Critical Analysis of the Economy of the Ottoman Empire

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The Economy of the Ottoman Empire

The Ottoman economy had a strong basis of many clever trade policies, transportation networks, and an abundance of diverse natural and land resources. It contributed to both European, Asian, and African economic processes, and influenced the economies of many other states in different periods of time. It had great potential for development and for becoming one of the greatest economies in Europe and the Middle-East. However, due to Ottoman conservatism, foreign intervention, and the absence of proper reforming that would let the economy develop, it never evolved to the level of the European industrial economies, lost its significance and power, and fell into decay.

Agriculture

As I said before, agriculture was the main aspect of the Ottoman economy. The Ottomans tried to develop their economy mainly by continuously expanding their empire, by conquests, in order to provide more land for farming and extracting natural resources for export. Ottomans believed that agriculture was more important than industry, private entrepreneurship, or trade. The Ottoman empire possessed a wide range of agricultural resources from the territories captured in Eastern Europe, Middle-East, and South Africa, that were used and consumed domestically, and exported to other countries. For example Barley was grown mainly from the western coasts of black sea; dried and fresh fruits were transported from Thessaly and Western Anatolia; cattle from the Balkans; cloth and wool from North Africa; gold and slaves from Sudan; spices, porcelain, silk and dyes from the East.

Before the 18th and 19th century (when urbanization started to take place with higher rates) the majority of the population used to live in rural areas, earning their living from small family holdings, growing crops both for themselves and for markets in big cities like Constantinople, to which they traveled to sell their harvest. Unfortunately, peasant population still had little income from their holdings. A big part of the Empire’s annual income came from agricultural taxation revenues and custom duties from agricultural exports. This was due to very high taxation rates for farmers in many regions of the Empire. Thus, the rates of growth of wealth among the people working in rural areas remained quite low until the 18th 19th century, when the Ottoman Government did a lot for the development of agriculture. In the 19th-century sedentarization programs took place, that were needed to integrate the nomadic tribes into the economy to get maximum economical control over them, and to involve more people in production. This coincided with refugee influxes, and as many refugees were granted land in Syria and Anatolia, the amount of land that was being farmed increased. The 19th century seen multiple irrigation projects and the introduction of modern agricultural technologies and tools, such as plows, reapers, and combines. As railroads were built across the empire, the effectiveness of transportation of agricultural goods increased multi-fold. Farmers began to increase the amount of time at work. Many people moved to urban areas. The urbanization process started to take place more with higher rates, and hence, the demand of consumer goods (manufactured in urban areas from materials from agricultural areas) increased. And finally, the new government policies that demanded a greater portion of taxes to be paid in cash also stimulated the increase in production.

Agricultural schools and model farms were founded. In order to increase the export values, and develop agriculture in general many agrarian specialists were educated. During the reign of Sultan Abdulhamid II), the value of agricultural exports from Anatolia increased by 45%.

Transportation

Transportation played an important role in the agricultural and trade spheres of Ottoman economics, as the Empire occupied vast territories in three continents, and had agricultural production in different regions, that were quite far apart from each other, and goods needed to be effectively transported to markets in Istanbul and other cities that were exporting and trading centers of the Empire. Even before the era of transportation modernizations, Ottomans had an effective system of roads and caravanserai (that they inherited from Seljuk Turks), due to which they carried out very effective land transportation.

With the introduction of steam engine (in 19th century) the sea and river trade significantly increased in importance, as the ship voyages became predictable (sail ships depended on seasonal wind changes), and ships became able to travel upstream the river. The duration of voyages from Istanbul to Venice became eight times shorter, and the load-carrying capacity of trade ships increased almost by 1000% on average. Railroads were built around the Empire, revolutionizing agricultural and trade transportation, and providing employment in for over 30 000 people.

Manufacturing

Manufacturing had always been a much less developed part of the Ottoman economy.

Although the majority of the workforce was distributed in rural areas, there were some craftsmen living in urban areas, whose numbers increased as urbanization took place, and demand in more commodities increased. Same as in medieval Europe, some guilds emerged among the urban societies of the Ottoman empire. But as the Ottoman manufacturing sphere of economics developed much slower (the urbanization took place slower because of many people being bound to the land and being unable to move to the urban areas) and less effective than the European ones, professional guilds became a well-established aspect of the Ottoman society only in the late 16th century. But in the 19th-century guilds finally came to decline.

The process of mechanization of production in all parts of economy was deterred and slown down by the population’s inability to accumulate capital (caused by a number of different factors, including an unwise taxation system). Despite this, some factories still were built in urban areas in the 18th and 19th centuries, leading to the decline of guilds. Factories now were dominating over the market by controlling the prices because of their production abilities being much bigger than those of handicraftsmen. Guilds lost their control over the market and their power to restrict production. But factories still were an insignificant part of the economy, and many handicraft businesses kept functioning. For example, hand-made yarns and leathers, and later raw silk and carpets were actively exported to other countries.

