The Longest Decade of the Empire’s Treasury: 1853-1856 Crimean War and Ottoman State Finances

Abstract

This study aims to investigate the economic factors behind the crisis of the state finances, caused by the effects of the Crimean War of 1853-56. In the 19th century, modernization of the economic structure was realized through administrative and fiscal restructuring within the framework of Tanzimat period reforms. The Crimean war that took place in such a context brought great financial burdens to the empire's treasury and the pressure caused by increased expenditure necessitated new methods to financing the state budget deficit. In this context, in addition to methods that were previously used as government financing instruments like short-term loans from Galata Bankers and paper money creation, external debt was borrowed from European financial markets for the first time and domestic borrowing securities were issued. The Ottoman government has postponed the crisis of state finances for a while through new financing methods. But the economic consequences of these financing instruments have led to more severe fiscal problems for the state in the following years.