Beratli Merchants in the 18th-Century Ottoman Empire 733

trade volume of about 3,000 kuru§ per year. Between 1794 to 1804, the
average import volume to Izmir per year was 1,750 kuru§ per merchant
overall, and 2,171 to 3,000 kuru§ per merchant using Ottoman ships.
Trade volume per beratli is unlikely to be significantly different. In
1759, a French beratli in Izmir paid 100 to 120 kuru§ customs at the
5 percent rate, suggesting his trade volume was about 2,000 to 2,400
kuru§.3] Similarly, Yanaki Cana, another French beratli in Izmir, paid
500 kuru§ in 1767, also at 5 percent, implying a trade volume of 10,000
kuru§, which was worth 7,931 kuru§ in 1750.
One might argue that the protection berats provided against irregular
taxes and expropriation made them valuable. Linda Darling (1996) shows
that these taxes had become quite stable and "regular" by the end of the
seventeenth century. Tax disputes between beratlis and local authorities
involved harag imposition or tariffs rather than other irregular taxes.32
Berats did confer protection from expropriation, essentially shielding a
deceased beratli's estate from local magistrates' arbitrary confiscations.
In response, French beratlis noted that consuls had sole jurisdiction over
their beratlis' inheritance.33 The British consul in Aleppo remarked that
he protected his beratli Abdallah's estate and family "from the molesta
tion of the Turkish justice for the usual time" before returning his berat to
Istanbul. Similarly, following the British beratli Antun Balit's decease,
the same consul sealed up Antun's estate "the usual way, [...] to secure
the Heirs from the Interference of the Turkish Justice."34 Regardless,
protection from extraordinary taxes cannot account for multiple berat
purchases or the cross-sectional price variation.

Access to Trade Networks

One can argue that berats granted access to trade networks and markets
that would otherwise be unavailable. The only reason foreign merchants
would not include Ottoman subjects in their trade is aversion to poten
tially subjecting their firms to the Ottoman law. This was a real concern
for British merchants.35 We might expect agents to have a preference to
transact only with parties who have fewer jurisdictional options.

31 CADN 166PO/D84/4: 10 February 1760.

32 Some illustrative examples appear in CADN 166PO/D1/7: 28 December 1764, 166PO/
D71/2: 30 November 1758, 20 February 1759, 31 March 1759, 166PO/D84/7: 8 December 1766,
166PO/D1/9: 8 December 1767, 166PO/D84/23: 7 Thermidor an 4.
33 The deceased, Stefan Mardiros, had a berat of the Kingdom of Two Sicilies. The total amount
of confiscation was 7,535 kuru§ and 107 Venetian sequins. CADN 166PO/D1/18: Beratlis of
France to Deperdriau [Consul of France in Aleppo], 19 December 1777.
34 TNA SP 110/53: f. 12, 3 November 1791; SP 110/53: f. 47, 15 July 1793.
35 TNA, FO 352/1: p. 400, Memorandum, 5 January 1811.

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734 Artung

There are only glimpses of evidence on this subject. Without having

access to merchants' private letter books, it is impossible to completely
map out beratlis' and non-beratlis' business networks and transactions.
Several pieces of evidence are inconsistent with this hypothesis. First,
a berat offered no ex ante commitment to the legal system to which it
granted access. The license bestowed the option to use a European legal
system. British merchants and beratlis both had recourse to Islamic law.
Hence, having a berat or trading with the Europeans of the same nation
ality did not bind an enterprise to that European legal system, or shield
it from Islamic law. Second, commercial correspondence and consular
registers suggest that British traders did not employ beratlis as agents.36
British merchants made a concerted effort to keep beratlis out of British
trade. Preventive measures included charging 20 percent consulage fees
on all beratlis using British ships. Clearly, buying British berats did not
grant access to British trade. French merchants also imposed similar
restrictions until the late eighteenth century.37
On the other hand, the Dutch imposed no such restriction. They adopted
a free trade policy and beratli partners regularly opened establishments in
Amsterdam, participating in that trade with or without Dutch merchants'
involvement. Many of these beratlis also had French or British berats.
Thus, the Dutch trade was not exclusive to Dutch beratlis. By the late
eighteenth century, beratlis had replaced Dutch traders in Izmir almost
completely.
Arguably, berats allowed non-Muslims to participate in European
trade by becoming intermediaries within the Ottoman Empire for the
country whose berat they carried. There are two pieces of evidence
against this argument. First, beratlis themselves were not simply inter
mediaries. Although the first buyers in the early eighteenth century did
intermediate European trade, by 1760 a typical beratli was a merchant
who had established firms in the Levant and Europe, had partnerships
with other beratlis, and were serious contenders to European merchants.
Genuine dragomans (as opposed to beratlis) and brokers did the actual
intermediation in Ottoman ports by the late 1700s. Second, while these
brokers would sometimes buy berats or nefer fermans, there is little
correlation between the country whose berats they purchased and the
country whose trade they intermediated. For example, French merchants

