Modernization in the Ottoman domestic borrowing system (1839-1881)

In this dissertation aim to analyze the emergence of securities-based domestic borrowing instruments, how they developed, their numerical size, the sustainability of debt, debt capacity, excessive debt, debt and money crises and debt bankruptcies in the Ottoman Empire. In this context, firstly, the alterations and/or developments of public debt in the historical process were examined chronologically and emphasized the important economic and political events occured in this process. Secondly, it has been tried to calculate the issue amounts of securities-based domestic borrowing instruments was carried out largely using primary sources, their variable volumes on yearly basis, their being taken out of circulation, being subject to consolidation and their interest costs on public finance. Also, the figures and their shares in the total domestic borrowing figures calculated by way of the Ottoman budgets and their changes according to the budget revenues and expenditures were examined. The interest costs incurred by the government due to the securities-based domestic borrowing instruments were analyzed by comparing with budget expenditures. Thirdly, a literature review was evaluated on the limit of public debt, the sustainability and capacity of borrowing, excessive indebtness, debt-induced crises and goverment bankruptcies. Afterwards, the financial reputation of the Ottoman Empire was examined on the basis of this literature. In order to analyze the size of the Ottoman public finance, the amount of financing obtained from domestic and foreign borrowings and paper money issuance, their share in the total finance was calculated and the changes on the basis of years were monitored. In the period subject to examination, the financing provided by the government from both domestic and external sources was compared and the dates of borrowing and money-based crises were determined. It appears that the Crimean War (1853-56) was effective in the Ottoman Empire's confrontation with excessive debt. Although the debt and paper money crises that occurred in 1861 indicated that borrowing was unsustainable for the Ottoman Empire, the borrowing channel could be contiuned until 1875. A partial moratorium was declared in 1875 and full in 1876. According to the data obtained with this study, the securities-based domestic borrowing figures in the Ottoman Empire were examined for the first time in a holistic manner. Also, assessments were made about the limit of the borrowing and aimed to contribute to this important deficiency in the literature.