Private Credit and Public Finance

As merchants shipped and trucked goods around the world in the seventeenth century, they created a web of obligations with credit extended across political boundaries, coins traded far beyond their issuing authority, and money transferred through bills of exchange more quickly and easily than ever before. The expansion of merchant interstate financial practices coincided with a period of increasingly assertive state formation. Money was then a key preoccupation of early modern states, but it also represented a persistent challenge to states’ sovereignty as their fiscal systems were buffeted by global monetary flows that encumbered their ability to set the value of money domestically.Footnote ⁴ In other words, early modern money was “sovereign but decidedly constrained by the parallel existence of interstate finance.”Footnote ⁵ By the end of the seventeenth century, the bifurcation between domestic state money and interstate merchant finance became increasingly difficult to maintain. Instead, the worlds of private credit and public finance became evermore intertwined.

“Empires of Obligation” follows merchants trading between England and the Ottoman Empire from 1670 to 1720 to untangle the relationship between private credit and state public finance in two empires not commonly included in the same analysis. Although it is often overlooked, trade between early modern England and the Ottoman Empire constituted one of the most important commercial relationships for both states around 1700. In the second half of the seventeenth century, the Ottoman Empire was England’s largest single market for woolen textiles, England’s leading industry into the nineteenth century.Footnote ⁶ At the same time, English traders had become the most important group of European merchants in the Ottoman Empire where they purchased raw silk that was mostly brought to Ottoman commercial centers on overland caravan routes.Footnote ⁷ A focus on Anglo-Ottoman merchants is not intended to dismiss the roles of many different actors in shaping English and Ottoman state finance. Instead, “Empires of Obligation” focuses on these merchants to open a window into the relationship between private interstate credit and public domestic finance in both empires.

Ottoman merchants conducted some of Anglo-Ottoman trade, but most of the long-distance shipping was controlled by an English merchant group known sometimes as the Turkey Company but more often as the Levant Company, a regulated company established in 1581 and dissolved in 1825.Footnote ⁸ The Levant Company depended on both English and Ottoman political power. For much of its existence, it benefitted from a monopoly issued by the English Crown over trade between England and the Ottoman Empire.Footnote ⁹ At the same time, the Levant Company depended on privileges from the Ottoman imperial government and access to the Ottoman legal system.Footnote ¹⁰ Unlike in a joint-stock company, Levant Company members organized their trade independently while agreeing to abide by Levant Company rules set by a General Court and to pay fees in exchange for consular assistance. As non-English subjects who were excluded from Levant Company membership, Ottoman merchants shipped their goods illicitly on English ships and never secured the prominence in London of the Ottoman merchant community in Amsterdam that undercut their Dutch competitors and even expanded into the Atlantic.Footnote ¹¹ When Ottoman subjects traveled to London to pursue the money and goods English merchants owed them, they were often met with delays, obfuscation, and frustration.

The Levant Company created stratification within its ranks as well as between subjects of different empires. In the second half of the seventeenth century, the Levant Company introduced membership restrictions that made it more difficult for apprentices to attain full membership. The Levant Company also used its proscriptive powers to shift the risks of credit arrangements from London-based principal merchants to their factors operating overseas in the Ottoman Empire. With fewer opportunities for advancement available to them through the Levant Company, some factors abroad specialized instead in providing financial services to Ottoman state officials during a period of financial crisis that ushered in longer-term state borrowing through the mālikāne system of life-term tax farming.Footnote ¹² Levant Company factors transferred tax revenue across great distances, provided Ottoman bureaucrats with short-term financing, imported coinage at a time when Ottoman mints were largely closed, and bought tax farming shares while the Ottoman fiscal system was itself transforming. The Ottoman Empire’s elite—men like Ahmet Paşa, a governor of Sidon and future grand vizier, and Ali Efendi, the overseer of the Imperial Kitchens—drew on English merchant finance for core functions of the empire. These were not small deals. A single loan or transfer could equal the annual customs revenue of a major Ottoman port city like Thessaloniki. One merchant described his fellow English merchants as “such a bank of trust that they furnished almost the entire empire.”Footnote ¹³ Partnerships between Ottoman elites and Levant Company merchants blended private credit networks with public finance in a way that challenges dominant ideas about internal competitive state formation.

