Roman Osharov
Would you take out a loan at 120 percent per annum? In colonial Tashkent, Central Asia's largest and richest city in the second half of the 19th century, short-term loans at such extortionate rates were a very common source of easily accessible credit. These loans were provided chiefly by the community of Hindu lenders, most of whom came to Tashkent from British-ruled Shikarpur. They were operating in Central Asia long before the Russian conquest of the region and represented a prominent group of trade intermediaries that historian Claude Markovits called ‘the Shikarpuri network’.[i] The episode with the Hindus and their moneylending activities in Tashkent tells us a lot about the city, its economy, and the informal sector. But it also sheds lights on issues such as economic mobility in Turkestan and cross-border mobility between the Russian and British empires in Asia more broadly.
The Hindus in Central Asia Source: Kavkaz i Sredniaia Aziia: alʹbom fotografii F. Ordena (1890).
The Hindus had a lot of success by catering to the needs of cash-poor residents of Tashkent and other major cities in Central Asia, especially Bukhara. But they were not welcomed in Turkestan by the Tsarist officials who gradually managed to drive most of the Hindus out of the region. Some of the first restrictions on the Hindus’ businesses were imposed in the 1860s, soon after the Russian conquest, and included caps on the interest rates that the Hindu lenders could legally charge.[ii] But in response, the Hindus stopped explicitly stating the interest rates they were charging in loan contracts,[iii] and most likely later completely abandoned using written contracts. Thus, the new rules, aimed at preventing the Hindu lenders from overcharging, had the effect of removing the necessary fine print in dealings between lenders and their borrowers, but did not eradicate the undesirable business itself. In fact, Hindus continued lending in Turkestan throughout the entire period of Tsarist rule in Central Asia, most probably because the official banks turned a blind eye to their moneylending activities.
In the 1890s, there were still about forty Hindu lenders operating in Tashkent, right under the noses of Tsarist officials, despite a long history of local restrictions and criminalisation of usury in the Russian Empire. Observations on the business operations of the Hindus in Tashkent were recorded by Russians living and serving there as officials, such as Nil Lykoshin (1870-1922), who was in charge of the Asian quarter of the city, and Ivan Geier (1860-1908), who worked as the secretary of the government-funded Statistical Committee of the Syr-Darya oblast, of which Tashkent was part.
According to Lykoshin’s writings, the terms of the loans were simple and straightforward, and the Hindu lenders did not require their borrowers to show any documents or provide collateral. Nor does Lykoshin mention that written contracts were needed, suggesting that they most likely were not used.
The Hindu lenders normally provided a maximum of 20 roubles per loan for up to 24 weeks, with a weekly repayment of 1 rouble, which included interest. The total cost of such a loan was 4 roubles.[iv] For context, 1 rouble was about what an average agricultural worker in Turkestan earned per day.[v]
Based on Lykoshin’s description of a typical loan, this is roughly 120 percent on an annual equivalent interest rate basis, which is very expensive, especially considering that it was likely that some people were borrowing multiple loans a year at similarly high interest rates. Lykoshin himself did not provide the interest rate figures, and, being a cautious writer, he did not give even approximate figures.
The state bank in Tashkent Source: Letters from Tashkent, https://mytashkent.uz/2017/04/12/110-let-domu-tashkentskogo-kommersanta/
Geier, who in many ways was the opposite of Lykoshin and seemingly never had a problem with providing vague figures, was also interested in Hindu merchants’ business in Tashkent. He clearly was not fond of their activities, saying that the Hindus ‘leave the banks of the Ganges only for the purpose of making a profit [in Russian Turkestan] and are engaged exclusively in usury’.[vi] This was not entirely correct, as the Hindus in Turkestan often ran their lending businesses alongside more conventional commodity trade.[vii]
But Geier’s account adds some details that Lykoshin did not cover, for example that the borrowers from the Hindu merchants also included larger businesses in Tashkent, whom they provided with loans of several thousand roubles at around 50 percent per annum. Was Geier’s information about the interest rates charged by the Hindus correct? Did he see it in the loan contracts, if there were any, or did he calculate the 50 percent figure himself? Perhaps the Hindus charged much lower interest rates for large loans to businesses than they charged for small loans to individuals. But knowing Geier’s work in Turkestan, it is difficult to trust all his numbers since there are many inaccuracies and mathematical errors in his publications. Geier edited the house journal of the Syr-Dayra oblast statistical committee, and some of the figures in his reports simply do not add up. For example, Geier tried to evaluate the wealth that the European peasants living in the Nikolʹskoe settlement near Tashkent had contributed to Turkestan.[viii] But he undermined his own argument by lowering his estimate of the Nikolʹskoe peasants’ total wealth because he did not add up his own figures correctly. Sadly, there are more examples of mathematical errors in Geier’s reports. Nevertheless, Geier’s reports are valuable sources for Central Asian history, one should just not make a habit of taking all his figures at face value.
