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Inflation or Deflation in Nineteenth-Century Syria and Palestine

Published online by Cambridge University Press:  11 May 2010

Haim Gerber  and
Nacham T. Gross
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Abstract

From the 1830s on Syria and Palestine exported monetary metal to pay for an import surplus. Nevertheless, there is evidence of a concomitant inflationary process. The apparent contradiction is resolved by a theoretical argument and by reference to the dual nature of the Ottoman monetary system. Government-induced inflation in terms of the domestic (token and paper) money reinforced the rising price of full-bodied coins, caused by the adverse balance of trade.

Type
Notes and Discussion
Information
The Journal of Economic History , Volume 40 , Issue 2 , June 1980 , pp. 351 - 357
Copyright
Copyright © The Economic History Association 1980

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References

The authors are, respectively, Lecturer in the Department of History of the Muslim Countries and Senior Lecturer in the Department of Economics, The Hebrew University of Jerusalem, Israel. They are grateful for the helpful comments of Jacob Metzer, Roger Owen, Yehoshua Porath, and Susanne Freund.

1 Chevallier, Dominique, “Western Development and Eastern Crisis in the Mid-Nineteenth Century: Syria Confronted with the European Economy,” in Polk, W. R. and Chambers, R. L., eds., Beginnings of Modernization in the Middle East (Chicago, 1968), pp. 205–22Google Scholar. Page references to Chevallier's article are enclosed in parentheses in the text.

2 The impoverishment argument has, however, already been questioned by Charles Issawi, at the conference at which the paper was originally presented. See Discussion in Polk and Chambers, Modernization, p. 11.

3 For example, Lord Bowring, who mentions in his famous report that in the 1830s, and perhaps also before, prices were generally rising in Syria (Bowring, John, Report on the Commercial of Syria [London, 1840], pp. 50–51)Google Scholar.

4 Chevallier, Dominique, La Sociéte du Mont Libah a I'ipoque de la Revolution industrielle en Europe (Paris, 1971), p. 127Google Scholar: “La hausse des prix qui atteignit la Syrie durant la decennie 1850 ”

5 A similar monetary dichotomy occurred in the other two great empires of the period. See Yeager, Leland B., “Fluctuating Exchange Rates in the Nineteenth Century: The Experiences of Austria and Russia,” in Mundell, R. A. and Swoboda, A. K., eds., Monetary Problems of the International Economy (Chicago, 1969), pp. 61–89Google Scholar.

6 Carl Anton Schaefer, “Die Türkische Wáhrungspolitik,” Archivfür Wirtschaftsforschung im ent (Weimar), 2 (April 1917), 41–75.

7 Yeager describes Austria-Hungary and Russia as “semi-developed countries, at best, with foreign trade heavily dependent on agricultural exports, with long histories of government budget difficulties, and with haphazardly regulated money supplies” (“Fluctuating Exchange Rates,” p. 61). This description seems to fit the Ottoman empire very well, too.

8 , Schaefer, “Wahrungspolitik,” p. 44Google Scholar.

9 Just as Schaefer ignored the monetary implications of the foreign trade imbalances, Chevallier almost entirely ignores the government's influence on the money supply. In one paragraph he does refer to “government manipulations” and to the monetary reform of 1844 (p. 212), but the passage is vague and not part of the systematic discussion of this aspect. Immediately afterwards Chevallier quotes an account written in 1847-that is, during one of the deflationary intervals, so that its description of “the absence of cash” is not surprising.

10 Ghazzī, Kāmil al, Nahr al-Dhahab fi Ta'rikh Halab, Vol. III (Aleppo, 1923–1926), pp. 301, 308, 366, 475Google Scholar.

11 al-Shihābī, Haidar Ahmed, Lubnanfi ‘Ahd al Umard’ al-Shihabīyīn, 3 vols. (Beirut, 1933)Google Scholar. The price information is taken from the following pages: Vol. I., pp. 126, 149, 151, 165, 176, 182, 185, 191; Vol. II, pp. 355, 361, 369, 370, 408, 430, 511, 530, 540; Vol. Ill, pp. 550, 570, 575, 595, 599, 604, 627, 641, 777.

12 Tobler, Titus, Denkblätter aus Jerusalem (Konstanz, 1853), p. 227Google Scholar.

13 Schulz, E. W., Reise in das gelobte Land im Jahre 1851 (Müllheim, 1853), p. 117Google Scholar; Luncz, A. M., Guide to Palestine and Syria (Jerusalem; 1891; Hebrew)Google Scholar; Kremer, A. von, Mittelsyrien und Damascus (Vienna, 1853), p. 256Google Scholar; Ruppin, Arthur, Syrien ah Wirtschaftsgebiet (Berlin, 1917), pp. 349–50Google Scholar.

14 Earlier, during the seventeenth century, such a process had turned the akche from local everyday money into a unit of account.

15 See note 11: the exchange-rate information appears together with the price data.

16 The bitakafranji was in all probability “the Imperial (or Hungarian) thaler, known as Abu Taka or pataque.” See Gibb, H. and Bowen, H., Islamic Society and the West, Part I, Vol. 1 (London, 1950), p. 308Google Scholar.