861 (Oxford University Press, 1968), p. 182. CHAPTER VII

THE ROLE OF SYRIAN FOREIGN TRADE

By altering domestic price ratios which consumers and producers of a static economy face, foreign trade affects the composition of production and consumption and the allocation of existing resources.

More significant, however, than the static gains from trade are the production or growth gains which the economy may experience through alteration of the amount of domestic factor supplies (if at least some of the factors are not perfectly inelastic), imporvement of the qual­ ities of domestic productive inputs, international transfer of crucial productive inputs, acceleration of technological knowledge, and crea­ tion of external economies. In this way, trade may serve as an engine of growth, not because of static comparative advantages, but because dynamic changes in productive factors serve to expand the markets for agriculture and industry. In the absence of trade, the backward economy may simply stagnate at low levels of income.

Prior to the Egyptian occupation in 1831, Syria’s economy was in a state of stagnation and its population in a state of decline.

The condition of the country was such that the possessor of the equiv­ alent of L45-L50 sterling "was reckoned a man of substance or as one in easy circumstances.The Egyptian administration, though it lasted for only nine years, opened up the country to a great deal of

Western commercial and cultural penetration, at a time when the rapidly industrializing countries of Europe were driving for new 235 market outlets for their manufactures. The commercial treaties imposed on the Ottoman government, guaranteeing almost free entry for

European manufactures into the markets of the Ottoman Empire, were the natural adjunct of this drive.

Despite the many deficiencies in the organization of Syrian foreign trade and the restrictive policies of the Ottoman administra­ tion, Syrian sea-borne foreign trade during the period 1831-1914 grew

twentyfold in current value, and even more in volume, in view of the secular downward trend in the general level of prices during nine­ teenth century. The intensification of trade relations can be assessed more properly when contrasted with the growth of the Syrian economy in general. Total population as well as cultivable land, two important dimensions of the economy, only doubled during the same period.

The growth of the Syrian economy must be attributed in part to

the rising demand at home and abroad for Syrian production and in part

to improved security conditions during the second half of the period under study. While population growth at the compound average annual 2 rate of one per cent — after the earlier decline had been arrested

before the raid-nineteenth century— must have been matched, or even

surpassed, by the rate of growth of the Syrian economy, the latter did

not develop, in the sense of attaining a state whereby the proceeds of

past expansion could become capable of carrying the bulk of subsequent

expansion. In the terminology of Rostow, the Syrian economy did not

take off into self-sustained growth. While it did shake off the drag of stagnation, the Syrian economy was still crawling by 1914, and-even relapsing seriously at times, under the impact of business fluctuations abroad. The traditional agricultural sector remained of greater sig­ nificance than the slowly growing modernized sector, which was concen­ trated in the urban centers. Most of the savings and commercial profits of the economy were invested in modernizing the cities, the rapidly growing seaports in particular. Evidences of progress were as 3 visible to the casual visitor as to the keen observer. At the time,

Syria was considered one of the most prosperous provinces of the Otto­ man Empire, the term "prosperous" being used here in a relative sense. 4 Per capita income in 1915 reached approximately L10 ($50), a figure comparable to that of Egypt in 1913, 25 per cent higher than Japan's, twice that of India, but about one-half that of Italy, almost one- quarter that of France, one-fifth that of Britain, and one-eighth that of the United States."*

The Syrian per capita figure conceals, however, the redistribu­

tion of income and polarization of wealth that occurred during the period under consideration, a phenomenon characteristic of all devel­ opment under conditions free of control. There was a shift of income shares from wages to profits, parallelled by a shift of income from

the Moslem artisan (and even commercial) classes to the Christian and

Jewish minorities, whose members benefited more, culturally and eco­

nomically, from expanded contacts with the West. This development,

coupled with foreign protection which Christian and Jewish merchants

enjoyed, created new social frictions that were superimposed on old 237

traditional animosities. The Aleppo riots of 1850 and the Damascus massacre of 1860 can be explained not only i,. terms of accidental or

traditional factors but also in terms of this shift in economic for­

tunes .

In rural areas there, too, was a shift of income in favor of

the new absentee landed class that looked at land mostly as a finan­

cial investment rather than as a productive resource. While these

income shifts helped to generate the savings required for modernizing

the urban centers, they tended at the same time to keep the purchasing

power of the masses at a level too low to sustain a prosperous agri­

culture or a thriving industry at home.

Notwithstanding these relative shifts and despite the infla­

tionary pressures that developed during the two decades preceding the

First World War,^ the average real wage of the Syrian artisan in urban

centers was fairly above the subsistence level.^ As stated above, it

Is very likely that the rate of increase in real output outstripped the

rate of population growth. But while the improvement in the general

condition of the urban masses was modest, there was a sharp rise in

the level of living of the upper classes. In rural and pastoral areas

population and resources remained precariously balanced at the subsis- 8 tence level.

How much of this economic growth can be classified as "growth

through trade"?

The blessings of international trade were mixed. Since our

study of this problem has been qualitative in its approach, the net 238 effect of trade cannot be quantitatively aggregated. In any event, it is usually extremely difficult, if not impossible, to isolate the effects of one single factor on the national economic life. And this is why other factors are usually considered along with the one factor under emphais. There is no doubt, however, that international trade played an influential role in shaping the emerging structure of the

Syrian economy. In the absence of national income statistics, the long-run movements in the composition of population may be used to indicate the relative structural changes that occurred in the Syrian economy. The urbanization trend, for example, can be explained, not along the European lines .^f an industrialization pull from the urban centers, but rather in terms of the widening commercialization of exchange and monetization of the economy. While in 1833 there were only seven cities with a population of 10,000 or over, accounting for only 20 per cent of the sedentary population, there were 2k such cities in 1913, representing approximately one third of the popula- 9 tion. As the coastal cities felt to a greater extent the impact of increasing trade exchanges, they showed the most impressive gain in material advance as well as in numbers. There was not one port city in 1833 with a population of 10,000 or over; in 1915 there were eight such cities, accounting for nearly 10 per cent of the sedentary popu­ lation."^ These demographic changes affected also the relative impor­ tance of the nomadic segment of the population. Increased trade rela­ tions as well as improved security conditions served to encourage some roving tribes to settle on the verges of the settled areas and led to 239 partial integration of the pastoral economy into the national economy.

From 25 per cent of total population in 1833, the non-sedentary popu- 11 lation was reduced to 13 per cent by 1915.

Despite these demographic shifts, seventy per cent of the popu­ lation remained lo_»ced up in agricultural and pastoral pursuits, a clear indication of the country's continued underdevelopment. In urban centers, people depended for their living on commerce and indus- 12 try, In equal proportions. Because of the backward nature of Syrian agriculture and relative decline of domestic industry, commerce came to be considered the leading economic sector, Syria being the distribu­ tion center for neighboring provinces. It was under this impression that the French High Commissioner, in his 1922 report to the League of

Nations, commented that until the First World War, "Syria lived on its trade; it has lived almost exclusively on it; it has lived on it for 13 many centuries." While the term "trade" must have been used in a very broad sense to include ancillary activities, the French official's statement lays emphasis on the mercantile character of the country.

Commercial capitalism was the dominant system, and an inordinately high proportion of national income was generated from commercial 14 sources and related activities.*

Since international trade assumed a number of roles in Syria's development, It may be useful to divide the period under consideration into three sub-periods, the first limited to the earlier decades of the 1830's and 40's, the second covering the next three decades, and the third extending over the last three decades preceding the First

World War. Kindleberger has pointed out that "incapacity to transform may 15 lead to disaster at the earlier stage as a consequence of trade."

Since most people in underdeveloped countries rre usually farmers, artisans or unskilled laborers, labor mobility is restricted by the skill factor. In Syria, while rising export prices in the 1830's and early part of the 40's benefited mostly the middlemen class, the deleterious effects of the import trade on the domestic industry were injurious to the artisan class and to the Moslem merchants whose for­ tunes were bound up with the local handicrafts. The loss of employ­ ment and income, as a result, must have exceeded any consumption gains from trade. Though Syrian exports rose in volume, thanks to the new stimulus of expanding contacts with the West, the real interest of the

European countries was centered on the search for new markets for their manufactures, and Syrian exports were promoted only to the extent that payment for European goods in specie was not forthcoming. Conse­ quently, the export sector remained relatively dormant. These devel­ opments were a source of great perplexity and anxiety to the Syrians at the time, as evidenced by the following dialogue between the head of a Lebanese monastery and Urquhart, related by the latter: "'When we had no trade,' he said, 'we were rich; now we have much trade and we are poor.’ I told him thatwhat he desired for the Lebanon, I desired for England; that she, too, when she had no commerce, was well clothed and well fed, and that the coming in of their gold was to her a much greater loss, than the going forth it was to them."^

Things changed in the course of the following decades. With increased inflow of American and Australian gold to Europe in the

1850's, "there was no longer the same motivation to obtain precious metals from the Near East."^ European commerce there, to sustain it­ self, depended upon the circulation of European currencies, as the

Ottoman currency reform of 1844, which was undertaken— under the rising pressures of expanding trade relations with the West— to sta­ bilize the monetary system, failed to provide sufficient gold to satisfy growing business needs. More significant, however, is that the reversal of currency flows coincided with rising European interest in the primary production of the Ottoman provinces. With increased industrialization and concomitant shift of resources away from primary production, the European countries began to search also for new sources of supply of agricultural products and raw materials. It was partly in response to the new demand forces that the Ottoman govern­ ment made an attempt at reforming the traditional land system. The

Land Code of 1858 was as much aimed at increasing government revenue in the aftermath of the Crimean War as at creating a new institutional framework for the agricultural sector that would be conducive to greater production.

The Syrian economy proved to be fairly responsive to growing

European demand for its production, as during the Crimean War and the

American Civil War, However, an attempt at cotton comeback fizzled

soon after the end of the latter war. The introduction of foreign

capital into the silk-spinning industry turned Syria into a supplier

of raw silk to the French market, which helped to offset the effects 242 of the decline in the domestic silk-weaving industry. Also, the importation of cheaper cotton yarn, which led earlier to the destruc­ tion of local cotton-spinning industry and eventually to the destruc­ tion of cotton cultivation (a negative backward linkage), enabled the weaving industry to adjust to changing conditions. Syrian agriculture exhibited an equal, if not greater, degree of flexibility, as it expanded, though along the same traditional lines, and adjusted in accordance with changing demand conditions. New cash crops were r-v: ' introduced and others were dropped, and the process of expansion and adaptation continued to the end of the period of our study.

The world depression of the 1870's arrested Syria's progress along the road to development during this transitional period. With the end of the depression, progress was resumed about 1883. Renewed interest by the European countries in expanding their trade relations with Syria was reflected in the building of new wagon roads and rail­ ways, the construction of Beirut's port and the opening of branches of foreign banks. Foreign trade grew roughly two times and a half between

1875 and 1913, compared with only one-third rise in total population.

The rapid fall in the prices of such colonial goods as sugar, coffee,

and rice, and the reduction in maritime transportation costs resulted

in appreciable improvement of Syria's terms of trade during this

period.

A change took place in the composition of trade. The relative

shares of wheat and raw silk exports declined while the relative shares

of citrus exports to Europe and of manufactured goods to neighboring 243 countries rose. On the side of imports, there was a decline in the relative share of textile and clothing Imports and a rise in the share of productive inputs, in the form of intermediate and capital goods.

It was cheap cotton and silk yarn imports that enabled the domestic

textile industry to revive by the turn of the century, as improved economic conditions in neighboring provinces shifted upward their demand for Syrian goods.

If Syrian foreign trade increased at a rate comparable to the

growth rates of its main European trading partners, namely, Britain

and France, why, then, did it not lead to more substantial growth gain?

