How the Ottoman Empire Lost Control of Its Own Money

The Ottoman public debt began with one war loan in 1854. By 1881, a council of the empire's creditors was collecting its salt, tobacco and silk. In August 1854, in the middle of the Crimean War, the Ottoman Empire took its first foreign loan in London, secured on the tribute from Egypt. A year later the British House of Commons guaranteed a second loan by just three votes, while John Bright warned where mortgaging the empire's revenues would lead. Over the next twenty years the Ottoman public debt grew loan by loan. A loan meant to retire the empire's paper money failed, the kaime collapsed in Istanbul in 1861, and by 1875 interest payments swallowed more than half of the state's revenue. After the Anatolian famine, Grand Vizier Mahmud Nedim Pasha cut payments in half, and bondholders in London began a campaign that reached the Congress of Berlin in 1878. On 20 December 1881, Sultan Abdülhamid II issued the Decree of Muharrem. It created the Ottoman Public Debt Administration, a council run for the empire's creditors that collected six of its revenues and sent the money straight to their banks. The empire kept its sultan, its army and its borders, and still handed over part of its purse.