Economic history of the Ottoman Empire


Economic history of the Ottoman Empire

Economic history of the Ottoman Empire covers the period 1299-1923. The economic history falls into two distinctive sub periods.Fact|date=July 2008 The first is the classic era (enlargement), which comprised a closed agricultural economy, showing regional distinctions within the empire. The Second period was the reformation era that comprised state organized reforms, commencing with administrative and political structures through to state and public functions. Change began with military reforms extending to military associated guilds (Ottoman: Yonca) and public craft guilds.

The Ottoman Economy

The Ottomans saw military expansion and fiscalism as the source of wealth, with agriculture seen as more important than manufacture and commerce. [Berkes described the Ottoman economy as a “war economy” where its primary revenue comprised booty from expansion. This idea has been supported by Ottomanists Halil Inalcik, 1994, op cit, and Suraiya Faroqhi - Faroqhi, S, The Ottoman Empire and the World Around it, The Library of Ottoman Studies 7, I B Tauris, London, 2004] Western mercantilists gave more emphasis to manufacture and industry in the wealth-power-wealth equation, moving towards capitalist economics comprising expanding industries and markets whereas the Ottomans continued along the trajectory of territorial expansion, traditional monopolies, conservative land holding and agriculture. [In economic terms, neither the Marxian Asiatic mode of production, nor the feudal mode found in mediaeval Europe reflect the Ottoman economy accurately, as it falls somewhere in between the two - excess peasant production was taxed by the state as opposed to it being paid in rent to feudal lords - Faroqhi, S, 1999, pp. 189-91]

Demographics

Ottoman censuses began in the early nineteenth century, with population approximations having to be created with demographic patterns for earlier periods. [The Ottomans developed an efficient system for counting the empire’s population in 1826, a quarter of a century after such procedures were introduced in Britain, France and America – Shaw, S J, “The Ottoman Census System and Population, 1831-1914”, International Journal of Middle East Studies, Cambridge University Press, 1978, p. 325] It is unclear why the population in the eighteenth century was lower than that in the sixteenth century. However, it began to rise to reach 25-32 million in 1800, with around 10 million in the European provinces (primarily the Balkans), 11 million in the Asiatic provinces and around 3 million in the African provinces. Population densities were higher in the European provinces, double those in Anatolia, which were triple Iraq or Syria and five times Arabia. [Quataert, D, 2000, op cit, pp. 110-11] In 1914, the Ottoman population was 26 million, similar to that of 1800, in between being reduced from over 3 million square kilometres to around a third. This means there was a doubling of population, increasing population densities in the empire. The average lifespan comprised 49 years towards the end of the empire, compared to mid-twenties in Serbia at the beginning of the nineteenth century. [Ibid, p. 112] Epidemic diseases and famine caused major disruption and demographic changes. In 1785 around one sixth of the Egyptian population died from plague and Aleppo saw its population reduced by twenty percent in the 1700s. Six famines hit Egypt alone between 1687 and 1731 and the last famine to hit Anatolia was four decades later. [Ibid, p. 113] They were brought under control in the nineteenth century with improvements in sanitation, healthcare and transportation of foodstuffs.

The rise of port cities saw the clustering of populations caused by the growth of steamships and railroads. Urbanization increased from 1700-1922, with towns and cities growing, especially with the improvements in health and sanitation, which made them more attractive to live and work. Port cities like Salonica, in Greece, saw a population rise from 55,000 in 1800 to 160,000 in 1912 and Izmir saw 150,000 in 1800 grow to 300,000 in 1914. [Ibid, p. 114; Pamuk, S, “The Ottoman Empire and the World Economy: The Nineteenth Century”, International Journal of Middle East Studies, Cambridge University Press, Vol. 23, No. 3, Aug. 1991] Some regions conversely had population falls - Belgrade saw its population drop from 25,000 to 8,000 due to political causes. [Ibid, p. 114] Population statistics thus mask varying experiences in different regions.

