MODERNIZATION AND COMMERCIALIZATION IN THE TANZIMAT PERIOD: 1838-1875 Zafer Toprak* ‘The aim of the present study is to reconsider and reconstruct the eco- nomic history of the “decaying” Ottoman Empire during the Tanzimat period. Scores of scholars have already interpreted the decay in terms of imperial expansion. The decay paradigm is part of empire histories. Therefore, itis strongly imprinted with political discourse, Below, I will argue that the Ottoman case would be better un- derstood if viewed within the context of a more dynamic process of change versus inertia rather than decay, and that such an approach to Ottoman economic and social history would be less tainted with political concerns. ‘The ultra-nationalist approach to Ottoman economic history, has always blamed the 1838 Anglo-Ottoman Commercial Treaty for the “under-development” or “dependency” of the Iate Ottoman Empire ‘This scenario with a xenophobic hint and backed by Marxist as well ‘as nationalist historiographies, finds the main scapegoat of modern Ottoman-Turkish economic history in the 1838 Treaty. Most students of Ottoman economic history, influenced by this mentality, saw the Tanzimat era as an economic process which forced the Ottoman Empire to fall under foreign domination and to lose its political and economic independence. According to this view, the new ‘era was characterized by the free-trade policy inaugurated in 1838, and foreign debts borrowed from 1854 onwards were instrumental in the creation of this dependency or foreign domination. For these students, the tenets of the Treaty created the legal and mental milieu for a laisser faire, laisser passer framework, which led to the destruction of Ottoman local economic potential, mainly the tra- ditional guild system, Ottoman foreign debts, on the other hand, pre- pared the milieu for foreign political and economic supremacy. ‘Thus, agricultural as well as non-agricultural pursuits became more and more dependent on foreign markets, relegating the Ottoman Empire to colo- nial or semi-colonial status. However, historians with a non-conflictual and consensual model of development in mind could construct a different scenario and offer an alternative problematic by framing their models in a complementary, * Roephora University, ntanbul, Department of History New Perspectives on Turkey, Spring 1992, 7, pp. 57-70.58 ZAFER TOPRAK rather than a mercantilist and antagonistic context. A much more optimistic acenario conld be adopted and the Tanzimat era could be considered as the turning point in the making of a modern nation-state with a capitalistic opening. In fact, most Ottoman-Turkish historians are uneasy in their treatment of late Ottoman-Thirkish history, namely the rise of a nation-state framework leading to Republican Turkey and the fall of the Ottoman Empire. When they embark upon global anal: ysis, they hesitate between analyses based on economic imperialism on the one hand, and socio-political evolutionism on the other. Despite their misgivings on economic policy, the Tanzimat, for most Republic can historians, is the starting point of modernization, or the making of the so-called nation-state. ‘The economics of the Tanzimat, despite its ups and downs, can, however, be integrated into this modernization paradigm summarized in terms of urbanization, secularization, and structural differentiation, In other words, the economic liberalism of the Tanzimat may well have been the prerequisite for a new structure, escaping inertia and low social mobility. So the Tanzimat era could be interpreted in terms of a gradual yet irreversible trend towards more rational, complex, and impersonal forms of social organization within the framework of capitalism and moder bureaucracy. In fact, I want to argue that the Tanzimat period should be seen as a phase which proved to be indispensable for the transition of the Ottoman economic structure from its pre-capitalist stagnation to a dynamic growth. Or in sociological terms, a transition from traditional society to modern society based on achievement and high mobility. One can argue that foreign trade had the “mission” to destroy the traditional social framework and make change possible, as Marx put it for the British in India. ‘The Ottoman ancien régime had to be disbanded and refortns had to be carried out, despite the economic and financial problems inherited from the classical economic model. And, this could only be pursued in a liberal capitalistic framework, ie., with capitalistic procedures and stitutions emulated from the Western world. ‘The Anglo-Ottoman Commercial Treaty