FROM BIMETALLISM TO THE VOLATILE GOLD STANDARD: THE TRANSFORMATION OF MONETARY POLICY IN THE OTTOMAN EMPIRE

Abstract

The history of the Ottoman Empire represents an inexhaustible source of economic questions and reflections that are relevant even today. Namely, the economic power of the empire can be traced back to its beginnings as a major economic trading centre between Europe, Asia, and Africa. Additionally, it served as a centre of science and innovation led by its eminent scientists such as Abu'l Fazl Ibrahim. However, with the rapid economic development of Central and Western Europe reaching its peak by the mid nineteenth century, the perception of the Ottoman Empire changed drastically from what Western powers had previously perceived. The empire, once seen as an economic political giant, began to be synonymous with obsolescence and stagnation not only in terms of economy but also in societal life. Hence, it earned the epithet "the sick man of Europe." This study aims to uncover the causal relationship for the emergence of the so called period of reform of the Ottoman Empire and its eventual decline. The monetary policy of the empire, primarily based on the bimetallic monetary system, characterized using two noble metals, predominantly gold and silver for trade transactions, was later replaced by the gold standard. The roots of which in the economic history of Central and Western Europe can be traced much earlier than those of the Ottoman Empire. This economic historical investigation will focus on identifying and explaining the connections and consequences of the monetary reform of the empire, aiming to provide the reader with a comprehensive understanding of the period known as the "Tanzimat reforms in the Ottoman Empire." The conclusions drawn from this study converge on the fact that the end of the empire was inevitable, but the timing and way it occurred were largely influenced by these economic political reforms that engulfed the empire at the end of the nineteenth and the beginning of the twentieth century. Furthermore, I would like to emphasize their impact, which left a significant mark on subsequent events in the economic history of the territory of the former Ottoman Empire.