is owned and operated by the Economic History Association
with the support of other sponsoring organizations.

East Meets West: Banking, Commerce and Investment in the Ottoman Empire

Author(s):Cottrell, Philip L.
Fraser, Monica Pohle
Fraser, Iain L.
Reviewer(s):Cosgel, Metin

Published by EH.NET (December 2008)

Philip L. Cottrell, Monica Pohle Fraser and Iain L. Fraser, editors, East Meets West: Banking, Commerce and Investment in the Ottoman Empire. Burlington, VT: Ashgate, 2008. xx + 193 pp. $100 (hardcover), ISBN: 978-0-7546-6443-7.

Reviewed for EH.NET by Metin Cosgel, Department of Economics, University of Connecticut.

The Ottoman Empire experienced fundamental changes in the nineteenth century as part of its integration into the world economy. Mechanized transportation networks were developed, new financial institutions accommodating foreign investment were established, the volume of international trade rose at historic proportions, and the basis for monetary policy increasingly required a compromise between domestic concerns and European interests. These changes were the subject of a colloquium held at the Imperial Mint, Istanbul, in 1999. It brought together historians of the Empire, some of whose work has pioneered much of the effort devoted to understanding the nature and consequences of the massive commercial, financial, and monetary transformation that took place during this period. Philip L. Cottrell, Professor of Economic and Social History at Leicester University, in collaboration with Monika Pohle Fraser and Iain L. Fraser of the European Association for Banking and Financial History in Frankfurt, Germany, has edited the papers presented at the colloquium in a volume titled East Meets West: Banking, Commerce and Investment in the Ottoman Empire. The outcome is a rich survey of the broad literature examining the transformation from a variety of perspectives.

The book includes ten chapters, in addition to Cottrell?s introduction, each written by either a banking specialist or an established social, cultural, or economic historian of the Empire with well-known expertise in the field, altogether forming a fairly comprehensive analysis of its integration into the world economy during this period.

In chapter 1, Murat Cizakca, member of the Academic Committee of the F. Datini Foundation in Proto and a Senate member of the INCEIF University in Kuala Lumpur, discusses the evolution of domestic borrowing methods from the early sixteenth century to the mid-nineteenth century. Interpreting tax-farming as a method of domestic borrowing by the state, he examines how the system evolved over time and relates significant changes, such as the shift from short-term to life contracts, to war finance and the way disastrous losses forced the state to raise extra revenue by altering the terms of contracts.

In the second chapter, Sevket Pamuk, Professor of Economics and Economic History at Bogazici University and the London School of Economics, studies what greater integration into the world economy in the nineteenth century meant for the Ottoman monetary system. To achieve greater stability of prices and expansion of foreign trade and investment, the Ottoman government abandoned debasements of coinage in the 1840s and embraced bimetallism under domestic and foreign pressure. When in the 1870s the leading economies abandoned bimetallism in favor of the gold standard, this time the government was pressured into severing the link between gold and silver. Although the Ottoman Empire finally adopted gold as its standard for currency as part of the debt settlement in 1881, it retained silver as the basic unit of account for most daily transactions in an interesting system called the ?limping? gold standard. Studying these developments, Pamuk argues that the Ottoman monetary policy in the nineteenth century was a compromise between the domestic concerns of an agrarian, low income economy and European interests for stability and greater integration.

David M. Williams, Professor of Economic and Social History at Leicester University, focuses on steam shipping in chapter 3 in studying advances in communications and trading links during the nineteenth century. The steamship had an earlier impact than railroads by providing regular liner services between eastern and western Europe from the 1840s. The impact was significant because the steam liners overcame the uncertainty and unpredictability of sails shipping and brought safety and regularity to the transportation of goods, passengers, and mail on published schedules.

In chapter 4, Caglar Keyder, Professor of Sociology at Bogazici University and State University of New York, Binghamton, studies the development of a bourgeoisie in the Ottoman Empire in the second half of the nineteenth century. Whereas by the nineteenth century bourgeoisie played a key role in Europe, it was virtually non-existent in the Ottoman Empire until the second half of the century. In a patrimonial order such as the Ottoman Empire the development of bourgeoisie was possible if imperial control was somehow weakened, its hold on taxable surplus was relaxed, and obstacles on the accumulation of private wealth were removed. Keyder identifies different trajectories of how imperial control could be weakened and bourgeoisie power could rise in different regions (Egypt, Balkans, and Anatolia) and sectors (agrarian, port cities) of the Empire. He identifies reasons for the slow growth of autonomy early in its history and circumstances that facilitated bourgeoisie development in the second half of the nineteenth century.

Surveying the growth of European investment in the Empire in chapter 5, Cottrell focuses on investment in state debt and railway securities over the sixty years before 1914. He identifies two long waves of changes in the composition of European investment in Ottoman securities during this period, the trough between them being marked out by bankruptcies of the mid 1870s.