As emphasized in the theoretical preface to Chapter I, the pro­

pulsive effects of foreign trade depend not only on the rate of trade

expansion, but also on the nature of export products. In addition,

the multiplier or spread effects of trade expansion depend on the flex­

ibility of the national economy and on its receptivity to the stimulus

from exports, which in turn depend on the progressiveness of the socio- 18 cultural customs and institutions.

The failure of trade or, for that matter, of any other source

of growth to create s^lf-generating forces in the Syrian economy is

hardly surprising in a country where the socio-economic institutions

of land tenure, farm credit system and organization of product and

factor markets remained resistant to the few attempts at change.

Furthermore, Syria's agricultural export products were ones that could

be produced by small-scale farmers, did not need frequently reorganiz­

ing technology, did not call for elaborate domestic industrial 244 processing methods or facilities, and could even be transported in small amounts by pack animals.

With the exception of horticulture, exapnsion of commercial production in agriculture did not seem to have affected agricultural productivity per man or per acre in general. The area of cultivable land almost doubled; so did the rural population. On the other hand, the proportion of population locked up in agricultural activity did not decline. Since farming methods and tools of production were not modernized, the production function in peasant farming did not change.

Consequently, the backward and forward linkages of export expansion were limited. Very little Investment was induced in the Industries supplying the export sector or in industries processing raw materials or foodstuff for export.

International trade forces failed to break down or even to weaken the traditional socio-economic instituitons that kept agricul­ tural techniques primitive and the peasantry downtrodden. The failure of the Ottoman government's attmpt at reform of the land system opened

the way for the transfer of land ownership from the traditional, con­ servative ruling class to the new class of commercial capitalists.

Commercial profits invested in the acquisition of farm land, instead of initiating agricultural improvements, worked to perpetuate the old semi-feudal relationship. Introduction of modern machinery and con­ struction of storage facilities was very limited. Even the less

costly application by peasants of better seed, insecticides, and fertilizers was hard to introduce because of the distorted incentives 245 created by the land tenure system. Moreover, price incentives could not be transmitted to farmers because a good share of price rises was appropriated by the class of middlemen, who in many cases doubled up as tax gatherers, moneylenders, landlords, men who exercised social as well as economic control over the life of the helpless peasant. As a result, expansion of Syrian exports did not break the rural low-income vicious circle or lead to a moderately wide distribution of income increases.

The modern banking and transportation facilities that were introduced to serve the foreign sector failed to impart their benefits to the rest of the economy. The Syrian peasant remained under the mercy of the traditional usurer. While foreign banks contributed to the stabilization of foreign exchange rates in the major cities, the existence of differential rates between one city and another was an indication of the compartmentalization of the market. Also, since roads and railways were mostly built in a west-east direction, Syria failed to get the north-south transportation network needed to inter­ grate the partially inter-connected economy. Consequently, a national market, in the modern sense of the word, never developed, and market imperfections hindered the spread effects of the export sector.

With agriculture in a backward state, the chances for expansion and modernization of domestic industry remained very limited. The damage caused to the textile industry by cheaper imports of machine- made goods did not help, either. Under the impact of such imports,

the element of continuity, which characterized the transition from 246 handicrafts to mechanized industry in Europe, was disrupted in Syria by the weakening of the artisan class. In a country with limited minerals, mechanical skill was a rare commodity. Therefore, aside from its detrimental political and social consequences, the destruction or even the weakening of the only skilled or semi-skilled elements of a backward economy must have served to retard economic development.

If development consists both in raising the level of output per worker and building a variety of productive sectors, then industrial activity should be a factor in national economic life.

With a backward agriculture and a relatively declining industry, the growing number of Syrian entrepreneurs turned to more attractive activities, such as trade, land and real estate purchases, were deemed safer, quicker, or more respectable. In any event, most Syrian entre­ preneurs , who were members of the native minority groups were nurtured and weaned at the doors of foreign trading houses and had no keen interest in other than distributive activities. Besides, they felt

too insecure to invest in long-range productive projects. The indi­ vidualistic character of the Syrian was another serious obstacle to

the teamwork or cooperative effort required by large-scale industry.

The Ottoman commercial policy, which was dictated by foreign mercantilistic interests, did not, either, give these entrepreneurs

the opportunity or the incentive needed to develop the attributes of modern industrial entrepreneurship. The few attempts that were made

as early as the 1850fs and 60's failed, primarily because of the

absence of industrial protection. 247

European capital was introduced into the silk-reeling industry, and most of the silk-reeling plants became Syrian-owned as early as the 1870's. But even here, the techniques of production that were introduced were not elaborate or complex, and the Syrian product was exported in a semi-processed— and quite often in cocoon— form. So were most Syrian exports, a fact that accounts for the feeble linkages between the export sector and the rest of the economy.

Foreign trade failed to generate in the Syrian economy the growth gains envisioned by the traditional trade theory, primarily because of the absence of domestic political, social and economic ingredients of economic development. Our study has given equal emphasis both to the growth-promoting and growth-impeding forces of international trade. Its value should be judged in terms of its con­ tribution to the understanding of the complex problem of economic development. To quote Gerald Meier,

Although the economists concerned with economic development, and even the economic historians, have concentrated almost exclusively on the period of the 1 take-off1 and the period of 'self-sustaining growth,1 it is the earlier period of the emergence of the preconditions for development that is still most relevant for many poor countries. An understanding of this period is most important; yet it is the most difficult to explain and remains the least understood 248

Footnotes to Chapter VII

1 BCR, report by Vice Consul Jago, July 11, 1876, op. cit., p. 197.

2Infra, Appendix II, Table III. 3 See for instance, Lewis Gaston Leary, Syria, the Land of Lebanon (New York, 1913), p. 23. In 1911 the British consul wrote that the "increase in business during the last ten years has been steady and continuous, as is indicated by the rise in'land values and wages, the cost of living and the increased business of the Ottoman Bank." BCR, Damascus, October, 1911, No. 4802. In an address before the Cottons Manufacturers Association in the state of Georgia on American foreign trade in cotton goods, Mr. Ralph H. Odell, special representative of the U.S. Department of Commerce, commented, "The first country which I visited in the course of my journey...was Syria. This country is one of the richest prov­ inces of the Ottoman Empire, and Imports great quantities of cotton goods." Translated from the French text as it appears in Levant Trade Review, op. cit., IV, No. 1 (1914), 20.

Figure is derived by dividing Ruppin’s figure for national income of approximately L35,000,000 (supra, Chap. V, n. 15 ) by a total population of 3,500,000 (infra, Appendix II, Table VIII).

^Other figures are cited by Charles Issawi, "Asymmetrical Development and Transport in Egypt, 1800-1914," Beginning of Modern­ isation. .., ed. by Polk and Chambers, op. cit., pp. 383, 399.

The rise in the cost of living between 1891 and 1913 varied from 100 to 200 per cent. It was due not only to the rise in the world price level but also to increased population at home and to the emergence of a semi-national market with improved road and railway communications. For the rise in the cost of living in Jerusalem, see BCR, 1908, No. 3974, p. 6 , and BCR, April, 1912, No. 4850, p. 3. For Damascus, see BCR, 1907, No. 3917, and BCR, November, 1912, No. 5016. 7 In a study made by the French Mandated authorities, it was found that in 1913 it took the head of a family of five persons to work, 23.9 days, 21.8 days, and 21.7 days of work to cover the monthly expenditures in Aleppo, Beirut and Damascus, respectively, or an aver­ age of 22.4 days for the three cities, compared with 47.8 days of work two decades later during the depression. In 1937 other members of the family, in addition to the head, also had to work in order to cover the monthly budget. See "Tableau D1ensemble de L'Empoi des Artisans et Ouvridrs dans le Principales Industries Ancienes et 249

Nouvelles en Syrie au Liban en 1913 et 1937," France - Ministere des Affairs Etrangeres, Rapport k la Soclete des Nations sur la Situation de la Syrie et du Liban (Paris, 1938). In BCR, Damascus, 1907, No. 3917 (supra, n.6 ), the British con­ sul, commenting on the rising cost of living, added, "These increased charges, however, as may be gathered from what has been written above, can be easily borne through the wealth flowing from abroad, and increasing wages and abundance of employment and progress in industry generally." S More than that, in view of his perennial indebtedness, the peasant and his family lived on the crop that was to come. 9 Infra, Appendix II, Table VII (B).

10Ibid.

11Ibid., Table VIII. 12 In the three major industrial cities of Aleppo, Damascus and Horns, the proportion of those engaged in industry (the term being used here in the oriental sense), was much higher than 50 per cent. 13 The French High Commission, La Syrie et le Liban en 1922, quoted in Himadeh (ed.) Economic Organization of Syria, op. cit., p. 119. 14 The ten to fifteen per cent of population engaged in trade must have contributed a greater proportionate share to national income. Ruppin's figures understate this share. (Cf. ante, Chap. V, n. 15 ).

^Kindleberger, Foreign Trade and National Economy, op. cit., p. 103. For complete statement of this view, see supra, p. 16 Urquhart, The Lebanon, op. cit., II, 8 .

"^Dominique Chevallier, "Western Development and Eastern Crisis in the Mid-Nineteenth Century: Syria Confronted with the European Economy," Beginnings of Modernization in the Middle East, ed. by Polk and Chambers, op. cit., p . 213. 18 These factors are more fully elaborated in Gerald M. Meier, The International Economics of Development, op. cit., pp. 239-250. 19 Ibid., p. 248, n. 37. APPENDIXES 251

APPENDIX I

The Foreign Trade Statistics of Syria

It is difficult, and sometimes impossible, to evaluate accurately

Syria's foreign trade over the years. Trade statistics prior to World

War I are incomplete and, for some years, non-existent. The first offi­

cial figures that seem to have been collected with greater care than in previous years are those for the year March 1910 - March 1911. The

important internal trade between the provinces of the Turkish empire is

not included, and no information thereon is available. The statistics

published by European consuls, notably British and Austrian-Hungarian,

can only partially fill the gaps in official statistics. They, moreover,

share with the latter a common error about the source of goods, and suf­

fer from the corrupt practices of customs officials. One can hardly

doubt that the proportion of goods escaping, on entry or exit, the con­

sideration of the Customs, was much greater than that in Western

countries.

The figures used in the present study are mainly drawn from the

British consular and commercial reports. The absence of official

returns and the unwillingness of traders to disclose particulars which

they imagined might injure their prospects made the collection of these

statistics a difficult task. In general, they were obtained from

respectable merchants, and British shipping or other foreign firms 252 established in the ports or the main trading centers. Even so, one consul after another cautioned that the figures thus obtained "cannot be considered as more than approximately accurate."'*'

The British consular figures relate only to Syria's sea-borne trade, including as of the 1840’s, sea-borne trade with Turkey and

Egypt. However, part of the shipments involved in the trade with these two countries originated in or was destined to European ports.

It is equally difficult to distinguish internal or transit from ex­ ternal trade; goods involved in the sea-borne trade were not all of local origin or destined exclusively for local consumption. Further­ more, imports to other Syrian ports via Beirut of European goods, par­ ticularly of British textiles, were frequently recorded in the trade statements of Beirut as well as of the other ports. To avoid double counting, adjustment has been made whenever possible in the British consular figures. On the other hand, the reports understate Beirut's trade, in that they cover only the port's principal exports and imports.

Beirut’s figures therefore had to be readjusted with the help of other sources and in the light of critical contemporary observations. Fur­ ther, British Consular reports do not systematically cover all seaports.

Accordingly, allowance was made, whenever possible, for the missing statistics. No adjustment, however, was made for smuggled goods which 2 are not covered by the trade figures.

Finally, the northern boundary of the country shifted frequently over the years, so that population and trade figures may not be compar­ able over time. In the absence of more accurate and reliable figures, 253

therefore, the nature and extent of the available information, must,

of necessity, set limits in this study.

