In the first two parts of this series on the history of medieval Georgia’s economy, agriculture and the role of cities and villages were discussed at length. Today, we’ll touch upon the crucial 18th century: the period when Europe took its first steps toward industrialization.

After the decline of the previous centuries, a favorable situation for economic development in eastern Georgia was created in the late 18th century, in most part conditioned by the liberation of Kartli-Kakheti from Iran and the reforms implemented by Erekle II.

Erekle II introduced progressive laws for the development of trade relations, and established a firm customs tariff. At the same time, he invited Armenian merchants and those living in various provinces of Iran to his kingdom, promising them protection and security. To stimulate trade, the King broke with feudal conservatism, took an unprecedented step, and advanced traders as princes and nobles. As a result, a large part of the South Caucasian merchants came under the protection of Erekle II.

As the restoration of the road connecting Europe and Asia through Georgia exceeded the capabilities of the Kingdom of Kartli-Kakheti, the King shifted his attention in another direction. In 1750, the Dariali or the "Ossetian Road" was opened, and Erekle II set a preferential customs tariff on imported or exported goods in order to popularize this road. In addition to the named highway, an important trading artery was the old traditional caravan route through which Tbilisi connected the cities of the eastern part of the South Caucasus and northern Iran with Istanbul. Care was also taken to improve the caravan routes, and, soon, Erekle's subordinate merchants were among the main actors in the Iran-Russia trade turnover. As a result, the role of Tbilisi grew.

The monetary reform also had a positive effect on deepening trade relations and strengthening independent economic policies. In the 1760s, the Tbilisi Mint became independent from the Iranian vassalage, and Erekle II started to issue large quantities of his own coins.

As a result of the implemented measures, the economy of eastern Georgia developed, contributing to the improvement of urban life. The opening of the road connecting to Russia led to the establishment and development of Dusheti, Ananuri and Akhalgori. As a result of the strengthening of economic ties between western and eastern Georgia, the cities on the roads connecting Imereti and Racha, namely Tskhinvali and Surami, developed significantly. The city of Sighnaghi developed in Kakheti, which, on the order of the king, was surrounded by a defensive wall.

The revival of urban life in the late 18th century, and the development of monetary and commodity relations, led to the strengthening of the domestic market. We see in the historical documents that in the discussed era, all the products or items that were consumed by the people were traded in the cities of eastern Georgia. Different corners of the country were connected to each other.

In the late 18th century, trade and economic ties between eastern and western parts of Georgia were restored. In addition to the loss of the Ottoman state’s power over time, which weakened economic ties, the traditional divide of western and eastern Georgia between Iranian and the Ottoman ceased to exist with the liberation of Kartli-Kakheti from Iranian domination. Kartli-Kakheti, independent of Iran, helped the country to escape economic isolation. In order to stimulate intensive economic relations between the two sides of the country, Erekle II set a preferential customs tariff for trade with western Georgia. As a result, according to sources, trade caravans between Kartli and Imereti were moving almost every day.

By Apolon Tabuashvili, Emil Avdaliani

Image: Four silver abazis of Erekle II struck at the Tiflis mint in the 1790s. Source: Wikimedia commons

Related articles: 

History of Georgia’s Economy. Part I

History of Georgia’s Economy. Part II