Economic history of the Ottoman Empire
While many sources state that the Ottoman Empire “blocked” the Silk Road by increasing taxes, this is not supported by any larger body of historical research.
The empire did not take an active interest in sea trade, preferring a free-market system from which they could draw a tax revenue.
For example, under Hadim Suleyman Pasha's tenure as Grand Vizier until 1544, the Ottoman administration was directly involved in the spice trade to increase revenue.
In 2020, archaeologists discovered the shipwreck of a massive Ottoman merchant ship in the Mediterranean thought to have sunk in 1630 CE en route from Egypt to Constantinople.
The ship was 43 meters in length and had burden of 1,000 tons, and was transporting wares including Ming-dynasty Chinese porcelain, painted ceramics from Italy, Indian peppercorns, coffee pots, clay tobacco pipes and Arabian incense.
The nature of this cargo and the vast size of the vessel are indicative of the activity of Red Sea-Indian Ocean-Mediterranean trade routes during the Ottoman period.
Not all regions benefited from steamships 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.
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.
[citation needed] With low population densities and lack of capital, the Ottomans did not develop extensive railroad or shipping industries.
The magnitude of variations in productivity is often at the core of such important historical debates as to whether there was an agricultural revolution, when and where it happened, and how the standard of living has varied among societies.
Some rural families manufactured goods for sale to others, for instance, Balkan villagers traveled to Anatolia and Syria for months to sell their wool cloth.
The empty central Anatolian basin and steppe zone in the Syrian provinces were instances where government agencies gave out smallholdings of land to refugees.
Foreign holdings remained unusual despite Ottoman political weakness – probably due to strong local and notable resistance and labor shortages.
[17] However, cheap American grain imports undermined agricultural economies across Europe in some cases causing outright economic and political crises.
However, with market forces driving down prices their importance declined, and with the Janissaries as their backers, being disbanded by Mahmud II in 1826, their fate was sealed.
[32][33] In addition to Egypt, other parts of the Ottoman Empire, particularly Syria and southeastern Anatolia, also had a highly productive manufacturing sector that was evolving in the 19th century.
[37] Following the death of Muhammad Ali in 1849, his industrialization programs fell into decline, after which, according to historian Zachary Lockman, “Egypt was well on its way to full integration into a European-dominated world market as a supplier of a single raw material, cotton.” He argues that, had Egypt succeeded in its industrialization programs, “it might have shared with Japan [or the United States] the distinction of achieving autonomous capitalist development and preserving its independence.”[35] Economic historian Paul Bairoch argues that free trade contributed to deindustrialization in the Ottoman Empire.
In contrast to the protectionism of China, Japan, and Spain, the Ottoman Empire had a liberal trade policy, open to imports.
The Treaty of Balta Liman with Britain doomed Ottoman industrialization in the 19th century as it was effectively an unequal free trade agreement.
The liberal Ottoman policies were praised by British economists such as J. R. McCulloch in his Dictionary of Commerce (1834), but later criticized by British politicians such as Prime Minister Benjamin Disraeli, who cited the Ottoman Empire as "an instance of the injury done by unrestrained competition" in the 1846 Corn Laws debate:[39] There has been free trade in Turkey, and what has it produced?
Wars had a 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.
[Note 7] Foreign trade, a minor part of the Ottoman economy, became slightly more important towards the end of the 19th century with the rise of protectionism in Europe and producers looking to new markets.
McNeill describes an Ottoman stagnation through center-periphery relations – a moderately taxed center with periphery provinces suffering the burden of costs.
It increasingly began to address education, health and public works, activities that used to be organized by religious leaders in the communities – this can be argued as being necessary in a rapidly changing world and was a necessary Ottoman response.
[58][59] As the 19th 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.
In 1875, with external debt at 242 million Turkish pounds, over half the budgetary expenditures going toward its service, the Ottoman government facing some 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.
[71] 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 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.