Economic and political migrations had impact across the empire, for instance the Russian and Austria-Habsburg annexation of the Crimean and Balkan regions saw large influxes of Muslim refugees – 200,000 Crimean Tartars fleeing to Dobruja. [Ibid, p. 115] Between 1783 and 1913, approximately 5-7 million refugees flooded into the Ottoman Empire, at least 3.8 million of whom were Russians. Some migrations left indelible marks such as tensions (Turkey and Bulgaria) whereas centrifugal effects were noticed in other territories, simpler demographics emerging from diverse populations. Economies were also impacted with the loss of artisans, merchants, manufacturers and agriculturists. [Ibid, p. 116]

Transport

During the nineteenth century, new technologies radically transformed the challenge of distance to both travel and communications. Through the invention of the steam engine in Britain, water and land transport revolutionised the conduct of trade and commerce. The steam ship meant journeys became predictable, times shrank and unimaginable weights could be carried more cheaply. Quataert cites the Istanbul-Venice route, a main trade artery, taking anything from fifteen to eighty-one days in the past, was now reduced to ten days. Sail ships would carry 50 to 100 tonnes – steamships could now carry 1,000 tonnes. [Comparatively ships like the Titanic could carry 66,000 tonnes - Quataert, D, 2000 op cit, pp. 117-8]

New routes once not possible were now traversable – rivers that carried cargoes only in one direction could now be traversed both ways bringing innumerable benefits to regions. New routes like the Suez Canal were created, prompted by steamships, changing trade demographics across the Near East as trade was rerouted. Quataert’s research shows volume of trade began to rise in the nineteenth century. By 1900 sailboats accounted for 5 percent of ships visiting the Istanbul, however this 5 percent was greater in number than any year of the nineteenth century. In 1873, Istanbul handled 4.5 million tons of shipping – this was 10 million tons by 1900. These ships accelerated growth of port cities with deep harbours to accommodate ever-growing ships. Europeans however owned 90 percent of commercial shipping operating in Ottoman waters. Not all regions benefitted from steam ships as rerouting meant trade from Iran, Iraq and Arabia now did not need to go through Istanbul, Aleppo, and even Beirut, leading to losses in these territories. [Quataert, D, “European capital and Ottoman port workers, 1880-1909”, ed. Islamoglu-Inan, H, 2004, op cit, pp. 302; Ibid, pp. 116-8]

The Ottoman world split into the European provinces of wheeled transport and non-wheeled transport in Anatolia and the Arab world. Railroads revolutionized land transport profoundly, cutting journey times drastically promoting population movements and changing rural-urban relations. Railroads offered cheap and regular transport for bulk goods, allowing for the first time the potential of fertile interior regions to be exploited. When built near these regions agriculture developed rapidly with hundreds of thousands of tons of cereals being shipped by this way. Railroads had additional benefits for non-commercial passengers who began using them with 8 million passengers using the 1,054-mile Balkan lines and 7 million using the Anatolian 1,488 miles. Railroads also created a new source of employment, over 13,000 workers by 1911. [149] With low population densities and lack of capital, the Ottomans did not develop extensive railroad or shipping industries.Most of the capital for railroads came from European financiers, which gave them considerable financial control. [Ibid, pp. 116-21]

Existing economic activity did not fall, on the contrary rising. The business and animals used previously to transport goods between regions found new work in moving goods to and from trunk lines. The Aegean areas alone had over 10,000 camels working to supply local railroads - Ankara station had a thousand camels at a time waiting to unload goods. [Pamuk, S, 1987, op cit, p. 124] Furthermore, additional territories running by railroads came under development and agriculture. Like sailing vessels, land transport contributed to and invigorated trade and commerce across the empire.

Agriculture

The Ottoman Empire was an agrarian economy, labour scarce, land rich and capital poor. Majority of the population earned their living from small family holdings and this contributed to around 40 percent of taxes for the empire directly as well as indirectly through customs revenues on exports.

