Cosgel on Cottrell, Fraser and Fraser, eds., _East Meets West: Banking, Commerce and Investment in the Ottoman Empire_

[Book Reviews in Economic and Business History]

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 Atatürk 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 at UConn.Edu.  Website: http://cosgel.uconn.edu .

Copyright (c) 2008 by EH.Net. All rights reserved. This work may be 
copied for non-profit educational uses if proper credit is given to the 
author and the list. For other permission, please contact the EH.Net 
Administrator (administrator at eh.net). Published by EH.Net (December 
2008). All EH.Net reviews are archived at http://www.eh.net/BookReview.