Liberal principles prevailed in Ottoman economic life, but it was not a loose liberalism, as social justice was essential in the distribution of the empire’s income
A state stands strong by means of its treasury. It is a fine art to keep the treasury full and to expend it properly. The oldest books still around today in this regard were written in the Islamic world. “Kitab al-Kharaj” (Book of Taxation), written by Abu Yusuf, the favorite student of Imam Abu Hanifa, who lived in the second century after the founding of Islam, at the request of caliph Harun al-Rashid, is an example of this.
Less tax equals more obedience
In Islamic law, the state treasury, which is also referred to as Bayt al-Mal (House of Wealth), consists of four parts:
1- Zakat, which is ordered to be given by rich Muslims in the amount of one-fortieth of their wealth, is distributed to the classes mentioned in the Quran. These are the poor, slaves, debtors, the stranded, those whose hearts will be warmed to Islam, those who serve in the way of God and the zakat takers.
2- The second part, of the war booty, mine and treasure tax, were the right of poor, orphan and moneyless passengers.
3- Taxes levied on non-Muslims were spent on civil servant salaries and national defense.
4- Unclaimed inheritance and found goods were used for Muslims or non-Muslims in need of care as a kind of social insurance fund.
If these incomes were insufficient for the expenditure of the state treasury, advance taxes could also be collected for certain services from the people using these services. However, efficient Ottoman governments content themselves with these in order to ensure that the people are pleased with them and obey them more from the heart. If the Bayt al-Mal revenues were collected properly and spent locally, there was no need to collect other taxes or borrow from the people.
In accordance with the tradition dating back to the Huns, there were two types of treasuries in the Ottoman Empire, one belonging to the state and one to the sovereign. The former was called the Outer Treasury (Birun Hazinesi) because it was kept outside the palace. The second, composed of the property of the sultan, was called the Inner Treasury (Enderun Hazinesi) because it was kept in the palace. After Sultan Mahmud II, the first began to be called Hazine-i Amira (State Treasury) and the latter Hazine-i Hassa (Privy Treasury).
History of privatization
According to Islamic law, the state does not intervene in economic life. It does not deal with trade and industry. Individuals carry out these transactions. There is no room for communism in this respect. The sole work of the state is to ensure internal and external security. It uses the treasury to fulfill this duty. Foundations run education and health services. For construction, those benefiting from the services participate physically or financially. Even the costs of the courts are met by those who apply. Then, military costs remain. By leasing state lands to the public, Ottoman rulers raised soldiers to the official post called “sipahi” (cavalryman) with the wages to be paid from them, and the wages of all kinds of officers were also covered in this way.
The state took the necessary measures to ensure that order was provided and maintained in the community. It prepared the necessary conditions for this and served as some kind of coordinator between individuals. Economic order was based on social justice. The state allowed private enterprise and everybody to do what they wanted in a legitimate circle. No one could intervene in a gain earned with great effort. Freedom to acquire and save was complete.
This economic system is close to the liberal system applied in free world countries now. But it is not an idle liberalism, because it is in the hands of the state to set price ceilings (narh), collect and expend treasury income such as zakat, and jizya production is based on private enterprise as much as possible while social justice is essential in the distribution of income.
Pictures on coins
Economic life in the Ottoman Empire was run according to the following principles:
Private property was inviolable. When public interest such as road expansion was required, personal property might be purchased without seeking the consent of the owner by the government. Unjust profits of civil servants were confiscated and put back in the treasury.
Engaging in trade affairs was free of charge. However, when necessary, a price ceiling could be set on goods such as bread, meat and other items. Trade of goods such as wine and pork, which are forbidden in Islam, was banned only for Muslims.
Trade was subject to a method called “gedik.” With the concern of maintaining the quality and supply-demand balance, every town had a certain number of traders. People were not allowed to open a new shop without a master or any time before the shop that did the same business closed its doors for good. Not every person was allowed to open a shop and perform any art or trade.
The government was able to prohibit exports of some important materials, especially cereals, with the aim of not causing scarcity. Agricultural and industrial goods were first offered to the people of the town where they were produced. The rest could be exported to surrounding cities and then abroad. Overseas imports of some strategic materials such as cotton, Russian leather and mohair could also be banned by the state.
There were monopolies in the production and sales of some goods. The purchase and sale of certain goods were carried out by the state. This system aimed to avoid any harm to the people due to cost differences or to control the circulation of strategic goods. Goods such as salt, tobacco, opium, bonito, silk, olive oil, cotton, mohair and fleece were subject to the state monopoly from time to time. This was abolished after 1839.
Public services were carried out through foundations. The government left the services such as temples, hospitals, fountains, bridges, imarets in which meals were served to the poor, schools and other places to the people. The state also supported these foundations by allocating an amount of income and exemptions. Even non-Muslim foundations that needed help or were about to be ruined, such as temples or orphanages, received financial support from the state.
The state met their expenses from its income. The rest was sent to the central treasury. Therefore, the state had as much prosperity as it produced. Some Ottoman provinces were, therefore, more developed than others.
Foreign traders were allowed. Apart from customs exemptions, they also had the opportunity to take their commercial cases to their consulates.The official currency was gold and silver. Copper coins were also minted for small needs. Even if it was in the state’s favor, paper money had not been issued to protect the people. Everyone could mint money by taking the gold and silver they had to the state mint for a small fee.
The state minted money, but also allowed other states’ money to circulate on the market. The seal or the picture on the gold and silver coins was not important in terms of value.