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Rh races which they conquered; and from this point of view a careful study of the financial history of Turkey will afford most valuable insight into the Eastern Question.

In reward for the brilliant services rendered him by Ertoghrul (the father of Osman) and by Osman himself, Ala-ud-din, the last of the Seljuk sultans, conferred certain provinces in fief upon these two great warriors. They in their turn distributed the lands so acquired among their sons and principal emirs on strictly feudal principles, the feudatory lands being styled ziamet and timar, a system long continued by their successors in regard to the territories which they conquered. The conquered peoples fell into an inferior caste, made to work for, and to pay for the subsistence of, their conquerors, as under the Arab domination; the principal taxes exacted from them were the kharaj, a tax of indeterminate amount upon realty, based on the value of lands owned by unbelievers—(in contradistinction to the tithe [a&#x0351;shār] which was a tax of fixed amount upon lands owned by believers)—and levied in payment of the privilege of gaining means of existence in a Mussulman country, and the jiziyé, a compulsory payment, or poll-tax, to which believers were not subjected, in lieu of military service. The conquerors were feudatories of the reigning prince or sultan, and their payments consisted principally in providing fighting forces to make up the armies of the prince. The kharaj, the jiziyé, and the whole feudal system disappeared in theory, although its spirit, and indeed in some respects its practice, still exists in fact, during the reforming period initiated by Sultan Selim III., culminating in the Tanzimat-i-Khairiyé (1839) of Abd-ul-Mejid, and the Hatt-i-Humayun issued by the same sultan (1856). The administration of the state revenues was managed by a government department known as the Beit-ul-Mal or Maliyé, terms generally employed throughout Islamic countries since the commencement of Islam. But the entire financial authority resided in the sultan as keeper, by right, of the fortune of his subjects. The public revenues were passed under three principal denominations: (1) the public treasury; (2) the reserve, into which was paid any surplus of revenues over expenses from the treasury; (3) the private fortune (civil list) of the prince. Expenditure, as under the Seljuk sultans, was defrayed partly in cash, partly in “assignations” (havalé).

The Osmanli sultans, as also the Mamelukes and the Seljuks, were accustomed to give largesse to their military forces on their accession to the throne, or on special occasions of rejoicing, a custom which still is practised in form, as for instance on the first day of the year, or the birthday of the Prophet (mevlûd). Largesse was especially given on the field of victory, and was, moreover, liberally distributed to stifle sedition and mutiny among the troops, the numerical strength of which was continually increased as the empire enlarged its borders. This vicious system, grafted as it was upon an inefficient administration, and added to the weight of a continually depreciated currency, debased both by ill-advised fiscal measures and by public cupidity, formed one of the principal causes of the financial embarrassments which assailed the treasury with ever increasing force in the latter part of the 16th and during the 17th and 18th centuries. The Turkish historian, Kutchi Bey, attributes the origin of the decline of the empire to the reign of Suleiman the Magnificent (1520–1566), when the conversion of many emiriyé lands into vakufs was effected, and the system of farming out revenues first introduced. Impoverished by these different causes, as well as by prodigal extravagance in interior expenditure, by shameless venality among the ruling classes, and by continual wars, of which the cost, whether they were successful or not, was enormous, the public treasury was frequently empty. So long as the reserve was available it was drawn upon to supply the void; but when that also was exhausted recourse was had to expedients, such as the borrowing, or rather seizure, of the vakuf revenues (1622) and the sale of crown properties; then ensued a period of barefaced confiscation, until, to restore public confidence in some measure, state budgets were published at intervals, viz. the partial budget of Ainy-Ali (in 1018 or 1609), the budget of Ali Aga (in 1064, or 1653) and that of Eyubi Effendi (in 1071, or 1660). At this time (1657–1681) the brilliant administration of the two Kuprilis restored temporary order to Ottoman finance. The budget of Eyubi Effendi is particularly interesting as giving the statement of revenue and expenditure for an average year, whereas the budget of Ainy-Ali was a budget of expenditure only, and even in this respect the budget of Eyubi Effendi is far more detailed and complete. The budget of Ali Aga is almost identical with that of Eyubi Effendi, and is worthy of special note for the conclusions which accompanied it, and which although drawn up 250 years ago, described with striking accuracy some of the very ills from which Turkish finance was suffering throughout the reign of Abd-ul-Hamid.