36 Except one case where a British merchant bought a British berat for his warehouseman
(United Kingdom, the British Library, Additional Manuscripts [hereafter BL Add MS] 46933: f.
217, Consul of Britain in Aleppo to James Porter, 3 October 1754.
37 TNA SP 105/122: pp. 369-70, The Levant Company to Alexander Straton, 10 June 1803; BL
IOR/G/17/5: ff. 383-7, Paper by George Baldwin about the Turkish Trade.

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 Beratli Merchants in the 18th-Century Ottoman Empire 735

had British, Swedish, or Neapolitan beratlis as brokers in Aleppo and

Salonica between 1750 and 1800.38
Primary sources suggest that beratlis mostly formed partnerships with
other beratlis or non-Muslim Ottomans who later purchased berats.
Many beratlis in Izmir participated in the European and Levant trade
by sending partners to Amsterdam and Livorno.39 Most merchants who
participated in the trade between Izmir and Amsterdam had berats.40
Berats might have opened up markets to Ottoman non-Muslims.
However, berats did not necessarily open up trade networks or markets
specifically associated with the country that- dispensed them. A British
berat offered little value to a merchant who hoped to participate in
British trade. While some countries explicitly tried to keep all beratlis out
of their respective trade, others remained indiscriminate. Beratlis' own
trade patterns reflect that they emerged as competitors to Europeans and
did not necessarily depend on Westerners for their commercial affairs.
The current evidence does not reveal whether a trade network sensitive
to specific berats existed among beratlis. This is outside the scope of this
article.

Jurisdictional Shift Hypothesis

The jurisdictional shift hypothesis argues that agents switched from an

inefficient legal system to a more efficient one, much like Tiebout sorting
(Tiebout 1956; Kuran 2004a, 2011). Inefficiencies in a legal system arise
from transaction and contracting costs, legal costs such as litigation and
verification, and distortion of incentives. Assume there are two legal
systems differentiated along costs they impose on trade. A given legal
system, say British common law, might be more efficient than Ottoman
law due to secure property rights, flexible inheritance rules, or better veri
fication technology (due to reliance on written evidence). Agents would

38 BL Add MS 45933: f. 123, Drummond to Porter, 5 April 1753;CADN 166PO/D1/1:

Drummond to Thomas; 166PO/D1/21: St. Priest to Ame, 28 October 1782; 166/PO/D1/22:
Vailhen to the ambassador, 8 June 1785; 166PO/D71/3: The minutes from the Chancery of the
Consulate of France.
39 CADN 166PO/D84/8: 1 February 1769; BL IOR/G/17/5: ff. 383-387, Paper by George
Baldwin about the Turkish trade, 22 January 1785.
40 Examples between 1740 and 1780 include Arakel d'Ovanez, Zingrilara, Vidali, Paniotis di
Jossif and his son Manuel Kiriaco de Panayoti, Nicola Patrichi, Antonio Bachatori, Mireck d'lsay,
the family of Mavrogordatos, Petro Cochino, Paolo Rodocanachi, Demetrio and Nicola Bachatori,
and Yenaki Kana. See Kadi (2012); CADN 166PO/D84/1: 16 November 1741, 166PO/D84/3: 10
September 1758, 166PO/D84/7: 8 March 1767, 166PO/D84/15: 8 January 1780, 166PO/D84/18;
AN AE/B3/233: Mission du baron de Tott, Izmir, 1777-1779; TNA SP 110/87: Murray to Hayes,
1 November 1766, SP 105/186, SP 105/188: 21 June 1782.