Cultivator families drew their livelihoods from a complex set of different economic activities and not merely from growing crops. This included growing a variety of crops for their own consumption as well as rearing animals for their milk and wool. Some rural families manufactured goods for sale to others, for instance Balkan villagers travelled to Anatolia and Syria for months to sell their wool cloth. [Islamoglu’s study of Anatolia from the seventeenth century onwards finds state policy by way of taxation and inheritance laws encouraged peasants to commercially develop fruits, vegetables and sheep - Islamoglu, 2004, ed. Islamoglu-Inan, H, op cit, p. 123] This pattern established for the eighteenth century had not significantly changed at the beginning of the twentieth century. [Quataert, D, 2000 op cit, pp. 128-9] That is not to say that there were no changes in the agrarian sector. Nomads played an important role in the economy, providing animal products, textiles and transportation. They were troublesome for the state and hard to control – sedentarization programs took place in the nineteenth century, coinciding with huge influxes of refugees. This dynamic had the effect of a decline in animal rearing by tribes and an increase in cultivation. The rising commercialization of agriculture commencing in the eighteenth century meant more people began to grow more. With increased urbanisation, new markets created greater demand, easily met with the advent of railroads. State policy requiring a greater portion of taxes to be paid in cash influenced the increased production. Finally, increased demand for consumer goods themselves drove an increase in production to pay for the same. [Ibid, pp. 129-30]

Quataert argues production rose due to a number of factors. An increase in productivity resulted from irrigation projects, intensive agriculture and utilisation of modern agricultural tools increasing in use throughout the nineteenth century. By 1900, tens of thousands of plows, reapers and other agricultural technologies such as combines were found across the Balkan, Anatolian and Arab lands. However, most of the increases in production came from vast areas of land coming under further cultivation. Families began increasing the amount of time at work, bringing fallow land into use. Sharecropping increased utilising land that had been for animal pasturage. Along with state policy, millions of refugees brought vast tracts of untilled land into production. The empty central Anatolian basin and steppe zone in the Syrian provinces were instances where government agencies parcelled out smallholdings of land to refugees. This was a recurring pattern across the empire, small landholdings the norm. Foreign holdings remained unusual despite Ottoman political weakness – probably due to strong local and notable resistance and labour shortages. Issawi et al have argued that division of labour was not possible, being based on religious grounds. [Issawi, C, The Economic History of the Middle East, 1800-1914, A book of Readings, University of Chicago Press, London, 1966, p. 114] Inalcik however demonstrates that division of labour was historically determined and open to change. Agricultural reform programs in the late nineteenth century saw the state founding agricultural schools, model farms, and education of a self-perpetuating bureaucracy of agrarian specialists focused on increasing agricultural exports. Between 1876 and 1908, the value of agricultural exports just from Anatolia rose by 45 per cent whilst tithe proceeds rose by 79 percent. [Quataert, D, “Dilemma of Development: The Agricultural Bank and Agricultural Reform in Ottoman Turkey, 1888-1908”, International Journal of Middle East Studies, 1975, pp. 210-11]

However, cheap American grain imports undermined agricultural economies across Europe in some cases causing outright economic and political crises. [Critz, J M; Olmstead, A L; Rhode, P W, “"Horn of Plenty": The Globalization of Mediterranean Horticulture and the Economic Development of Southern Europe, 1880-1930”, The Journal of Economic Histor,yEconomic History Association, Vol. 59, No. 2, Jun 1999, pp. 316-352]

Manufacture

Whilst looking at Ottoman manufacture, a significant area of technology transfer, Quataert argues one must not only look at large factories but also the small workshops:

“One will find then find that Ottoman industry was not a “dying, unadaptive, unevolving sector...”
[but] vital, creative, evolving and diverse”. [Frangakis-Syrett, E, “Manufacturing and Technology Transfer in the Ottoman Empire, 1800-1914”, International Journal of Middle East Studies, 1994, p. 115]