of 1838 and the ensuing treaties were parts of this spurt. Rather than the antagonistic mercantilist assumption of dif- ference of interest, a much more liberal approach was tested in the ‘economic and financial activities of the ‘Tanzimat. NEW PERSPECTIVES ON TURKEY 50 Restructuring of the Empire ‘The reports sent to the British Board of Trade in the 1830s, before the signing of the ‘Treaty, illustrate amply the irregularities of the market mechanism in the pre“Tanzimat era. David Urquhart, renowned for his book The Resources of Turkey, compiled prices at different stages of rmarketization with the help of an Armenian commercial house. Accord- ing to his report to the British Board of Trade, the price of commodities increased more than ten times through their journey to the export port For example, a quintal of valonia bought at seven karsg from the peas- ant leaped to seventy kurus in Izmir. In a mediocre year it could be as high as ninety kurug. Other export goods such as wool. sesame, nuts, raisins, and olive oil shared the same fate. Monopolies, internal customs and permis, plus money paid to the local governors, restricted the market. The practice of monopoly at the mercy of local governors discouraged many commercial houses from earrying out business in the Ottoman territories. As for the producers, they had no choice but to deliver their products to the monopolizers or accapareurs. ‘We cannot deny, however, that the policy adopted by 1838 Treaty, as in all iberal economic trends, engendered a duality in the Ottoman ‘economy. Most students of Ottoman economic history argue that im- ported goods, mainly cotton goods, dismantled the old household cot~ ton industry, This has been shown by many local as well as foreign chronicles. But one has to be cautious in generalizing such a decay. ‘The dismantlements cannot be denied for several Ottoman urban centers vulnerable to foreign trade. But the process was much more complicated. First ofall the picture of total collapse is unrealistic and challengeable. In most cases the dismantling of a traditional structure went hand in hand with a transformation in non-agricultural sectors Several factors affected the process. Inland areas were always protected from the challenge of foreign trade. In addition, consumption patterns in a traditional society are not always rational and are therefore vulner- able to foreign invasion. Thus the duality of demand in several parts of the Ottoman territory continued to survive for a long time. In fact, in several parts of Anatolia, the number of looms increased rather than decreased up to World War I. In Antep, for instance, be- tween four and five thousand looms were active on the eve of World War I (Tevfik Nevzat, 19260, 1926b). ‘The main blow came with World War I and the ensuing economic dislocation, rather than economic lib- eralism of the nineteenth century. Despite the World War and the War Foran intereating local account, ace Ahmned Mubtar (1326)60 ZAFER TOPRAK of Independence, Republican Turkey inherited 4,500 looms in Kasta- ‘mon alone? According to an industrial census sponsored in 1921 by the Ministry of Economy during the turmoil of the war, in the non: occupied territory of Anatolia the number of shops with hand-looms engaged in textile manufacture reached 20,057. In fact, the duality in the consumption patterns always provided a certain market for tradi- tional “home-made” textiles. In several cases, such as leather, the liberal atmosphere encouraged the transition to “manufacture.” In Istanbul, Yedikule, and Kazligegme leather manufactures developed in the last quarter of the nineteenth century (M. Ziti, 1340/1924, pp. 50-100). In Adana, several factories wwere established for the production of cotton goods. ‘Commerce was not the only channel of economic integration dur- ing the nineteenth century. The 1838 Treaty was part of a whole set cof measures serving British economic interests in Ottoman territories. ‘The expansion of foreign trade requited more than commercial treaties Liberal trade had to be supported by an efficient credit apparatus. This engendered the need for financial and banking institutions. The con- cept of the modern banking institution had been introduced into the Ottoman Empire by British diplomats and men of commerce in the same year as the signing of the Treaty. But banking institutions and credit facilities provided by these banks have always been seen as patt of the dependency scenario. Studies have usually focused on the sup- ply of capital rather than demand for capital. They have seen foreign banks, debts with the ensuing