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736 Artung

be willing to pay at most the difference between their expected gains and
current payoff to place themselves under better legal rules. In a market
with a fixed supply of access to additional legal jurisdictions, agents
would bid the price up, and people with relatively smaller expected gains
would stay in their original jurisdiction.
Now, suppose there are finitely many legal systems available. Tiebout
sorting would imply that agents with the highest expected benefits would
place themselves in the most efficient legal jurisdiction. Since the supply
is fixed and positions are auctioned off, agents with relatively smaller
expected benefits would place themselves in the second-best, and so
on. This theory implies an ordering of legal systems in their efficiency
reflected by the berat prices. Furthermore, by revealed preference, those
who could afford access but did not purchase it do not benefit from
"better" law.
Even though all berats granted the same tax exemptions, the cross
sectional price variation implies that berats were not homogenous
objects. In order to assess the impact of "better law" on prices, we need
to be careful about alternative explanations for the systematic variation in
berat prices across jurisdictions. Berat price is a function of the discount
factor which depends on mortality and prevailing interest rates, the value
of tax exemptions, the probability that the Sultan annuls the berat, the
quality of arbitration and protection services which depend on the compe
tence or willingness of the particular ambassador and consul, and finally
the value of the legal system itself. Given this formulation, there are three
possible sources of variation: the probability of berat annulment, ambas
sador and consul effects, and the legal system.
Recall that a country's berats became void if war broke out with the
Ottoman Empire. Such revocation might involve more than the loss of
future benefits. When Napoleon invaded Egypt, the Ottoman govern
ment repealed all French berats and confiscated French beraths' estates
in Aleppo. These beraths lost as much as 10,000 to 200,000 kuru§ to
these confiscations; they either had to leave the city or buy other berats to
shield themselves.41 Thus, we would expect Austrian and Russian berats
to be relatively cheaper, since they were much more likely to go to war
with the Ottoman Empire. During the eighteenth century, the Ottoman
Empire had six military conflicts in Europe. Three of them involved
Austria, four involved Russia, one Venice and the last the French First
Republic. While we do not have data on Russian berats, the probability
of annulment might explain the lower price of Austrian berats.

41 CADN 166PO/D1/29: 5 VendemiaireXI.

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 Beratli Merchants in the 18th-Century Ottoman Empire 737

Berats' value also depended on the ambassador and the consul who
did the actual representation. Whenever local magistrates intervened
in beratlis' business or an Ottoman subject sued a beratli in an Islamic
court, consuls represented beratlis at the local court, and ambassadors at
the higher court. An ambassador's influence at the Ottoman court was
critical in acquiring favorable verdicts for beratlis, which might explain
the systematic price variation even across British and French berats.
France had consistently a higher stock of berats than the British, whose
berats exceeded the Dutch Republic's. Higher supply is associated with
a higher price in this market due to the correlation between the berat
stock and the ambassador's influence. Thus, the variation in prices might
reflect a preference for better protection in disputes rather than a prefer
ence for legal systems.
Beratlis' occupations also highlight the value of European law.
The scattered data on applicants show that they were predominantly
merchants, followed by sarrafs (bankers and moneychangers), arti
sans, shopkeepers, and brokers.42 French ambassador Choiseul-Gouffier
described beratlis as "almost all rich sarrafs, or bankers" (Eldem 1999,
p. 282). Thus, European law had value precisely for those involved in
trade and finance.
Kuran (2011) explains European rules' advantage in business expan
sion by Islamic law's less flexible organizational forms, less flexible
inheritance law that gave insufficient discretion to testators, and the inef
ficiency of pious foundations called waqfs. The interaction of these three
factors prevented capital accumulation in the Ottoman economy. Out of
these factors, this article will discuss the partnership law, and briefly,
inheritance rules.43
The evidence shows that European enterprise forms mattered little for
non-Muslim Ottomans' demand for berats in the eighteenth century. In
this period, there were no general incorporation laws in Europe. Timothy
Guinnane et al. (2007, p. 692) show that incorporation required special
permission from the government in many European countries until the
second half of the nineteenth century. Being unavailable to beratlis, such
organizational forms could not have provided incentives to buy berats.
Joint-stock companies were also unavailable. In eighteenth-century

42 CADN 166PO/D1/1, 5, 7, 10, 18, 23; 166PO/D84/3, 4, 7,15.

43 While the waqf is an integral piece of Kuran's argument, this article's evidence has no
bearing on this institution. The waqf was a rigid institution; its inflexibility led to notorious
mismanagement and trapped assets in unproductive ventures indefinitely. Their role in business
stagnation is not in question. Regardless, it is interesting to note that there are some instances of
beratlis being involved in waqfs (CADN 166PO/D1/2Q).