Footnotes to Appendix I

^British Consular Report (hereinafter referred to as BCR), Aleppo, 1909, No. 4230. Similar caution was voiced by Huvelin, op. cit., pp. 30-31, Earlier commercial and consular reports spoke of the imprecise information contained in these reports, e.g. BCR, 1872; BCR, March 23, 1882; and BCR, Beirut, May 22, 1899, No. 2286. 2 The export duty of 12 per cent, while it endured, gave rise to smuggling (see supra, Chap. Ill, n. 25), while the ad valorem import duty gave rise to invoice falsification (see supra, p.101). 254

TABLE I EXPORTS AND IMPORTS OF SYRIA (Annual or Annual Averages in L 000 Pounds Sterling)

Period Port Exports Imports Total

1776-87 Alexandretta 109 71 180 Other ports 74 34 108 Total 183 105 288

1787a Alexandretta 152 59 211 Other ports 54 35 89 Total 206 94 300

1825-27b Alexandretta 62 124 186 Other ports 130 184 314 Total 192 308 500

1835-37° Alexandretta 131 234 365 Other ports 299 537 836 Total 430 771 1201

1844-46d Alexandretta 121 252 373 Other ports 559 828 1387 Total 680 1080 1760

1844-466 Alexandretta 121 252 373 Other ports 293 698 991 Total '414 950 1364

1850-55f Alexandretta n.a. n.a. n.a Other ports 943 999 1942

1855f Alexandretta IX i 3 t n.a. n.a Other porta 1565 1430 2995

1857® All ports 1280 1448 2728

1857-59h Alexandretta 337 449 786 Other ports n.a. n.a. n.a

1861-64h Alexandretta 506 1104 1610 Other ports n.a. n.a. n.a

1868-691 Alexandretta n.a. n.a. n.a Other ports 503 1253 1756 255

TABLE I (continued)

Period Port Exports Imports Total

18711 Alexandretta 285 774 1059 Other ports 717 1339 2056 Total 1002 2113 3115

1875J All ports 1370 2725 4095

1878-79k . Alexandretta 912 1908 2820 Other ports 825 1429 2254 Total 1737 3337 5074

1883-871 Alexandretta 888 1497 2385 Beirut 790 2156" 2946 Tripoli 200 150 350 n Latakia 50 50 n Acre/Haifa 237 237 Jaffa 135 264 399 Total 2300 4067 6367

Adj. for Jaffa0 -55 -55 Adj. Total 2300 4012 6312

1888-92P Alexandretta 742 1699 2441 Beirut 693 2467“ 3160 Tripoli 100q 150q 250 __ n Latakia 50q 50 n Acre/Haifa 267 267 Jaffa 277 290 567 Total 2129 4606 6735

Adj. for Beirut* +231 +231 Adj. for Jaffa0 -91 -91 Adj. Total 2360 4515 6875 1893-97® Alexandretta 868 1668 2536 Beirut 744 1816" 2560 Tripoli 591 481n 1072 Latakia 50q «— 50 Acre/Haifa 108 80 188 Jaffa 317 292 609 Total 2678 4337 7015 Adj. for Beirutr +248 +248 Adj. for Jaffa0 -76 *76 Adj. Total 2926 4261 7187 256

TABLE 1 (continued)

Period Port Exports Imports Total

1898-1902u Alexandretta 976 1908 2884 Beirut 730 1444 2174 Tripoli 442 357 799 11 Latakia 97 97 Acre/Hai£a 2Q0q 80q 280 Jaffa 274 385 659 V Gaza 100q 100 Total 2819 4174 6993 Adj. for Belrutr +243 +243 Adj. for Jaffa0 -89 -89 Adj. Total 3062 4085 7147

1903-07W Alexandretta 1367 2262 3629 Beirut 924 1523 2447 Tripoli 424 534 958 m Latakia 100q 100 Acre/Haifa 273 199 472 Jaffa 394 569 963 V Gaza 107 107 Total 3589 5087 8676 Adj. for Beirutw Adj. for Jaffa 0 -263 -263 Adj. Total 3589 4824 8413

1908-12* Alexandretta 1135 1476 2611 Beirut 722 1784 2506 Tripoli 405 710 1115 n Latakia 100q 100 Acre/Haifa 220 368 588 Jaffa 648 1008 1656 V Gazza 82 82 Total 3312 5346 8658 Adj. for Beirut^ +361 +892 +1253 Adj. for Jaffa ° -318 -318 Adj. Total 3673 5920 9593

191G/112 All ports 3136 625.) 9389 257

TABLE I (continued)

Period Port Exports Imports Total

1913aa Alexandretta 908 902 1810 Beirut 631 2175 2806 Tripoli 750 1250 2000 Q Latakia 100q 100 Acre/Haifa 200q 530 730 Jaffa 745 1313 2058 V Gaza 161 161 Total 3495 6170 9665 Adj. for Beirut^ +315 +1088 +1103 Adj. for Jaffa ° -316 -316 Adj. Total 3810 6942 10752

1913bb All ports 4000 5400 9400

1914cc All ports 2560 5000 7560

n.a. * not available Sources and Notes: Syria's trade with France only, calculated from Charles-Koux, op. cit., Appendix I, pp. 194-196. bFor ports other than Alexandretta, see Polk, op. cit., p. 162, quoting French Archives, "Correspondence Commerciale de Beyrouth, 1834-1835," pp. 29-37; and Hassani, op. cit., pp. 187-188. For the totat of L50Q,000, see Issawi, op. cit,, p. 209. The residual figure of Alexandretta is divided between exports and imports approximately in the same ratio of one to two as in 1835. cHassani, op. cit., pp. 177-79, 187-88; and Bowring, op. cit., p. 136. Syria's exports for 1835 were estimated by a contemporary source at L400,G0Q sterling. See Charles Anderson, Damascus and Palmyra (London, 1841),Vol. II, p. 471. Catabi, op. cit., pp. 48-49, quoting Guys, Esquisse op. cit., p. 237. These figures include exports and imports of precious metals. See Chevallier, "Western Development and Eastern Crisis in the Mid-Nineteenth Century....", op. cit,, Table 1, p. 214, also quoting Guys. eFigures are recomputed to exclude trade in precious metals. Cf. Chevallier, "Western Development....,11 op. cit., Table 2, p. 215, quoting French consular reports. 258

^Ibid., pp. 214-215; and Hassani, op. cit,, p. 188. Arbitrarily derived as average of 1850-55 and 1857-59 figures. hBCR, Beirut, 1864.

A c r , Vilayet of Syria, 1872. •^Arbitrarily derived as average of 1871 and 1878-79 figures.

A c r 's for the years 1878, 1879. Alexandretta's specie exports and imports are henceforth subtracted from quoted trade figures up to 1913. A c r ' s for the years 1883-1887, including as of 1885, Nos. 8 , 105, 114, 164, 290, 363, 419 (see infra, Bibliography). 121 Beirut's imports from Britain only are given, but assumed to equal 45 per cent of its total imports. Adjustment is made in table accordingly. nImports of European goods are Included in Beirut's figures. Adjustment is made to avoid double counting of European goods that were imported through Beirut, mostly British textiles. PBCR's Nos. 500, 508, 529, 745, 773, 896, 908, 1186, 1200, 1279. ^The writer’s estimate on basis of fragmentary reported data and earlier figures. rBeirut's reported principal exports, raised by one-third to cover all exports. See Verney and Dambmatm, op. cit., p. 342; and also the still higher figures for Beirut reported by Vital Cuinet, Syrie...., op. cit., pp. 67-68. SBCR’s, Nos. 1403, 1418, 1539, 1540, 1626, 1698, 1790, 1809, 1872, 1952, 1970, 2050, 2083, 2116; and Verney and Dambmann, op. cit., pp. 360, 369-71, Figures reported for 1897 only. UBCR's, Nos. 2217, 2262, 2404, 2406, 2441, 2584, 2587, 2662, 2785, 2822, 2836, 2962, 2970, 3059. vGaza'a imports are included in Jaffa's figures. WBCR's, Nos. 3154, 3192, 3223, 3363, 3410, 3459, 3561, 3569, 3582, 3771, 3798, 3838, 3974, 4061, 4142. Beirut's exports figures are not adjusted. xBCR’s, Nos. 4222, 4230, 4329, 4471, 4496, 4526, 4697, 4741, 4746, 4850, 4863, 4942, 5107, 5167, 5184. Adjustment is made by raising Beirut's quoted trade figures by nearly 50% for exports and 60% for Imports. See Government of Britain, A Handbook op. cit., pp. 291, 299. 259

Turkish official figures for the year ending March 13, 1911, not including overland trade with other parts of Turkey, but adjusted to include non-dutiable items, quoted in ibid,, p. 289. da BCR's, Nos. 5302, 5339, 5383. Catabi, op. cit.. p. 65, quoting Credit Financier d'Algerie a de Tunisie, "Repertoire et Financier de la Syrie et du Liban." cc Nadra Moutran, op. cit., p. 283. 260 TABLE II. COMPOSITION OF PRINCIPAL EXPORTS® (Annual Average Values in Pounds Sterling) Export Class 1835-37b 1844-46c 1873-77 1878-82 Agricultural Products 1. Wheat 59,367 135.000 2. Barley 12,931 71,259 3. Cereals (not specified) 84,555 159.000 4. Sesame 8,584 49,481 26,685 5. Cotton 64,500 10,783 55,385 25,399 6 . Tobacco 12,143 Total 64,500 19,367 273,862 417,343 % (16.32) (9.70) (20.80) (30.74) Fruits 7. Oranges 15,636 38,385 8 . Pistachio Raisins 30,322 Total 15,636 68,717 % (1.19) (5.06) Pastoral Products 9. Wool 2,818 26,957 267,586 157,958 10. Goat's hair (1,400) 11. Samne (Butter)6 14,708 26,330 12. Cattle 87,228 56,026 13. Leather 468 10,988 17,021 Total 4,218 27,425 380,510 257,335 % (1.07) (13.72) (28,90) (18.96) Wild Products 14. Bee-wax 5,824 [ 15. Gall nuts 3,000 27,487 43,864 [38,400 16. Yellow berries 11,584 [ 17. Sponge 5,596 18. Licorice roots Total 8,824 33,083 55,448 38,400 % (2.23) (16.55) (4.21) (2.83) Cocoons & Raw Silk 19. Cocoons 102,332 20. Raw Silk 272,640 53,063 294,170 308,000 21. Silk Waste 16,825 Total 272,640 53,063 413,327 308,000 % (69) (26.56) (31.39) (22.69) Processed & Manufactured Products 22. Soap 45,000 51,349 45,920 48,038 23. Olive Oil 14,940 49,425 40,304 24. Gold & Silver Works ^ 592 25. Manufactured Products 82,520 Total 45,000 66,881 177,865 88,342 % (11.38) (33.48) (13.51) (19.72) Grand Total 395,182 199,819 1 ,316,648 1,357,486 % (100) (100) (100) (100) TABLE II (continued) /D Product No. 1883-87 1888-92 1893-97 1898-1902

1 . 294,225 139,291 209,733 2 , 85,800 224,678 173,959 3. 341,534 78,875 58,942 25,605 4. 76,298 95,524 103,830 82,384 5. 17,424 5,843 8,050 7,586 6 . 9,440 12.055 729,481 414,773 395,496 511,322 (41.59) (20.36) (16.60) (18.63)

7. 25,141 72,905 174,000 188,997 8 * 40,900 26,240 22,000 36,148 66,041 99,145 196,000 225,145 (3.77) (4.87) (8 .22) (8 .20)

9. 127,961 205,831 197,795 174,138 1 0 . 1 1 . n.a. 83,063 68,024 92,229 1 2 . 68,108 76,204 86,129 67,814 13. 14,318 29,934 54,493 108,287 210,387* n 395,032 406,441 442,468 (12.00)® (19.39) (17.05) (16.12)