Public Debts Association, and the cre- ation of concessionary enterprises owned by foreign shareholders, as a loss of national sovereignty and first step to colonial subjugation This negative evaluation is largely due to preconceived notions minimizing the importance of financial input in developing economies in favor of productive capacities, infrastructure, or managerial experi- cence, Furthermore, analyses always concentrated on external relations rather than the internal economy. In line with this approach, the im- portance of finance in the Ottoman Empire is limited to forcign debts, debt payments, and the effec of exchange rates on external trade, Such a view overlooks the added importance monetary factors assume lethargic economy. In short, in Ottoman economic history, monetariza- tion is always taken for granted 3 Turhiyetde 1597 Senesi Sanayi Faaliyet* Istanbul Ticarst ve Sanayi Odass Mec suas, 39/2, January 1390/1923, pp 66-87 NEW PERSPECTIVES ON TURKEY 61 Quantitative Data or Serial History What were the basic concerns of the Tanzimat men when they adopted ‘a new financial framework? What did Ottoman integration to Europe mean to the Ottoman bureaucracy? How did the emerging middling, strata perceive European civilization in the light of capitalism? Polit- ical and diplomatic history fail to give us convincing answers as they reflect the daily concerns of governing bodies. The complex mental val- ues of the Ottoman civil servants do not reveal the conceptual frame- work of the emerging social structure. The answer had to be sought in a socio-economic paradigm of development. And this requires first of all quantitative data or serial history. Cliometric data for Ottoman history have recently gained impor- tance thanks to the work of economists interested in history. Vedat. Eldem in his famous book on late Ottoman history compiled statistical data for the last 40 years of the empire (Eldem, 1970). Sevket Pamuk, relying on European foreign statistics, provided us with series on for cign trade from 1820 onwards (Pamuk, 1987). ‘The quantitative data of these two pioneer works defy the classical “sick man” appronches to. modern Ottoman history. However, one must admit that quantitative studies have a long way to go in Ottoman historiography. The compilation of such a serial his- tory requires methodological expertise as well as historical insight. not to mention some knowledge of economics. Wages, prices, budgets, and a host of numerical data await discovery by historians, Such sources, including monetary history and metrology, are vital for drawing the outlines of Ottoman social history in its widest context. While waiting for the quanto-historical findings, social historians could partly overcome the lack of serial data through “by-products” of social history. In some cases, broad inter-disciplinary perspectives could substitute for the gaps in cliometric historiography. The nomen- clature of import commodities, for instance, could well be a source of information for consumption patterns. Advertisements in journals, pe- riodicals, or yearbooks could lead the researcher in studies of income distribution (Toprak, 1988, pp. 22-29); o a telephone directory could be the main source for real-estate values. In fact, consumption ori- ented perspectives could direct researchers in their search for rough ‘quanto-historical trends, Historians badly lack statistics prepared by the government for the Tanzimat era, the only exception being budgets é Veuropéen from the late 1850s onwards. But in the absence of reliable figures. the perfor- ‘mance of the Tanzimat could well be evaluated through the interrelated62 ZAFER TOPRAK processes of monetization and commercialization. ‘To begin with, there were a multitude of basic handicaps in the classical provisionist model of Ottoman economy. Arbitrary attitudes in commercial transactions, governmental restrictions, monopolies, inc of rationality, fiscalism, and a number of similar malaises characteristic of the pre-mercantile era dominated the classical Ottoman structure. ‘An economy suffering from an in-built inertia could hardly harmonize itself with industrializing Europe. Europe, and particularly the pioneer country England, with its commercial expansion did in fact kill the autarkic internal inertin of the Ottoman Empire and provided the spurt for its speedy commer- cialization and monetization. Compared to the pre-Tanzimat period, the economic history of the Tanaimat ia characterized by the rise of modern economic and fi nancial institutions, both public and private. The first paper money, the transition to a unitary monetary structure, state and private bank- ing institutions, European-style budgets, the stock exchange, foreign debts, foreign chambers of commerce, in short a host of new economic land financial devices unknown to the previous era proliferated from 1838 onwards. The commercial treaties of 1838-52 and the succeeding ‘ones in 1861-62 are part of this renovation of the economic structure.