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7 Trust, Social Capital, and Networks Informal and Semiformal Institutions at Work Trust consists of placing valued outcomes at risk to others’ malfeasance, mistakes , or failures. Trust relationships include those in which people regularly take such risks. Although some trust relationships remain purely dyadic, for the most part they operate within a network of similar relationships. Trust networks, then, consist of ramified interpersonal connections, consisting mainly of strong ties, within which people set valued, consequential, longterm resources and enterprises at risk to the malfeasance, mistakes, or failures of others.1 A group within which there is extensive trustworthiness and extensive trust is able to accomplish much more than a comparable group without that trustworthiness and trust.2 Trust was an essential component of early modern long-distance trade, as such trade depended upon a modicum of mutual confidence and expectation that neither party would be defrauded by the other in a potentially profitable venture. Trust emerges as an issue because economic transactions in early modern long-distance trade were rarely based on “simultaneous exchange.”3 Rather, the quid was separated from the quo over time and space in such transactions, to paraphrase Avner Greif.4 Risk and potential malfeasance arise because of this separation.5 For instance, as we have seen, an eighteenth-century Armenian merchant from Julfa who wanted to sell his merchandise or invest his capital in purchasing goods in a market situated at a great distance from his base usually did not travel with his goods or capital to that distant market himself. Instead, he delegated a commenda agent or factor to carry out this task on his behalf. In such a situation, the stationary merchant needed to have some level of trust that his agent would not disappear with his capital once he had left his sight. After all, what would prevent a factor from absconding with his master ’s money once he had traveled from Isfahan to India or Italy and was out of reach? Given the potential risks inherent in such a venture, why would a merchant in Julfa 166 wanting to do business in India or the Mediterranean entrust large sums of capital and consign goods to a factor, knowing that the factor might cheat him? Trust was also vital for merchants who needed to appoint representatives and give them powers of attorney to carry out important services, often in distant places where the merchants themselves could not be present. It was equally important in cases where large sums of money were loaned on credit to be repaid at some specified time or place in the future. For these and other similar transactions to take place, some level of trust between the interested parties was necessary. If such trust existed, the parties to a transaction would cooperate more effectively. Thus trust was essential in generating an atmosphere of cooperation and collective action among merchants conducting long-distance trade. But how was trust itself generated? Most scholars of early modern merchant communities have either altogether ignored the role of trust as an important factor in the lives of early modern long-distance merchants or, when they have realized its importance, have merely posited trust as a given attribute of such communities, not as a factor requiring historical explanation or analysis. As Francesca Trivellato has noted, the tendency of some scholars to take trust for granted is a legacy of the school of “trade diaspora” scholarship , whose followers have worked under the influence of Philip Curtin and Abner Cohen.6 Trivellato suggests that such scholars have treated merchant communities under the label of “trade diasporas” as “communities of mercantile trust” (to use Chris Bayly’s term), thus giving the false impression that trust is a natural byproduct of “closely knit communities.”7 Even scholars who do not use the term “trade diaspora” but stick to the less problematic label of “merchant community” have invoked trust as a “self evident attribute of a merchant community.”8 For instance, Frédéric Mauro, in an otherwise excellent account of Julfan merchants, remarks: “One of the reasons for the success of the Armenians was the atmosphere that prevailed at the heart of this merchant community: a great sense of solidarity based on kinship ties or marriage and on contractual relations, especially relations of trust.”9 Mauro, however, does not explain what these “relations of trust” are, implying insteadthattheysomehowarisefrom “kinshiptiesormarriage.”Anotherscholar,Vahe Baladouni, also attempting to answer a question first posed by Fernand Braudel— namely, what constituted “the key...

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