14. 15. [ 16, [ 53,640 49,573 37,655 27,727 17. [ 18. 53,843 32,347 69,448 107,025 107,483 81,920 107,103 134,752 (6 .12) (4.02) (4.49) (4.91)

19. 14,880 47,221 111,668 177,227 2 0 . 418,250 613,193 661,873 699,600 2 1 . 18,810 18,686 38,215 433,130 679,224 792,227 915,042 (24.70) (33.34) (33.24) (33.34)

22 . 20,772 66,402 135,747* 99,152* 23. 13,982 17,278 71,51s1 26,530 24. 25. 172,639 283,413 278.639 390,153 207,393 367,093 485,904 515,835 (11.82) (18.02) (20.40) (18.80)

1,753,915 2,037,187 2,383,171 2,744,564 (100) (100) (100) (100) 262 TABLE II (continued)

Product No. 1903-07 1908-12 1913

1. 142,287 235,500^ 59,976 2 . 190,345 172,651 274,103 3. 57,329 10,965 4,660 4. 129,033 174,964 94,835 5. 36,564 30,522 26,800 6 . 77,900 118,400 105,030 633,458 743,002 565,404 (19.39) (22.08) (18.88)

7. 211,411 299,373 386,455 8 . 41,111 63,492 96,520 252,522 362,865 482,975 (7.73) (10.79) (16.13)

9. 209,386 147,562 197,440 10. 1 1 . 100,931 154,746 16,200 1 2 . 191,312 198,392 261,000 13. 115,638 125,997 136,700 617,467 626,697 611,340 (18.90) (18.63) (20.41)

14, ( 15. [ 27,338 24,400 18,000 16. I 17. 85,676 110,311 53.697 113,014 134,711 71.697 (3.46) (4.01) (2.39)

19. 149,435 215,012 139,000 20. 884,180 572,187 454,300 21. 48,968 103,627 141,900 1,082,583 890,826 735,200 (33.15) (26.48) (24.55)

22. 93,832 201,490 224.414 23. 3,140 24. 25. 470,414 404,140 304,00Qk 567,386 605,630 528.414 (17.37) (18.01) (17.64)

3,266,430 3,363,731 2,995,030 (100) (100) (100) 263

Sources and Notes:

Except where otherwise noted, the main source of this table is British Consular Reports, listed in the notes to Table I, plus the following reports, Nos. 99, 417, 538, 690, 1121, 1411, 1589, 2306, 2832, 3059, 3266, 3437, 3699, 3917, 4080, 4293, 4467, 4802, 5016. ^Bowring, "Commercial Statistics of Syria," op. cit., values arrived at by multiplying quantities and prices given by the author; Hassanl, op. cit., pp. 178, 179. c Hassani, op. cit., pp. 180, 191. Allexandretta exports,mainly of wheat and barley. g Refined butter. Mainly textile manufactures of Aleppo and Damascus. o °Understate figure, because data on exports of samne (refined butter) and Beirut's exports are not given. 1*1 Including Gaza's exports estimated by writer at L 80,000 sterling. ^Figures arrived at by adding BCR's and Verney's figures. ^Damascus' figures, instead of Haifa's, are here used, k Including Damascus' exports, estimated by writer at L 200,000 sterling. 264 TABLE III, QUANTITY AND AVERAGE VALUE OF SELECTED EXPORTS 1874-1913 (Index, 1898-1902 - 100) A. Agricultural Products Cereals - Aleppo Cotton - Aleppo

Years Ton Index L/Ton Index Ton Index L/Ton Index 1881-82 27742 517 8.00 168 582 228 50 168 1883-87 26156 487 7.55 158 386 151 45 152 1888-92 12799 239 6.16 129 149 58 59 132 1893-97 11594 216 5.08 106 251 98 32 108 1898-1902 5366 100 4.77 100 255 100 30 100 1903-07 11760 219 4.87 102 1005 394 36 122 1908-12 1771 33 6.19 130 602 236 51 171 1913 753 14 6.19 130 603 236 44 149 Sesame - Jaffa Barley - Gaza 1874-77 2819 158 17.55 123 2937 9 4.40 126' 1879-81 1575 88 16.94 119 5152 16 4.58 131 1883-87 2104 118 15.82 111 n.a. 1888-92 3272 183 14.59 102 [ [19603 61 4.38 125 1893-97 3908 219 12.26 86 [ 1898-1902 1784 100 14.24 100 32000 100 3.50 100 1903-07 2268 127 15.39 108 35000 109 3.66 105 1908-12 2624 147 20.61 145 12103 38 5.63 153 1913 1535 86 20.39 143 19055 60 7.73 221 B, Fruits Oranges - Jaffa Pistachio - Aleppo Case s./Cas e 1874-77 118332 38 2.64 51 1879-81 182472 59 4.20 80 1883-87 107577 35 4.67 89 1888-92 236000 76 5.86 112 1893-97 270000 87 4.93 94 228 69 81 99 1898-1902 311323 100 5.22 100 332 100 82 100 1903-07 509911 164 5.12 98 403 121 86 105 1908-12 912401 293 4.78 92 423 127 138 169 1913 1608570 517 3.70 71 607 183 154 188 265 TABLE III (continued) C. Pastoral and Wild Products - Aleppo Wool Hides and Leather Years Ton Index L/Ton Index Ton Index L/Ton Index 1881-82 1988 103 77 134 256 29 60 68 1884-87 2756 143 45 80 236 26 61 69 1888-92 3063 159 48 85 399 44 75 85 1893-97 2709 141 52 91 647 72 84 95 1898-1902 1923 100 57 100 898 100 88 100 1903-07 2226 116 57 99 860 96 106 120 1908-12 519 27 96 169 510 57 141 160 1913 42 2 106 186 307 34 184 208 Sarane (flutter) Licorice Roo ts 1887 3788 35 8.32 107 1888-92 4421 41 7.32 94 1893-97 971 84 70 88 7760 71 7.11 91 1898-1902 1157 100 80 100 10889 100 7.78 100 1903-07 1173 101 86 108 9744 90 7.44 96 1908-12 553 48 122 153 12419 114 7.55 97 1913 113 10 143 179 7155 66 7.54 97 D. Manufactured and Processed Goods Textiles - Aleppo Silk Thread - Beirut Bale L/Bale 1881-82 313 63 460 122 1350 47 204 110 1883-87 273 55 425 113 2165 75 193 104 1888-92 306 62 383 102 3040 106 190 103 1893-97 377 76 374 99 3571 124 152 82 1898-1902 394 100 376 100 2880 100 185 100 1903-07 596 121 439 117 3792 132 201 109 1908-12 356 72 455 121 3175 110 155 84 1913 229 46 455 121 2800 97 155 84 Olive Oil - Jaffa Soap - Jaffa Ton L/Ton 1874-77 1760 1760 28 85 1556 62 30 125 1878-82 1350 1350 30 91 1375 55 34 141 1883-87 592 592 26 79 642 26 30 125 1888-92 580 580 30 91 2150 85 29 121 1893-97 161 161 28 85 4082 162 25 104 1898-1902 100 100 33 100 2517 100 24 100 1903-07 112 112 37 112 2941 117 26 108 1908-12 4892 194 34 141 1913 6250 248 32 133

Source; British Consular Reports. TABLE IV, COMPOSITION OF PRINCIPAL IMPORTS3 (Annual Averages in Pounds Sterling) Import Class 1836-37b 1844-46C 1873-77 A. Food, Drinks, etc. 1 . Sugar 13,856 8,000 71,759 2 . Coffee 12,128 20,000 47,559 3. Tead 160 4. Rice 16,818 n.a. 93,363 5. Flour 6 . Preserved goods 7. Pepper 2,200 1,461 XI ■ 3 t 8 . Pimento 462 4,512 n.a. 9. Tobacco Total 45,464 33,973 212,841 % (12.84) ( 4.97) (11.38) B. Textiles and Clothing 10. Cottons [ 369,643 1,397,096 1 1 . Woolens t 12,413 20,634 12. Cottons & Woolens [ 13. Silks [ 204,880 2,144 10,337 14. Linen & hosiery [ 759 15. Ready-made clothing . - - 16. Fezzes n.a. n.a. n.a. Total 204,880 384,959 1,428,067 % (57.89) (56.78) (76.39) C. Fuels 17. Petroleum 13,791 18. Linseed & machinery oil 19. Coal and patent fuel 798 Total 14,589 % ( 0.79) D. Household & other Consumption Goods 20. Manufactures 57,793 21. Glass & crystals 22. Enameled hollow-ware 23. Stationery paper 1,560 " Total 59,353 % ( 8 .66) 267

TABLE IV (continued)

Import Class 1836-37 1844-46 1873-77 Intermediate Goods 24. Cotton yarns 24,750 105,372 25. Raw Silk 37,572 26. Indigo 23,200 21,960 75,928 27. Cochineal 33,621 18,893 12,028 28. Copperas 22,000 29. Colors J 30. Drugs & Chemicals 57,881 4,614° 31. .Metals & metalwares 1,664 68,140 32. Timber 8,163 33. Tile & marble 34. Cigarette paper 35. Packaging paper 36. Leather & hides 7,489 Total 103,571 205,770 213,934 % (29.27) (30.09) (11.45) Capital Goods 37. Jute sacks n.a. n.a. 38. Oil engines n.a. n.a. 39. n.a. n.a. Total % Grand Total 353,915 683,955 1,869,431 % (100) (100) (100) 268 TABLE IV (continued) sduct No. 1878-82 1883-87 1888-92 1893-97

1. 93,258 76,046 45,904® 135,226 2 . 49,757 44,071 34,690 88,643 3. 184 143 n.a. 1,400 4. 56,062 79,038 87,761 63,923 5. 4,197 5,300 5,324 23,050 6 . 15,692 7. 8 , 9, 14,040 25,447 Total 203,458 204,598 187,719 354,381 % ( 8.32) ( 8.19) ( 6.33) (11.19)

1 0 . 1,897,636 1,803,785 2 ,069,016 1,749,827 1 1 . 51,162 135,149 129,699 118,166 12 . 13. 45,450 33,049 53,221 112,725 14. 3,609 3,884 35,733 15. 15,733 16. n.a. n.a. n.a. 31,333 Total 1,997,857 1,975,867 2 ,251,936 2,063,517 % (81.74) (79.13) (75.99) (65.19)

17. 28,173 35,202 31.335 64,783s 18. 19. 622 4,272 4,696 27,744 Total 28,795 39,374 36,031 92,527 % ( 1.18) ( 1.58) ( 1 .22) ( 2.92)

20. 2 1. 9,088 32,277 2 2. 23. 10,933 Total 9,088 43,210 % (0.31) ( 1.37) 269 TABLE IV (continued) Product N o , 1878-82 1883-87 1888-92 1893-97 E. 24. n.a, n.a, 60,000 70,,000 25. 41,307 30,000 98,860* 93,,933 26. 52,840 84,535 93,965 85,,607 27. 13,188 12,708 8,716 20,,656 28. 29. 15,393 15,,120 30. 6,863 4 ,460c 33.,415 31. 64,357 81,668 94,462 1 2 0,,365 32. 6,037 20,428 47,037 54,,916 33. 1,200 1,963 2 0 ,,050 34. 35. 1 0 ,,000 36. 20,284 35,273 39,700 70,,186 Total 204,876 265,812 464,556 594,,248 % ( 8.39) (10.64) (15.67) (18,.77) F. 37. 9.023 11.570 13.948 17,,670 38. n.a. n.a. n.a. n.,a. 39. n.a. n.a, n.a. n,■ a. Total 9.023 11.570 13.948 17,670 % ( 0.37) ( 0.46) ( 0.48) ( 0.56) Grand Total 2,444,009 2,497,332 2,963,278 ‘,165,553 % (100) (100) (100) (100) 270 TABLE IV (continued)