* ‘The 1838 Treaty, in its liberal context, dislocated the self-sufficient, internal, local economy with a limited market, and integrated part of the hinterland to the world economy. ‘The abolition of monopolistic practices, despite its capitulatory nature in its bilateral legal aspect, liberated the producers from the commands of the fiscalist, provision- ist Ottoman classical mind (Toprak, 1988). The profit motive became increasingly the main concern of the peasantry. ‘The lot of the ru- ral population improved. Mass consumption started. The quality of consumer goods increased. Prices of staples decreased. Urbanization started. Public amenities in urban centers improved ‘The above scenario presumes that the 1838 Treaty opened new vistas to commercial milieus. Price mechanism replaced arbitrary de- cisions. Port cities, such as Istanbul, Tamir, and Saloniea prospered. Local men of commerce became the nucleus for the ensuing middling strata or Ottoman bourgeoisic. + For the legislation concerning the emerging Ottoman economic and financial struc ‘une, ace Ahmed Rait (1311), NEW PERSPECTIVES ON TURKEY 63 Urban Life and Middling Strata In order to judge the real impact of “liberalization,” one has to recon- struct the economic life of these port cities in the late nineteenth and carly twentieth centuries. The urban and bourgeois life of these cities and the wealth they acquired owes much of its success to the libertarian atmosphere dominant in commercial activities With the impact of burgeoning market relations in terms of mon- tization and commercialization, the population of Istanbul tripled within thirty years. At the turn of the century, Istanbul and its sur- rounding banlieues accounted for around one million people. A capital in inertia for more than two centuries transformed itself as the Ottoman Empire became part of the European world and as its market articulated with the European economy. The population growth in Istanbul, the geographical extension of the market area con- trolled by mercantile interests in Istanbul, the removal of obstacles to the free movement of goods thanks to commercial treaties enacted with European powers and to legislation borrowed from Napoleonic codes, technical developments in terms of the transport of goods and the cir- culation of information about market opportunities—all helped widen the market in the Ottoman capital. ‘The old bazaar-type local markets lost ground and territorial markets, including national and international ones, began to replace them. Annals or yearbooks, such as L'indicateur constantinopolitain Guide commercial or Annuaire oriental du commerce containing ad- dresses and advertisements of commercial firms were published reg- ularly in Istanbul from 1868 onwards. Exhibitions such as Sergi Umumi-i Osmani of 1863, emulating the Great Exh the Crystal Palace in Hyde Park, London, were held in of the Ottoman Empire. Money and commodities exchanges were es- tablished in the 1860s. Wholesale commodities prices were advertised in the dailies. Commercial news was disseminated from Istanbul thanks to the separate Turkish and French editions of the Chamber of Com- merce's newspapers. Fairs in Anatolia and in Rumelia, continuing to play important roles as marts for particular products, became sensitive to the price variations in Istanbul ‘The Tanzimat era brought in its train the concept of urban de- velopment, mainly in port cities. In fact, Istanbul, the capital of the Empire, witnessed a process of urbanization from the middle of the nineteenth century. Public transport, street lights, piped water and refuse disposal became basic concerns of the newly established munie- ipal authorities.64 ZAFER TOPRAK ‘The transformation of the economic structure, as a result of the new economic vistas pursued by liberal policies of the Tanzimat men created a duality in the urban shaping of Istanbul. Galata and Pera, the districts inhabited mostly by non-Muslims, adapted to the require ‘ments of modern living. The influx of foreigners who settled in Istanbul exacerbated this duality as they created new consumption patterns. Istanbul, in the last quarter of the nineteenth century, with its depart ment