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738 Artung

Ottoman trade, the only possibility was the Levant Company, which
was not really a joint-stock company; it had no stock. It was a regulated
monopoly instead and did not admit beratlis as members.44 Furthermore,
most beratli firms were ordinary partnerships, which, as C'zak^a (1996, p.
50) shows, had equivalent forms in Ottoman law. Beratli firms remained
family enterprises and rarely transformed into corporations well into the
nineteenth century (McCabe, Harlaftis, and Minoglou 2005, p. 179).
Indeed, Kuran (2011) argues that the advantages of European legal
rules were not immediate; they unfolded over time. While non-Muslims
Ottomans' jurisdictional shift in the eighteenth century did not grant
them access to superior enterprise forms, Kuran's thesis suggests that
jurisdictional shift still enabled them to interact with more complex
organizational forms and the concept of legal personhood, allowing non
Muslim minorities to form corporations more easily than non-Muslims
when the corporate form did become optimal (and available) in the mid
nineteenth-century Ottoman Empire.
Beratlis did have access to a particular type of firm organization that
might have been unavailable otherwise: the merchant house. Comprising
one or more partnerships, merchant houses were tied to a single venture.
They had no legal personhood; such partnership contracts had to be
renewed and could be subject to unilateral dissolution by a single party.
Kuran describes merchant houses as precursors of joint-stock compa
nies to which they could transform by issuing tradable shares. Although
Ottoman law did not specifically disallow such enterprises, Turkish tribu
nals had trouble adjudicating disputes arising from their function (Kuran
2011, pp. 202-4). If Turkish courts did impose such transaction costs, then
using European law would have been more efficient to operate merchant
houses. Indeed, many beratlis organized their firms as merchant houses.45
Having access to more flexible inheritance laws is another possibility.
Boogert (2005, 2009) gives several examples where the partition instead
followed Islamic law. Nevertheless, there are other cases that suggest
flexible estate division, although the final inheritance outcome is not
explicitly provided. The current evidence, then, appears too thin to verify
this hypothesis effectively.

44 Walsh (1825, p. 6); BL Add MS 38229: ff. 145-71, a dissertation by F. Daniel on the Turkey
trade, 23 March 1794.
45 Some examples of berath merchant houses are Stefan & Abkar Nalbandoglu, Demetrio &
Nicola Bachatari & Co., Manuel Kiriaco de Panajoti, Mavrogordato's merchant houses in Izmir,
Chios, and Amsterdam, Antonio Zingrilara; and George Vitale's merchant house Vitale brothers
& Co. (TNA SP 110/43, p. 226: To Will Magee, 6 January 1775; SP 105/186; CADN 1666PO/
D84/3:10 September 1758; 166PO/D84/7: 8 March 1767; 166PO/D84/18: 3 March 1786; 166PO/
D84/15: 8 January 1780.)

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 Beratli Merchants in the 18th-Century Ottoman Empire 739

