Imperial Ottoman

Economy · Complete overview

The Ottoman Economy: Trade, Agriculture, and Craft Production

A comprehensive overview of the Ottoman economy from the timar system and urban crafts to long-distance trade, monetary policy, and 19th-century integration into the world market.

The Ottoman economy was, for nearly six centuries, one of the largest and most durable in the pre-modern world. At its height in the sixteenth and seventeenth centuries, the empire stretched from the Balkans and the Black Sea littoral through Anatolia and the Levant to Egypt, the Hijaz, the Persian Gulf, and the Maghreb. Within those borders lived roughly thirty to thirty-five million people who produced, exchanged, and consumed an extraordinary range of goods: Anatolian wheat and cotton, Balkan silver and copper, Levantine silk, Egyptian rice and sugar, Arabian coffee, Persian raw silk, Indian pepper, and European cloth and metalware. The administrative capacity to tax that production, the legal frameworks that let merchants of many faiths operate safely, and the political stability that kept caravan and sea routes open for long stretches together made the Ottoman economy a defining feature of early modern Eurasia.

Yet the same economy that financed the army of Suleiman the Magnificent and built the great mosques of Istanbul also displayed deep structural weaknesses. The prebendal cavalry system that underpinned the military began to corrode in the seventeenth century. Silver shortages, repeated debasements, and a chronic balance-of-payments deficit drained the treasury. By the nineteenth century the empire was forced to borrow from European banks at punishing rates, surrender tariff autonomy through the capitulations, and ultimately submit to the unequal treaties that turned the Ottoman lands into a semi-colony of European capital. Understanding the Ottoman economy is therefore less a matter of cataloguing its many prosperous centuries than of tracing a long arc from a largely self-sufficient agrarian order, through a long phase of manufactured export and re-export, to a final era of dependency.

Agriculture and the rural economy

Agriculture was the foundation on which everything else rested. In the sixteenth century perhaps four out of every five Ottomans made their living from the land, and even in Istanbul a sustained population of several hundred thousand could only be fed by drawing grain, rice, oil, and meat from a vast hinterland. Anatolia produced wheat, barley, and rye, with cotton and opium as valuable cash crops in the south. The Balkans supplied additional wheat, while the Wallachian and Moldavian principalities, although formally tributary rather than directly governed, sent enormous numbers of cattle, sheep, and seasonal laborers into Ottoman markets. Egypt, once incorporated in 1517, added the long-staple rice of the Nile Delta and continued to export sugar until European beet sugar and Caribbean plantations undercut it in the eighteenth century.

The most distinctive Ottoman institution linking agriculture to public finance was the timar system, in which the right to collect the taxes of a village or group of villages was assigned to a cavalryman in return for mounted military service. Sipahi cavalry and their officers held timars and zeamets; the largest fiefs, called haslar, were reserved for the sultan, his family, and senior officials. Because the sipahi had a direct interest in the productivity of his land, the system encouraged the registration of new villages, the construction of small-scale irrigation works, and the extension of cultivation in marginal areas. At its best, the timar system gave the Ottoman state a cheap and politically reliable army and a tax base that did not require a vast bureaucracy.

The system was not, however, as efficient as its admirers sometimes claimed. Assessment surveys, called tahrir defters, were expensive to produce and rapidly went out of date. Tax farming (iltizam), in which the right to collect revenues was sold to the highest bidder for a fixed sum, crept into the system from the late sixteenth century onward and became the standard practice by the seventeenth. Over time timar lands were converted into private property (çiftlik), particularly in Anatolia and the Balkans, and the sipahi cavalry lost both their economic basis and their military usefulness. The disappearance of the timar system is one of the central facts of the long Ottoman seventeenth century.

Urban crafts and manufacturing

Alongside the rural economy stood a substantial urban sector, dominated by craft production organized in guilds. Cities such as Bursa, Edirne, Istanbul, Damascus, Aleppo, Cairo, and Thessaloniki were not merely administrative centers but also great manufacturing hubs whose products travelled across the empire and beyond. The most important concentrations of production included silk weaving in Bursa and Damascus, cotton and woolen cloth in Edirne and Salonica, fine ceramics at İznik and later Kütahya, leatherwork in a dozen provincial cities, sword making and metalwork in Damascus, and carpet weaving in Uşak, Ghiordes, Kula, and eventually Hereke. The institutions that regulated all of this are examined in detail in crafts, guilds, and manufacturing.

The guilds, or esnaf, organized masters, journeymen, and apprentices in each trade, set quality standards, fixed prices in coordination with local authorities, and limited entry into the trade. They also provided social services for members, arranged collective worship, and represented the city in negotiations with the governor. The state generally supported the guilds because they allowed tax collection and price control to be administered cheaply, but it could also override them, as it did repeatedly when provisioning Istanbul or supplying the army.

The most prestigious manufacturing establishment of all was the palace workshop, called Ehl-i Hiref (Community of the Talented), which produced textiles, carpets, ceramics, books, jewelry, and arms for the imperial household. Bursa silk woven into brocades and velvet, and the brilliant quartz-frit wares of İznik in the sixteenth century, were the most celebrated of all Ottoman manufactures. Bursa in particular was a center whose products moved along the Bursa–Bozyük–Istanbul silk road and onward to Europe and the East.

Long-distance trade

The Ottoman state sat at the hinge of three continents and several major trading systems. Overland caravan routes ran from the Balkans through Istanbul or Edirne to Anatolia, branched through Sivas and Erzurum into Safavid Iran, and continued to Tabriz and the Persian Gulf. The classical Silk Road had been broken by the Mongol successor states and the disintegration of the Timurid empire, but the early modern Ottomans operated a system of their own, often called the Ottoman overland trade and silk road, which carried Persian raw silk to Bursa, Anatolian copper to the east, Venetian and Florentine cloth westward, and a stream of pilgrims toward Mecca and Medina.

Maritime trade was no less important. The Black Sea, treated by the Ottomans after 1453 as an imperial lake, exported furs, slaves, tallow, timber, and grain from the northern shore and brought finished goods from Istanbul and the Aegean in return. The Levant trade, organized through the great emporia of Aleppo, Smyrna (İzmir), and Sidon, connected Ottoman raw materials and foodstuffs with Venetian, French, English, and Dutch merchants. The spice trade, which had been the original lure of Indian Ocean commerce, was substantially rerouted through the Red Sea and Egypt after Selim I conquered the Mamluk sultanate in 1517, and the Ottoman role in that trade is described in the spice trade under the Ottomans.

The Hajj itself was an important economic system. Every year tens of thousands of pilgrims converged on the holy cities, bringing with them a demand for food, water, transport, and souvenirs, and the routes they used doubled as commercial arteries. The pilgrimage caravan from Damascus to Mecca, organized in part by the state, was a major source of revenue for Syria. The cost of securing the routes, the welfare of pilgrims, and the provisioning of Medina and Mecca were imperial concerns, and the religious endowments of the Holy Cities were a substantial item in the sultan’s budget.

The merchants

Merchants in the Ottoman world came from many backgrounds. Muslim Turks and Arabs traded in every major city; Greeks, Armenians, Jews, and Syriac Christians played a disproportionately large role in long-distance commerce, often in partnership with foreign houses. Jewish merchants expelled from Spain in 1492 were welcomed by Bayezid II and founded important communities in Istanbul, Salonica, and Izmir; the latter city became, by the eighteenth century, a major center of the European Levant trade, much of it passing through Greek and Armenian intermediaries. The capitulations granted to Venice, France, England, Holland, and Russia in the sixteenth and seventeenth centuries allowed European merchants to live under their own consuls, to be judged by their own laws, and to trade at favorable rates, and these treaties are the subject of the capitulations and their consequences.

The state derived substantial revenue from customs duties. The principal levy, called the gümrük, was nominally 5 percent on incoming goods and was sold in bulk to local tax farmers or to the great merchant guilds of the capital. Although the rate was low by Western European standards, the volume of trade was so great that customs revenue became one of the largest single items in the imperial budget. Additional income came from the transit dues levied on caravans, the port fees charged at Istanbul and the Black Sea ports, and the modest market fees collected in towns and cities.

Coinage, prices, and monetary policy

The monetary system of the Ottoman state was as distinctive as its fiscal institutions. The basic silver coin was the akçe, of which three went to a para and forty to a gold sultani. The akçe was debased repeatedly, particularly during the wars of the late sixteenth and seventeenth centuries, and its silver content fell from roughly 0.68 grams in the time of Mehmed II to a fraction of that by the early seventeenth century. The gold sultani, introduced under Suleiman, was intended as a stable international coin and was widely accepted in the Safavid and Mughal worlds. The full history of Ottoman money is given in Ottoman coinage and currency.

Price levels moved with coinage. The “price revolution” of the sixteenth century, driven by the influx of American silver through European trade, hit the Ottoman economy as well, and the state’s response was typically to debase rather than to raise taxes. By the seventeenth century the akçe had become almost worthless, and the kuruş (piastre) and para had become the working coins of everyday life. The chronic shortage of silver was a persistent problem, and the empire’s balance of payments with Europe, which the Ottomans lost in the eighteenth century, was a structural weakness that the state could not easily remedy.

In the nineteenth century the monetary system was thoroughly reformed. The gold lira, the mecidiye, was struck in 1844, followed by banknotes issued by the Ottoman Bank (a Franco-British institution founded in 1863) and a decimal currency modeled on European practice. These reforms are described in Ottoman coinage and currency.

Fiscal weakness and the long crisis of the seventeenth century

The seventeenth century was, in economic terms as in others, a long crisis. The Celali rebellions in Anatolia, the great revolts in Syria and Iraq, and the wars with the Habsburgs, the Safavids, and Venice drained the treasury and disrupted trade. Tax farming spread rapidly and became the principal mode of revenue collection. The devshirme and the janissary corps, the slave-born infantry that was the military backbone of the state, grew increasingly corrupt and unwilling to fight. The sipahi cavalry, undermined by the disappearance of the timar system, lost much of its military value.

The economic consequences of these political and military shocks were severe. Agricultural production fell in some regions, caravan trade was repeatedly interrupted, and inflation ate into the value of salaries. The state responded by debasing the coinage, increasing tax rates, and selling offices, all of which further weakened the economy. By the end of the seventeenth century the Ottoman state was no longer the dominant power in the eastern Mediterranean, and its share of European trade had begun to fall.

Integration into the world economy

The eighteenth and nineteenth centuries saw the Ottoman economy become increasingly entangled with European capital, and increasingly dependent on it. The treaty of Küçük Kaynarca in 1774 gave Russia the right to trade in the Black Sea and to intervene on behalf of the sultan’s Orthodox subjects; subsequent treaties with Britain, France, and other powers extended the system of capitulations and gave European merchants access to the interior. The 1838 Anglo-Ottoman free-trade agreement, signed by Mustafa Reşid Pasha and Lord Palmerston, abolished the Ottoman state monopoly on many goods and reduced customs duties to a uniform 5 percent, a level too low to fund the modernizing state that the same government was trying to build.

The result was a profound reorganization of the Ottoman economy. European manufactured goods, particularly cotton textiles from Britain, flooded the market and displaced local producers. Ottoman raw materials, including silk, cotton, wool, and tobacco, were exported in ever greater quantities to European factories. Peasants in Anatolia and the Balkans shifted from subsistence crops to cash crops for export, often at the cost of food security. Foreign investment built railways, ports, and utilities, but the profits left the country and the terms of trade moved against the Ottomans. The empire was effectively drawn into a peripheral position in the European-centered world economy that economists sometimes call the “semi-colony.”

The textile trades

Textiles were by far the most important manufacturing sector of the Ottoman economy. Ottoman silk weaving centered on Bursa, which imported raw silk from Persia, woven it into brocades and kaftans, and exported the finished products across the empire and into Europe. The Bursa silk industry was at its height in the fifteenth and sixteenth centuries, and Ottoman silk textiles were a familiar luxury in the courts of Italy, France, and England. Cotton was woven at Edirne, Salonica, and in the Levantine cities, while wool was spun and woven in Anatolian villages and in Damascus.

Ottoman carpets, too, were a major export, and the history of Ottoman carpet weaving traces a long arc from the geometric Uşak rugs of the sixteenth century, which appeared in European paintings as signs of wealth and oriental exoticism, through the Ghiordes and Kula rugs of the seventeenth and eighteenth centuries, to the fine Hereke carpets of the nineteenth century, which were produced in a palace factory for the court and for export to the wealthy households of Europe and America. The European taste for “Turkey carpets” was an important stimulus to production, and it shaped the patterns of the rugs themselves.

Mining, metals, and energy

Mining was a substantial sector of the Ottoman economy, although it has been less studied than agriculture or manufacturing. The empire was rich in copper, lead, silver, iron, salt, alum, and various mineral pigments, and the state carefully regulated the extraction and refining of the most valuable metals. The great copper mines of Ergani, in eastern Anatolia, produced the bulk of the empire’s copper, and the silver-bearing lead mines of Balyabadra (Balıkesir) and Gümüşhane were important sources of precious metal. Borax, alum, and saltpeter were extracted in Anatolia, and the salt mines of the central Balkans supplied the empire’s most basic mineral need.

Mining was typically carried out under a system of state concessions, and the proceeds were divided between the state and the operator. The most important mining towns developed their own patterns of settlement and production, often with a substantial non-Muslim population, since Christians and Jews were over-represented in the mining and metalworking trades. The guild of the goldsmiths and silversmiths, organized in Istanbul, Damascus, and Cairo, was a major sector of the Ottoman manufacturing economy, and the famous Damascus steel industry, which produced blades of legendary quality, was one of the most skilled metalworking traditions of the early modern world.

Energy sources were limited. Wood was the principal fuel, and the empire’s forests, particularly in the Balkans and the Black Sea coast, were heavily exploited. Coal, known since Roman times, was used locally but did not become a major energy source until the late nineteenth century, when the British and German investors introduced steam power and railways. The shortage of wood fuel, and the gradual deforestation of the Anatolian interior, was a chronic problem of the Ottoman economy and trade, and it was one of the factors that encouraged the long-term shift to imported energy and to European-controlled mining.

Labor, slavery, and demographic patterns

The Ottoman economy rested on a complex labor system that combined free wage labor, household labor, sharecropping, and slavery. Slavery was legal under Islamic law and was a substantial sector of the labor market until the nineteenth century. The principal sources of slaves were the Black Sea, the Caucasus, East and Central Africa, and the Balkans. The devshirme, the periodic levy of Christian boys for service in the household of the sultan and the janissary corps, was a state-organized form of slavery that produced some of the most important administrators and generals of the empire. The household slaves of private persons, often Circassian, Georgian, or African women, were a normal feature of elite life, and the agricultural slaves of the Black Sea and the Caucasus supplied much of the labor of the great estates.

The position of women in the Ottoman economy has been the subject of much historical work. Muslim women could own and inherit property, including agricultural land, urban real estate, and commercial partnerships, and the great foundations of Istanbul and Bursa preserve a rich archive of female economic activity. Women were heavily represented in the textile trades, both as weavers and as merchants, and the female-owned workshops of Bursa, Edirne, and Damascus were a substantial part of the urban economy. The veiling and seclusion of the wealthier classes did not prevent their participation in commerce, and the records of the Ottoman courts show women appearing as plaintiffs, defendants, and witnesses in a wide range of commercial cases.

The demographic history of the empire was complex. The population grew rapidly in the sixteenth century, from perhaps twelve to thirty-five million, and then stagnated or fell in the seventeenth and early eighteenth centuries. The causes of the seventeenth-century decline are debated: plague, war, famine, the Celali rebellions, and the breakdown of the timar system all played a role. The population began to recover in the eighteenth century and grew rapidly in the nineteenth, reaching perhaps thirty-five to forty million by the end of the Ottoman period. The high and growing population provided a large labor force, but it also placed a heavy burden on the agricultural and fiscal resources of the empire.

The maritime economy

The Ottoman navy was one of the principal instruments of economic policy. The conquest of Constantinople in 1453 and the subsequent wars with Venice, Genoa, the Knights of St. John, and the Portuguese gave the Ottoman state a dominant position in the eastern Mediterranean and the Black Sea, and the navy was used to protect the Ottoman trade routes and to project commercial power. The great port of Istanbul, at the meeting point of the Mediterranean and the Black Sea, was the principal commercial hub of the empire, and the great arsenal of the Golden Horn was a major industrial complex that produced ships, sails, ropes, and cannon for the fleet.

Maritime trade was a major sector of the Ottoman economy. The Black Sea trade, in grain, fish, timber, slaves, and furs, was conducted in Ottoman, Greek, and Italian ships. The Aegean and eastern Mediterranean trade, in silk, cotton, wine, and oil, was conducted in a mix of Ottoman, Greek, Italian, and French ships. The Mediterranean spice and luxury trade, organized through the great emporia of Smyrna, Aleppo, and Alexandria, was dominated by European shipping after the seventeenth century, but Ottoman and Greek merchants continued to play an important role. The Red Sea and Persian Gulf trade, conducted in the early period largely in Ottoman and Indian ships, declined in the face of European competition, and the trade of the Indian Ocean came increasingly under the control of the Dutch and English East India Companies.

The Ottoman shipbuilding industry, centered in Istanbul, Izmit, and Sinop, was one of the most important in the world. The Ottoman navy of the sixteenth century, the great fleet of Sinan Pasha, was a major instrument of Mediterranean power, and the merchant fleet of Istanbul and the Aegean ports was a substantial presence in the Mediterranean trade. The gradual decline of the Ottoman fleet in the seventeenth century, the loss of naval supremacy to Venice and then to the northern European powers, was a major contributor to the economic weakness of the later empire.

The fiscal state

The fiscal system of the Ottoman state was among the most elaborate in the early modern world. The principal revenues were the harac, the poll tax on non-Muslims, the aşar, the tithe on agricultural production, the gümrük, the customs duty, and the various monopoly revenues from salt, alum, and other goods. These revenues were supplemented by the income of the pious foundations (vakıf), which operated hospitals, schools, soup kitchens, and caravanserais throughout the empire. The state budget was modest by later standards, perhaps five to ten percent of national income, but it was sufficient to maintain a large army, a substantial bureaucracy, and an extensive palace and provincial administration.

The principal weakness of the fiscal system was its inflexibility. The timar system, which had been the foundation of the agrarian revenue, could not easily be expanded or contracted, and the new taxes introduced in the seventeenth century were often levied on a narrow section of the population and were deeply unpopular. The system of tax farming, which spread rapidly from the seventeenth century onward, made revenue collection easier in the short term but undermined the political reliability of the state, since the tax farmers were typically members of the local elite and used their wealth to accumulate political power. The long-term result was a fiscal system that could not keep pace with the rising cost of war and administration, and that forced the state to borrow heavily from European banks in the nineteenth century.

Coffee and the urban consumer economy

Coffee arrived in the Ottoman world with the conquest of Yemen in the sixteenth century, and it transformed the urban consumer economy of Istanbul and the larger cities. The Ottoman coffee trade moved the bean from Mocha and Aden through the Red Sea and Egypt to the imperial capital, where it was roasted, sold by licensed coffeehouse keepers, and consumed in establishments that quickly became centers of sociability, news, and sometimes seditious discussion. The first coffeehouse in Istanbul opened in the Tahtakale district in 1554, and within a few decades there were several thousand such establishments. The state taxed coffee heavily and periodically tried to close the coffeehouses, particularly in moments of political tension, but it could not suppress the trade, which was both too popular and too profitable to suppress.

The economy of the late empire

By the late nineteenth century the Ottoman economy was in many respects a colonial economy. Foreign investors owned or controlled the railways, the ports, the utilities, and a growing share of the public debt. The Public Debt Administration, established in 1881 to manage the bankruptcy of the previous decade, collected the revenues of a number of Ottoman provinces and remitted them to European creditors. Local industry struggled to compete with cheap European imports, and the small Anatolian bourgeoisie that emerged in cities like İzmir and Bursa was largely confined to commerce rather than to manufacturing. The economy of the late empire produced great wealth for a small foreign and minority elite and grinding poverty for the great majority of its subjects.

Conclusion

The Ottoman economy was therefore not a single thing but a succession of overlapping systems. The timar-based agrarian order of the fifteenth and sixteenth centuries gave way to a tax-farming regime, then to a semi-colonial incorporation into the European world economy. The great manufacturing cities of the early modern period declined as European imports undercut them. The monetary system, originally robust and well respected, was debased, reformed, and finally replaced with European-style currency. Yet the long arc of Ottoman economic history is not only one of decline. For most of its six centuries, the Ottoman economy was a major part of the world economy in its own right, and its institutions, from the timar system to the guilds to the great emporia of the Levant, deserve to be studied in their own terms.