stores, music halls and beer houses catered to an emerging bour- {geoisie. As for the traditional neighborhoods of Istanbul, the southern part of the Golden Horn, Uskiidar, Eyiip, and to some extent. Kadikdy, income structure of the populace dictated their way of life. The old guild system dominated the bazaars in the traditional quarters. Dis- trict retailing was conducted through itinerant traders wandering in the streets and weekly bazaars where street traders plied their trades from fixed stalls. Direct exchange between producers and retailers still prevailed. Changes in retailing were slow and patchy. In fact, this duality of market relations dominated the capital for at least half a century and was a function of its ethnic structure, Then came the take-off of the traditional districts inhabited by the Muslims. ‘This was partly due to the disintegration of the classical guild system challenged by imported goods. Retail shops catering to the rising mid: dling strata and the well-to-do became firmly established in the second half of the nineteenth century. ‘The growth of population in Istanbul during the nineteenth cen- tury had widespread implications for patterns of demand. Specializa- tion became important. Per capita incomes rase. ‘The structure of expenditures changed. A vastly increased market for food and other agricultural products emerged. Activities such as food processing and tailoring, which had previously been carried out on a customary basis within the family, were now shifted to the market. ‘The use of money became widespread. Consumption Patterns ‘The increasing purchasing power of the populace affected patterns of consumption. Even patterns of food consumption, generally slow to change, became a function of income level. Ottoman cookbooks published in the second half of the nineteenth century reflected this ‘transformation. Western styles brought in their train Western tastes, ‘The purchase of luxury items and furniture gathered momentum as the emerging uropeanized strata in the capital emulated Paris and London. Department stores, such as the Bon Marché, the Louvre, and NEW PERSPECTIVES ON TURKEY 65 the Lion were set up in the 1860's and 1870's and increased the effi- ciency of marketing. Besides population growth, changing attitudes of mind also had important. consequences for consumption patterns. In traditional Istanbul, Islamic precepts had dictated the limits of material aspira- tions. Ottomans, Muslim or non-Muslim, were expected to live unos- tentatiously and dress soberly. With liberal economic policies, the old concepts of modest living lost their appeal. Westernization led liter- ate people to emulate Western styles. The reforming bureaucracy and foreigners settled in Istanbul expounded a hedonistic calculus rather than asceticism. The attitude of acquisitiveness gained ground as the individual and his or her interests articulated in the nebulous Ottoman society. In fact, the Ottoman Empire in its late decades inherited a mone- tized, commercialized economic structure from the nineteenth century. “Consent” rather than “command” dominated rural life. Monopoli tic practices almost disappeared. Money in hard currency became the main solvent in the economy. Rationality replaced customary habits. Mercantile concerns dominated fisealist ones. Ottoman finances and the economy in the Young Turk era (1908. 1918) were “modern” in every sense. Efficient devices were imple- mented to secure a decent revenue to the state. Economic concerns replaced budgetary ones in the promulgation of legislation, Budgets drawn and published every year became reliable sources for Ottoman state expenditures and income. The ministry of finance reshaped itself in line with the requirements of a modern-nation state.® Local as well as foreign chambers of commerce,* trade unions, money and commodity exchanges, paper money, international and local credit institutions, joint stock companies,’ and cooperatives were the compo- nents of a capitalistic economic model. In fact, dissolution of the former inertia through a “liberal” shock was the spurt required. From the sec- cond quarter of the nineteenth century onwards, the outside world was better known thanks to commercial transactions and improved trans- port and communication. This process, of course, took place over more ‘than one generation ‘The Ottoman economy did develop in the nineteenth century. Ac- For a modern Ottoman financial institution, see Maliye Netaret (1327) For foreign chambers of commerce, see Topeak (1890/2, pp. 78-81) 7 For a compile let of joint-stock piled lat of joint-stock