The Ottoman government's own competing berat sales reveal

further evidence. In 1802, the Sultan formed his own corps of beratli
merchants called Avrupa Tiiccari, literally "European merchants," and
started issuing associated patents in 1806. Its inception coincided with
the Ottoman government's rigorous attempts to suspend berats and other
consular protections. Later, the government offered similar protection to
its Muslim subjects as well, under the moniker Hayriye Tiiccari, liter
ally "merchants of goodness." Both groups had the same exemptions as
the other beratlis, including lower customs. While Avrupa Tiiccans were
not exempt from the harag duty, the amount was modest and meant to
emphasize that they were Ottoman subjects (Masters 1992).
Ottoman berats also placed their bearers out of local courts' reach.
These merchants' litigation followed European courts' arbitration proce
dures closely (Bagi§ 1983, pp. 65-70; Masters 1992). Their privileges
also extended to two agents, like the two nefers attached to European
berats. The Ottoman government priced its berats competitively. Bagi§
(1983) reports 1,500 to 2,000 kuru§, which are evidently lower than the
prevailing prices of European berats in the late eighteenth century. By
1806, five or six of these patents had already been sold. In 1810, imperial
beratlis numbered around 80. In 1815, 151 such patentees existed. By
1835, the number had increased to 521, with another 453 procuring them
between 1839 and 1861.46 These are the cumulative number of registra
tions rather than the number of imperial berats in circulation; the number
of imperial beratlis was more modest.
Although the imperial berats enjoyed some initial success, especially
in Aleppo, the reform failed to inspire confidence in non-Muslims, who
might have found the Ottoman's promise to respect these privileges non
credible (Rey 1899, p. 282). Since the Ottoman government simulta
neously started suppressing European berats, we cannot determine the
extent to which the Sultan's berats depressed the demand for European
berats, if at all. Still, the imperial berats' apparent failure suggests that
berats had value beyond tax exemptions, arbitration services, or repre
sentation by other merchants.
Overall, the systematic price variation across countries shows that
the market valued each country's berat differently. I discussed three
possible aspects of law that agents might have found profitable to induce
switching jurisdictions: better enterprise forms, flexible inheritance law,
and secure property rights. Enterprise form availability is an unlikely

46 TNA FO 78/50: ff. 19-20, Report on Barats, 24 April 1806; (,'izak<;a (1996, p. 206); Masters
(1992, p. 581).

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740 Artung

explanation. While access to European law provided access to and inter

actions with types of firm organization that allowed beratlis to transi
tion into modern organizational forms more successfully than Muslim
Ottomans in the nineteenth century, those advantages might not account
for berat purchases in the 1700s. There is suggestive evidence about flex
ible inheritance law's importance. Finally, confiscation risk and insecure
property rights could have led to jurisdictional shift. However, it is not
evident how that could affect the price variation.

Forum Shopping

One final motive for buying a berat could be forum shopping, where a
litigant chooses the most favorable judge to hear or defend his case over
a set of possible courts. That is, beratlis chose different jurisdictions,
not for efficiency gains, but to extract rents from their partners. Boogert
(2003) shows that in the Ottoman Empire, a plaintiff had to sue a defen
dant at the defendant's natural jurisdiction. This rule effectively allowed
defendants, especially non-Muslim Ottomans, to engage in strategic court
switching by placing themselves under the jurisdiction of Ottoman or
European courts. Thus, beratlis could defect to other jurisdictions either
to get a favorable verdict or delay judgment. Verdict disparity across
forums could be due to the underlying law itself or simply court bias.
This hypothesis states that there is an option value of having access to
multiple legal systems and courts, independent of their efficiency. The
law itself does not have to be different, since even adjudication delay
implies gains for a defendant. Forum shopping has a natural testable
implication: incentives to purchase multiple berats.
Indeed, compared to Europeans, Muslims, or other non-Muslims,
beratlis had more legal options for contracting and dispute resolution,
which they fully exploited. The French ambassador Vergennes noted that
"if the law of France harms and ruins [French beratlis], they [would]
resort to Turkish law" (Eldem 1999, pp. 282-83). Later, Sir Robert
Liston, the British ambassador in Constantinople, revealed the extent of
forum shopping in his report:

Men of profligate character procured Berats, to skreen [s/c] them from the
punishment of the Law, to enable them to avoid the payment of their just debts,
or perhaps to oppress an innocent neighbour. [...] And there are instances, not
infrequent, that when one minister [...] has determined to withdraw his patronage,
and to deliver him over to the Tribunals of the Country, there has been found another
minister ready to frustrate the good intention, by an adoption of the criminal.47

47 TNA FO 78/16: ff. 90-91, Liston to Grenville, 25 April 1795.

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 Beratli Merchants in the 18th-Century Ottoman Empire 741