Product No. 1898-1902 1903-07 1908-12 1913 A. 1. 164,418 223,945 360,785 607,130 2 . 75,407 69,795 83,555 127,233 3. 1,400 n.a. 3,000 n.a. 4, 80,022 146,746 228,578 218,340 5. 16,090 51,183, 62,000 48,300 6 , 15,330 30,000 38,000 45,000 7. 8 . 9. 60,000 155,881 148,856 147,809 Total 412,667 677,550 924,774 1,193,812 % (10.57) (12,70) (16.02) (19.06) B. 1 0 . 192,556 2,130,272 1,765,987 349,200 11. 94,791 142,818 192,256 39,300 12. 1,500,000 13. 164,182 145,943 204,130 128,600 14. 29,500 70,000 80,000 30.000 15. 15,000 20,000 30,000 30.000 16. 24,600 29,325 31,150 32_j_500 Total 2,520,629 2,538,358 2,303,523 2,109,600 % (64.59) (47.60) (39.91) (33.68)

17. 65,131 152,543 198,805 344,400 18. 8,589 11,000 19. 39,417 69,378 179,345m 189.836 Total 104,548 221,921 386,739 545,236 % ( 2 .68) ( 4.16) ( 6.70) ( 8.70) r* D. 20. 84,819 108,751 21. 32,772 63,821, 50,000 n.a. 22. 50,000 21,963 16.390 23. 12,750 11,120 21.963 16.390 Total 45,522 124,941 156,782 125,141 % ( 1.17) ( 2.34) ( 2.72) ( 2 .00) TABLE IV (continued)

Product No, 1898-1902 1903-07 1908-12 1913 E, 24. 65,476 400,000 650,000" 900,000n 25. 224,255 268,882 280,263° 262,800° 26. 88,629 48,351 40,450 20,010 27. 2,249 2,240 2,426 1,615 28. 29. 20,295 15,007 13,727 4,781 30. 72,428J 77,976J 111,126 107,298 31. 143,868 486,219 350,697p 444,151P 32. 43,347 69,114 128,075 177,652 33. 17.000 14,482 16,306 14,600 34. 1,400 1,320 1,460 2,020 35. 10.000 10,000 18,000 14,500 36. 113,046 295.008 270,513 222,660 Total 801,993 1,688,779 1,883,043 2,172,087 % (20.55) (31.66) (32.63) (34.68) r • 37. 14,740 70,000 70,000 50,000 38. 2,550 4,805 8,934 12,750 39. n.a. 6,913 37,750 55,320 Total 17,290 81,718 116,684 118,070 % ( 0.44) ( 1.54) ( 2 .0 2 ) ( 1 .88) Grand Total 3,902,649 5,333,267 5,771,545 6,263,946 : % (100) (100) (100) (100) 272

Sources and Notes; a See' Table XI, n. 1, above. b Ibid., n. 2. cHassanit op. cit., pp. 180, 189-90. ^British imports only. Figures for Beirut's imports not available. f Including imports by Damascus and Tripoli, estimated at L 80,000. ®For Beirut's and Tripoli's imports, see Verney and Dambmann, op. cit., p. 670. hIbid., p. 650. ^"Beirut's imports from Britain only. •^For Beirut's imports, see Weakley, op. cit., p. 165. kIbid., p. 157. ^This figure for cottons and woolen imports accounts for the low figures of the previous two items. mFor Haifa's imports, see A Handbook of Syria, op. cit.» p. 292. ^uvelin, op. cit., p. 35. °For Beirut's imports, see Weakley, op. cit., p. 150. ^Including some building materials for railways. 273

TABLE V, QUANTITY AND AVERAGE VALUE OF SELECTED IMPORTS 1866-1913 (Index, 1898-1902 » 100) A. Food and Drinks, etc.

Sugar Alepgo Sugar '- Jaffa _ Years Ton Index L/Ton Index Ton Index L/Ton Inde] 1874,73,77 685 33 40 283 188 1,82a 560 17 31 237 2138 102 35 243 1883-87b 723 23 33 257 2159 103 25 172 1888-92 1172 37 24 188 840 40 21 144 1893-97 2064 64 20 154 2062 99 16 109 1898-1902 3210 100 13 100 2093 100 14 100 1903-07 3290 102 12 93 2364 113 15 105 1908-12 2046 64 14 110 3052 146 18 126 1913 2470 77 15 115 3480 166 19 136 i Rice - Aleppo Rice ■- Jaffa 1874,75,77 1452 39 17.2 172 188 1,82a 734 73 21.5 208 1634 45 17.7 177 1883-87 888 88 21.4 207 2456 65 14.3 143 1888-92 542 54 17.8 173 2311 61 16 160 1893-97 592 59 10.4 101 2484 66 11 110 1898-1902 1008 100 10.3 100 3764 100 10 100 1903-07 991 98 9.9 96 3008 80 11.1 112 1908-12 565 56 9.9 96 4434 118 12.9 129 1913 598 59 10.1 98 6677 177 9.5 95 Coffee “ Aleppo Coffee - Jaffa 1874,75,77 284 43 119 308 1 8 8 1 ,82a 273 57 102 162 343 52 75 193 1883-87b 231 48 102 162 284 43 65 167 1888-92 197 41 102 162 199 30 74 193 1893-97 269 56 100 159 276 42 79 205 1898-1902 481 100 63 100 656 100 39 100 1903-07 423 88 45 72 301 46 44 114 1908-12 141 29 61 97 452 69 55 143 1913 80 17 66 105 865 ~ 132 59 152 Tobacco & Turnback - Aleppo > 189T-92 101 31 139 87 1893-97 157 48 162 102 1898-1902 327 100 160 100 1903-07 262 80 160 100 1908-12 166 51 160 100 1913 175 54 160 100 274 TABLE V (continued) B. Textiles and Clothing British Cotton Manufactures Aleppo Beirut Year Ton Index L/Ton Index Bales Index L/Bales Index 1866-67 8298 69 62 98 1868-72 8564 71 69 109 1873-77 9826 81 57 91 1881-82 3751 48 296 161 11227 93 57 91 1883-87 3619 47 275 149 12233 101 66 105 1888-1892 4984 64 235 128 14139 116 63 100 1893-97 5708 73 175 95 13841 114 53 84 1898-1902 7774 100 184 100 12063 100 63 100 1903-07 7334 94 183 99 12328 102 64 101 1908-12 4085 52 163 89 n.a. 74 117 1913 2225 29 155 84 n.a. C. Fuels

Petroleum - Aleppo Petroleum - Jaffa Box Index s/Box Index 1874-77 5263 8 12 0 246 1881-82* 2373 59 10.2 171 31000 49 6.7 137 1883-87 1989 49 8.4 139 59400 94 6.2 128 1888-92 3481 86 6.4 107 39750 63 4.5 92 1893-97 4528 112 5.1 85 50940 80 5.1 105 1898-1902 4022 100 6.0 100 63300 100 4.9 100 1903-07 6033 150 6.1 102 111710 176 5.2 106 1908-12 4498 112 6.3 105 162255 256 5.2 106 1913 6055 151 7.3 122 262450 411 6.2 127 D. Intermediate Goods Raw Silk - Aleppo Indigo — Aleppo Ton L/Ton 1881-82 23 110 1300 113 46 62 870 144 1883-87 14 69 n.a. n.a. 79 102 775 128 1888-92 12 59 1521 132 87 112 720 119 1893-97 17 81 1490 129 108 138 593 98 1898-1902 21 100 1155 100 78 100 604 100 1903-07 28 133 1032 89 75 96 550 91 1908-12 42 200 958 83 50 64 539 89 1913 26 124 877 76 14 18 501 83

Cochineal - Aleppo Other Colors - Aleppo 1881-82 54 982 320 271 1887 40 727 317 269 1888-92 37 673 235 199 166 62 93 122 1893-97 15. 6 284 183 155 191 72 79 104 1898-1902 5. 5 100 118 100 267 100 76 100 1903-07 3. 6 65 150 127 232 87 59 78 1908-12 9.6 174 180 152 179 67 58 76 1913 11 200 147 124 91 34 53 69 275

TABLE V (continued)

D. Intermediate Goods (cont.)

Hides and Leather - Aleppo Drugs and Chemicals - Aleppo Years Ton Index L/Ton Index Ton Index L/Ton Index 1881-82 133 21 144 158 1883-87 292 45 121 131 1888-92 342 53 116 126 1893-97 437 67 109 118 640 55 45 112 1898-1902 648 100 92 100 1174 100 40 100 1903-07 870 134 107 116 713 61 44 109 1908-12 620 95 112 122 344 29 70 173 1913 313 48 87 94 219 17 61 151 Copper - Aleppo Iron and Ironware - Jaffa 1881-82 371 374 112 134 1883-87 340 343 112 134 1888-92 194 196 97 117 3075 129 8.25 99 1893-97 208 210 77 93 1658 70 8.32 100 1898-1902 99 100 83 100 2380 100 8.31 100 1903-07 149 150 88 106 2441 103 8 96 1908-12 235 273 88 106 2612 110 8.56 103 1913 90 91 87 105 3456 145 7 84 E. Producers' Goods Jute - Aleppo Timher - Jaffa M 3 Index L/M3 Indei 1893-97 8150 112 2.11 95 1898-1902 512 100 27 100 7290 100 2.21 100 1903-07 763 149 31 117 11699 160 2.47 112 1908-12 420 82 36 135 18095 240 3.16 143 1913 140 27 36 135 26210 360 4.08 185

Source: British Consular Reports

Notes: aThe years for Jaffa are 1879, 81. ^The years for Aleppo are 1883, 87. CThe years for Beirut are 1878, 79, 81. dThe years for Jaffa are 1891, 92. 276

APPENDIX II

POPULATION STATISTICS OF SYRIA, 1784-1915

Demographic data are essential for the understanding of the economic, social and political development of a country. Long-term changes in the population growth rate, for instance, normally reflect parallel changes In the level of economic activity. Thus, in the absence of national income statistics, population figures may be con­ sidered a rough index of the general economic condition of a country.

Moreover, long-run movements in the composition of population show the relative changes in the structure of production and pattern of con­ sumption.

The following demographic tables are essential for the analysis contained in the main body of this work. They are based on a separate study made by the author and are added here without further analysis because of limited space. However, the sources from which these esti­ mates were derived are given along with a few notes in clarification

f. that would serve to make the population figure more meaningful. 277

TABLE I

SEDENTARY POPULATION OF SYRIA, 1784-1915 (Thousands)

Province or District* 17843 1833b 1857° 1875d 1895e 1915f

Aleppo 320 285 480 660 602 656 Damascus 600 407 400 ( 906 925 Tripoli ) 200 167 ( (1100 ( ) Beirut (330 ( (578 823 Acre/Sidon ) 300 108 (( ( Lebanon 235 192 220 220 300 301 Palestine (Jerusalem) 50 190 180 200 270 343

Total 1705 1349 1610 2180 2656 3048

In 1867 the county was divided into two main administrative provinces, namely, Vilayet of Aleppo in the north, and Vilayet of Surlya (or Damascus) in central and southern Syria, made of all other provinces. The districts of Lebanon and Jerusalem had special status. In 1873 the Jerusalem district was attached directly to Constantinople, while Lebanon kept its autonomous regime. In 1888, the Vilayet of Beirut was created, corresponding roughly to the old provinces of Tripoli and Acre/Sidon.