Over the nineteenth century, a shift occurred to rural female labour with guild organized urban-based male labour less important. The global markets for Ottoman goods fell somewhat with certain sectors expanding. However, any changes were compensated by an increase in domestic consumption and demand. [Quataert, D, 2000 op cit, p. 132] Mechanized production even at its peak remained an insignificant portion of total output. The lack of capital, as in other areas of the economy, deterred the mechanization of production. Nonetheless, a number of factories did emerge in Istanbul, Ottoman Europe and Anatolia. In the 1830s steam powered silk reeling factories emerged in Salonica, Edirne, West Anatolia and the Lebanon. [Ibid, pp. 132-7; Frangakis-Syrett, E, 1994, op cit, p. 116]

Under the late eighteenth century fine textiles, hand-made yarns and leathers were in high demand outside the empire. However, these declined by the early nineteenth century and half a century later production for export re-emerged in the form of raw silk and oriental carpets. The two industries alone employed 100,000 persons in 1914 two-thirds in carpet-making for European and American buyers. Most workers were women and girls, receiving wages that were amongst the lowest in the manufacturing sector. Much of the manufacturing shifted to the urban areas during the eighteenth century, in order to benefit from the lower rural costs and wages. [Quataert, D, 2000, op cit, p. 133]

Guilds operating prior to the eighteenth century did see a decline through the eighteenth and nineteenth centuries. Guilds provided some form of security in prices, restricting production and controlling quality and provided support to members who hit hard times. However, with market forces driving down prices their importance declined, and with the Janissaries as their backers, being disbanded by Mahmut II in 1826, their fate was sealed. [Reeves-Ellington, B, op cit; Quataert, D, 2000, op cit, pp. 132-137]

By far the majority of producers targeted the 26 million domestic consumers who often lived in adjacent provinces to the producer. Analysing these producers is difficult, as they did not belong to organizations that left records.

Manufacturing through the period 1600-1914 witnessed remarkable continuities in the loci of manufacturing; industrial centers flourishing in the 1600s were often still active in 1914. [Inalcik, H and Quataert, D, 1994, op cit, p. 5] Manufacturing initially struggled against Asian and then European competition in the eighteenth and nineteenth centuries whereby handicraft industries were displaced by cheaper industrially produced imports. [Quataert’s study of the Istanbul port workers and their struggle over two decades against the European companies with indirect support from the state highlights the difference between colonial administrators elsewhere and the Ottoman government – Pamuk, S, “Social Disintegration and Popular Resistance in the Ottoman Empire, 1881-1908: Reactions to European Economic Penetration”., The Journal of Economic History, Economic History Association, Vol. 44, No. 3, Sep 1984, pp. 872-73] However, manufacturing achieved surprising output levels, with the decline of some industries being more than compensated by the rise of new industries. [Quataert, D, 2000, op cit, p. 110] Decline of handicrafts production saw a shift of output move to agricultural commodity production and other manufacturing output. [For instance, silk reel production from the Levant emerged in the nineteenth century, as did the production of raw silks and carpets. Pamuk, S, 1987, op cit, p. 8]

Domestic

Domestic trade vastly exceeded international trade in both value and volume though researchers have little in direct measurements. [Quataert, D, 2000 op cit, pp. 126-7] Much of Ottoman history has been based on European archives that did not document the empire’s internal trade resulting in it being underestimated. [Faroqhi, S, 1999, op cit, p. 142]

Quataert illustrates the size of internal trade by considering some examples. The French Ambassador in 1759 commented that total textile imports into the empire would clothe a maximum of 800,000 of a population of at least 20 million. In 1914 less than a quarter of agricultural produce was being exported the rest being consumed internally. [Quataert, D, 2000 op cit, p. 126; Pamuk, S, 1984, op cit, p. 109] The early 1600s saw trade in Ottoman-made goods in the Damascus province exceeded five times the value of all foreign-made goods sold there. Finally, amongst the sparse internal trade data are some 1890s statistics for three non-leading cities. Their sum value of their interregional trade in the 1890s equalled around 5 percent of total Ottoman international export trade at the time. Given their minor status, cities like Istanbul, Edirne, Salonica, Damascus, Beirut or Aleppo being far greater than all three, this is impressively high. These major trade centres, dozens of medium sized towns, hundreds of small towns and thousands of villages remains uncounted – it puts into perspective the size of domestic trade. [Quataert, D, 2000 op cit, pp. 126-7]

Two factors that had major impact on both internal and international trade were wars and government policies. Wars had major impact on commerce especially where there were territorial losses that would rip apart Ottoman economic unity, often destroying relationships and patterns that had endured centuries. The role of government policy is more hotly debated – however most policy-promoted barriers to Ottoman international and internal commerce disappeared or were reduced sharply. [Ibid, pp. 124-5] However, there appears little to indicate a significant decline in internal trade other than disruption caused by war and ad-hoc territorial losses.