Case records give many concrete examples of forum shopping. In

1769, Essaid de Masse, a Dutch beratli who did extensive trade with the
Dutch Republic, declared himself an Ottoman subject during his bank
ruptcy despite the litigation having started in the Dutch consular court. In
fact, he switched courts several times.48 In 1789, The British ambassador
Ainslie advised one of his nefer fermanli to suspend the ferman tempo
rarily to use the Ottoman jurisdiction.49 Using consular correspondence
and chancery registers, I constructed a sample of commercial disputes
involving British and French beratlis between 1751 and 1802. One
should interpret this sample cautiously since it is a non-random sample
of conflicts. Consuls and ambassadors' choice of dispute resolution was
arbitration, and those successfully resolved in this way were unlikely to
appear in consular correspondence. Even those registered in the consular
chancery, but not reported to the ambassador, might be subject to selec
tion. Thus, these cases likely overestimate the frequency of forum shop
ping, but they give some illustration of its extent and character. Table 3
displays the results.
"None" refers to successful adjudication or arbitration in the forum in
which the case is filed. "Weak" refers to disputes where the defendant
threatens to switch courts or registers the dispute in another forum but
does not carry out the threat. "Strong" involves disputes where the defen
dant switches to another jurisdiction, which carries out the final adju
dication. Percentages are reported in parentheses. In the records, 42.7
percent of disputes involved some degree of forum shopping, with 28.2
percent actually ending up in another court. When we exclude disputes
involving Muslims, which required adjudication in Islamic courts, the
percentages increase to 47.6 percent and 31.4 percent, respectively.
Furthermore, ambassadors did not seem to have adjudicated disputes
in their beratlis'' favor indiscriminately since defendant beratlis found
it profitable to switch courts. Ambassadors could refuse representation,
would not accept cases, or even revoke berats if they thought a beratli
was too much trouble or was clearly at fault.50
Forum shopping hypothesis predicts multiple berat or ferman
purchases, which is consistent with the primary evidence. In Aleppo, c.
1755, a bankrupt Dutch fermanli solicited a Venetian berat, fearing the
sequestration of his Dutch berat. Others purchased berats despite having
protection through their fathers. For instance, Shiudiac and Aida were

48 CADN 166PO/D84/8: 18 August 1768, 1 February 1769.

49 TNA FO 261/6: Ainslie to DeVezin, 11 April 1789.
50 TNA FO 261/4: Ainslie to Olifer, 15 June 1782; FO 261/5: Ainslie to Hays, 17 August
1783; 261/6: Ainslie to Moore, 10 November 1789; FO 261/7: ff. 394-5, Ainslie to Charnaud,18
November 1793.

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 742 Artung

Table 3

THE FREQUENCY OF FORUM SHOPPING IN COMMERCIAL DISPUTES

Number of Disputes in the Provinces, 1751-1802

None Weak Strong Total

All disputes 67 17 33 117

Percent 57.3 14.5 28.2 100.0
Excl. Muslims 55 17 33 105
Percent 52.4 16.2 31.4 100.0

Notes: "None" refers to cases in w

there was no application to a diff
formal application to a different
"Strong" refers to disputes that t
"Excl. Muslims" omits proceeding
using British and French consular
and Izmir.
Sources: CADN 166PO/D1/1-4, 5,
166PO/D84/7-9, 11, 12, 14-20; 18
SP 110/26, 53,58.

both Dutch dragomans in

Austrian and British bera
several powers' protection
His son Yussuf, as noted e
son Yeperi a Venetian ber
berat. Nasrallah Kassab's three sons each had berats of Denmark. Two
of them resided in Aleppo, the other in Salonica. Two other Kassabs in
Aleppo were British and Prussian beratlis, but we cannot say for certain
they were from the same family. The British berath Samaan Kassab's
father, Elias Kassab, had an Austrian berat. Anton Diab and his son
Petros had British and Swedish berats, respectively. Two members of
the Frangopoulos family in Salonica, possibly brothers or father-and
son, had berats from France and Austria, c. 1761. Brothers Iakov and
Abraham Frances, established in Salonica, had berats of Austria and
Ragusa, respectively, c. 1761.52
Since most firms were family-based, multiple licenses allowed a
diverse portfolio of berats within the firm. This diversification is evident
in other firms as well. Business partners Sader brothers and Anton Diab
had berats from Britain and the Dutch Republic in 1763. Yusuf Dwek

51 TNA SP 110/32: f. 128, 10 October 1755; FO 261/6: Ainslie to Moore, 5 March 1790.
52 Turkey, Ba§bakanhk Osmanli Ar§ivi [hereafter BOA] HAT 196 B, C, D, E, G, H, J, K;
Greece, Historical Archives of Macedonia, K. 94 33/34, cited in Vasdravellis (1952); BL Add
MS 45933: f. 122, Drummond [consul at Aleppo] to Baron de Penklern, 2 April 1753; Boogert
(2005, p. 267).