Levant Company merchants similarly moved into state finance in England. Levant Company merchants were the wealthiest of any merchant group during the 1690s and leveraged that wealth into state finance.Footnote ¹⁴ They were easily the largest investors relative to the size of their trade in the Bank of England and were heavily represented in its leadership. Some also served as agents for Dutch investors in the Bank of England while opposing naturalization acts that would open their trade to foreign-born competition. In both England and the Ottoman Empire, Levant Company merchants played a key role in new longer-term systems of public finance and introduced questions about the proper role of foreign capital and capitalists in state finance.

Levant Company merchants’ wealth also translated into political sway. The “astonishing” extent of Levant Company power in the City of London led a historian of London’s politics to describe Levant Company merchants as “the dominant players in London affairs from the reign of Charles I to the end of the seventeenth century.”Footnote ¹⁵ Levant Company merchants were then in positions of power at a time when the question “What is money?” was very much up for debate. In arguments over monetary policy, Levant Company merchants sought to protect international creditors from currency fluctuations by subjecting domestic money to interstate logics. In managing its affairs in the plural monetary environment of the Ottoman Empire, Levant Company officials had argued for an intrinsic value theory of money, the idea money represented a government commitment to delivering a set amount of precious metal. As English bureaucrats, Levant Company merchants like Sir Dudley North and Sir John Buckworth similarly pushed for money’s intrinsic value in the English Atlantic. They feared that colonial monetary control would threaten the interests of creditors, including those of the slave-trading Royal African Company that was owed huge debts by Caribbean sugar planters. The politics of money pitted the interests of colonists with little access to cash against those of metropolitan creditors like many Levant Company merchants. The resulting preference for metropolitan creditors over colonial monetary control would lead to further acrimony in the lead up to the American Revolution.Footnote ¹⁶

After supporting the intrinsic value theory of money in the Atlantic, many Levant Company merchants joined with others calling for its adoption in England during the recoinage debates of the 1690s. The Great Recoinage of 1696 succeeded in defining money according to how it functioned in international trade beyond state control, an episode which some scholars see as key for the intellectual foundations for the later international gold standard.Footnote ¹⁷ Its supporters, including Levant Company merchants who drew on their experiences in the Ottoman Empire, argued for subjecting domestic money to interstate logics. The intrinsic value theory of money was then shaped by a widening world of trade, including beyond Europe, and experimented with in England’s emerging Atlantic empire before being adopted at home through the Great Recoinage.

The English Great Recoinage may be the most famous recoinage in which Levant Company merchants played a role, but it was not the only one. In the Ottoman Empire, bureaucrats also grappled with the threat to monetary sovereignty posed by interstate finance and a global trade in coins. Levant Company merchants and other European merchants shipped chests of dubious coins into the Ottoman Empire, provoking debates over what constituted good money at a time when Ottoman mints were largely idle. Sometimes these debates were grand trials held before the empire’s elite in Topkapı Palace, the seat of Ottoman imperial power. Often, though, these debates were more mundane—the routine haggling over coins before a sarrāf (moneychanger) in a bazaar. In 1697, amid war with the Habsburg Empire and its allies, Sultan Mustafa II challenged the prevailing system of monetary governance. He ordered that all foreign coins in the empire should be recoined as Ottoman ones. Sometimes this process involved striking the sultan’s tuğra (emblem) directly over European coins in a visually powerful illustration of financial sovereignty. Amid the hardships of war and despite opposition from regional interests, the Ottoman Empire drew on deep associations between sovereignty and coinage to redefine money as an instrument of the state, a move that contradicts dominant depictions of eighteenth-century Ottoman finance as disinterested or decentralized.Footnote ¹⁸ Despite uneven implementation, following merchants across the English and Ottoman empires then leads to a plurality of responses to the seventeenth-century monetary moment instead of one single, western path to modern capitalism.

