Organization and Profits

In addition to joint ownerships of single soap factories, each shareholder often formed partnerships with wealthy individuals (akin to venture capitalists) who, in return for a percentage of the profit, financed the cost of labor, equipment, and all the raw materials except olive oil. This pattern of organization is illustrated by the 1826 expense and income account sheet of the Yusufiyya soap factory found among the Nimr FamilyPapers.^[40]

This document shows that Ahmad Agha Nimr formed a partnership with Sayyid Hasan Fakhr al-Din Akhrami, almost certainly the brother of Sayyid Ahmad Fakhr al-Din Akhrami, whom we met before. Sayyid Hasan advanced 21,500 piasters for the purchase of qilw, lime, and jift (crushed olive pits used as fuel to cook the soap), as well as labor and other miscellaneous expenses, for 21 batches (tabkhas) of soap. Oil is not listed among the expenses, which means that it was supplied by the merchants who commissioned the tabkhas. This amount corresponds roughly to the total sum (20,000 piasters) paid by Ahmad Agha Nimr to renovate and expand the factory that year. No doubt, therefore, this partnership was concluded before the renovations began.

Of the 21,500 piasters invested by Sayyid Hasan, approximately 70 percent were spent on qilw. By comparison, the cost of lime amounted to 4.5 percent; jift, 4 percent; taxes, 5 percent; labor, 4 percent; and equipment and miscellaneous expenses, 12.5 percent. These figures generally agree with those calculated from a much briefer account sheet for the Yusufiyya factory for the year 1855–1856. Of the total capital invested in that year, 64 percent went toward the purchase of qilw; jift cost 6.6 percent; lime, 4.3 percent; labor, 10.6 percent; rent, 3 percent; and miscellaneous expenses, 11.5 percent.^[41]

In 1826 Ahmad Agha and Hasan Fakhr al-Din charged oil merchants 1500 piasters for each cooked batch, making a profit of roughly 476 piasters per tabkha after the costs of labor and raw materials were deducted. The profits were then split evenly: half to Ahmad Agha for renovating the waqf property of which he was the superintendent and half to Sayyid Hasan for supplying the additional capital. Their return on their initial investment (over and above the renovations), after only three months’ work, was a respectable 30 percent.

This partnership was political as well as economic, in the sense that Ahmad Agha’s connections were important for securing the needed supplies; that is, some merchants during this period still found it easier to back a large venture by an established ruling family than to bear the entire risk themselves. One needs to consider, for example, the sources of the raw materials purchased by Sayyid Hasan for the Yusufiyya factory. First, 147 out of the 166 qintars of qilw purchased came from the Salt region: consistent supplies of this raw material depended primarily on the relationship between Nablus and the bedouins of the eastern bank of the River Jordan, especially members of the Bani-Sakhr tribe. Second, the lime came from three villages east of Nablus: Awarta, Salim, and Bayt Furik.^[42] As discussed in Chapter 4, these villages had been closely connected to the Nimr family since the seventeenth century as part of their timar and, later on, their tax-farming holdings.

The fact that patronage, official position, and political power defined the relationship between the Nimr family and the peasants of these villages throughout the last three centuries of Ottoman rule does not mean, however, that this relationship did not change dramatically over time. The Nimrs shifted from being sipahis, or military officers with rights to a percentage of the surplus, to becoming tax collectors (multazims) and, finally, entrepreneurs who simply took advantage of previous connections but no longer had the political influence to enforce them. It was only in the last phase of this changing relationship that merchants could begin to make major inroads into the hinterland, successfully compete with old ruling families, and eventually be able to directly decide what was produced, to whom it was sold, and for how much.

The 1855–1856 account sheet of expenses and income for the Yusufiyya factory shows that the division of labor in financing the production of soap was somewhat similar. Ahmad Agha’s son, Abd al-Fattah, put up one-quarter of the capital, and three partners put up the rest.^[43] They contracted an unspecified number of tabkhas, making a profit of 20.1 percent, or a third less than in 1825–1826. Because costs averaged roughly the same percentages as in the previous account sheet, it is not clear what the reasons for the decline in profit were. Perhaps greater competition from a rising number of soap factories encouraged merchants to offer a lower fee for each tabkha. In any case, profit margins of 20–30 percent for just the short-term production stage of the soap industry are not only impressive but also similar to the figures given by Tamimi and Bahjat more than six decades later, suggesting that a steady high profit was one of the factors behind the expansion of the soap industry during the second half of the nineteenth century.^[44]

As for the soap merchants, it is not known how much profit they made on the soap, but it must have been considerable. After all, it was the soap merchants who bore the brunt of capital investment in soap production. The cost of oil alone for the 21 tabkhas in 1825–1826 was more than 120,000 piasters, or more than three times the joint investment by the soap-factory owner and his partner.^[45] This is not to mention the rent for storing the oil, the 1,500 piasters’ fee for each batch, the export taxes and transportation,^[46] and the long waiting period while the soap was dried, packaged, and shipped. Not surprisingly, therefore, soap merchants also formed partnerships in order to defray the high costs of production.