Chapter 6 is a survey of the history of the Imperial Ottoman Bank, established in 1863 after an agreement between the Ottoman, French, and English representatives of the Bank?s founders. Andre Autheman, general manager of the Ottoman bank from 1975 to 1986 and member of the Bank Committee from 1980 to 1990, starts by tracing the origins of the Bank, conceived at the end of the Crimean War (1853-56) out of concerns with severely destabilized state finances and the need to reform the financial and monetary system by reaching out to foreign powers for assistance. The Bank was established to perform three roles. It issued notes guaranteed by gold reserves, facilitated commercial transactions, and promoted business development. After surveying the history of the Bank?s operations in each role, Autheman concludes the chapter by discussing how at the end of the Empire the Bank had to be transformed from an imperial bank with enormous powers to an international bank with vastly reduced functions.

The next chapter, authored by Christopher Clay, Professor Emeritus of Economic History at the University of Bristol, is also devoted to the history of the Imperial Ottoman Bank, particularly its experience in borrowing for the state in the bankruptcy era (1863-77). Soon after its establishment, the bank faced fierce competition from other institutions with European connections that also sought to provide loans to the government. Although the Ottoman government benefited from competition by obtaining favorable terms for loans, its financial situation deteriorated sharply during the 1873 crises and it was forced to reform its budget operations. As an important component of the financial reform, the government extended the status of the Bank to include the function of an independent supervisor over government finance as a whole.

In chapter 8, Jacques Thobie, Professor Emeritus of contemporary history at the University of Paris, presents quantitative information from his work on French investments in the Ottoman Empire just before the First World War. Differentiating between investments in public and private funds, he charts the evolution of French investment in the Empire in each fund from 1881 to 1914. He also estimates the relative attractiveness of these investments, shows the distribution of overall French investment by country and sector, and discusses the role of the Imperial Ottoman Bank.

Chapter 9, authored by Zafer Toprak, Director of the Atat?rk Graduate Institute for Modern Turkish History, Bogazici University, Istanbul, is on the development of the Ottoman Stock Exchange. As the Empire undertook a series of reforms in the nineteenth century and integrated into the world economy, the inadequacies of traditional sources of revenue became increasingly more apparent. The Istanbul Stock Exchange was established informally in 1853 and formally in 1866 to broaden the types of available capital and to accelerate the pace of integration. The Exchange quickly became an important accelerant in the pace of integration, facilitating the flow of foreign capital to treasury bonds and the financing of railroads and public utilities.

German financial interests in the construction of railways are the subject of the final chapter, authored by Boris Barth, University of Konstanz. The Deutsche Bank was involved in Ottoman railroads in two phases, first at the end of the 1880s as the financier of a section of the Anatolian railway project. After the financial success of this project, it was also involved in the construction of the Baghdad railway, in collaboration with French investors. Describing the events surrounding these involvements and the cost and benefit (profitability) of each project from a German perspective, Barth also discusses the relative weights of political and economic concerns in investment decisions.

Despite the high quality of most of its chapters, the volume as a whole suffers from a lack of coherence, organization, and ambition in editing. Other than the topic of each chapter being loosely related to the Ottoman integration into the world market in the nineteenth century, there is little common ground in method or objective that ties them together. There are numerous overlaps and redundancies among chapters, but few cross-references, and no shared or debated claims. The lack of coherence also reflects in the organization of the book, as can be seen from the seemingly arbitrary order of chapters without a clear structure. Most chapters are reviews or summaries of previous work, some dating back to 1970s, rather than extensions or applications to a new, common theme. It does not appear that the editor has set an agenda for the colloquium or asked that contributions to the volume push the boundaries of scholarship in a new direction. Readers looking for the newest ideas on the economic integration of the Ottoman Empire in the nineteenth century would be well-advised to look elsewhere or to other recent works of some of the contributing authors.

I recommend East Meets West to the general historian or the Ottoman specialist looking for brief surveys of the issues faced by the Ottoman Empire in its integration into the world economy in the nineteenth century. It includes essays on a variety of topics, including events leading to integration (Cizakca, Williams), the process of integration (Cottrell, Autheman, Clay, Toprak, Barth), and its consequences (Pamuk, Keyder, Thobie). Some of the chapters also include tables or references to sources of data, which should be useful to those looking for quantitative information about the commercial, financial, and monetary history of the Empire during this period.

Metin Cosgel is Professor of Economics at the University of Connecticut. His current research interests include the economic history of the Ottoman Empire and the political economy of religion. Email: Metin.Cosgel@UConn.Edu. Website:

Subject(s):Transport and Distribution, Energy, and Other Services
Geographic Area(s):Middle East
Time Period(s):20th Century: Pre WWII