The legal and economic functions of commercial papers in the Ottoman State in the 19th century

Reputation or financial reputation is the ability to temporarily benefit from someone else's capital. Transactions that convert the debt securities established on reputation into a means of exchange is in particular the formation of methods for drawing up the aforementioned debt securities to be promissory or bearer. While the most commonly used bills of exchange were bill of exchange, bono (bill to order), cheque and bond, bill of exchange was to be most frequently preferred until the 20th century. Although there are different theories and approaches related to emergence dates of bill of exchange, it can be safely argued that "indorsement" and "order registration", which were discovered towards the end of the 17th century, made the use of bill of exchange easier and widespread. The first record of bill of exchange use in the Ottoman Empire dates to 1655. The relevant records indicate that the use of policies began to spread as of this date. The development of relations with European countries was the main reason for this spread. Besides, heavy cost and probable dangers of coin transfer arising out of banditry and corsair activities had rendered land and sea routes dangerous, making bill of exchange an important alternative. Nevertheless, in the early days when the bill of exchange began to become widespread throughout the empire, it was observed that issue of trust was on the stage regarding bill of exchange, which was then a new method, and this situation slowed down the spread of it. For this reason, bill of exchange began to be used more widely in the Ottoman Empire by the 19th century. However, there was no precisely defined legal basis for bill of exchange affairs until 1849, though being long since a common case in Ottoman economic system. It was only after the Commercial Code, which was enacted in 1849 and entered into force in 1850, that bill of exchange related issues were regulated. Having rendered commercial courts, where disputes resulting mostly from bill of exchange related matters were to be resolved, into a more effective and legal institution, the Commercial Code Addendum strengthened the newly established legal structure. The development of domestic and foreign trade in the Ottoman Empire increased bill of exchange use as well. In addition, bill of exchange was of special importance in terms of the financial management as an alternative to the transfer of internal revenues to Istanbul. The archival records introduce us that domestic use of bill of exchange in Ottoman lands was prevalent particularly in the borders of present-day Turkey with Rumelia and partially in northern Syria as well as Palestine. It appears that strikingly certain provinces like Aydın, Thessalonica, Edirne and Hüdavendigar came to the forefront and Istanbul was moving towards becoming a financial center. During this period, a great number of policies had been drawn to Europe from Ottoman territory and vice versa with the first rank of Istanbul. The efforts to preserve the value of Ottoman kurus also increased the use of bill of exchange. It had become the method through which embassy and consular expenses were covered. All in all, bill of exchange was to maintain its importance until the fall of the Ottoman Empire.