Such ‘progress’ included the Empire’s initiation into the realm of interna tional loan
finance in 1854. Turkey’s resultant increasing indebtedness from then on—until by 1875
over half its borrowing was for principal and interest payments on former loans (owed
largely to foreign creditors)—led to its virtual bankruptcy that year, made final in 1879.
Following this bankruptcy Turkey’s creditors succeeded in reorganising the country’s
finances and some of its main revenue-producing areas of the economy through the medium
of the Ottoman Public Debt, set up in 1881 under the Decree of Mouharrem. These
creditors, or bondholders, had as their delegates on the Council of the Ottoman Public
Debt Administration financial figures representing all the Great Powers; and these figures,
in effect, worked in close harmony with their governments. If considerable reform and
improvement in Turkish economic management did indeed result from establishing the
Debt Administration, it represented, none the less, a serious and deeply resented
infringement of Turkey’s sovereignty.
Symptomatic of the power of the Debt Administration was the position of the Imperial
Ottoman Bank. By the later nineteenth century this was the single most powerful bank in
the whole Empire, with its own seat on the Debt Council, for it was the agency through
which the Ottoman government was able to contract almost all of its loans, being able to
guarantee—or withhold—quotation on the Paris Bourse. Founded first in 1856, and
reorganised in 1863, the bank was originally a British and then an Anglo-French institution;
but soon it became in effect French. It was the only bank able to issue currency (apart from
the Ottoman government itself), and it quickly became involved in economic investment
in the Ottoman Empire, as did other, Europeancontrolled banks there.
Participation in development concessions was the other main source of European
economic power in the Ottoman Empire. The Empire had neither the resources nor the
ability to develop its own economic potential. But the European Powers did. The nineteenth
century saw European involvement in developing virtually every aspect of the economy—
communications, transport, services, factories and mines, and trade—while by the early
twentieth century the Empire’s three main creditor European Powers, France, Germany
and Britain, supplied advisers to the Ottoman government over a very wide range of its
activities. This was quite apart, of course, from the very great involvement in the Turkish
economy after 1881 by the Debt Administration. Concessions were sought by groups of
financiers, banks or business entrepreneurs, and the more important concessions were
usually obtained through intervention by their sponsor governments with the sultan. He
was unable to refuse if he wished to attain any of his own goals, although he did become
expert at playing one Great Power off against another to his best advantage. But Sultan
Abdul Hamid II himself, who was in power from 1876 to 1909, through much of the period
of Great Power financial domination of the Empire, sought not only to modernise his realm
but also to do so in such a way as to strengthen his own position. The most ambitious of all
these concessions, and that most fraught with political friction among the Powers, was
the German Baghdad Railway scheme. Begun in 1899, it was seen by the sultan as a vital
strategic link across the mountainous backbone of his territories.
This scheme, the great scheme of German imperial economic endeavour in the Ottoman
Empire, symbolised also the aggressive emergence of German interests into Europe’s
established areas of influence. These now represented a unified and dynamic Power,
2 THE GREAT POWERS AND THE END OF THE OTTOMAN EMPIRE