The Ottoman Empire was one of the world’s most enduring empires, surviving for 623 years under 39 sultans beginning with the empire’s namesake, Osman I, and formally ending with the foundation of the modern republic of Turkey on October 29, 1923. Even though the end of the Ottoman Empire can be identified with a specific date, like the Romans and Byzantines before them the Ottomans suffered a long period of stagnation and decline, and one common theme that connects most of the factors that contributed to the demise of the empire is the economy.
Interference from foreign powers, ethnic and sectarian unrest among the empire’s diverse population, and political infighting among the Ottoman ruling class all played a role in bringing the empire to an end, and all were caused, in one way or another, by economic circumstances. Looking at these factors today, many parallels with events in our own time become apparent, which, depending on one’s point of view, can be either a hopeful sign for our own future or a warning about the folly of letting history repeat itself.
A Bad Business Model
The Ottoman Empire suffered from a historically inevitable problem that affects every empire: as it expanded, reaching its greatest extent in the mid-17th century, its political administration became increasingly decentralized. It was only natural for the Ottomans, as a hereditary monarchy, to treat leadership positions in the provinces and small political units as a form of patronage for key supporters of the throne, but they also recognized the danger of letting local power grow too much. Thus it was typical for leaders to be appointed to positions far from their homes:
Muhammad Ali, for example, the founder of modern Egypt, was an Albanian military commander.
In theory, the outsiders placed as local leaders should have owed their allegiance to Istanbul rather than the local elite being made subjects of the empire; in practice, however, local rulers were given so much authority – such as responsibility for tax collection, local defense, and infrastructure development – that they had little reason to be loyal to anyone but themselves:
Muhammad Ali is perhaps the best example of this; appointed Viceroy of Egypt by the Sultan after coming out on top of a fierce and confusing struggle among tribal leaders and Ottoman officers in the province, Ali found himself strong enough to challenge the Ottomans directly while nominally remaining loyal to the empire. His power grew to the extent that the British, French, and Russian governments agreed to impose a declaration of Ali’s hereditary rule in Egypt on the Ottoman government in 1841. The Ottoman Empire essentially became a loose confederation of relatively strong little kingdoms; loyal to Istanbul when it suited their purposes, but otherwise practically independent.
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Further eroding the ability of the Sultanate to effectively manage the empire was the basic economic model, the waqf, underlying its public administration.
Waqf is an Islamic principle whereby property is made “inalienable” by a grant of its owner, with whatever profits arising from the property afterward being devoted to charity in accordance with Islamic tradition.
In the Ottoman Empire, the waqf was used for most public works – roads, ports, hospitals, and other public facilities – rather than these things being developed directly through tax revenues; the justification for this was that the Sultanate, as the nominal leadership of the Muslim faith (or at least most of it) was a worthy recipient of the waqf as it ensured the “profit” was used for the greater good of the Ottoman people. The problems with this model is that first of all, it left the administration of public works in private hands, and second, it was wholly insufficient for the empire to keep up with its European rivals in terms of economic development. Moreover, it further eroded the opportunities for the Sultanate to collect taxes since many waqf grants were made as payments in kind.
An Empire Drowning in Debt
Lacking a sufficient resource base, the Sultanate was increasingly forced to turn to foreign borrowing to fund its administrative functions and military expenditures. Unrest throughout the Ottoman Empire and a seemingly-endless string of military adventures involving the other European powers sapped what financial resources the Sultanate had left; between the end of the Crimean War in 1854 and the accession of Abdulhamid II in 1876, debt service grew to account for roughly half of the empire’s yearly income.
The Vienna stock market crash of 1873 and the ensuing “Long Depression” was the proverbial straw that broke the camel’s back – the new Sultan was forced to declare bankruptcy, which in turn helped to provoke another brief, disastrous war with Russia, the end of which in 1878 further eroded Ottoman financial strength by removing about 20% of its population and 40% of its remaining territory.
In 1881, frustrated European powers established a Public Debt Commission in Istanbul to oversee the repayment of the Ottoman’s foreign debt. The taxes levied by the Commission created dire economic hardship in the empire, driving up prices on all manner of goods and services, and further reducing the Sultanate’s revenue base – for example, the entire yearly tribute or treaty payments of Bulgaria, Greece, Cyprus, and Montenegro were collected by the Commission instead of the Ottoman government.
By 1908, a growing rebellion within the Ottoman military forced Abdulhamid II from the throne, and within the next few years the outbreak of World War I put the final few nails in the Ottoman Empire’s coffin. What is most interesting about the decline of the empire in the years leading up to the revolution of 1908 and the disastrous outcome of the First World War is how many of the critical problems suffered by the Ottoman Empire seem to be repeating themselves.
Countries such as Greece and Spain find themselves mired in foreign debt, and at the mercy of European powers’ direction of their sovereign economies. All around the world, in developing nations as well as highly-developed countries like the US, increasing privatization of public institutions has not only led to an erosion of public services but paradoxically, less efficient collection and spending of public revenues. And while the entire world struggles with economic threats to sovereign stability, small – but expensive – military conflicts persist in draining countries’ resources.
The hopeful outlook would be that by studying the decline and collapse of the Ottoman Empire, we could learn how to avoid the same pitfalls; history suggests that humanity on the whole, however, may not be all that good at learning from its own mistakes.