International

Global trade increased around sixty-four fold in the nineteenth century whereas for the Ottomans it increased around ten to sixteen fold. Exports of cotton alone doubled between 1750 and 1789. The largest increases were recorded from the ports of Smyrna and Salonica in the Balkans, however they were partially offset by some reductions from Syria and Constantinople. While cotton exports to France and England doubled between the late seventeenth and late eighteenth centuries, exports of semi-processed goods to northwest Europe also increased. Whilst the Ottoman market was important to Europe in the sixteenth century, it was no longer so by 1900. The Ottoman Empire was not shrinking - quite the opposite in fact – however it was becoming relatively less significant. [Reeves-Ellington, B, op cit]

As regards trade imbalance, only Constantinople ran an import surplus. Both Lampe and McGowan argue that the empire as a whole, and the Balkans in particular, continued to record an export surplus throughout the period. [As early as 1850, French authorities became concerned that imports of 27.3 million francs from the Ottoman Empire exceeded what France was exporting to them 19.9 million francs and were anxious to balance the two figures - Raccagni, M, “The French Economic Interests in the Ottoman Empire”, International Journal of Middle East Studies, Cambridge University Press, 1980, p. 342] The balance of trade however moved against the Ottomans from the eighteenth century onwards. They would re-export high value luxury goods, mainly silks from the Far East and exported many of its own goods. Luxury goods began being imported. Through the eighteenth century, exports moved to unprocessed goods whilst at the same time commodities were imported from European colonies. Most of these commodities were produced by slave labour undercutting domestic production. However, according to most scholars, a favourable balance of trade still existed at the end of the eighteenth century. [Quataert, D, 2000, op cit, pp. 126] Nineteenth century trade increased multi-fold, however exports remained similar to eighteenth century levels. Foodstuffs and raw materials were the focus with carpets and raw silk appearing in the 1850s. [Pamuk, S, 1984, op cit, p. 109-111] Although the basket of exports remained generally constant, relative importance of the goods would vary considerably.

From the eighteenth century onwards, foreign merchants and Ottoman non-Muslims became dominant in the growing international trade. With increasing affluence, their political significance grew especially in Syria. Muslim merchants however dominated internal trade and trade between the interior and coastal cities. [In 1793, Aleppo alone issued 1,500 certificates to Ottoman non-Muslims for such privileges which through the course of the eighteenth century allowed them to replace their European counterparts. Istanbul boasted over 1,000 registered merchants in the early twentieth century, of which only 3 per cent comprised British, French or German merchants – Quataert, D, 2000, op cit, pp. 127-8]

Foreign trade, a minor part of the Ottoman economy, became slightly more important towards the end of the nineteenth century with the rise of protectionism in Europe and producers looking to new markets. Its growth was seen throughout the period under study, particularly the nineteenth century. Throughout, the balance of payments was roughly on par with no significant long-term deficits or surpluses.

