Economic history of the Ottoman Empire

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	Economical History of Ottoman Empire
Enlargement Era
Reformation Era
See also	Capitulations

Economic history of the Ottoman Empire covers the time period, between 1299- 1923. The economic history was divided into two distinctive sub periods. First one is the classic era (enlargement), which was a closed agricultural economy, showing regional distinctions within the empire. Second one is the reformation era (westernization). It was mainly composed from state organized reforms which began from administrative and political structures and than extended to the related transformations from state to public functions. The change began with the military reforms and its extension to military associated guilds (ottoman: Yonca) to public craft guilds. These reformations during Tanzimat expended to education, taxation, and even subsidizing of the small industry.

1 Classic Era
2 Reformation Era

[edit] Classic Era

Main article: Socioeconomics of Enlargement Era (Ottoman Empire)

[edit] Reformation Era

Main article: Socioeconomics of Reformation Era (Ottoman Empire)

Prior to the Siege of Vienna, Ottoman Empire was not subjected to regular diplomatic customs, nor was it recognizing the right to existence of the Christian states, which were considered tolerated enemies. The Vienna failure starts a process of medievalisation of the Ottoman state, as the Muslim faith is gradually replaced by financial and civil contracts in all the aspects (external relations, army recruiting, state organization etc.)

Social structure had remained stereotypically feudal. A strong, zealously followed religious establishment had helped to sustain this and resulted in most official posts, legislations and culture moreover being heavily influenced by the prolific Islamic councils and having strong outwards signs of Islam. The Madrasas, the primary education centres of the empire, had staunchly religious doctrines and acted as an expresser of the contemporary Muslim world view. Also, foreign policy, at least with relation to European states, was highly pragmatic but also pre-emptive, a foreign policy common to earlier European feudal states. Many official posts required active or previous military experience; Grand Viziers, the equivalent chief ministers of other contemporary nation, often commanded the army in person. Such a social and administrative structure, however, remained effective and efficient in conducting foreign policy, gains in Europe being evidence for this.

Areas of economic surplus, above self-sustaining bases, were few in relation to the area under Ottoman rule. Such areas focused around an urban centre surrounded by well tilled arable farmland. Populations and population density was huge where substantial rural to urban migration had occurred; famine, conflict and extortion from tax-farms being the main stimulus for this. Cities, as in Europe, were the focuses of manufacture and trade. Ottoman cites had a large out put of goods, where comprehensive guild systems maintained quality at the expense of competition. However, the main source of Ottoman wealth came from less industry reliant goods and raw materials, mainly items from the east such as silk and gems; also the passage of such goods generated revenue due effective taxing measures. In comparison to its neighbours, the Ottoman empire was immensely wealthy.

[edit] Industrial Revolution

Further information: Industrial Revolution

While the industrial revolution had swept through western Europe, the Ottoman Empire was still relying mainly on medieval technologies. The vast empire had no railroads, and few telegraph lines. It took days before the major naval defeat at Sinope was learned of in the capital. The poor communications made it very difficult for Constantinople to control its provinces. Thus the provinces in the Balkans, Africa, and Asia became almost autonomous. Serbia was now an independent nation in all but name, paying only token tribute to the Sultan. Most of the other provinces also paid only fractions of the tribute required by law. Even the areas under the Sultan's direct control had an outdated and corrupt tax system, drastically depleting revenues. The disorganization and corruption permeating the nation also discouraged trade, hurting both itself and its relations with other nations. Compared to any other European power the Ottoman empire also had virtually no industry, and its raw materials were not being harvested.

[edit] Commerce as an economic inducer

International commerce was in rise through out the 19th century. The enlargement periods the main commerce consisted from local trade (closed economic system) between the Ottoman subjects. The international trade was reaching its peak in Europe and Ottoman Empire was one of the main interest area, but the question was how to enable this form of trade into Empire.

The task of uniting Ottoman Empire to this international trade was achieved through linking millet (Ottoman Empire) that wanted (capable) of communicating with European traders. In 1838, the signing of British-Ottoman commercial convention was one of the unique points in the economical history of the Empire that breaks its won shell. This achievement had come with giving some favors to British merchants. As with this agreement port cities such as Izmir and Beirut grew rapidly. In 1827 British exports were around 500,000 pounds which will grow to five times of this size in 1849. The closed system of Ottoman Empire with British imports was becoming a form of slave system, as the only way to pay back to England was passing through cheap labor. Ottoman historians point to this fact as the major source behind the uprising in the Empire. The fast grow of the Economy induced by British commerce was not compensated with the technological and other forms of production, which strike on the society that was based solely on agricultural production.

The western powers had invested a great deal of resources in the Crimean war and they did not wish to come to the aid of the faltering Empire again. Thus the nation was invaded by British, French, and Austrian businessmen and administrators who came to reform and rebuild the economy. This period known as the Tanzimat saw great changes. During the period after the Crimean war a national bank was created, the tax system was revised and strengthened, the law was altered to emulate the Napoleonic Code, a public education system based on that of the French was created, the Orient Express railroad was constructed, as well other railroads were built that travelled along the coast of Anatolia and into the Balkans.

Then on Friday, May 9, 1873 disaster struck. The Vienna stock market crashed and took with it the economy of Europe. The money and loans from abroad stopped pouring into Istanbul and the government entered a financial crisis. Unable to deal with this, the Sultan Abd-ul-Aziz began to rapidly switch Grand Viziers. Unable to repay foreign loans, the empire was forced to default on them, and ask for assistance from Europe. Soon the Sultan could avoid a fetva no longer and he was deposed. Eventually Abd-ul-Hamid II was girded with the sword of power.

[edit] Ottoman Public Dept Administration

Bankruptcy of 1875 could only be overcomed by central government (House of Osman) giving promises to bondholders and consolidation of the 210 million pound external debt. That is achieved through establishing a council. A council that will be an big power on the administration of the empire, behind the curtains. The official name was "The Council of Administration of the Ottoman Public Dept" (PDA). The PDA transferred huge amount of investments from England to build the credit. In five years the 1/5 of the huge debt was paid off. In 1880 the sultan had a good credit. That gave chance to other branches of the Empire to bring new credits. The borrowing was blooming before turn of the century. This financial reform gave chance to implement railways as an economic inducer idea.

In 1900, PDA was financing many railways and many other industrial artifacts. The organization was very famous at this time. It was announced as the new frontiers of the Ottoman extension. Some claimed that PDA was an instrument of imperialism. If this argument was true, the controllers (board of regions) were not obviously the Ottomans. The Sultan had the power of assigning only one member to the board.

[edit] Railways as an economic inducer

Despite the turmoil’s in the country the Ottoman economy was in rise mainly because of the foreign investment. The GDP of the empire was tripled between 1890 to World War I. One main characteristic of the development in the period was it was not homogenous. As the growth was mainly subsidized by external investment (such as German investments) only places that German investors went was having the transformation. After "Oriental Railway" was finished with reaching to Istanbul, "Anatolian Railway Company" become a significant marker to the development pattern in the Empire as it was the subsidiary of German investment.

The railways brought the Emperor Wilhelm to Istanbul in 1889 and 1898. Berlin-Baghdad railway was the hottest concept of its time. It was seen as an instrument of German influence to Middle-East.

Sultan Abdulhamid believed that unification of the empire could only achieved by moving goods and people effectively within the empire, which the railway was the instrument. Economic prosperity was the only glue that could have hold an Empire which was fractured with national and religious conflicts.

This article incorporates text from the Encyclopædia Britannica Eleventh Edition, a publication now in the public domain.

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