Capitalism and Global History

By following early modern merchants in interimperial trade, “Empires of Obligation” engages with the question of how to think globally about the history of capitalism around 1700. Balancing the tension between integrative and disintegrative forces has been a persistent challenge in the field of global history.Footnote ¹⁹ Practitioners of “connected history” who trace individuals across political, religious, and cultural boundaries are often criticized for emphasizing similitudes over division.Footnote ²⁰ Comparative models, however, as Pamela Crossley has argued, regularly rely on “fixed-point schemas” in which the objects of comparison become geographically and temporally fixed, obscuring the “influence of continental or global integrating mechanisms.”Footnote ²¹ In devising strong comparisons, the medievalist Marc Bloch, a prominent theorist of the comparative method, advised that historians should select societies that were geographically adjacent and historical contemporaries, because comparisons are strongest where the two societies were routinely influencing one another.Footnote ²² For Bloch, geographic continuity and contemporariness were the best means to ensure, in Fernand Braudel’s words, that he was comparing “like with like.”Footnote ²³

“Empires of Obligation” presents an alternative, interconnected institutional approach for thinking historically across traditional geographical boundaries. Rather than Bloch’s geographical continuity as the basis of strong comparisons in the medieval period, “Empires of Obligation” builds its comparison around connections—merchants who themselves moved across empires—in the early modern period. The study of connections, not simply for their own sake but as the basis of institutional comparisons, allows us to balance broad integrative forces with local particularities. As J.H. Elliott argued, “to compare and connect are, and should be treated as two sides of a single coin.”Footnote ²⁴ Comparisons constructed through historical connections between England and the Ottoman Empire are further able to break from the expectations of a general model derived from the western European experience through “reciprocal comparisons,” as urged by Kenneth Pomeranz and R. Bin Wong.Footnote ²⁵ Yet, the comparisons in “Empires of Obligation” are rooted in the experiences of people who moved between both empires, foregrounding the global forces operating within the comparison and showing how they can foster divergences as well as synchronicities.

The role of integrative forces like Levant Company merchants within systems of state finance then allows us to reconsider the early modern geography of capitalism. “Empires of Obligation” shows that we cannot think of capitalism, as scholars traditionally have, as emerging in Europe and then engulfing the rest of the world.Footnote ²⁶ In “Empires of Obligation,” the English Financial Revolution, a key event in many histories of capitalism, develops within an expanding world of trade and empire. Likewise, early modern state formation cannot be seen as simply an internal, domestic process. Instead, states formed within deep interimperial networks, and money became capital through a global process.

“Empires of Obligation” also moves beyond the more recent trend of viewing the history of capitalism as a variety of capitalisms developing independently around the world, each with its own internal dynamic.Footnote ²⁷ English and Ottoman monetary governance reflected changing global circumstances and decisions about which scale of exchange mattered—the global, the imperial, or the local. The English recoinage represented the triumph of international merchant creditors, while the Ottoman recoinage reflected a preference for an imperial understanding of money. “Empires of Obligation” connects now-famous English events with little-known Ottoman developments through Levant Company merchants to reveal different imperial visions and hierarchies.

Through its interconnected institutional approach, “Empires of Obligation” then highlights both integrative forces and their stratifying consequences within societies and across states from 1670 to 1720. As merchants moved across empires, they not only traded goods but also shaped state institutions. A constant exchange of variegated global currencies, many of which emanated from Spanish America, posed new problems of statecraft. Merchants who created globalized monetary conditions through their endless swapping of coins also facilitated the introduction of new financial institutions. Narratives of state formation, including well-known accounts of the English Financial Revolution, benefit from a broader geographical lens that can include interimperial comparisons and agents whose activities transgressed political boundaries. The interlacing, global financial infrastructures exposed in “Empires of Obligation” emerged through the activities of interimperial merchants haggling over an unpaid debt in the shadow of overlapping legal systems, Ottoman petitioners pursuing restitution in London, English traders swapping Ottoman tax farming shares, and a ceaseless competition between counterfeiters and Ottoman sarrāfs. Early modern globalization and state formation were intimately intertwined.