Sources: aVolney, II, op. cit., p. 365. Volney's estimate of the popula­ tion of the province of Damascus at 1,200,000 seems too high; it was probably half this figure (cf., Alfred Bonn€'s discussion of population estimates in Palestine and Middle East Economic Magazine, Tel Aviv, 1943, p. 201, and Issawi, Economic History..., op. cit., p. 209). Vol- ney arrives at his figures first by estimating the population densities of various provinces and districts, and then by multiplying his esti­ mates times the respective areas of the provinces and districts.

bBowring, Commercial Statistics of Syria, op. cit., p. 3, quot­ ing official estimates based on tax returns, and assuming the family size of taxpayers as being five persons in Mount Lebanon and four per­ sons in the other regions. 278

cWilliam M. Thomson, Land and the Book (New York, 1859), I, p. 246,

^For provinces other than Aleppo, see BCR, Beirut, July 11, 1876, The figure for Aleppo province is estimated on the basis of Consul Skene’s estimate in 1860 and the census of male population (198,595), quoted in Great Britain, Parliamentary Papers, 1879, p. 137. The total figure is also based on BCR, Beirut, April, 1875.

Cuinet, Syrie.♦.., op. cit., pp. 4, 304, and 515. For Aleppo see also Cuinet, La Turqui D' Asie (Paris, 1891), II, pp. 160. The following adjustments are made in Cuinet's figures: The nomad popula­ tion of Rakka district is excluded from Aleppo's figure. Also, the two districts of Orfa and Mardsh, which were not included in previous esti­ mates of Aleppo’s population, are excluded as these two districts were later detached from the Province of Aleppo, Orfa in 1910, and Marash in 1915. Druzes in the Province of Damascus were overestimated by 50,000, while the Alawites in the Province of Beirut were underestimated by an equal number. An adjustment had been made in the figures of these two provinces. Nomads are excluded from Jerusalem population. For­ eigners are deducted from the population of Beirut and Jerusalem. Lebanon's figure is reduced by 100,000 as Cuinet overestimated the num­ ber of Maronites in particular and Catholics in general. (See the following note). f Ruppin, Syria: An Economic Survey, op. cit., p. 6. 55,000 nomads in Jerusalem district are included, and Lebanon's figure is reduced by 106,750 (cf., A Handbook of Syria, op. cit., p. 175.) See also Levant Trade Review, op. cit.. Vol. 2, No. 2, September Quarter, 1915, pp. 156-159, where population of Syria is estimated by Nassouhi Beydoun, a native of Syria, at 3,000,000. 279

TABLE XI

DISTRIBUTION OF POPULATION BY RELIGIOUS CREED, 1833-1915 (Thousands)

Sect 1833a 1857b 1875° I895d 19156

Moslems 1007 1120 1580 1753 2291 Per Cent (74.60) (69.56) (72.47) (66.00) (75.88)

Christians 320 465 560 813 642 Per Cent (23.72) (28.89) (25.69) (33.60) (21.31)

Jews 22 25 40 90 115 Per Cent ( 1.68) ( 1.55) ( 1.84) ( 3.40) ( 2.81)

Total 1349 1610 2180 2656 3048 Per Cent ( 100 ) ( 100 ) ( 100 ) ( 100 ) ( 100 )

Sources: Bowring (supra.Table I, n. 2). Number of Jews is computed from data on urban population.

Thomson (supra, Table I, n. 3).

CBCR, Beirut, 1872.

Cuinet (supra, Table I, n. 5). Cuinet's figure for Christians is reduced by 100,000, and foreigners are excluded.

eRuppin (supra, Table I, n. 3), Christian population is reduced by 106,750. 280

TABLE III

COMPOUND AVERAGE ANNUAL RATES OF POPULATION GROWTH, 1833-1915 (Per Cent)

Sect 1833-1857 1857-1875 1875-1895 1895-1915 1833-1915

Moslems 0.4 1.9 0.4 1.3

Christians 1.5 1.0 1.8 -0.9

Jews 0.4 2.6 4.1 1.2

Overall rate 0.7 1.6 0.9 0.6 1.0

(Adjustment for emigration)* 1.0 1.0

The outflow of emigrants was slow at the beginning, at the rate of 3,000 per annum from 1860-1900. The figure rose to an annual average of 15,000 over the period 1900-1914. See Himadeh, The Eco­ nomic Organization of Syria, op. cit., p . 16.

Source: Table II, above. TABLE IV

POPULATION/LAND RATIO, 1909/10 (Area In hectares)*

(1) (2) (3) Province/ Rural Actually Man/Land District Population cultivated ratio land (ha.) (l)/(2)

Aleppo 405,000 300,000 1.35

Damascus 605,000 347,100 1.74

Beirut 539,000 297,460 1.80

Lebanon 286,000 17,500 6.34

Jerusalem 209,000 112,532 1.85

Total 2,044,000 1,074,592 1.92

* Ha. ■ 2.47 acres

Sources: Column (1) computed from Tables I and VI of this Appendix. Rural population is defined here to include people living in settle­ ments with less than 10,000 inhabitants. Column (2) is from Huvelin, irQue Vant la Syrie," op. cit., p. 8, and Mears, Modern Turkey (New York, 1924), pp. 284-285, quoting official figures for the year 1909/10, published by the Turkish Government in 1912. The area of actually cultivated land in the province of Aleppo has been adjusted above to exclude the district of Marash. 282

TABLE V

ESTIMATES OF NOW-SEDENTARY POPULATION OF SYRIA 1784-1915

Year Arab Bedouins Kurds Turcoman

1784 125,000a 80,000b 30,000

1833 400,000^ n.a. n.a.

1857 200,000C 50,000f 40,000 -500,000

1875 400,000h n.a. n.a.

1895 400,000* n.a. n.a. -500,000

1915 467,463J n.a. n.a.

n.a. ■ not available

Sources and Notes:

aVolney, II, op. cit., pp. 349, 398.

bIbid., I, p. 375 (20,000 tents).

CIbid., I, p. 371.

j Polk, op. cit., p. 224 (200,000 men, i.e., males).

Thomson, op. cit., p. 246. f (Anon.) Rambles in the Deserts of Syria (London, 1864),p. 22 (in Aleppo province only).

®Isidor J. Taylor, La Syrie, La Palestine et la Judee (Paris, p. 445.

There were 42,000 tents between Hama in Central Syria and Jer- ash, north of Amman (cf. Isabel Burton, The Inner Life of Syria, Pales­ tine, and the Holy Land (London, 1875), I, p. 1 0 0 . A*naze tents south of the Euphrates were estimated in 1878 by Ann Blant at 30,000 (quoted 283 by Noel Maes traced., La Syrie Contemporalne (Paris, 1930), p. 23, See also Lawrence Oliphant, The Land of Gilead (Edinburgh and London, 1880) p. 123, and Gottlieb Schumacher, Across the Jordan (New York, 1896), p, 110.

*Cuinet gives the following incomplete figures: 70,000 in Racca sub-district, 100,000 adults (sic) near Gaza, 64, 280 in Jeru­ salem district, and 34,000 tents in the vicinity of Aleppo. In addi­ tion, the majority of the population of Deir Zor (estimated at 100,000) was nomad or semi-sedentary. Cuinet, La Turquie..., II, op. cit., pp. 114, 225, 280; Syrie..., op. cit., pp. 520, 671,

^Ruppin, Syria..., op. cit., p. 6. A Handbook..., op. cit., p. 175, gives 400,000 as the number of nomads. 284

TABLE VI

SYRIAN CITIES WITH POPULATION OF 5,000 AMD OVER, 1833-1915 (Thousands)

1833 1857 1875 1895 1915

A. Port Cities 1. Beirut 8a 40h 65n 120V 150x 2. Tripoli 7a 18h 20° 24U 32y 3. Jaffa 7b 71 12n 21v 30Z 4, Latakia 6C 6h 8P 20U 22s 5. Sidon 5C 7j 7q 11V 12X 6. Acre 5d 51 7n 10V llaa 7. Gaza 5e 10d 10d iod 12aa 8. Haifa 5n 10V 20bb gaa 9. Alexandretta 6V 10. Tyre 6V 6X

B. Interior Cities 1. Damascus 110f 120h 14 3r 16 4W 175CC 2. Aleppo 70C 80h 110s 127V 150x 3. Aintab 25g 27k 35d 43V 50aa 4. Horns 20d 25h 28P 60V 70x 5. Hama 20° 33h 30q 45V 50x 6. Killis 128 121 15d 20V llaa 7. Jerusalem 12C 18h 20P 51V 80bb 8. Nablus 8b 12h 14p 20U 15d 9. Saf ad 8b 5h 12p 10V 10d 10. Antioch 6C 8J 20d 23V 30bb 11. Hebron 5C 6h 8P 10 d 12Z 12. Deir el Kamar 5° 8a 7P 5V 5X 13. Idlib 10h 12p 13V ioaa ^aa 14. M a ’rra 5“ 5d 6V 285

TABLE VI (continued)

1833 1857 1875 1895 1915

15. Hasbeya 6h 6p 5V 5X 16. Zahleh 6’ 81 16V 15bb 17. Nazareth 7P 8V 12dd 18. Tiberias 6P 7V 7X ^aa 19, Baalbeck 5U 5V 20. Jezzin 5P 5V 5X 21, Bethlehem 5P 6V 8eC 5aa 22. Rashaya 5V 23, Douma 8V 10d 24. Bab 6V 6d 25. Racks 5V 5d 26. Salamiah 6V 3d 27, B a 'aklin 5V 3d 28. Bshirri 5V 3d 29. Bekfeya 7V 30. Shwaifat 9V 7X 31. Lydda 5V 7X 32. Ramie 5V 7X l5bb 33. Salt 8V 5aa 34. Jenin 5bb 35, Tul Karm 6aa 36, Nabk 286

Sources; Hitti, Lebanon..., op, cit,, pp. 426, 436. Edward Robinson, Biblical Researches in Palestine (London, 1856), III, pp. 31, 113. CGeorge Robinson, Travels in Palestine and Syria (London, 1837), I, pp. 156, 269; II, pp. 20, 246, 269, 274, 311. ^Writer's estimate. ePolk, op. cit., p. 92, ^Bowring, op. cit., pp. 7, 135 (Consul Moore's estimate.) ^Ibid., p. 10 (Consul Barker's estimate.) S/.H. Thomson, op. cit.. I, p. 247; II, pp. 129, 338, 591, *C,W.M, Van De Wilde, Narration of a Journey Through Syria and Palestine in 1851 and 1852 (Edinburgh and London, 1854), I, pp. 225, 289, 440. ■^Gregory Wortabet, Syria and the Syrians (London, 1856), I. pp. 24, 335.