companies ertablished in the Ottoman Empire from 1849 101918, se Topeat (1982, pp. 369-83),66 ZAFER TOPRAK cording to the GDP figures provided by Vedat Eldem, despite the 1873 1896 Great Depression, the gross domestic product showed a yearly increase in real terms of approximately two percent between 1889 and 1911. This growth rate, compared to Western countries, remained be- low that of Germany (3.1 percent between 1875 and 1913) and that of the USA (3.5 percent between 1884 and 1913). But, apart from the pioneering late-comers, the Ottoman growth rate fared quite well. In eastern Europe, Hungary, with the advantages of being on the outskirts of a developed Europe, had a similar growth rate with the Ottoman Empire between 1907 and 1911, namely 2.5 percent. [As for the Tanzimat era, it will be difficult for the years to come to calculate the GDP figures of the empire as a whole. It is, on the other hand, useless to look for hard data for all the regions of the empire, ‘Such a dispersed empire, with different economic and social structures within its realm, eannot provide a coherent model for meaningful ex- planations if the stage in question is pre-capitalistic. Even the most abstract conceptual frameworks, such as “modes of production,” would not be helpful in covering such a geography. But Anatolia and Rumelia, with all their dualities, could well be a meaningful “unit” of consideration. Despite the decentralized economic aspect of the so-called core area, rough estimates could he deduced from indirect input to economic and social history. Monetization and commercialization, twa basic concerns in our development. paradigm, are well documented in foreign and Ottoman sources. It would not be difficult. to write a monetary history of Turkey or to account for commercial developments for the last 150 years. ‘Trade and Money Sevket Pamuk, in his recent book, provides us with data on long-term fluctuations in Ottoman foreign trade. Pamuk estimates that during the three-quarters of a century following the Free Trade Treaties, to- tal Ottoman exports measured in current prices increased more than five times, from 4.7 million to 28.4 million, while imports measured in current prices expanded six and a half times, from 5.2 million to 39.4 million, despite the loss of territories. Since the prices of the commodi- ties involved in Ottoman foreign trade were considerably lower on the eve of World War I than in 1840, the increases in trade volumes were even greater. Pamuk measures them in constant 1880 prices: Ottoman ‘exports and imports increased respectively, approximately nine and ten times during the period 1840 to 1913. ‘The expansion in foreign trace was more rapid in the Tanzimat NEW PERSPECTIVES ON TURKEY 67 era than the following Hamidian period which experienced the Great Depression. The compound annual rates of growth of Ottoman trade, in constant 1880 prices for exports and imports are respectively 5.3 and 64 during the early Tanzimat, (from 1839-41 to 1852-54), and 6.2 and 5.2 during the late Tanzimat (from 1857-59 to 1871- -73). In view of these figures, one could assume that the Ottoman eco- nomic structure did in fact commercialize speedily in the years of the ‘Tanzimat. ‘The growth in foreign trade would in any case have its im- pact on internal trade. The injection of money through foreign trade would dismantle the self-sufficient, closed economic circuits in many districts and create in many cases dual economic structures with disin- tegrated, money-oriented market economy and resistant, selfintegrated “domestic” economy. Following the item-by-item analysis of imported commodities as well as marketed commodities in urban milieus, one can restructure the consumption patterns and assume that the inter nal trade carried out in hard currency doubled or even tripled in the span of three decades. Such a growth could hardly take place in the pre-Tanzimat era in one, or even, two centuries, In like manner, the volume of circulating media (i.e. Ottoman hard currency, the old one and the new one after the Monetary Re- form of 1844, foreign currencies in circulation in the Ottoman territo- ries, paper money issued by the Treasury, and finally the banknotes of the Ottoman Bank), creating a well-developed exchange mech: (Toprak, 1990/1, pp. 67-71), increased, roughly speaking, four times before the bankruptey in 1875. The 1844 Monetary Reform was an important step in the pro- cess of the unification of Ottoman currency.