The city of Astrakhan sits on a delta, not too far from where the Volga River empties into the Caspian Sea. In modern Russia it is an industrial city known for its fish processing and as a regional administrative centre. Yet, in the 17th century, Astrakhan had a far more glamorous role, owing to its position on a geographical crossroad between Russia and lucrative Asian markets.
A warm welcome
During the Time of Troubles (1598-1613), Russia experienced enormous socio-political upheaval characterised by the end of the 800-year old Rurikid ruling dynasty, numerous pretenders to the Tsarist throne and foreign interventions by neigbouring powers. Once the chaos subsided, Russian officials faced the predicament of building an economy depleted by famine and war. To increase customs revenues and ensure the flow of foreign silver into the empire, the Russian state encouraged foreign merchants to settle in Astrakhan, a city conquered by Ivan the Terrible nearly seven decades prior.
Non-Russians dominated the imports and exports trade in Astrakhan, among whom were merchants hailing from Mughal India. By 1725, there were 209 Indians residing in Astrakhan and engaging in local banking, mercantilism and moneylending. Additionally, the need to interact with the resident Turkic and Russian communities necessitated the hiring of interpreters.1 The Russian state cautiously allowed merchants to practice religious rites; where merchants could employ private cooks (likely to meet strict vegetarian diets) and were even allowed to cremate the dead, even if it alarmed local Christians.2 The mercantile community mainly imported Persian textiles into Russia; a 1638 Russian customs report found one merchant carried up to 28 varieties of silk and cotton. Similar to European markets, Mughal Indian consumers valued Russian furs. However, unlike their European counterparts there was a lower demand for Russian forest products in India. Instead, Mughal elites coveted luxury goods such as gyrfalcons, walrus tusks and Borzoi dogs.
The transcontinental trader’s dilemma
Between the 16th and 17th century Astrakhan’s Indian merchants formed part of a wider Persianate world, where the Persian language facilitated international trade stretching from Bengal to southern Russia’s borders. Trade routes could encompass distances as long as 3,600 kilometres, and this required enormous levels of trust between traders. To better understand how Indian merchants would have imported and exported under such uncertainty, I will introduce transaction costs; which are costs incurred to accomplish a trade. Firstly, participants in a transaction need to address search and information costs; that is the costs of finding a trading partner and to market their goods. Subsequent bargaining and decision costs involves the ironing out of a contract which is agreeable to the respective trading parties. Finally, policing and enforcement costs ensure the contract is not broken and there is a recourse to action should a default occur.3 Trading is difficult enough for a modern-day seller who uses eBay to peddle old revision guides and, arguably, Astrakhan’s merchants faced much more manifold challenges.
Indian merchants would mainly operationalise Commenda agreements to reduce the transaction costs associated with long-distance trades. These were straightforward contracts where one or many merchants would provide capital for the business venture and traders, who lacked funds for investments, would need to fulfill the potentially life-threatening task of marketing or delivering the merchandise. If successful, the profits would be divided; where two thirds went to the investors and one third to the trader.4 On the other hand, if an attack on a caravan led to the endeavour’s failure, the investor would lose their money, whilst the trader risked losing their life. The 17th century merchant would be faced with an impasse: how could they find a trustworthy business partner who would not renege on their contract? It would be incredibly tempting for a trader to dash off with expensive merchandise they have not paid for.
The answer to this may lie in the 1747 Russian Census which revealed, out of the 51 Indian merchants residing in the Astrakhan, nearly half originated from a single city; Multan, whilst most other came from nearby areas in southern Punjab. Stephen Frederic Dale asserts that the Multani Hindu merchants would most likely have been from the Punjabi Khatri caste whereas Muslim traders would have hailed from the Pashtun ethnic group.5 Furthermore, there was a familial aspect to these firms too; five pairs of brothers conducted joint trade within Astrakhan and twelve Astrakhan Indians received goods from uncles or brothers in the Gilan province of Iran.
Membership of the same caste meant prospective firm partners were usually employed in the same profession, consequently their skills could be easily verified. In place of complicated contracts, kinship also provided a set of common cultural norms and allowed for mutual peer-monitoring. Furthermore, transaction costs associated with rule-breaking could be met with enforceable sanctions, including exclusion from the community.6 This ultimately encouraged prolonged economic interactions between Indian merchants, whilst discouraging opportunism associated with uncertainty. Similar kinship firms were also found among the Indian merchants’ Armenian contemporaries who originated from a single suburb of Isfahan in Iran, yet dominated the lucrative Indian Ocean silk trade.7
Protectionism and decline
Astrakhan’s Indian merchants kept business within the family as a response to trading in an uncertain environment. Yet, these same firms proved to be quite dynamic in the face of state pressures. Whilst Indian merchants were initially welcomed by Russian officials, Peter the Great’s introduction of the New Trade Regulations posed a serious financial challenge. The protectionist measures bestowed special trading privileges to Russians, Turks and Armenians, whilst Indians would have to pay extra custom duties, thus introducing new transaction costs. Indian firms would bypass these regulations by intermittently increasing their firm’s size, through recruiting Armenians and Russians, who would act as intermediaries for their business.
Whilst Russia’s protectionist measures discouraged Indian traders, it was wider external socio-political processes which ultimately debilitated Astrakhan’s mercantile activity. The sudden collapse of the Safavid empire in 1722 interrupted Multani trade networks within Iran, resulting in a rapid dwindling of Astrakhan’s Indian population. The slower disintegration of the Mughal empire had disrupted Multan itself and by 1850, Astrakhan’s Indian community had all but vanished.
Featured image: ‘Astrakhan in Russia’ in Rambaud’s Russia, volume 2 (1898), Public domain, via Wikimedia Commons
1 Dale, Stephen Frederic. Indian merchants and Eurasian trade, 1600-1750. Cambridge University Press, 2002.
2 Gopal, Surendra. “A Brief Note on Business Organisation of Indian Merchants in Russia in the 17th Century.” Journal of the Economic and Social History of the Orient/Journal de l’histoire economique et sociale de l’Orient (1986): 205-212.
3 Dahlman, Carl J. “The problem of externality.” The journal of law and economics 22, no. 1 (1979): 141-162.
4 Dale, Stephen Frederic. Indian merchants and Eurasian trade, 1600-1750. Cambridge University Press, 2002.
6 Gopal, Surendra. “A Brief Note on Business Organisation of Indian Merchants in Russia in the 17th Century.” Journal of the Economic and Social History of the Orient/Journal de l’histoire economique et sociale de l’Orient (1986): 205-212.
7 Aslanian, Sebouh. From the Indian Ocean to the Mediterranean. University of California Press, 2011.