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 Beratli Merchants in the 18th-Century Ottoman Empire 743

Cohen and Minas Uskan, Dutch and British beratlis in a partnership in

1780s.53
Furthermore, a beratli or a beratli's son could renounce his patent and
purchase another country's berat. Yussuf Karali, a merchant and French
trader Pons's agent in Aleppo, abandoned the Swedish protection he had
through his father's berat and applied to the Turkish tribunal, only to buy
a berat from Spain later, all during the adjudication of his debt payment.54
Another example involves Antonio Zingrilara. He was an Ottoman Greek
who settled in Amsterdam and obtained Dutch citizenship in 1759, but had
a dispute with the Dutch later. He applied to the Turkish court and in the end
the Dutch revoked his citizenship in 1768. During this process he purchased
a French berat in 1767, and later solicited a British berat in 1768.55
This is strong evidence of forum shopping. Agents desired additional
legal options to enhance their position whenever parties disputed the
contract. This presented prospective berat buyers a trade-off. Having a
berat could yield short-term gains in the form of forum shopping, but in
the long-run could have the unintended consequence of harming their
reputation. The looming threat of rent extraction could have discour
aged agents without berats from entering into contracts or transactions
with berat holders, which can decrease the number of potential partners
beratlis could enjoy. Werry, a British Consul in Izmir, simultaneously
drew attention to the differences between Turkish and European law, and
justified British reluctance to trade with local non-Muslims (including
beratlis) by non-Muslims' lack of commitment to European law ex ante.

It is well known, that there exists a wide difference between the Code of Turkish
Laws, and the Laws & usages of Europe. It is also a fact, that all Subjects of
Turky [sic], Greeks, Armenians, Jews, &c, are always amenable to the Turkish
Tribunals [...] No writen [sic] engagement under their head—no act past in a
foreign Cancellaria or before a European Magistrate, is binding for them [...] To
obviate this, it would be highly useful [...] that all Subjects of Turky [sic] entering,
of their own accord, into an Engagement, transaction, or Contract whatever
in matters of Trade, with any of the European Factories & under the Sanction
& influence of the Laws of the Nation to which that Factory belongs, shall be
obliged to abide by that engagement, transaction, or Consent, [...] without being
at liberty to appeal, or have recourse to the help of the Turkish Law, in order to
elude the consequences of such Engagement for when likely to prove inconsonant
with their own advantage, & profit.56

53 CADN 166PO/D1/5; BOA HAT 196 B, C, D, E, G, H, J, K.

54CADN 166PO/D1/22: Ame to the Ambassador, 19 April 1784, 17 June 1784; 166PO/D1/23:
1 June 1786.
55 Boogert (2006, pp. 131-12); CADN 166PO/D84/7: 8 March 1767; TNA SP 110/87: Murray
to Hayes, 9 June 1768.
56 TNA FO 352/1: p. 400, Memorandum, 5 January 1811.

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744 Artung

It is not clear how much of an adverse impact holding berats had on

berath merchants. Buying licenses that made reneging contracts possible
could have created an unfavorable reputation among these merchants.
In the end, such disadvantageous reputation might completely erode the
license's value. European ambassadors and consuls disapprovingly made
note of beratlis' forum shopping in their reports.57 Yet, non-Muslims
paid large sums to acquire a portfolio of different berats.
There are two mechanisms that might have prevented the formation
of such adverse reputational effects. First, information about being a
berath was a license holder's private information. The market did not
necessarily know if a particular merchant enjoyed European legal protec
tion. In some cases, even an ambassador was not aware of those who
were under his protection.58 The fact that agents could (and did) purchase
berats in the midst of ongoing legal disputes, and "discard" their berats
after the termination of proceedings reinforced the information asym
metry between a potential berat holder and his partners. Second, the
market might have coordinated on an inefficient equilibrium in which
all participants acquired legal protection. Disputes between two beratlis
were resolved through arbitration in which arbitrators and consuls
attempted to reach a consensus. Thus, if a merchant believed that other
merchants would acquire berats, he had an incentive to obtain one as
well to shield himself against potential partners' forum shopping. As non
Muslims bid up the price of the limited stock of berats, agents who either
could not afford them (other non-Muslim Ottomans) or partake in this
system (Europeans and Muslims) were discouraged from participating
in the European-Ottoman trade, leading to beratlis' entrenchment in this
business.

