Tariffs, Treaties, Trade: Integrating Tsarist Russian and Qajar Persian Markets under the Nineteenth Century Global Condition Paper Submitted for the Sixth International Conference on Iran’s Economy of the International Iranian Economic Association (IIEA) to be held at Department of Asian, African and Mediterranean Studies, University of Naples 'L'Orientale' (May 2019) William Bullock Jenkins London School of Economics and Political Science (LSE) and University of Leipzig 15 January 2019 Tariffs, Treaties, Trade Jenkins, WB Contents ABSTRACT .......................................................................................................................................... III KEY TERMS, ABBREVIATIONS AND A NOTE ON TRANSLITERATION ...................................................... IV TRANSLITERATIONS .............................................................................................................................. V LIST OF FIGURES................................................................................................................................. VI 1 INTRODUCTION ........................................................................................................................... 1 1.1 RESEARCH QUESTION ............................................................................................................... 1 1.2 ARGUMENT ............................................................................................................................ 2 1.3 SCOPE ................................................................................................................................... 3 1.4 RESEARCH DESIGN AND METHODOLOGY ....................................................................................... 3 2 LITERATURE REVIEW, CONTRIBUTION, AND SOURCES ................................................................. 7 2.1 LITERATURE ............................................................................................................................ 7 2.2 CONTRIBUTION...................................................................................................................... 15 2.3 PRIMARY SOURCES ................................................................................................................. 16 3 THE TERMS AND COMPOSITION OF RUSSO-PERSIAN TRADE ...................................................... 18 3.1 TERMS AND BALANCE OF TRADE ............................................................................................... 18 3.2 COMPOSITION OF TRADE ......................................................................................................... 26 4 CUSTOMS, TRADE NETWORKS, AND TRIBULATIONS UNDER THE GLOBAL CONDITION ............... 30 4.1 THE ECONOMIC CONDITIONS OF RUSSO-PERSIAN TRADE ................................................................ 32 4.2 INSTITUTIONAL FRAMEWORK OF RUSSO-PERSIAN TRADE ................................................................ 34 4.3 THE NATURE OF PERSIAN MERCANTILE SOCIETY AND NETWORKS ..................................................... 36 4.4 OVERSTATING STATE CAPACITY ................................................................................................. 40 5 FINDINGS: INTEGRATION OR CAPITULATION TO GLOBAL MARKETS? ......................................... 42 BIBLIOGRAPHY .................................................................................................................................. 44 ii Tariffs, Treaties, Trade Jenkins, WB Abstract This paper explores and explains how Russo-Persian commerce in the 1800s was shaped by the persistence of early modern commercial dynamics, in the first era of globalisation.1 Continuity in early modern trade practices prevailed across the period, even as both economies changed and integrated under the distinct nineteenth century global condition. Compared to other regions, the transition to modern trade occurred late in the Russo-Persian connection. This is reflected in the positive Persian balance of trade with Tsarist Russia. Terms, composition, and dynamics of trade constructed from primary sources show, contrary to reigning historiography, that: o the robust continuity of early modern trade, commercial practices and institutions generally favoured Persia and not Russia in the 1800s, o Russo-Persian commercial interactions reveal the agency of real historical merchants and Tsarist and Qajar state incapacity in trade between their territories, o claims of 'economic penetration' as regard Persia’s commercial relations with Russia in the nineteenth century lack historicity. This paper contributes to two research agendas by examining these historical dynamics. Firstly, through an economic history account of Russo-Persian trade that synthesises social and political history reconstructions of nineteenth century Eurasian interconnection and economic life. Secondly, the Iranian case is distinguished from generalised economic history of the Middle East, a neglected field of investigation. By assessing these findings Tsarist Russian and Qajar Persian market integration in the historical context of globalisation, a vivid picture of global entanglement at the local and transregional levels emerges to challenge assumptions of imperial dynamics defining commerce. 