The Armenians were by tradition settled farmers and enterpreneurs, the Tatars (now known as Azeris) were originally semi-nomad shepherds, under leading military families who were also extensive landlords.

In 1832 there lived 762 Armenian and 936 Tatar families in Shushi. 138 Armenians were engaged in trade, the rest were craftsmen. One of the influential Armenians supplied the town with water, but it was not enough to satisfy the increasing need of the population. In 1829 one hundred and 32 machines of the town produced natural silk.

After the Russo-Persian Treaty of Turkmenchai, the Shushi fortress lost its defensive importance and obtained a new status of a trading centre. The three Armenian families of the town controlled the trade and production of silk. They bought the silk in Shaki, Shirvan, Shushi, Gandzak and Iran and sent it to Russia. The Shushi merchants bought products worth 140 thousand roubles in Iran, salt worth 90 thousand roubles in Yerevan and Nakhichevan, ready made goods worth 30 thousand roubles in Tiflis and Nukhi and sold all this product in Russia or other places.

Shushi was the fourth largest town in Transcaucasia, Baku and Gandzak followed it. The German “Algemeine Zaitung”, periodicle wrote, “The main city of Karabakh; Shushi, without exaggeration can be called the Caucasian Jibraltar. It is situated on the route, connecting Iran, Turkey, Yerevan, Tiflis…. The Shushi merchants are seen in Nizhegorodsk, Islambul, Leipzig fairs”.

The Nerkin Tagh (lower district) of Shushi, occupied largely by Armenians, existed till 1840. The Tatars had set up new districts around it and were intending to squeeze out the Armenians from there. They practised the same tactical means of their ancestors, gradually persuading the Armenians that it was impossible to live side by side with them. Their extremism frightened the administration of the city, who would bear responsibility for the riots, which threatened to break out. The Armenians gradually left their houses in that part of the city. Phychologically it was very difficult for them to leave their spiritual centre; the St. Astvatsatsin Church, where their ancestors had created several Bibles, the Holy place Kamu Khach and the tombs of their fathers. But being constantly subdued by the Tatars and the administration, they left their houses and moved higher, setting up their Verin Tagh district there.7

It may seem that under the Russian centralized power such hostilities were impossible but in fact national confrontation was growing day by day. The Tatar tribes tried to capture new lands from the Armenians in Karabakh. In the mid ninteenth century some balance was maintained, which was soon broken by the new discourse which penetrated to the region.

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