The dollar in the time of Süleyman the Magnificent

The dollar in the time of Süleyman the Magnificent

At the time of Sultan Süleyman the Magnificent, the American continent had been discovered but there was no American state or dollar. The Ottomans, who ruled from the Atlantic Ocean to the gates of Vienna, had an extremely serious “money” issue.  

Just as the Turkish Lira that is losing value against the dollar today, the Ottoman currency “akça” was losing value against gold and silver.
In his book “Devlet-i Aliye” (The Sublime State), late scholar Halil İnalcık explained that in the year 1525, one unit of gold was 57 akças; in 1584, the same unit of gold was 120 akças. The same went for silver.

Imagine the akça against the gold yesterday and imagine the lira against the dollar today. Of course it is not the same but an important principle of the science of economics can be grasped: The value of a country’s currency is dependent on factors such as capital accumulation, savings rates, technological level and production capacity. If these are weak, then your money loses value. 

At those times, coins were used all around the world. The real value of the money was related to the ratio of gold and silver in it; in other words, coins were made of gold and silver. 

In the Ottoman akça, the ratio of gold and silver was constantly being lowered; in other words, devaluation was occurring. 

When the janissaries and the tradesmen refused to accept this “weak akça” or the “light coins,” then there would be rebellions. 

On the other hand, in Europe the trade revolution was taking place; banks were developing, collecting money with interest and selling credits to merchants, thus creating capital for commercial life; capital accumulation and companies were also strengthening. Due to this, the interest rate in Europe was around 5 percent in the 16th century. 

In the Ottoman Empire, where institutions such as companies and banks did not exist and where everything was dependent on an agricultural economy, the interest rate was set at 12 percent because of the inadequacy of capital following a fatwa by the shaikh al-Islam. 

Historian Mustafa Akdağ has explained this chronic money issue of the Ottomans as follows: 

“While the fame and reputation of Süleyman the Magnificent, a sultan who had achieved the most glorious of Turkish conquests, was circling Europe, the government was taking every road possible to find the money to meet the expenses in the capital Istanbul.” 

By the 13th century, Europe was transferring to a regular infantry army equipped with rifles thanks to its strengthened capital accumulation. The Ottomans were not able to replace their land-bound cavalry army with a rifled infantry because they were in financial trouble. 

After a while, defeats were to start. 

Modernization attempts started in the 1700s, but it was not possible to alter the course of history. We withdrew from Vienna to the Maritza River at the Bulgarian border, as a matter of fact, even to Sakarya, near Istanbul. Thanks a thousand times to the Liberation War and the Lausanne Treaty, we were able to save the current borders of the country except for the Iraqi border. 

The capital formation that caused Europe to leap forward in the 17th century was a process that started in the 12th century. It was not the product of the conscious economic politics of states but the outcome of social dynamism born of the special geographic circumstances of Europe. Later, it became state policy. 

For this reason, it is wrong either to blame the Ottomans or entertain Ottoman dreams in the 21st century by looking at the conquests. Both stances prevent anyone from drawing lessons from the colossal, 600-year experience of the empire or “learning” the dynamics of history. 

In Turkey, in the past five or six years, we have forgotten reforms, European standards, the role of technology in the economy and the accumulation of savings and capital… We have fueled construction investments and a consumer economy that bring votes in the short term. 

As such, Turkey does not need to change the system but adopt a modern economic mentality and democratic and rational politics.