1 ‘(Tsarist) Russia’ and ‘Russian Empire’ are used interchangeably as are ‘(Qajar) Persia’ and ‘Persian Empire’. ‘Iran’, the immutable name in the Persian language itself, is also used to a lesser degree as interchangeable with ‘Persia’, the conventional Western name for the state and region until 1935. iii Tariffs, Treaties, Trade Jenkins, WB Key Terms, Abbreviations and a Note on Transliteration Asnaf (sing: senf): artisanal, craft-based ‘guilds’, an early modern Persian system of corporate organisation. Balance of Trade (BoT): the difference in value between a country's imports and exports for a given period. A country importing more goods and services than it exports has a trade deficit. BoT is a simple economic measure of the relative strength of an economy. Dallal: a Persian commercial credit broker. FTWT: Federico World Trade Historical Database. Globalisation: the permanent existence of trade where exchange of goods, ideas, and people is continuous and on a scale with lasting impacts on all trading partners.2 A constantly integrative dynamic that dissolves autonomous entities and fragments the world even as it unifies. Global Condition: the specific circumstances of globality that are historically bound to particular periods or places, both integrating and fragmenting local and global dynamics. Kargozar: a Persian legal apparatus and semi-legal title, with distinct aspects of the principal- agent problem for contract enforcement and trade. Tojjar (sing: tajer): ‘merchants’, a particular class of traders in Persia operating on traditional, pre-modern commercial practices usually in wholesale. Market Integration: ‘soft’ globalising market integration is assessed by change in volume or composition of trade, growth of trade along particular routes or in particular commodities, the ratio of trade to output, or trends in total trade; ‘hard’ globalising market integration is evidenced by price convergence of uniform commodities in separate markets. MFN: Most Favoured Nation. Non-Competing Goods (NCG): traded and treadeable commodities and manufactures with sufficient difference in type, quality or price as not to substitute for others. NCG’s are not susceptible to price convergence. 2 Jan De Vries, “The Limits of Globalization in the Early Modern World,” The Economic History Review 63, no. 3 (2010): 710. iv Tariffs, Treaties, Trade Jenkins, WB Price Convergence: prices of uniform, competing goods when traded with price flexibility and absence of trade frictions (including transaction costs) should converge to a single price in different locations, through the mechanism of arbitrage (Law of One Price). RCR: Russian Customs Receipts Sarraf: A traditional Persian banker for currency and credit. Terms of Trade (ToT): the ratio (of an index) of a country's export prices to its import prices. Transaction Costs: transportation and communication costs, barriers to trade, and costs including insurance charges, capital raising costs, commissions, storage and porter charges that introduce a price gap – even when goods traded are adjusted to account for differences in quality.3 Transliterations As exampled above with kargozar and toijar, Persian and Russian terms are romanised in this paper according to the Library of Congress system for Russian and the Journal of Persianate Societies for Persian. Foreign terms are italicised. Exceptions are words commonly transliterated differently into English such as bazaar, firman etc. and those preserved in citations; thus I accept there may be some discrepancies in style. 3 Giovanni Federico and Karl Gunnar Persson, “Market Integration and Convergence in the World Wheat Market, 1800-2000,” in The New Comparative Economic History: Essays in Honor of Jeffrey G. Williamson, ed. Tim Atton, Kevin O’Rourke, and Alan M. Taylor (Cambridge, Mass: MIT Press, 2007), 97-98. v Tariffs, Treaties, Trade Jenkins, WB List of Figures FIGURE 1: TOTAL RUSSO-PERSIAN TRADE VOLUME, 1830-1900 ........................................................ 19 FIGURE 2: RUSSO-PERSIAN TRADE RETURNS, 1830-1896 (ACCOUNT ROUBLES) ................................. 21 FIGURE 3: RUSSO-PERSIAN TRADE RETURNS, 1830-1900 (GOLD ROUBLES) ....................................... 22 FIGURE 4: