Imperial Ottoman

Economy · Article

The Capitulations and Their Consequences

The early commercial treaties (imtiyazat) granted by the Ottoman sultans to Venice, France, England, the Dutch Republic, and Russia, and their long-term economic effects on the empire.

The earliest Ottoman capitulation was, on the evidence of the Venetian archives, granted in 1387 to Venice by Murad I, and it set the basic template that the next five centuries of treaties would follow: a fixed customs rate, consular jurisdiction over the merchant community, and certain protections for persons and property. For the first two hundred years of the system the sultans granted these treaties from a position of strength. The 1536 French capitulation, signed by Jean de La Forêt for Francis I and negotiated with Süleyman the Magnificent personally, was an alliance against the Habsburgs; the 1580 English and 1612 Dutch treaties were gestures of welcome to Protestant powers that might be useful against Catholic Spain. By the nineteenth century the same legal instruments had become a chain. The capitulations are a small text and a long history; they are an essential part of the Ottoman economy and trade.

Key dates

  • 1387 — Earliest Venetian ahdname under Murad I.
  • 1453 — Fall of Constantinople; Venetian trade continues uninterrupted.
  • 1536 — French capitulation under Süleyman I and Francis I; Jean de La Forêt negotiator.
  • 1569 — Renewed French capitulation; extraterritorial jurisdiction reaffirmed.
  • 1580 — English Levant Company receives its first Ottoman confirmation.
  • 1612 — Dutch Republic–Ottoman treaty of friendship and commerce.
  • 1774 — Treaty of Küçük Kaynarca; Russian capitulation.
  • 1838 — Anglo-Ottoman free-trade agreement (Balta Liman).
  • 1923 — Capitulations formally abolished by the Treaty of Lausanne.

The early treaties: Venice and Genoa

The earliest Ottoman–Venetian commercial treaties were granted in 1387 and 1403, and the basic pattern held for half a millennium. The treaty gave Venetian merchants a fixed customs rate of 2 to 5 per cent, consular jurisdiction in civil cases, and certain protections for the persons and property of Venetian subjects. The treaty was renewed under successive sultans, and it formed the template for every later capitulation. Venice remained the most important European trading partner of the Ottomans for nearly two centuries, and the Venetian community in Istanbul, organized in the Fondaco dei Turchi (the great Venetian inn in Galata), was the largest and most privileged European merchant community. The fall of Constantinople in 1453 did not interrupt the trade; the 1446 re-grant to Venice under Murad II had already secured it.

The French capitulation of 1536

The 1536 French capitulation is the document on which the whole later system was modelled. Francis I had been seeking an alliance against the Habsburg emperor Charles V since 1525, and the Ottoman sultan, fighting the same enemy in the Mediterranean, was receptive. The treaty, negotiated by the French ambassador Jean de La Forêt, gave French merchants the right to trade throughout the Ottoman Empire at a customs rate of 5 per cent, the right to be tried in French consular courts, the right to bring their wives and families, and — controversially — the right of French consuls to extend protection to Christians in the Holy Land. The last provision, the “protection of the Holy Places,” was the seed of three centuries of French involvement in Lebanese and Syrian politics. Edhem Eldem, in the Cambridge History of Turkey volume, calls the 1536 document the moment when “the logic of reciprocity tipped into the logic of privilege”; the phrase is a fair summary.

“Let the French nation, in whatsoever part of our Empire, in whatsoever city, port, or coast, be free to trade, in all safety, by land and by sea, in the old manner and the new. And let them be judged by their own consul, in whatsoever cause, civil or criminal, between Frenchmen; and let the consul take order, according to the law of France, without hindrance from any of our judges.” — Ahdname of Süleyman I to Francis I, 1536, article 2 (paraphrased from the French translation registered at the French Archives, Affaires Étrangères, Constantinople 1).

The English and Dutch capitulations

The English Levant Company received its first Ottoman confirmation from Murad III in 1580 (the English charter to the Company was 1581, so the two dates are sometimes confused); the Dutch Republic — the States-General, not the VOC, which was a chartered company and not a treaty party — received its first treaty of friendship and commerce from Ahmed I in 1612. Both treaties gave their merchants the right to trade at the customary 5 per cent customs rate, consular jurisdiction, and the right to maintain warehouses and chapels in the Ottoman ports. The English and Dutch merchants concentrated in Smyrna, Aleppo, and Istanbul, and traded primarily in Ottoman raw materials: raw silk, cotton, wool, hides, and dyestuffs. The Levant Company was one of the most important English overseas trading organizations for nearly two and a half centuries; it was dissolved only in 1825, long after the Ottomans had lost effective control of their own trade.

The Russian capitulation of 1783

The Russian capitulation was the last and the most dangerous of the classical series. It was granted as part of the Treaty of Küçük Kaynarca in 1774, the peace settlement that ended the first Russo-Turkish War of Catherine the Great. The treaty gave Russia the right to trade freely in the Ottoman Empire, the right to build a church in Istanbul, and — most alarmingly to the Ottoman government — the right of the Russian ambassador to intervene on behalf of Orthodox Christian subjects of the sultan. The latter provision, the “right of protection,” was a major breach of Ottoman sovereignty and a forerunner of later nineteenth-century interventions. The Greek uprising of 1821 and the Crimean War of 1853–56 were both shaped in part by the protection regime that Küçük Kaynarca inaugurated.

The 1838 Balta Liman agreement

The 1838 Anglo-Ottoman convention, signed at Balta Liman on 16 August by Mustafa Reşid Pasha and Lord Palmerston, is the most important capitulation of the nineteenth century and the legal moment at which Ottoman economic sovereignty effectively ended. The convention abolished the Ottoman state monopoly on most goods, fixed a uniform external customs duty of 5 per cent ad valorem, and provided for a transitional 12 per cent reduction on some categories. The exchange was reciprocal in form — Britain abandoned its Navigation Acts in favour of Ottoman goods — but in practice the deal removed the last protective barrier around Ottoman manufacturing and exposed the urban guilds of Bursa, Edirne, and Damascus to British factory production. The 1838 agreement is read in three different ways: as a British imperial heist (Issawi), as a rational Ottoman response to a fiscal crisis (Owen), or as a missed opportunity to reform the tariff regime in a way that would have protected domestic infant industry (Pamuk). The truth is some combination, and the answer depends on how one weights Reşid Pasha’s room for manoeuvre against Palmerston’s leverage.

“The Sublime Porte engages to prohibit the exportation of the natural productions of the said states, of which the annual proceeds suffice for the consumption of the population, only in the event of, and during, a real and considerable rise in the price of those productions in the markets of the said states.” — Anglo-Ottoman Convention of Balta Liman, 1838, article 4.

Economic effects

The economic effects of the capitulations were, in the short term, modest. The 5 per cent customs rate was no lower than the rate charged to Ottoman subjects, and the European merchants who operated under the capitulations were a small fraction of the total merchant class. The principal beneficiaries of the early capitulations were the European trading companies, which were able to operate under the protection of their own consuls and to bring larger volumes of capital into the Ottoman market.

In the long term, however, the capitulations were deeply harmful to the Ottoman economy. The system of extraterritoriality, under which Europeans were immune to Ottoman law, made it impossible for the state to enforce its own commercial regulations. The right of European merchants to settle in the Ottoman interior and to trade directly with producers bypassed the guilds and undercut the local manufacturing base. The 1838 free-trade agreement accelerated this process, and the influx of cheap European manufactured goods destroyed the urban crafts and manufacturing sector of the empire. The capitulations were formally abolished only in 1923, as part of the Treaty of Lausanne that established the Turkish Republic. By that time the legal framework had been progressively narrowed, but the underlying economic dependency on European capital had not been undone.

Frequently asked questions

What was a capitulation?

A capitulation (Turkish imtiyazat, from Arabic imtiyaz, “privilege”) was a unilateral grant by the Ottoman sultan to a foreign state, giving the merchants of that state the right to trade in the empire at a fixed customs rate, to be judged in consular courts, and to enjoy certain protections for persons and property. Capitulations were originally expressions of Ottoman sovereignty; by the nineteenth century they had become instruments of European economic dominance.

When were the capitulations abolished?

The capitulations were progressively narrowed through the late nineteenth and early twentieth centuries, beginning with the unilateral abrogation of the 1838 agreement in 1920. They were formally and finally abolished by Article 28 of the Treaty of Lausanne (24 July 1923), which established the Turkish Republic. By that time the legal framework had been a fiction for some years — the British and French had effectively occupied Istanbul after 1918 — but Lausanne is the date that matters diplomatically.

Did the capitulations help the Ottoman economy?

In the short term, the early capitulations brought European capital and European shipping into the Ottoman market, and the customs revenue was useful. In the long term, the system of extraterritoriality made it impossible for the state to enforce its own commercial regulations, the low uniform tariff of the 1838 Balta Liman agreement removed the protection around domestic manufacturing, and the “right of protection” of Küçük Kaynarca (1774) set the precedent for European political intervention in Ottoman internal affairs. The 1838 agreement in particular is the legal document on which the standard account of nineteenth-century Ottoman underdevelopment is built.

Sources and further reading

  • Maurits H. van den Boogert, The Capitulations and the Ottoman Legal System: Qadis, Consuls and Beratlı in the 18th Century (Brill, 2005).
  • Maurits H. van den Boogert and Kate Fleet (eds.), The Ottoman Capitulations: Text and Context (Analecta Isisiana, 2003).
  • Virginia H. Aksan and Daniel Goffman (eds.), The Early Modern Ottomans: Remapping the Empire (Cambridge University Press, 2007).
  • Halil İnalcık, “Imtiyazat,” in The Encyclopedia of Islam, 2nd ed. (Brill, 1971).
  • Edhem Eldem, “Capitulations and Western Trade,” in The Cambridge History of Turkey, vol. 3, ed. Suraiya Faroqhi (Cambridge University Press, 2006).