® In the turmoil of war and rebellion in the early nineteenth century, Ottoman currency was debased several times. During the reign of Mahmud II, for example, the form and name of Ottoman coinage was changed 35 times for gold and 37 times for silver issues and the rate of the Ottoman kurus or its, equivalent to the pound sterling fell from 23 in 1814 to 104 in 1839. The aim of the 1844 reform was to stabilize Ottoman currency and establish a uniform monetary unit valid in all parts of the Ottoman territories. The old, debased silver currency had to be withdrawn and the circulation of foreign pieces to be prohibited. With the 1844 Reform, new gold, silver, and copper coinages were issued. But as commercial transactions increased, the volume of new68 ZAFER TOPRAK currency fell short of the need. Money supply had to be supplemented with the old debased coinage and unpopular paper money. Foreign currency also remained in circulation mainly in the distant provinces of the empire. The variety of circulation media created an internal exchange mechanism which lasted until World War I, In 1916 a radical ‘attempt was made to unify the currency. The Law for Unification was enacted and the gold standard was adopted instead of the bimetallic 1844 system. In the years of the Tanzimat, expanding internal and foreign trade and state expenditures required a larger volume of circulating media. Before the Tanzimat, governments relied on debasement of the cur- rency when they were in a revenue crisis. As long as the prices of staples were fixed through governmental or municipal decters, the low- of intrinsic value provided the governing bodies a certain surplus. But as the Ottoman economy integrated into the European economy and free market dictated the purchasing power of Ottoman « any debasement was reflected in the prices of commodities, mainly the imported ones. And this, in chain effect, increased the general price level. The debasement of hard currency was no longer an appropriate ‘way to meet the expenditure needs of the government, ‘Tanzimat men had to find new ways of increasing the amount of culating media. Borrowing from abroad was the last resort. As the amount of bullion could not be increased quickly, the issue of paper money seemed appropriate for the government to mect hoth the state expenditure and the need of further money for the market. at large. ‘According to available records of the mint, between 1840 and 1863 the amount of hard currency in circulation did not exceed 2,000,000 Ottoman liras in gold and 2,000,000 Ottoman tiras in other coins, It is true that in some parts of the country and even in Istanbul foreign gold and silver coins circulated, but the highest estimate for such coins docs not exceed 1,500,000 in Ottoman liras. The paper money in circulation in 1863 was about 11,000,000 million lias In fact, despite all its inconveniences, the unredeemable paper money was an important step in the monetization of the Ottoman econ- omy. But as it jeopardized the whole monetary system, the Tanzimat, government replaced the unpopular paper money with hard currency imported from Europe, ic., debts. This heralded a new era in Ottoman ‘economic history. The foreign debts from 1854 onwards, the founding of the Imperial Ottoman Bank, the bankruptcy of 1875, the estab- lishment of the Ottoman Public Debt. Administration, all these stages are part of the monetization and commercialization process. A stable reniey, NEW PERSPECTIVES ON TURKEY 69 and sound currency with fixed exchange rates was indispensable for a flourishing economic system. How did this process of capitalistic development occur in terms of institutions and mentalities? What were the basic inputs and open- ings in the making of Ottoman capitalism? How did the Western style of life affect Ottoman strata? These questions remain to be answered in much detail, But students of Ottoman history have to admit that ‘Ottoman society did in fact gather momentum in the making of a con- sent economy with a price mechanism and did go through a radical social transformation following its encounter with European finance and economy. ‘The development of a unitary monetary system and sound finan- cial institutions and techniques greatly helped the rise of a financial ‘and mercantile milieu in the Ottoman Empire. By the end of the nine- teenth century, the Ottoman Empire had a sound currency system, an ordered currency exchange, a full-fledged Ministry of Finance with an efficient bureaucratized system of tax collection, a detailed economic and financial legislation, an annual budget, an ordered capital market in bonds and equities, and modern banking institutions including a ‘quasi-central bank. In conclusion, we may argue that. the 