Maimonides and the Merchants. Mark R. Cohen

the active merchant bore no responsibility whatsoever for financial losses to the stationary partner’s invested capital.⁷

      The Islamic commenda offered distinct advantages in an economy in which investment and long-distance trade comprised such essential elements, and it was accepted at an early stage into Islamic law.⁸ It encouraged impecunious adventurers to take part in the enterprise, since they took very little personal financial risk, while they could anticipate benefiting from a portion of the profit. And it ensured investors ready access to business collaborators who were willing to do the hard work that they themselves did not wish to, or could not, do—work that usually entailed extensive travel and separation from family for long stretches of time.⁹ The risk that the active commenda partner took, apart from the usual physical dangers, was limited to the loss of his time and effort and the portion of the profits he had anticipated receiving.

      Because of its advantages in long-distance trade, including exemption of the active party from responsibility for loss, the Islamic commenda constituted the most common type of collaboration between Jewish and Muslim merchants.¹⁰ Even among themselves, Jews chose to employ the Islamic form of commenda somewhat more often than the Talmudic ‘isqa.¹¹ In such cases, halakhic authorities were constrained, grudgingly, to recognize the reality as well as the fact that Jewish merchants often had recourse to Islamic courts to register such contracts and adjudicate disputes.¹² To be constituted in the Jewish court, a muḍāraba contract had to assign some responsibility for loss to the active partner.¹³ In his role as a Jewish muftī, Maimonides responded to queries involving commenda contracts, which, if they exempted the active party from responsibility for losses, signified what the halakha calls the “dust of usury” (avaq ribbit), a rabbinic concept broadening the usury prohibition in the Bible. For that reason, Maimonides insisted that Jewish traveling merchants be accorded a greater share of the potential profits than the percentage stipulated for the stationary partner in an Islamic commenda.¹⁴

      Vexingly for the researcher and doubtless for contemporaries as well, the same word, qirāḍ, was used for both the Islamic commenda and the Jewish ‘isqa because of the similarity between the two institutions. Because of the ambiguity, however, sources—Maimonides’ responsa, especially—distinguish the two, calling the former qirāḍ al-goyim, “the qirāḍ of the Gentiles” (meaning Muslims); and the other, qirāḍ be-torat ‘isqa, “qirāḍ according to the Jewish law of ‘isqa.”¹⁵

      4.2 Partnership Law in the Code

      In what follows, I discuss several aspects of partnership and partnership law that Maimonides modified or updated in the Mishneh Torah in order to accommodate the custom of the merchants. Section 4.2.1 deals with a common practice of Geniza merchants to cope with risk by multiplying partnerships. The next section (4.2.2) discusses traveling partners. Section 4.2.3 takes up the question of partnership with a Muslim. The final section (4.2.4) addresses an aspect of partnership in agricultural produce that relied on knowledge of local merchant custom.

       4.2.1 Diversifying Partnerships to Cope with Risk

      Long-distance trade, whether on land or by sea, brought profit but was also fraught with risks and danger.¹⁶ Reports of brigandage on the caravan routes, of storms, shipwrecks, and, occasionally, piracy at sea, even wartime depredations, pepper the correspondence of Geniza merchants and crop up frequently in responsa dealing with losses incurred as a consequence of such calamities.¹⁷ Maimonides was all too aware of the precariousness of mercantile life. In an oft-cited Geniza letter, his merchant brother, David, describes his own danger-filled journey across the desert from the Nile port of Qūṣ to the Red Sea port of ‘Aydhāb en route to India. He met his death in a shipwreck in the Indian Ocean, possibly on that very journey. The tragedy plunged Maimonides into a depression that lasted a year. His letter (not from the Geniza) describing his melancholy mentions that he lost a lot of his own money because of that tragedy.¹⁸

      Beyond physical perils, much of the uncertainty in long-distance trade stemmed from the unpredictability of markets. Fluctuating prices and the availability or unavailability of commodities loomed large in merchant planning, as their letters abundantly attest. Goods or coins could be lost to pirates at sea or to brigands on land. In the absence of the insurance that late medieval European merchants developed and that we have in modern society, how did Geniza merchants cope with risk?

      Risk associated with transporting money could be diminished by keeping deposits in distant entrepôts with a “banker” and by using a suftaja to remit funds.¹⁹ We have seen (in Chapter 2) that the Babylonian Geonim sanctioned this custom of the merchants. Uncertainties in the marketplace could be reduced by depositing goods with a “representative of the merchants,” wakīl al-tujjār (Hebrew, peqid ha-soḥarim).²⁰ This individual, whose functions are familiar to us, thanks to the Geniza, helped limit the risks involved in business by serving as a proxy agent representing merchants in their legal claims against debtors. He also provided storage in his warehouse when other options for safekeeping of goods were lacking. He might even sell goods on behalf of the owner(s) in their absence, taking advantage of a good price in the marketplace.

      Risk could also be diminished through diversification by forming separate partnerships with different people, an arrangement that was permitted in Islamic Ḥanafī law, even without the permission of the primary partner.²¹ As numerous Geniza letters illustrate, a person sharing in a commercial venture with an investing partner, traveling with his money or goods and transacting business along the way, might do the same with another party.²² By concatenating partnerships, merchants counteracted some of the financial risk involved in long-distance trade. If one partnership resulted in a poor showing of profit, another might be more successful, compensating for the loss. Diversification served a purpose, too, when one commodity being shipped was lost or damaged. Another might be delivered in good shape.

      Maimonides addresses multiple partnerships in the Code in Agents and Partners 5:2, drawing on the Talmud but also incorporating material that does not appear to derive from that source. The halakha begins with a general statement: “If one of the partners deviates and sells on credit or goes on a voyage or goes to any other place or trades with other merchandise or does any similar thing, then he alone must pay for all the loss that ensues as a result of his disobedience, while if there is a profit, the partners, because he deviated, shall share it equally, in accordance with what they have stipulated in regard to profit.” This summary of principle is then explained through concrete examples drawn from the Talmud:

      Therefore, if one gives money to another to be used in partnership to buy with it wheat for trading purposes, and the other goes and buys barley, or he gives him money to buy barley and the other buys wheat, then if there is a loss it is the loss of the latter who deviated, while if there is profit, they share it equally. Likewise, if he goes and forms a partnership with a third party, using money from the [first] partnership, if there is a loss it is his loss, and if there is a profit, they share it equally. However, if he forms a partnership with another person using his own money, if there is a loss it is his loss, and if there is a profit, the profit is also his. If they made some stipulation [in this matter], the stipulation determines all.

      The ostensible source for this halakha, as recognized by the commentator Joseph Caro in his Kesef Mishneh, is the discussion in the Babylonian Talmud Bava Qamma 102a–b. The Talmud relates to the first part only: “If one gives money to his agent [sheluḥo] to purchase wheat, and he purchases barley,” or vice versa, it considers how this deviation from instructions would affect his share of any profits. Like Rashi and Tosafot, Maimonides understood the Talmud to be referring to a partnership, in which profits are shared, so he changed the wording accordingly: “If one gives money to another to be used in partnership” (be-torat shutafut). This was important because “agency” in the Talmudic period was not a commercial institution; it became so only after the Islamic commercial revolution. (I discuss this form of commercial agency in Chapter