^Farley, Resources..., op. cit., p. 243. ^Rambles,.., op. cit., p . 70. tn Isidore J. Taylor, op, cit,, p, 177, nBCR, Beirut, July 11, 1876, p. 197. • Trubner & Co., Rough Notes of Journies (London, 1875), p. 324. pIsabel Burton, op. cit.. I, pp. 105, 356; II, p. 25. qBCR, Beirut, April, 1875, p. 1717. rNuman Kasatli, Damascus (Arabic) (Beirut, 1879), p. 8, SBCR, 1872. CBCR, Beirut, July, 1876, p. 197. uAbdul Karim Gfaaraybeh,-op. cit., pp. 77, 165. vVital Cuinet, La Tprquie..., op. cit., pp. 177, 186, 189. 193, 202, 212, 216, 218; Syrie..., op. cit., pp. 53, 71, 83, 101, 106, 115, 119, 133, 162, 184, 238, 250, 265, 267, 409, 426, 432, 445, 448, 508, 628, 659, 664, 667, wVerney and Dambmann* op. cit., p. 1. France, Ministeure de la Guerre, Notice Sur la Syrie (Paris, 1916), pp. 127, 128, 133, 198, 199, 204. ^BCR, Beirut, August 1912, No, 5184, p. 11. 287

zGreat Britain - Foreign Office, Syria and Palestine (London, 1920), p. 16. aaMoutran, op, cit,, pp. 83-88. fob ^PPin* QP» cit., pp. 6-7. cc August Bernard, "La Syrie st les Syrians" Annales de Geographic (Paris, 1919), XXVIII, pp. 33-51. ddA Handbook of Syria, op. cit., p. 548, quoting Trietch, Levante-Handbuch (Berlin, 1914). 6 6 Ibid., quoting J. Hakenbroch, A Trip to Palestine and Syria. 1913, “ 288 TABLE VII

DEGREE OF URBANIZATION 1833 - 1915 (Thousands) A. Cities of 5,000 and over

1833 1857 1875 1895 1915 Port Cities No. 7 7 8 10 10 Popula tion('000) 43 93 134 238 304 Per Cent ( 3.18) ( 5,77) ( 6.14) ( 8.95) ( 9.97) Interior cities No. 12 16 21 33 36 Population(1000) 301 43 7 501 7lT 838 Per Cent (22.32) (27.13) (22.46) (27.00) (27.48) Total No. 19 23 29 43 46 Population('OOO) 344 530 635 955 1142 Per Cent (25.50) (32.90) (29.10) (35.95) (37.45)

B. Cities of 10, 000 and over -- —

1833 1857 1875 1895 1915 Port Cities No. 0 2 4 8 8 Population(*000) 0 68 107 226 289 Per Cent ( 0.00) ( 4.22) ( 4.90) ( 8.50) ( 9.48) Interior Cities No. 7 9 11 12 16 Population('000) 269 334 439 596 715 Per Cent (19.93) (20.74) (20.14) (22.44) (23.46) Total No. 7 11 15 20 24 Population('OOO) 269 402 546 822 1004 Per Cent (19.93) (24.96) (25.04) (30.94) (32.94)

Source: Computed from Tables I, and VI, above. 289 TABLE VIII

OCCUPATIONAL DISTRIBUTION OF POPULATION, 1833 - 1915 (Thousands and Percentages)

1833 1857 1875 1895 1915

Pasture ('000) 450 450 450 450 450 Per cent ( 25) ( 22) ( 17) ( 14) ( 13)

Agriculture ('000) 1080 1208 1634 1834 2044 Per cent ( 60) ( 59) ( 60) ( 59) ( 58)

Industry Trade, etc,(s000) 269 402 546 822 1004 Per cent ( 15) ( 19) ( 23) ( 27) ( 29)

Total 1799 2060 2630 3116 3498 Per cent (100) (100) (100) (100) (100)

Sources; Derived from Tables I, V, and VII (B), above. BIBLIOGRAPHY 291

BIBLIOGRAPHY

I. TRADE AND DEVELOPMENT (Theoretical and Historical)

A. BOOKS

Buchanan, Norman S., and Howard S. Ellis. Approaches to Economic Development. New York: Twentieth Century Fund, 1955.

Chase, Stuart. Tontorrow's Trade. New York: E.L. Hildreth & Co., 1945.

Condiiffe, J.B. The Commerce of Nations. New York: W.W. Norton Sc Co., Inc., 1950.

Court, W.H. British Economic History. L.andon: Cambridge University Press, 1965.

Deane, Phyllis, and W.A, Cole. British Economic Growth, 1688-1959. Second edition. London: Cambridge University Press, 1967.

Habakkuk, H., and M. Postan (eds.). The Cambridge Economic History of Europe, vi, Part I. London: Cambridge University Press, 1966.

Haberler, Gottfried. International Trade and Economic Development. Cairo: National Bank of Egypt, 1959.

______. A Survey of International Trade Theory. Second edition. International Finance Section, Princeton University Press, 1961.

. The Theory of International Trade. London: W. Dodge & Co., Ltd., 1936.

Hlrschman, Albert 0. National Power and the Structure of Foreign Trade. Berkely: University of California Press, 1945,

______. The Strategy of Economic Development. New Haven: Yale University Press, 1958.

Kindleberger, Charles P. Economic Development. Second edition. New York: McGraw-Hill Book Co., Inc., 1965.

______. Foreign Trade and the National Economy. New Haven: Yale University Press, 1962,

______. The Terms of Trade, A Euopean Case Study. New York: Technology Press of M.I.T., and John Wiley & Sons, Inc., 1956. 292

Leibenstein, Harvey. Economic Backwardness and Economic Growth*. New York: John Wiley & Sons, Inc., 1957.

Lewis, W. Arthur. The Theory of Economic Growth. Homewood (Illinois): Richard D. Irwin, 1955.

Linder, Staffan Burenstam. An Essay on Trade and Transformation. New York: John Wiley & Sons, 1961.

______. Trade and Trade Policy for Development. New York: Frederick A. Praeger, Publishers, 1967.

Marshall, Alfred. Money, Credit and Commerce. London: MacMillan & Co., 1923.

______• Principles of Economics. Eighth edition. London: MacMillan & Co., 1920.

Meier, Gerald. The International Economics of Development. New York: Harper & Row, 1968,

______. International Trade and Economic Development. New York: Harper & Row, 1963.

______. Leading Issues in Development Economics. New York: Oxford University Press, 1964.

Mitchell*,Brian R. Abstract of British Historical Statistics. London: Cambridge University Press, 1962.

Morris, Bruce R. Economic Growth and Development. New York: Pitman - Publishing Company, 1967.

Mulhall, Michael G. Dictionary of Statistics. Fourth edition. London: G. Routledge & Sons, Ltd., 1899.

Myint, Hla. The Economics of the Developing Countries. New York: Frederick A. Praeger, Publishers, 1965.

Myrdal, Gunnar. Economic Theory and Underdeveloped Countries. London: Gerald Duckworth & Co., Ltd., 1957.

Nurkse, Ragnar. Problems of Capital Formation in Underdeveloped Coun­ tries. Oxford: Basil Blackwell, 1953.

______. Equilibrium and Growth in the World Economy. Cambridge: Harvard University Press, 1961.

______. Patterns of Trade. Oxford: Basil Blackwell, 1961. 293

Pepper, Charles M. American Foreign Trade. New York: Century Co., 1919.

Pincus, John. Trade, Aid and Development. New York: McGraw-Hill Book Co., 1967.

Ramsay, George D. English Overseas Trade. New York: St. Martin's w Press, 1957.

Stern, Robert M. Foreign Trade and Economic Growth in Italy. New York: Frederick A. Praeger, Publishers, 1967.

United Nations, Department of Economic Affairs. Relative Prices of Exports and Imports of Underdeveloped Countries. New York, 1949.

Vlner, Jacob. International Trade and Economic Development. New York: Glenco (Illinois): Free Press, 1952.

______. Studies in the Theory of International Trade. New York: Harper & Bros., 1937.

Wirthin, Richard Bitner. International Trade and the Economic Develop­ ment of the Underdeveloped Country: The Brazilian Casa„ Unpub- lished doctorate dissertation, The University of California, Berkeley, 1964.

Woytinsky, Wladmir, and E.S. Woytinsky. World Commerce and Governments. New York: Twentieth Century Fund, 1955.

B. ARTICLES AND PERIODICALS

Allen, R.G.D. "Index Numbers of Volume and Price," International Trade Statistics. Ed. by R.C.D. Allen and J. Edward Ely. New York: John Wiley & Sons, Inc.*, 1958.

Berrill, K. "International Trade and the Rate of Economic Growth," The Economic History Review, XII, No. 3 (April, 1960), 351-59.

Drucker, Peter F. "Marketing and Economic Development," The Journal of Marketing, XXII (January 3, 1958), 252-59.

Haberler, Gottfried. "Some Problems in the Pure Theory of International Trade," Economic Journal, LX, No. 238 (June, 1950), 223-40.

Kemp, M.C, "Terms of Trade," International Encyclopedia of the Social Sciences, 1968, under "International Trade."

Lewis, W. Arthur. "Economic Development With Unlimited Supply of Labour," Manchester School of Economic and Social Studies, XXII (May, 1954), 139-91. 294

Morgan, T. "Trends in Terms of Trade, and Their Reprecussions on Primary Producers," in Roy Harrod and Douglas Hague (eds.). International Trade Theory in A Developing World (London: MacMillan & Co., Ltd., 1963).

Michaely, Michael. "Patterns of Trade," International Encyclopedia Of The Social Sciences, 1968, under "International Trade."

Myint, Hla, "The 'Classical Theory' of International Trade and the Underdeveloped Countries," Economic Journal, LXVIII.(June, 1958).

______. "The Gains from International Trade and the Backward Countries," Review of Economic Studies, XXII (2), No. 58 (1954-55), 128-58.

______. "An Interpretation of Economic Backwardness," Oxford Economic Papers, June, 1954.

Pigou, A. "Some Aspects of Welfare Economics," American Economic Review, XLI, No. 1 (June, 1951), 287-302.

Prebish, Raul. "The Economic Development of Latin America and Its Principal Problems," Economic Bulletin for Latin America, VII, No. 1 (Santiago: February, 1962).

Robertson, D.H. "The Future of International Trade," Essays in Monetary Theory, London, 1940, reprinted in the American Economic Associa­ tion's Readings in the Theory of International Trade. Philadelphia: Blakiston Co., 1949.

Scitovsky, Tibor. "The State of Welfare Economics," American Economic Review, XLI, No. 1 (June, 1951), 303-315.

Singer, H.W. "The Distribution of Gains Between Investing and Borrowing Countries," American Economic Review-Papers and Proceedings, XL (May, 1950), 473-85.

Young, Allyn A. "Increasing Returns and Economic Progress," Economic Journal, XXXVIII (December, 1928), 527-42,

II. THE OTTOMAN EMPIRE, SYRIA, AND THE MIDDLE EAST

A. BOOKS

Anderson, Charles. Damascus and Palmyra. 2 vols. London: Richard Bentley, 1830.

Baedekar, Karl. Palestine and Syria, Handbook for Travellers. Lelpsig: C. Scribner's Sons, 1898. 295

Barker, John. Syria and Egypt Under the Last Five Sultans of Turkey. 2 vols. Edited by Edward B.B. Barker, London: S. TinSley, 1876.

Burton, Isabel. The Inner Life of Syria, Palestine, and the Holy Land. London: H.S. King & Co., 1875.

Burton, Richard F. and C.F. Tyrwhitt Drake. Unexplored Syria. 2 vols. London: Tinsley Bros., 1872.

Catabi, Wassel. Le Commerce Exterieur en Syrie. Unpublished thesis, Sorbonne, Paris, 1945.

Charles-Roux, F. Les Echelles de Syrie et de Syrie et de Palestine au XVlIIe Siecle. Paris: P. Geuthner, 1928.

Churchill, Charles Henry. Mount Lebanon, Ten Years of Residence. London: Saunders & Otley, 1853.

Cuinet, Vital. Syrie, Liban et Palestine. Paris: E. Leroux, 1896.

______. Turqui D'Asie. 2 vols. Paris: E. Leroux, 1891.

Curtis, William Elroy. Today in Syria and Palestine. Chicago: F.H. Revel1 Co., 1903.

De Perthius, Comte. Le Desert de Syrie. Paris, 1896.

Farley, James Lewis. The Resources of Turkey. London: Longman, Green, Longman and Roberts, 1862,

______. Two Years in Syria. London, 1858.

______. Turkey. London: S. Low, Son & Marston, 1866.

France, Government of,. Syrie. Paris, 1920.

______-Haut Commissariat. La Syrie et le Liban en 1921. Beirut, 1922.

______, Ministere des Affairs Etrangirs, Rapport a la Societd des Nations sur la Situation de la Syrie et du Liban. Paris, 1938.

______, Ministere de la Guerre. Notice Sur la Syrie. Paris, 1916.

Gharaybeh, Abdul Karim. History of Syria in the Nineteenth Century, 1840-1876 (Arabic). Damascus, 1962.

Gordon, Leland James. American Relations with Turkey 1830-1930, An Economic Interpretation. Philadelphia, 1932. 296

Great Britain, Admiralty, Naval Intelligence Division. A Handbook of Syria, (including Palestine). London, 1920.

______, Foreign Office. Syria and Palestine. London, 1920.

Grunwald, Kurt. The Government Finances of the Mandated Territories in the Middle East. Tel Aviv: The Palestine Economic Association, 1932.

