After a war with Russia emptied the treasury, the Ottoman Empire stopped selling entire tax farms to a handful of rich financiers and instead cut each tax source's future income into thousands of small shares, sold as lifetime annuities to ordinary savers.

问题

a government needs to raise a large amount of cash immediately, but the only available lenders are a small circle of wealthy financiers who can dictate harsh terms because they have no competition for the deal

背景

换别人会怎么做

The available approach was continuing to auction entire tax farms whole to wealthy financiers under the existing malikane system, negotiating one large loan with a narrow circle of buyers rich enough to purchase an entire tax source's future revenue outright.

他们看到了什么

The Ottoman treasury saw that a narrow lender base gave the financiers who could afford whole tax farms real pricing power over the state precisely when the state's need for cash was most urgent, meaning the structural problem wasn't the treasury's creditworthiness, it was that only a handful of buyers could compete for each deal. Rather than continuing to sell tax revenue rights whole to a small circle of large financiers, the fix was fractionalizing each tax source's future revenue into thousands of small shares sold directly to a broad base of ordinary savers as lifetime annuities, converting a narrow, terms-dictating lender pool into a wide, competing one.

那一手

Beginning in 1775, the treasury introduced esham: rather than auctioning a tax source's entire future revenue to one buyer, officials fixed the tax source's expected annual net revenue in nominal terms, divided that amount into a large number of small shares, and sold each share to an individual buyer as a fixed annual payment for the remainder of that buyer's own life. Shares typically sold for six to seven times their fixed annual payment, implying an effective yield in the range of roughly 14-17%. Tax collection itself stayed with state-appointed officials rather than the shareholders — esham holders were purely investors receiving an annuity, not administrators running a tax farm, which meant the instrument could be sold in units small enough for ordinary savers, not just financiers wealthy enough to run an entire tax operation.

为什么管用

Dividing a tax source's fixed expected annual revenue into many small shares, each sold as a fixed annual payment for the buyer's own lifetime, meant the instrument could be purchased in units small enough for ordinary savers rather than only financiers wealthy enough to run an entire tax operation, dramatically expanding the pool of potential lenders competing to buy in. Because tax collection itself stayed with state officials rather than shareholders, esham holders were purely investors, not administrators, which let the treasury sell shares to groups, including non-Muslim communities, who had been largely excluded from the previous malikane auctions, further widening the buyer base and the pricing competition it created. This broadened lender pool is what let the treasury raise substantial capital quickly from the public rather than negotiating one large loan on a small circle of financiers' terms, relieving the state's dependence on a narrow group precisely when it needed cash fastest after the costly war with Russia.

值了多少

Esham let the Ottoman treasury raise substantial capital quickly from a broad public rather than negotiating one large loan with a small circle of financiers, and it opened treasury lending to groups — including non-Muslim communities holding shares such as the tax farm on spirits — who had largely been shut out of the previous malikane auctions. The instrument functioned, in effect, as an early life-annuity government bond, resembling annuity instruments emerging in Europe around the same period. Its long-run fiscal performance was mixed: authorities struggled to police secondary transfers of shares and to stop heirs from continuing to collect payments after a buyer's death, which undercut the fixed-lifetime pricing the system depended on, and the government alternated between expanding and curtailing esham issuance through the following decades before it was phased out as part of broader 19th-century fiscal reform.

什么时候会失灵

The mechanism depends on the issuer actually being able to administer and enforce the terms of many small, individually held shares reliably, and the case's own outcome shows this is a real vulnerability, authorities struggled to police secondary transfers of shares and to stop heirs from continuing to collect payments after a buyer's death, undercutting the fixed-lifetime pricing the whole system depended on. It also depends on there genuinely being a large enough pool of smaller investors both willing and able to buy in, a population without sufficient savings or trust in the issuer's ability to pay would leave the fractionalized shares undersubscribed, failing to generate the broad competitive demand the approach requires to work. And converting one large negotiated loan into many small distributed obligations trades away the administrative simplicity of dealing with a handful of large counterparties for the much greater complexity of tracking, verifying, and paying thousands of individual lifetime annuities correctly, an administrative burden that, as esham's own mixed long-run fiscal performance shows, can erode much of the financing benefit if the issuer isn't equipped to manage it well.

后来呢

Esham is documented in Ottoman economic-history scholarship as a genuine 18th-century financial innovation — converting a single large, illiquid revenue right into many small, life-tenured shares sold directly to a broad investor base — that broadened who could lend to the state and briefly relieved the treasury's dependence on a narrow circle of large financiers, even as the mechanism's later administrative weaknesses limited its long-term fiscal value.

资料来源

1. [1]The Evolution of Fiscal Institutions in the Ottoman Empire, 1500-1914London School of Economics, Global Economic History Network (Şevket Pamuk), 2005lse.ac.uk
2. [2]The Ottoman Sarraf, Public Debt, and Usury Laws: Rethinking Capitalism and Empire beyond AnomaliesComparative Studies in Society and History (Cambridge University Press), 2022cambridge.org

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