Finance

Ottoman bureaucratic and military expenditure was raised by taxation, generally from the agrarian population. [Ibid, p. 71] Pamuk notes considerable variation in monetary policy and practice in different parts of the empire. Although there was monetary regulation, enforcement was often lax and little effort was made to control the activities of merchants, moneychangers, and financiers. [Under Islamic law usury was prohibited, Pamuk quotes a number of stratagems that were used, notably double-sale agreements. - Wilson, R, “A Monetary History of the Ottoman Empire”, Business History Review, Boston, Summer 2003, Vol. 77, Iss. 2, p. 384; Pamuk, S, 2000, op cit] During the "price revolution" of the sixteenth century, when inflation took off, there were price increases of around 500 percent [These figures are based on price indices Pamuk constructed for Istanbul in the sixteenth and seventeenth centuries; other scholars have recorded similar trends for the period - Ibid] from the end of the fifteenth century to the close of the seventeenth. [Pamuk argues the Turkish economic historian Omer Barkan is incorrect in attributing price rises to imported inflation rather the cause being the velocity of circulation of money drove prices up, as well as increasing commercialization with the growing use of money as a medium of exchange – Pamuk, S, 2001, op cit, pp. 73-85; Wilson, R, 2003, op cit, p. 384] However, the problem of inflation did not remain and the eighteenth century did not witness the problem again.

The eighteenth century witnessed increasing expenditure for military related expenditure and the nineteenth century for both bureaucracy and military. McNeil describes an Ottoman stagnation through centre-periphery relations – a moderately taxed centre with periphery provinces suffering the burden of costs. [McNeil’s contribution was informed by his research on relations between centres and peripheries of world empires - McNeil, W, Europe’s Steppe Frontier 1500-1800, The University of Chicago Press, London, 1964] Though this analysis may apply to some provinces, like Hungary, recent scholarship has found that most of the financing was through provinces closer to the centre. [Finkel, C, The Administration of Warfare: The Ottoman Military Campaigns in Hungary 1593-1606, Vol I, Vienna, VWGO, 1988, p. 308, cited by Faroqhi, S, 1999, op cit, p. 180] As the empire modernized itself in line with European powers, the role of the central state grew and diversified. In the past, it had contented itself with raising tax revenues and war making. It increasingly began to address education, health and public works, activities that used to be organised by religious leaders in the communities – this can be argued as being necessary in a rapidly changing world and was a necessary Ottoman response. At the end of the eighteenth century, there were around 2,000 civil officials ballooning to 35,000 in 1908. [Quataert, D, 2000, op cit, p. 62] The Ottoman military increasingly adopted western military technologies and methods, increasing army personnel of 120,000 in 1837 to over 120,000 in the 1880s. [Ibid, p. 63] Other innovations were increasingly being adopted including the telegraph, railroads and photography, utilised against old mediators who were increasingly marginalised. [These comprised diverse groups such as the Janissaries, guilds, tribes, religious authorities and provincial notables – Ibid, p. 63]

Up to 1850, the Ottoman Empire was the only empire to have never contracted foreign debt and its financial situation was generally sound. [Ibid, p. 341;] [Pamuk, S, 1984, op cit, p. 110] As the nineteenth century increased the state’s financial needs, it knew it could not raise the revenues from taxation or domestic borrowings, so resorted to massive debasement and then issued paper money. [Clay, C, “A Monetary History of the Ottoman Empire”, The Economic History Review, Economic History Society, Vol. 54, No. 1, Feb 2001, p. 204;] [Pamuk, S, 2001, op cit] It had considered European debt, which had surplus funds available for overseas investment, but avoided it aware of the associated dangers of European control. [Ibid, p. 71; Raccagni, M, “The French Economic Interests in the Ottoman Empire”, International Journal of Middle East Studies, Cambridge University Press, 1980, p. 343;] [Anderson, O, “Great Britain and the Beginnings of the Ottoman Public Debt, 1854-55”, The Historical Journal, Cambridge University Press, 1964, Vol. 7, No. 1, pp. 47-63;] [Clay, C, “The Origins of Modern Banking in the Levant: The Branch Network of the Imperial Ottoman Bank, 1890-1914”, International Journal of Middle East Studies, Cambridge University Press, Vol. 26, No. 4, Nov 1994, pp. 589-96] However, the Crimean war of 1853-1856 resulted in the necessity of such debt. [Between 1854 and 1881, the Ottoman Empire went through a critical phase of the history. Beginning with the first foreign loan in 1854, this process involved sporadic attempts by western powers to impose some control. From 1863 a second and more intense phase began leading to a snowballing effect of accumulated debts. In 1875, with external debt at 242 million Turkish pounds, over half the budgetary expenditures going toward its service, the Ottoman government facing a number of economic crises declared its inability to make repayments. The fall in tax revenues due to bad harvests and increased expenditure made worse by the costs of suppressing the uprisings in the Balkans hastened the slide into bankruptcy. After negotiations with the European powers, the Public Debt Administration was set up, to which certain revenues were assigned. This arrangement subjected the Ottomans to foreign financial control from which they failed to free themselves, in part because of continued borrowing. In 1914, the Ottoman debt stood at 139.1 million Turkish pounds, and the government was still dependent on European financiers - Clay, C, Gold for the Sultan: Western Bankers and Ottoman Finance, 1856-1881, IB Taurus, 2001;] [Anderson, O, “Great Britain and the Beginnings of the Ottoman Public Debt, 1854-55”, The Historical Journal, Cambridge University Press, 1964, Vol. 7, No. 1, pp. 47-63; Clay, C, 1994, op cit, p. 589;] [ [http://www.bartleby.com/67/1341.html 1875–1914] , "Bartleby Encyclopaedia of World History", 2001] [Eldem, E, “Ottoman financial integration with Europe: foreign loans, the Ottoman Bank and the Ottoman public debt”, European Review, Cambridge University Press, Vol. 13, Iss. 03, July 2005, pp. 431-45; Pamuk, S, 1987, op cit, p. 57]