As the Ottoman Empire followed liberal free-market trade policies, it lacked protectionist policies (as of those of European Countries), that could help support domestic manufacturing (factories) and let the Empire industrialize successfully. Although Ottoman Domestic production still struggled with Asian and European competition in the 18th and 19th centuries, it was often undercut by imports of cheap industrially produced goods (For example, cheap commodities from European colonies, that were produced by slave labour). The handicraft industry declined, also being undercut by imports. However, some historians state that decline of some industries was compensated by rise of other industries. The decline of handicraft production was compensated by increase of output in agricultural commodity production.

Overall, Ottoman Empire stayed deindustrialized, which made it a weaker economic power than other European States. Deindustrialization remained a big problem for a long time and contributed to the fall of the Empire. Only one part of the Empire nearly achieved industrialization. Namely, Ottoman Egypt (which was quite independent from the rest of the Empire, and had a developed economy comparable to European countries like France) under the reign of Muhammad Ali. Unfortunately, after his death, all the industrialization projects were canceled, and later Egypt (as well as Ottoman Empire in general) became an exporter of unprocessed goods.

Trade

Trade in the Ottoman empire was diverse and well-established. The government took no part in the trade process and developed a free-market system from which they could get tax revenue. Despite this, they sometimes moved away from such policies, but usually for a short period of time and not often. (For example, in 1544 the ottoman government was involved in the spice trade.).

Due to liberal free-market policies the Ottoman government followed, trade (both international and domestic) had no political barriers, and was affected mainly by territorial losses, and sometimes by foreign pressure (most significant examples seen in the 19th century – eg. Treaty of Balta Liman, that forced Ottomans to abolish all trade monopolies and give British merchants full access to Ottoman markets).

Domestic trade

Due to the vagueness of the original sources, and lack of detailed evidence, the is not a lot of information about the domestic trade in the Ottoman Empire (because most European sources do not describe internal trade of the Empire), and so, the domestic trade is often underestimated. However, from the sources that give some description of the domestic trade, it can be estimated that it was of a much larger volume and value than the foreign trade. More than 75% of the agricultural goods produced in the empire was traded within the Empire. In some provinces, the amount of domestically produced goods that were sold was 400% bigger than the amount of imported goods that were sold there every year. Only about 4% of the population wore imported textiles. Some statistics of late 19th century say that the interregional trade of 3 certain towns (that obviously were not leading trade centers) was comparable in its value and volume to the twentieth part of all the Ottoman annual export at the time. From this, we can only assume how ‘‘big’’ Ottoman domestic trade was.

External Trade.

Ottoman Empire exported a lot of agricultural goods from its own territories. Due to high rates of export the Empire kept a positive trade balance (exporting more than importing). and exported to other countries. For example, Barley was grown mainly from the western coasts of the black sea; dried and fresh fruits were transported from Thessaly and Western Anatolia; cattle from the Balkans; cloth and wool from North Africa; gold and slaves from Sudan.

Ottoman Empire was the intermediary between the East and West, re-exporting many Asian luxury goods, silks from the Far East spices, porcelain, silk, and dyes. The Empire controlled the mainland trade routes to Asia and Africa, and this gave the Ottomans a significant economical advantage, and for quite a long time the Ottoman Empire as the only country trading with India, Arabia, Iran, Ethiopia, and many other countries. However, this economic advantage had become insignificant when the Europeans discovered other sea routes to Africa and Asia. But later the Ottoman Empire turned into one of the major European naval powers (during the rule of Suleiman I the magnificent), and started to develop sea trade along the Mediterranean Sea, Red Sea, Black Sea, and the Persian Gulf.

The Ottoman trade system began to lose its efficiency in the 18th and 19th centuries. Ottomans began to import more luxury goods and many products from European factories (undercutting domestic production). Handicraft manufacturing declined. All Ottomans were left with were unprocessed goods (that were in demand in the manufacturing industry of Europe), that became their main exports. The trade balance became negative. In the 19th century, the Ottoman Public Debt became a problem, and when the Ottoman Empire declared bankruptcy, its European creditors were able to get some of the Empire’s trade monopolies, and gain considerable economic influence over the empire.

The main reasons why the Ottoman economy was ineffective, were the government, its conservatism, and the clergy’s influence over the government. The government did not let the country industrialize, and advance technologically, often on religious grounds.

Due to this, at the end of the 19th century Ottoman Empire was a deindustrialized, economically weakened country, that suffered territorial losses, debts, and both political and economic pressure from European imperialistic powers. The Ottoman economy was rich with potential and poor with wise administration.

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