Published by EH.NET (August 2001)

Christopher Clay, Gold for the Sultan: Western Bankers and Ottoman Finance,

1856-1881. London and New York: I.B. Tauris Publishers, 2000. xx + 698 pp.

$65.00 (hardback), ISBN: 1-86064-476-6.

Reviewed for EH.NET by Faruk Tabak, Walsh School of Foreign Service,

Georgetown University.

Christopher Clay’s Gold for the Sultan is a detailed and painstaking

study which reconstructs, in all its historical richness and specificity, a

story which is all too familiar in its general outlines and yet always

arresting when skillfully couched in the labyrinthine details of the

relationships it relates. The story is that of the conflict-laden and

systemically-forged relationship between money, or capital if you will, and

political power. Here, the former assumes the form of loans extended to a

perpetually cash-strapped Ottoman state by a myriad of banks domiciled in

London, Paris and elsewhere, and the latter is personified by a Sublime Porte

which, in the wake of two decades of reforms starting with the Tanzimat, was

forced during the Crimean War to resort to borrowing in world capital markets

for the first time in its history. Christopher Clay, Professor of History at

the University of Bristol, gives a blow-by-blow account of the mercurial

relationship between the handlers of the world-economy’s wealth, i.e. the

banking institutions and bankers inhabiting global centers of accumulation,

and the Ottoman state from the onset of the Crimean War in 1856 to the

installation in 1881 of the Public Debt Administration after the default of

1875-76. Here, the well-known scenario of spiralling indebtedness culminating

in bankruptcy owes its peculiar twist to the founding of the Banque Imp?rial

Ottomane (BIO), the governmental bank of the empire, by no less than the

lenders themselves. Owned, controlled and managed from London and Paris, the

Bank was expected to lay the foundations of a modus vivendi between the

lenders and the Sublime Porte. The relationship between the two, when viewed

from the imperial seat of power, was more adversarial than not, especially in

times of pressing need which not incidentally was the case for most of the

twenty-five years covered in the book. In the eyes of those associated with

the Bank, however, the interests of the Ottoman state and western bankers were

not almost always divergent, they were closely intertwined.

Clay examines the dynamics of this relationship from the vantage-point of the

Bank, through the eyes of its major decision-makers. The book traces the

historical trajectory of the Bank from the growing presence of western bankers

in Ottoman finances during the Crimean War (Chapter 1) to the successful

raising of a series of loans until 1875 under the watchful eyes, but not

always with the intermediation, of the Bank (Chapters 2 to 5); from the

bankruptcy and the crisis that ensued in 1876-77 (Chapters 5 to 7) to the

securing, with the help of the Bank in particular, of a partial rehabilitation

that led to the creation of the Public Debt Administration (Chapters 8 to 11).

In essence, the book discusses, through the prism of the BIO, whether a

working relationship can be established between a “state bank” marching to the

tune of world capital markets and an imperial seat of power inclined or forced

to live beyond its means yet not willing to bow down to the demands of

capital markets precisely because it was given access to a bank which it

invested with imperial privileges and expected, in return, to be given some

financial breathing space. The author clearly demonstrates that the answer is

more nuanced than not. The first two decades of the Bank’s existence were not

happy ones indeed, because it was forced to compete with other lenders who

were more than willing to extend funds to the Ottoman state on better terms.

The relationship between the two turned cordial only at the end of the 1870’s

and in the early 1880’s. The taxing times following the default created a more

cordial environment. It is this brief “moment” that Clay silhouettes in his

conclusion and highlights the value of the service the Bank had then rendered

to the Ottoman state.

To make his point, Clay scrutinizes conditions surrounding the timing and

nature of each and every loan and analyzes whether it was more or less likely

for the Porte to get better terms. By design, the cases are handled on an

individual basis rather than systemically. This detailed account, by

clarifying the motives of each agent engaged in the process of negotiation and

the course of action available to each under the circumstances, turns, in

Thomas Hardy’s words, “a bag of bones and a quarter pound of blood” into

flesh and soul. Yet, overall, the approach is not without its drawbacks. When

seen from a bird’s eye-view and not from the vantage-point of the BIO, it was

not incidental that the bankruptcy came after 1873, the start of the Great

Depression of the nineteenth century. Neither was it serendipitous that during

the mid-Victorian boom when money was chasing after borrowers, there were

scores of lenders willing to outcompete the BIO if not undermine its

foundations. Nor was it by chance that conditions of cohabitation between the

Sublime Porte and the BIO improved during the Great Depression precisely

because borrowers started chasing after money after losing the freedom of

choice the expansionary phase offered them between 1850 and 1873.

That these two sets of events, closely interlinked, are not presented as one

cannot be attributed to oversight. Far from it. It is reflective of the

priorities the author has set for himself for this enterprise. As clearly

expressed in the introductory chapter, this is a book about Ottoman and global

financial history, and not about the Ottoman economy or the world-economy at

large. Yet, respecting this self-imposed demarcation, and unwaveringly so, has

its drawbacks. For one, in a setting where agricultural production was

overwhelmingly dominant and in-kind tax collection the order of the day, as in

the Ottoman case, fluctuations in prices that agricultural goods fetched in

world markets found immediate reflection in the fluctuations in state

revenues. With the onset of the Great Depression around 1873, global terms of

trade between agricultural and manufactured goods were tipped to the detriment

of the former, and this had a direct –and negative– bearing on the size of

Ottoman state revenues as elsewhere. The reversal in terms of trade was not a

short-term phenomenon either; agricultural prices picked up only after the

mid-1890’s. In the interim, the number of defaults and debt reschedulings

increased around the globe notwithstanding the specificity of each case


The absence of a larger frame of reference makes itself evident in the

author’s contention that “the financial failure of 1856-75 thus led directly

to the further disintegration of the empire after 1908 and its final collapse

in 1918″ (p. 1). Yet, the global economic environment changed drastically from

the mid-1890’s, the start of an expansionary phase that lasted until the

1920’s. Doubtless, the burden of debt weighed heavily on the state in the

long-run, but from the turn of the century capital flows resumed their inward

course and agricultural prices resumed their upward course. Moreover, the

imperial rivalry between the Great Powers allowed more funds to be injected

into the Ottoman economy in the form of loans than were repatriated in the

form of interest payments and repayments. The line of causality linking the

third quarter of the nineteenth century to the final collapse of the empire is

not necessarily a linear one. After all, periods of downturn (and

accompanying defaults) were, and are, as much part of the functioning of the

world-economy as periods of boom. The aftershocks of a default may linger on,

but unless compounded by new misfortunes, its ability to singlehandedly

determine the direction of change in the long-run is not unlimited.

Analyzing historical developments through the prism of the Bank does not

obscure larger forces only. The Bank’s principal local competitors, the Galata

bankers, who did not leave behind as copious a documentation as the Bank,

appear as mostly enigmatic if not shady characters whose mores were radically

different from the Bank’s western competitors (p. 181). The view from Galata,

one could surmise, was quite different. Overall, however, it is impossible not

to agree with the author that the number of substantive works on the Ottoman

state’s dependence on world capital markets and on the Bank is inversely

proportional with that of theoretical works on it, and that this gap in the

empire’s vital information data base has to be filled in if the impact this

institution had on the trajectory of the Ottoman state is to be charted rather

than simply inferred. This Christopher Clay has done impeccably.

Faruk Tabak is coeditor of Landholding and Commercial Agriculture in the

Middle East (SUNY Press, 1991) and Informalization: Process and

Structure (Johns Hopkins University Press, 2000).