Imperial Ottoman

Economy · Article

The Capitulations and Their Consequences

The early commercial treaties (imtiyazat) granted by the Ottoman sultans to Venice, France, England, Holland, and Russia, and their long-term economic effects.

The capitulations (Turkish: imtiyazat) were a series of commercial treaties by which the Ottoman sultans granted to European powers legal and economic privileges within the empire. The earliest and most famous was granted to Venice in 1380, and the system was extended in stages to France (1536), England (1580), the Dutch Republic (1612), and Russia (1783). At first these treaties were a sign of Ottoman strength: the sultan, secure in his sovereignty, was extending commercial hospitality to friendly states. By the nineteenth century they had become a symbol of Ottoman weakness, a legal framework in which the empire’s economy was opened to European penetration and ultimately controlled by European capital. The history of the capitulations is one of the central threads of the broader Ottoman economy and trade.

The early treaties: Venice and Genoa

The earliest capitulations were granted to Venice in 1380, after the Ottoman victory over the Genoese and the temporary restoration of Venetian influence in the eastern Mediterranean. The treaty gave Venetian merchants in Ottoman territory the right to trade at a fixed customs rate of 2 to 5 percent, the right to be judged by their own consul in civil cases, and certain protections for the persons and property of Venetian subjects. The treaty was renewed under successive sultans, and it formed the basic pattern for later capitulations.

Venice remained the most important European trading partner of the Ottomans for nearly two centuries, and the Venetian community in Istanbul, organized in the Fondaco dei Turchi, was the largest and most privileged European merchant community. The fall of Constantinople in 1453 and the subsequent Venetian-Ottoman wars did not interrupt the trade: the Venetians were too useful to the Ottomans to be excluded.

The French capitulation of 1536

The most important of the early capitulations, and the model for many of those that followed, was the treaty granted to Francis I of France in 1536. Francis had been seeking an alliance against the Habsburg emperor Charles V, and the Ottoman sultan Suleiman the Magnificent was receptive. The treaty, negotiated by the French ambassador Jean de La Forest, gave French merchants the right to trade throughout the Ottoman Empire at a customs rate of 5 percent, the right to be tried in French consular courts, the right to bring their wives and families, and (controversially) the right of French consuls to extend protection to Christians in the Holy Land.

The French capitulation was the model for almost every subsequent European treaty with the Ottomans. It set the customs rate at 5 percent, established the principle of extraterritorial jurisdiction, and gave France a privileged position in the protection of Christian holy places — a position that survived the dissolution of the empire and shaped French policy in the Levant for centuries. The English and Dutch capitulations of the late sixteenth and early seventeenth centuries were essentially copies of the French treaty.

The English and Dutch capitulations

The English Levant Company received its first capitulation from Murad III in 1580, and the Dutch East India Company received one from Ahmed I in 1612. Both treaties gave their merchants the right to trade at the customary 5 percent customs rate, the right to be judged by their own consuls, and the right to maintain warehouses and chapels in the Ottoman ports. The English and Dutch merchants were concentrated in Smyrna, Aleppo, and Istanbul, and they traded primarily in Ottoman raw materials: raw silk, cotton, wool, hides, and dyestuffs.

The Levant Company was one of the most important English overseas trading organizations for nearly two and a half centuries. It was dissolved only in 1825, long after the Ottomans had lost effective control of their own trade. The Dutch company, less durable, gave way to individual Dutch merchants operating under the same capitulations.

The Russian capitulation of 1783

The Russian capitulation was the last and the most dangerous of the classical series. It was granted as part of the Treaty of Küçük Kaynarca in 1774, the peace settlement that ended the first Russo-Turkish War of Catherine the Great. The treaty gave Russia the right to trade freely in the Ottoman Empire, the right to build a church in Istanbul, and — most alarmingly to the Ottoman government — the right of the Russian ambassador to intervene on behalf of Orthodox Christian subjects of the sultan. The latter provision, the so-called “right of protection,” was a major breach of Ottoman sovereignty and a forerunner of later nineteenth-century interventions.

The Russian capitulation was followed in the nineteenth century by a flood of new treaties, all of which extended the privileges of European commerce and reduced the sovereignty of the Ottoman state. The 1838 Anglo-Ottoman trade agreement, signed by Lord Palmerston and Mustafa Reşid Pasha, abolished the Ottoman state monopoly on many goods and reduced customs duties to a uniform 5 percent, a level too low to fund the modernizing state that the same government was trying to build.

Economic effects

The economic effects of the capitulations were, in the short term, modest. The 5 percent customs rate was no lower than the rate charged to Ottoman subjects, and the European merchants who operated under the capitulations were a small fraction of the total merchant class. The principal beneficiaries of the early capitulations were the European trading companies, which were able to operate under the protection of their own consuls and to bring larger volumes of capital into the Ottoman market.

In the long term, however, the capitulations were deeply harmful to the Ottoman economy. The system of extraterritoriality, under which Europeans were immune to Ottoman law, made it impossible for the state to enforce its own commercial regulations. The right of European merchants to settle in the Ottoman interior and to trade directly with producers bypassed the guilds and undercut the local manufacturing base. The 1838 free-trade agreement accelerated this process, and the influx of cheap European manufactured goods, particularly British cotton textiles, destroyed the urban crafts and manufacturing sector of the empire.

The capitulations were formally abolished only in 1923, as part of the Treaty of Lausanne that established the Turkish Republic. By that time the legal framework had been progressively narrowed by the Ottoman government in the late nineteenth and early twentieth centuries, but the underlying economic dependency of the empire on European capital had not been undone.

Conclusion

The capitulations began as instruments of Ottoman sovereignty and ended as instruments of European economic dominance. For the first two centuries of the system the treaties were a reasonable accommodation of the presence of European merchants in the Ottoman market. By the eighteenth century, however, the growing economic power of Europe and the growing weakness of the Ottoman state had turned the capitulations into a system of unequal exchange, and by the nineteenth century the empire had effectively lost control of its own Ottoman trade and economy. The history of the capitulations is, in microcosm, the history of the long Ottoman decline.