1838 Anglo-Ottoman Com- mercial Treaty dislocated the self-sufficient, provisionist and fisealist Ottoman economy with a local market, Integration of urban centers and part of the hinterland to the world economy dismantled the autar- kkie internal inertia and paved the way for a structural change through speedy commercialization and monetization. The basic changes in ma- terial civilization went hand in hand with changes in habits of mind. ‘The classical Ottoman mentality withered away and an enlightened bu- reaucracy functioning under rational and impersonal rules took over. Achievement and mobility became the main concerns of the Tanzimat men. Without a liberal capitalistic framework borrowed from the West cern experience, this transformation could not have taken place70 ZAFER TOPRAK REFERENCES Ahmed Muhtar. 1316. Rehber-i Umran. Konstantiniye: Tahir Bey’in 40 Niimerolu Matbaasi Abmed Regit. 1311. Hukuks Ticaret. Istanbul: Dersaadet Ticaret Odast Gazetesi Matbaasi Eldem, Vedat. 1970. Osmanh Imparatorlujunun Tktisadi Sartlary Hakkinda Bir Tetkik. Ankara: Ig Bankast Kiiltir Yayinlant M. Zithti. “Istanbul Deri Imalatgili,” Ticaret Vekaleti Mecmuas, 1(2), October 1340/1924, pp. 50-100. Maliye Nezareti. 1327. Ihsaiyyat-s Maliye: Varidat de Mesay miyyeyi Muhtevidir. Istanbul; Matbaa-i Amire. Pamuk, Sevket. 1987. The Ottoman Empire and European Capitalism, 1820-1913. Cambridge: Cambridge University Press. ‘Tevfik Nevaat. 1926a. “Gaziantep Vilayetinin Vaziyet-i Iktisadiyyesi,” Istanbul Ticaret ve Sanayi Odest Gazetesi, 1926/10, June, pp. 311— 12 ‘Tevfik Nevzat. 1926b. “Gaziantep Vilayetinin Vaziyet-i Iktisadiyyesi,” Ticaret Vekaleti Mecmuast, Il (21-24), May-August, pp. 9-19. ‘Toprak, Zafer. 1982. Tirkiye'de “Milli Iktisat” (1908-1918). Ankara: ‘Yurt Yayinlan, ‘Toprak, Zafer. 1988/2. “Tanzimat’tan Cumburiyet'e Reklameslik,” Bogazigi, pp. 22-29. ‘Topeak, Zafer. 1988. “Iktisat Tarihi,” in Aksin, Sina (ed.) Tirkiye Tarihi -3- Osmanh Devleti 1600-1908. Istanbul: Cem Yaymnevi, pp. 191-246. ‘Toprak, Zafer. 1990/1. “Osmanh Kambiyolan,” Finans Dinyast, pp. 67-71, ‘Toprak, Zafer. 1990/2 “Osmanl’da ‘Eencbi’ Ticaret Odalart,” Finans Dinyast, pp. 78-81 Umu- OPEN-DOOR TREATIES: CHINA AND THE OTTOMAN EMPIRE COMPARED Regat Kasaba* ‘The Balta Liman ‘Treaty of 1838, the Nanjing Treaty of 1842, and the events that led to them have epochal significance in the history of Britain's involvement in the Ottoman Empire and China. In addition to stipulating the principles according to which commercial relations were to take place between England and the Ottoman Empire and China, these treaties became the first in a series of international and domestic measures that marked a turn toward free trade and informal empire as distinct from the widespread use of formal methods of control that had characterized British policies in previous periods. As such, the treaties are also regarded as having a global significance. Furthermore, unlike previous unilateral grants by the Ottoman and Chinese governments that restricted the commerce and the residence of foreigners, the Balta Limam and Nanjing documents were drawn up as bilateral agreements that greatly expanded the foreigners’ ability to trade and reside in the Ottoman Empire and China, Both of these treaties were negotiated and signed during what, could be described as difficult times for the Ottoman and the Chinese Empires. In the late 18305, the Ottomans were trying to suppress a revolt by the Governor of Egypt. The Chinese, for their part, had just fought a very costly three-year war with Britain! Reflecting the fact, that it came after such a confrontation, the Nanjing Treaty contained a number of punitive clauses.? For example, the Chinese government agreed to pay 21 million dollars’ indemnity, ceded the territory of Hong Kong to the English, granted amnesty to Chinese subjects who had been imprisoned for their dealings with the British, and allowed for the presence of the British fleet in Nanjing to enforce compliance with the treaty. Outside of these provisions, the bulk of the Nanjing Treaty and all of the Balta Limant ‘Treaty dealt with commercial matters. Both were “free-trade treaties” in the sense that they sought to provide * University of Washington, Jacaon School of International Studies, 4 rhe literature on the Opiuin war in extensive In addition to the classic Foiebank (1959), ae Waly (1968), Chang (1968), Fay (873). 2 Por the text ofthe treaty, se Mayers (1806, pp. 1-4). 3 For he tet ofthe Datta Limans Teeny, ave len (1866, pp. 99-40), Kiko (41974, pp 100-13) ‘New Perspectives on Turkey, Spring 1992, 7, pp. 71-89.