CONCLUSION

The eighteenth-century Ottoman Empire offers an unusual c

legal pluralism in which access to additional European jurisdiction
auctioned off to non-Muslim Ottomans. This corps of merchants w
acquired legal privileges succeeded in getting ahead of both Muslim
Europeans in the Mediterranean trade by the early 1800s.
This article provided a systematic discussion of these privileges
their sales. I constructed a novel panel of price data for British and Fr

57 Ibid. p. 400, Memorandum, 5 January 1811, TNA FO 78/16: ff. 90-1, Liston to G
25 April 1795.
58 TNA FO 261/3: Ainslie to Olifer, 20 September 1777.

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 Beratli Merchants in the 18th-Century Ottoman Empire 745

licenses using primary sources. These price data revealed three important
facts. First, berats were expensive investments. They cost as much as 55
times the annual Ottoman GDP per capita, or about 20 times the annual
wage of skilled labor in Istanbul at the time. Second, berat prices showed
statistically significant variation across countries, with the French having
the most expensive licenses. Third, despite the hefty price, non-Muslim
Ottomans found it profitable to purchase multiple berats simultaneously
from different European nations.
Using these novel price data, as well as information on commercial
disputes and reports, I calculated the extent to which various privileges
mattered for explaining the demand for berats. Tax exemptions could
not have exclusively driven berat demand; the discounted value of tax
benefits make up a small portion of the full berat price. This factor is also
inconsistent with the fact that agents purchased multiple berats, where
one would have sufficed for evading taxes.
Furthermore, the systematic price variation suggests idiosyncratic
benefits associated with the country which dispensed the berat. This
observation is consistent with three arguments: access to trade networks,
jurisdictional shift, and ambassador's influence. The evidence is too thin
to effectively disentangle these three factors, which need not be mutu
ally exclusive. The available primary sources do allow us to eliminate
the trade networks explanation as both the French and the British were
protective of their commerce and barred beratlis from participating in
it. Trade networks might have mattered to the extent that beratlis them
selves preferred trading with other non-Muslim Ottomans who had the
same berat. Without the full account of every berat within partnerships
and these firms' activities, there is little way to verify or repudiate this
particular claim. On the other hand, there is suggestive evidence for both
ambassador's influence and jurisdictional shift (i.e., acquiring benefits
idiosyncratic to a legal system) in explaining the price variation.
In investigating the jurisdictional shift hypothesis, this article also
addressed several points in Kuran's argument, which states that Ottoman
business expansion stagnated due to the combination of inflexible inheri
tance law, partnership law that did not recognize legal personhood, and
the existence of waqfs. I showed that better enterprise forms did not
constitute a tangible benefit for beratlis since they did not organize their
firms as joint-stock companies or corporations; beratli firms continued
to be (mostly) family-based ordinary or limited partnerships. However,
this article does not dispute that beratlis' interactions with more flexible
European organizational structures had long-run advantages that were
realized in the nineteenth century as Ottoman minorities transitioned into

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746 Artung

using the corporate form more successfully than Muslims did. While the
article presents some mixed evidence on more discretionary estate divi
sion, the sample is not large enough to verify this claim conclusively.
Neither quality of protection nor jurisdictional shift can explain multiple
berat purchases. This article proposed a new hypothesis, strategic forum
shopping, as an alternative. Multiple berat acquisition reflected the option
value associated with having access to an additional legal system. Agents
switched legal systems ex post in order to avoid or delay contractual obli
gations. This is consistent with the evidence on commercial disputes.
Furthermore, forum shopping and ambassadors' influence together can
explain the variation in berat prices, which might depend on how willing
an ambassador or consul is to give favorable verdicts to their beratlis.
This kind of strategic court switching created a great deal of uncer
tainty in contract enforcement. In this sense, this article enhanced the
view that finds legal institutions culpable in the Ottomans' stunted busi
ness expansion by identifying another channel.

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