Foreign Capital in the Ottoman Mining Sector

Based on an archival research, this paper traces the European capital circulating in the Ottoman mining sector and its relations with the Ottoman government in the period between 1850 and 1908. This paper intends to explore some neglected areas in the academic circles like how foreign capital intervened into the mining sector, how foreigners dominated the mining business and how the Ottoman government received the capital flow from Europe.

Ottoman lands witnessed an unprecedented level of European economic activity in the second half of the nineteenth century. Mines and mineral resources of the empire became a subject of European entrepreneurs who were seeking cheap raw materials for the industrial production.The liberal spirit of the Tanzimat period together with the pressure of European capital paved the way for direct foreign control over the Ottoman mines especially in the Anatolian territories. The changes in the Land Law in 1867 and the Mines Law of 1869 prepared the legal ground for the foreigners to own and operate Ottoman mines. Foreigner capital was welcomed by the Ottomans in the first decades of foreign penetration. The Ottoman government was in a financial crisis and looking for alternative sources for increasing public revenues. In line with this purpose, chartering the mines to private entrepreneurs and taxing the production and exportation appeared as a favorable way for the government. In this period, many foreign entrepreneurs obtained concessions for operating mines.

In a few decades, foreigners dominated the sector because of their financial and technological superiorities. By 1907, European extraction constituted 92 per cent of the total mines production. However, foreign domination did not satisfy the Ottoman government because foreigners were leaving a small share to the state. This disturbed Ottoman society and government and many people from bureaucratic circles turned against the foreign mining investments. They tried to limit foreign activities by making amendments in the Mines Law and some bureaucratic strategies like favoring the Ottoman citizens while granting concessions.

Still, the Ottomans could not dismiss foreign capitalists entirely. Though there were certain efforts to restrain foreigners, the pressure of the foreign states on the Ottoman government on the one hand, and foreign capital’s function in the employment and the transfer of European mining technology on the other hand, secured foreign mining investments.