The Hindu lenders continued to cater to the needs of Tashkent residents in the early 20th century, and as time went on the Tsarist officials began to make more sophisticated attempts to reduce the size of the Indian diaspora in Turkestan. For example, in the early 1900s the newly opened Russian consulate in Bombay started to refuse visas for Shikarpuris suspected in usury.[ix] The efforts of Tsarist officials eventually reduced the number of the Hindus in Turkestan, but some were still in Russian Central Asia even after the 1917 revolution. The Hindus were witnessed there by Frederick Bailey, an officer with the Indian Political Service, whom they approached for help in transferring two million roubles out of the country, fearing Bolshevik reprisals.[x]
How did so many restrictions not lead to the complete departure of the Hindus from Turkestan? The answer can probably be found by reading between the lines of the history of Central Asia. Senator Konstantin Pahlen, who led a year-long inspection of Turkestan in 1908-1909, was also amazed by the extortionate interest rates he observed there. Pahlen wrote nothing on the Hindus in his official report – a gargantuan publication on the state of Turkestan.[xi] But in his later memoirs Pahlen blamed banks for turning a blind eye to usurers, whom they provided with loans at rates around 10 percent per annum knowing that the money would be used by them to give out loans at rates above 100 percent.[xii] At the same time as one branch of Tsarist rule opposed the Hindus and their undesirable business practises such as moneylending, others, such as the banks, encouraged it.
Roman Osharov is a PhD candidate at the University of Oxford’s Faculty of History. His research explores the formation of the Russian Empire’s knowledge about Turkestan, as Russian Central Asian was known, in the late nineteenth and early twentieth centuries.
[i] C. Markovits, The Global World of Indian Merchants, 1750-1947: Traders of Sind From Bukhara to Panama (Cambridge, UK: Cambridge University Press, 2000), p. 83 [ii] For example, the decree ‘O paralizatsii ėkspluatatsii tuzemnogo naseleniia indiiskimi vykhodtsami’ was introduced in 1877, as cited by S. C. Levi, The Indian Diaspora in Central Asia and Its Trade (Leiden: Brill, 2002), p. 251 [iii] Ibid. [iv] N. I. Lykoshin, ‘Pisʹma iz Tuzemnogo Tashkenta. Pisʹmo pervoe’, Turkestanskiia Vedomosti (1894), nos. 9. [v] K. K. Pahlen, Otchet po revizii Turkestanskogo kraia, proizvedennoi po vysochaishemu poveleniiu senatorom gofmeisterom grafom K.K. Palenom. Materialy k kharakteristike narodnogo khoziaistva v Turkestane. Ch. 1. Otdel 1. (Sankt-Peterburg: Senat. tip., 1909-1911), pp. 254-255 [vi] I. I. Geier, Turkestan (Tashkent: A.L. Kirsner, 1909), p. 37 [vii] C. Markovits (2000), p. 83 [viii] I. I. Geier, Selenie Nikolʹskoe – opyt statisticheskogo issledovaniia, Sbornik materialov dlia statistiki Syr-Dar'inskoi oblasti (Tashkent: Syr-Darʹinskii obl. stat. kom, 1892) [ix] Donesenie Generalʹnogo konsula v Bombee V. O. fon Klemma v Pervyi departament MID s prosʹboi soobshchitʹ, sushchestvuiut li ogranicheniia v vydache viz na vezd v Sredniuiu Aziiu litsam, zanimaiushchimsia rostovshchichestvom, AVPRI, f. 147 Sredneaziatskii stol, op. 485, d. 1707, l. 23 in Russko-indiiskie otnosheniia v 1900-1917 gg. Sbornik arkhivnykh dokumentov i materialov (Moscow: Vostochnaia literatura, 1999) [x] F. M. Bailey, Mission to Tashkent (London: Jonathan Cape, 1964), p. 242 [xi] More on Pahlen’s report see, for example, Alexander Morrison, «The Pahlen Commission and the Re-Establishment of Rectitude in Transcaspia, 1908-1909 », Monde(s), vol. 4, no. 2, 2013, pp. 45-65. [xii] K. K. Pahlen, R. A. Pierce, Mission to Turkestan: Being the Memoirs of Count K. K. Pahlen 1908-1909 (London: Oxford University Press, 1964), p. 102