Why had the Ottomans not developed their own financial system in line with London and Paris? It was not for the want of trying. Since the beginning of the eighteenth century, the government was aware of the need for a reliable bank. The Galata bankers, mostly Greeks or Armenians, as well as the Bank of Constantinople did not have the capital or competence for such large undertakings. [Raccagni, M, “The French Economic Interests in the Ottoman Empire”, International Journal of Middle East Studies, Cambridge University Press, 1980, p. 343; Clay, C, 1994, op cit, pp. 589-90] As such, Ottoman borrowings followed the Heckscher-Ohlin theorem.

Borrowing spanned two distinct periods, 1854-1876 (see Table 4). The first is the most important resulted in defaults in 1875. Borrowings were normally at 4 to 5 percent of the nominal value of the bond, new issues however being sold at prices well below these values netted of commissions involved in the issue, resulting in a much higher effective borrowing rate – coupled with a deteriorating financial situation, the borrowing rate rarely went below 10 percent after 1960. [Pamuk, S, 1987, op cit, p. 59]

European involvement began with the creation of the Public Debt Administration, after which a relatively peaceful period meant no wartime expenditures and the budget could be balanced with lower levels of external borrowing. The semi-autonomous Egyptian province also ran up huge debts in the late nineteenth century resulting in foreign military intervention. With security from the Debt Administration further European capital entered the empire in railroad, port and public utility projects, increasing foreign capital control of the Ottoman economy. [Pamuk, S, 1987, op cit, pp. 130-1] The debt burden increased consuming a sizeable chunk of the Ottoman tax revenues – by the early 1910s deficits had began to grow again with military expenditure growing and another default may have occurred had it not been for the outbreak of the First World War.

The exact amount of annual income the Ottoman government received, is a matter of considerable debate, due to the scantness and ambiguous nature of the primary sources. The following table contains approximate estimates. Simple timeline
event-title=Annual Revenue
type=style=""
1433|2,500,000 ducatsW. Treadgold, "A History of the Byzantine State and Society", 969]
1496|3,300,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1520|3,130,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1526|4,500,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1530|6,000,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 181]
1553|7,166,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1558|7,740,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1566|8,000,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 181]
1587|9,000,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1592|10,000,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1603|8,000,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 180]
1660|12,000,000 ducatsA. Lybyer, " The Government of the Ottoman Empire in the Time of Suleiman the Magnificent", 181]

ee also

*History of Turkey
*Caliphate
*Sick man of Europe
*French colonial empires
*Italian Empire
*Byzantine Empire

References

External links

* [http://www.turizm.net/turkey/history/ottoman3.html The Ottoman Empire] , by Richard L. Chambers, University of Chicago.


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