The Penetration of European Banking into Ottoman Lands during the Second Half of the Nineteenth Century

Abstract

We discuss the development of ‘modern’ banking in Ottoman lands during the nineteenth century. We present some evidence showing considerable local financial sophistication prior to European entry in 1856. Drawing on the ‘constitutional commitment’ literature we argue its success was related to the ability of European bankers to extend security of life and property to Ottoman decision makers. We describe the conflictual process ending around 1900, with the domination of Ottoman capital markets by European banks, particularly the Banque Imperiale Ottomane, or BIO. The conflict pitting the BIO against ethnically based local banking networks opens a different window into that epoch. Last, we consider the role of the ‘South African Gold Panic of Autumn 1895’ in London and Istanbul in bringing about this final outcome.