Forgotten Ottoman Empire

Because not enough money to pay for salaries of officials, the government of the Sultan was forced to announce that within five years it will be able to pay their debts only half size. By 1879 the situation is so bad that it was announced complete financial bankruptcy of the Ottoman Empire. After the budget crisis, the government turned its attention to the West, arguing that the Greek banking experiments fail. So the empire were first European banks Ottoman Bank, Credit Mobilier, Comptoir National d'Escompte, Pereire Brothers, Societe Generale de l'Empire Ottoman and other French financial institutions. At the beginning of XX century, the country was carried out operations through 15 branches of European banks, and only one National Agricultural Bank, formed in 1888, Western investors consider the market empire to as the "New California."

Private central bank

In June 1856 the empire was established kvazitsentrobank - Ottoman Bank. Charter is privately owned bank in the United Kingdom was signed that housed its headquarters, and ratified by the Sultan. Ottoman Bank was entirely under British influence. He had no special privileges such as a monopoly on the issue of banknotes or the conduct of state finances. However, the Ottoman government used its banknotes as legal tender.

The successful experience of the private institutions has led to its transformation into an imperial bank. Imperial Ottoman Bank for a long time functioned as both the State Bank and the Ministry of Finance. The owners of the Imperial Bank were mainly British (59% equity) and French partners (37%), but the founders of the government of the empire also included (4%). Law on Concessions, signed by Sultan Abdulaziz, confer a monopoly bank note issue.

The government had hoped to help revive the economy, the Bank of the empire, the victim after the Crimean War with Russia. Starting with a few finance public investment projects related to infrastructure Ottoman Empire, the bank moved to commercial operations. Thanks to a widespread network of branches Imperial Ottoman Bank was able to take the lead in the deposit market, securities and loans. Ten years later, in February 1875, the bank signed a new agreement under which the Imperial Ottoman Bank has received an unprecedented right to manage the state budget and the financial system. The agreement also provides for the extension of monopoly on monetary another twenty years. Thus, the private bank completely transformed, becoming a state bank.

During the Russian-Turkish War of 1877-78. Bank credits to the government in full, resulting in his leadership became a state council on the issue of debt. Public finance Ottoman Empire actually under the control of the bank. As a guarantee of income he was given a monopoly on tobacco trade, which the bank sold by founding Cointeressee Regie des Tabacs de l'Empire ottoman. In the mid-1880s, international confidence in the Ottoman Empire was restored. After a long break, the government was able to enter the market of foreign loans, and reduce the financial burden on the Imperial Ottoman Bank has allowed him to take up private commercial transactions. Interests of the bank moved into the sphere of construction lending rail lines, and the coal industry.