Apart from unimportant modifications, the form of the budget must have remained unchanged until the organic reforms of Selim III., while its complete transformation into European shape dates only from the year 1278 (1862), when Fuad Pasha attached a regular budget to his report on the financial situation of the empire. Since that time there had been no further change worth noting until the “new régime” was established in 1908. Although the publication of the budget had only taken place at very irregular intervals, it must also be observed that the published budgets were by no means

accurate. From the time of Eyubi Effendi until the end of the grand vizierate of Ibrahim Pasha (1730), the empire experienced periodical relief from excessive financial distress under the series of remarkable grand viziers who directed the affairs of state during that time, but the recovery was not permanent. Ottoman arms met with almost systematic reverses; both the ordinary and the reserve treasuries were depleted; a proposal to contract a foreign loan (1783) came to nothing, and the public debt (duyun-i-umumiyē) was created by the capitalization of certain revenues in the form of interest bearing bonds (sehims) issued to Ottoman subjects against money lent by them to the state (1785). Then came forced loans and debased currency (1788), producing still more acute distress until, in 1791, at the close of the two years' war with Russia, in which the disaster which attended Ottoman arms may be largely ascribed to the penury of the Ottoman treasury, Selim III., the first of the “reforming sultans,” attempted, with but little practical success, to introduce radical reforms into the administrative organization of his empire. These endeavours were continued with scarcely better result by each of the succeeding sultans up to the time of the Crimean War, and during the whole of the period the financial embarrassment of the empire was extreme. Partial relief was sought in the continual issue of debased currency (beshlik, altilik and their subdivisions), of which the excess of nominal value over intrinsic value ranged between 33 and 97%, and finally paper money (kaimé) which was first issued in 1839, bearing an interest of 8%, reduced in 1842 to 6%, such interest being paid on notes of 500 piastres, but not on notes of 20 or 10 piastres, which were issued simultaneously. Finally, usage of paper money was restricted to the capital only, and in 1842 this partial reform of the paper currency was followed by a reform of the metallic currency, in the shape of an issue of gold, silver and copper currency of good value. The gold coins issued were 500, 250, 100, 50, and 25 piastres in value, the weight of the 100-piastre piece (Turkish pound), 7.216 grammes, .916⅔ fine. The silver coins were of 20, 10, 5, 2, 1 and ½ piastre in value, the 20-piastre piece weighing 24.055 grammes, .830 fine. The copper money was in pieces of a nominal value of 40, 20, 10, 5 and 1 paras, 40 paras being equal to 1 piastre. In 1851 further attempts were made to withdraw the paper money from circulation, but these were interrupted by the Crimean War, and the government was, on the contrary, obliged to issue notes of 20 and 10 piastres. Finally, at the outbreak of the Crimean War Turkey was assisted by her allies to raise a loan of £3,000,000 in London, guaranteed by Great Britain and France; in 1855 an organic law was issued regulating the budget, and in the same year a second guaranteed loan of £5,000,000 was contracted in Great Britain. In 1857 an interior loan of 150,000 purses in bonds (esham-i-mumtazē), repayable in three years and bearing 8% interest, was raised; the term of repayment was, however, prolonged indefinitely. In the same year another series of bonds (haziné tahvili), bearing 6% interest, and repayable in 1861, was issued; in 1861 the term of reimbursement was prolonged until 1875. In 1858 a third loan was contracted in Great Britain for £5,000,000, and thereafter foreign loans followed fast on one another in 1860, 1862, 1863, 1864, 1865, 1869, 1872, 1873 and 1875, not to mention the two Egyptian tribute loans raised on Egyptian credit in 1871 and 1877. In 1859 the settlement of palace debts gave rise to the issue of 1,000,000 purses of new interior bonds (esham-i-jedidē) spread over a period of three years, repayable in twenty-four years, and bearing interest at 6%. Further 6% bonds, repayable in ten years, and styled serguis, were issued in the same year. Seeing the rapid increase of the financial burdens of the state, a commission of experts, British, French and Austrian, was charged, (1860) with setting the affairs in order, and with their assistance Fuad Pasha drew up the budget accompanying his celebrated report to the sultan in 1862. Meanwhile kaimē was being issued in great quantities (about 60,000 purses a month) and fell to a discount (December 1861) of 75%. In 1862 further sehims were issued, and these and the loan of 1862 (8,000,000) were devoted to the withdrawal of the kaimē. Later, however, the kaimē was again issued in very large amounts, and the years succeeding 1872 up to the Russian War (1877) presented a scarcely interrupted course of extravagance and financial disorder, the result of which is described below.

The Budget was supposed to be drawn up according to an excellent set of regulations sanctioned by imperial decree, dated the 6th of July 1290 (1875), of which the first article absolutely prohibited the increase, by the smallest sum, of any of the expenses, or the abandonment of the least iota of the revenues fixed by the budget. Under these regulations the revenues were divided into two categories, viz. the direct and the indirect. The first category included the “imposts” properly so called, the fixed contributions (redevances fixes) to be paid by the “privileged provinces,” and the military exoneration tax. In the second were comprised tithes, mine-royalties, forests and domains, customs, sheep-tax, tobacco, salt, spirits, stamps and “various.” The expenses were also divided into two categories—(1) “Periodic and fixed” expenditure, which admitted of neither reduction nor delay; and (2) the credits allowed to the various departments of state, which might be increased or diminished according to circumstances. The expenditure of the first category was made up of the service of foreign loans, of the general debt, of the dotations replacing ziamet and timarat (military fiefs) and of fixed contributions such as vakufs. In the second category were