Hassani, Ali. The Economic History of Syria (Arabic). Damascus, 1923.

Hershlag, Zvi Y. Introduction to the Modern Economic History of the Middle East. Leiden, E.J. Brill, 1964.

Himadeh, Sa’id B. (ed.). Economic Organization of Syria and Lebanon. Beirut: American University of Beirut, 1936.

______. The Economic System of Iraq (Arabic). Beirut, 1938.

Hitti, Philip K. History of Syria, including Lebanon and Palestine. London: MacMillan & Co., Ltd., 1951.

______. Lebanon in History from the Earliest to the Present. London: MacMillan & Co., Ltd., 1957.

Ismail, Adel. Histoire du Liban. I, Paris, 1955; IV, Beirut, 1958.

Issawi, Charles P. (ed.), The Economic History of the Middle East, 1800-1914. Chicago: The University of Chicago Press, 1966.

Kasatli, Nu'man. Damascus (Arabic). Beirut, 1879.

Leary, Lewis Gaston. Syria, the Land of Lebanon. New York: McBride Nast & Co., 1913.

Maestracci, Noel. La Syrie Contemporaire. Paris, 1930.

Ma'oz, Moshe. Ottoman Reform in Syria and Palestine, 1840-1861. Oxford: Oxford University Press, 1968. e Masson, Paul. Histoire du Commerce Francais dan le Levant au XVII siicle. Paris: Librairie Hachette & Co., 1896.

Mears, E.G.,(ed.), Modern Turkey. New York: The MacMillan Co., 1924.

Menassa, Gabriel. Plan for Reconstruction of Lebanese Economy and State Reform (Arabic). Beirut, 1957.

Moutran, Nadra. La Syrie De Demain. Paris: Plon-Nourrit & Co., 1916. 297

Muller, Victor. En Syrie Avec Lea Beduins, les tribus du desert. Paris, E. Leroux, 1931.

Oliphant, Laurence. The Land of Gilead, With Excursions In the Lebanon. Edinburgh and London: Blackwood & Sons, 1880.

Paton, Andrew B. The Modern Syrians. London: Longman, Brown, Green & Longmans, 1844.

Polk, William R. The Opening of South Lebanon, 1788-1840. Cambridge: Harvard University Press, 1963.

______, and Richard L. Chambers (eds.). Beginnings of Moderniza­ tion in the Middle East;, the Nineteenth Century. Chicago: The University of Chicago Press, 1968.

(Anon.). Rambles in the Deserts of Syria. London, 1864.

Robinson, Edward. Biblical Reseraches in Palestine, 3 vols. Boston, Crockers & Brews ter, 1836.

Robinson, George. Travels in Palestine, and Syria. 2 vols. London: H. Colburn, 1837.

Ruppin, Arthur. Syrien als Wirtschafsgebiet. Beihefta Zum Tropen- flauzen, Vol. XVI, No. 3/5. Berlin, 1916, excerpts of which are reproduced in Issawi, Economic History of the Middle East, pp. 270-273. The English version titled, Syria: An Economic Survey, New York, 1918, is translated In abridged form by Nellie Straus.

Salibi, Kamal, The Modern History of Lebanon. New York: Frederick A. Praeger, Publishers, 1965.

Schumacher, Gottlieb. Across the Jordan. New York: Scribner & Welford, 1896.

Smith, Sir George Adam. Syria and the Holy Land. New York: George H. Doran Co., 1918.

Statesman's Yearbook. London, 1921.

Taylor, Isidor J. La Syrie, La Palestine et la Judee. Paris: A.F. Lemaitre, 1856.

Thomson, William M. The Land and the Book. 3 vols. New York: Harper & Bros., 1859 and (1880-85).

Thoumain, Richard L. Geographie Humaine de la Syrie Central. Tours: Ernest Leroux, 1936. 298

Trubner and Co. Rough Notes of Journies. London, 1875.

U.S. Department of Commerce and Labor, Bureau of Manufacturers, Consular Reports, Annual Series, No. 1. Turkey (in Europe and Asia), Trade for the Fiscal Year 1907. April, 1908.

Urquhart, David. The Lebanon (Mount Sourla). 2 vols. London: T.C. Newby, 1860.

______. Turkey and its Resources. London: Saunders & Otley, 1833.

Van De Wilde, C.U.M. Narrative of a Journey Through Syria and Palestine in 1851 and 1852. 2 vols. Edinburgh and London: William Blackwood & Sons, 1854.

Verney, Noel and Georges Dambmann. Les Puissance Etrangeres dans le Levant, en Syrie et en Palestine. Paris: Guillaumin & Co., 1900.

Volney, C.F. Travels Through Syria and Egypt. 2 vols. London: G.G.J. and J. Robinson, 1787.

Warriner, Doreen. Land and Poverty in the Middle East. London: Oxford University Press, 1948.

Wortabet, Gregory. Syria and the Syrians. London: J. Madden, 1856.

B. ARTICLES AND PERIODICALS

American Chamber of Commerce, Constantinople. Levant Trade Review, 1912-1915. * Bernard, August. "La Syrie et les Syriens," Anna les de Geographie, XXVIII (Paris: 1919), 33-51.

Bustanl, Fuad Afram al-. "The Role of Christians in Solidifying the Umayyad Caliphate," Al-Mashriq (Arabic), XXXVI (Beirut: 1938).

Chevallier, Dominique. "Western Development and Eastern Crisis in the Mid-Nineteenth Century; Syria Confronted with the European Economy," Beginnings of Modernization in the Middle East, ed. by Polk & Chambers, op. cit., pp. 205-222.

Fletcher, Max E. "The Suez Canal and World Shipping," The Journal of Economic History, XVIII, No. 4 (December, 1958).

Huvelin, Paul. "Que vaut la Syrie?" L'Asie Francaise, Paris: (December, 1921), Supplement, No. 1. 299

Iseminger, Gordon L, "The Old Turkish Hands: The British Levantine Consuls, 1856-1876," The Middle East Journal, XXII, No. 3 (Summer, 1968), 297-316.

Issawi, Charles. "Asymmetrical Development and Transport in Egypt, 1800-1914, Beginnings of Modernization in the Middle East, ed. by Polk & Chambers, op. cit., pp. 383-400.

______. "British Consular Views on Syria’s Economy in the 1850's and 1860's," in American University of Beirut, Festival Book (Festschrift), Centennial Publications, 1967, pp. 103-120.

_____. "Economic Development and Liberalism in Lebanon," The Middle East Jouranl, XVIII, No. 3 (Summer, 1964), 279-292.

Klat, Paul J. "The Origins of Land Ownership in Syria," Middle East .Economic Papers, Beirut, 1958.

Latron, A. "La Production et le Commerce de la Soie au Levant," L ’Asie Francaise, (1935), 78-82.

Lewis, Norman. "The Frontier of Settlement in Syria, 1800-1950," International Affairs, XXXI (January, 1955), 48-60.

Lusan, Pretre Sherril. "Commercial Speculation," Al-Hashriq (Arabic), VIII, No. 24 (Beirut: December 15, 1905), 114-118.

Maghribi, Shaikh Abdul Kader. "The Jews of Damascus, One Hundred Years Ago," Arab Academy Journal, IX (Damascus: November, 1929), 642-653.

Ma'oz, Moshe. "The Impact of Modernization on Syrian Politics and Society During the Early Tanzimat Period," Beginnings of Modern­ ization.:, ..... op. cit., pp. 333-349.

The Mischar W'Tassia Publishing and Exhibition Co., Ltd., Palestine and Middle East Economic Magazine, 1937, 1943.

Sarc, Omer Celal. "The Tanzimat and Our Industry," in Tanzimat, Istanbul, 1941, reproduced in Issawi (ed.), The Economic History of the Middle East, op. cit., pp. 48-59.

Shaoul, Khalil. "Causes of Backwardness of Syrian Industry," Al-Muqfcataf Journal (Arabic), IX (Cairo: November, 1884).

Shihabl, Mustapha. "Our Chief Economic Ills," Arab Academy Journal, VIII (Damascus, 1928).' 300

Shukair, Aspir. "The Silkworm," Ali-Muqtataf Journal (Arabic), IX (March, 1884), 329-336.

Smilianskaya, I.M. "The Disintegration of Feudal Relations in Syria and Lebanon in the Middle of the Nineteenth Century," Feredneaziatskii Etuograficheskli Shornik, Moscow, I, 1958, reproduced in Issawi (ed,), The Economic History of the Middle East, op. cit., pp. 227-247.

III. BRITISH COMMERCIAL CONSULAR AND DIPLOMATIC REPORTS (Referred in the text as BCR)

Before 1885, commercial reports were not issued regularly,nor did they cover in any single year the four major consular districts of Beirut, Damascus, Aleppo, and Jaffa-Jerusalem. There are reports at the Library of Congress for the years 1864, 1865, 1871, 1873-1884. As Britain began to face stronger competition in the world markets before the turn of the century, consular reports were issued on a regular basis. As of 1885, the annual series carried serial numbers. The following reports are available at the Library of Congress.

Year Covered Beirut Damascus Aleppo Jaffa (Jerusalem)

1885 8 1886 114 99 105 164 1887 290 417 419 363 1888 568 538 500 529 1889 720 690 745 733 1890 908 896 1891 1121 1892 1279 1261 1200 1186 1893 1418 1411 1403 1350 1894 1626 1589 1539 1540 1895 1790 1809 1698 1896 1970 1952 1872 1897 2116 2083 2050 1898 2286 2306 2262 2217 1899 2441 2404 2405 1900 ' 2662 2587 2584 1901 2836 2832 2785 2822 1902 3026 3059 2970 2962 1903 3192 3266 3154 3223 1904 3459 3437 3363 3410 1905 3569 3699 3582 3561 1906 3798 3917 3838 3771 1907 4142 4080 4061 3974 1908 4329- 4293 4230 4222 1909 4496 4467 4526 4471 301

Year Covered Beirut Damascus £BE° Jaffa (Jerusalem)

1910 4746 4802 4741 4697 1911 4863 5016 4942 4850 1912 5184 5167 5107 1913 5302 5383 5333

In addition, the following reports were consulted and because of their special significance are listed separately (in chronological order).

Great Britain-House of Commons, "Report on the Commercial Statistics of Syria," by John Bowring. Parliamentary Papers, XXI, 1840.

______. "Affairs of Syria," Part I. Parliamentary Papers, LX, 1843.

John MacGregor, Commercial Statistics, 2 vols., London, 1847, excerpts of which are reproduced in Issax^i (ed.), Economic History of the Middle East, op. cit., pp. 221-225.

Great Britain-House of Commons, "British Overseas Trade, 1845-55," Parliamentary Papers, LII, 1856.

______. "Correspondence Relating to the Affairs of Syria," Part I and Part II, from Consul Brant (Damascus) to Sir H. Bulwar, British Ambassador (Constantinople), August 30, 1860. Parliamentary Papers, LXVIII, 1861.

British Consul (Beirut), "Report by Vice Consul on Education in the Vilayet of Syria and Economic Conditions of Christians and Moslems," April, 1875.

. (Beirut), "Report on Revenue and Expenditure of Syria and Palestine, including Mount Lebanon for the Year ended March 13, 1876."

. (Beirut), "Report by Vice Consul Jago Upon Revenues and Taxation in the Vilayet of Syria," July 11, 1876.

Great Britain, House of Commons, "Reports on the Condition of Palestine," Jerusalem, July 30, 1879, from Consul Moore to Sir A.H. Layard, printed in "Correspondence Respecting the Population in Asia Minor and Syria," Part I, No. 4, Parliamentary Papers, LXXX, 1880.

Weakley, E. "Report on the Conditions and Prospects of British Trade in Syria," Great Britain, Accounts & Papers, 1911.