“For almost two decades during the middle of the seventeenth century, French, Italian, and Dutch merchants minted in southern France, northern Italy, and elsewhere in Europe large amounts of European coinage whose specie content had been reduced to mostly copper with a thin silver coating. These coins were then transported across the Mediterranean and used as payment for Ottoman goods or even sold wholesale to local merchants and moneychangers. Initially they fetched prices far above their metal content, but these premiums declined over time with the increasing volume of trade that eventually involved hundreds of ships and close to 200 million pieces of coin. The gross revenues of the European merchants have been estimated […] somewhere between six to eight million Venetian gold ducats” (p.345).
The scale of this counterfeiting scheme has puzzled commentators since the 17th century. Its success has usually been explained by the Turks’ lack of wit. But rather than the Ottoman merchants’ naivety, the author proposes to consider the prevailing fiscal and monetary conditions in the Empire as the base of the success of the scheme (p.346).
During the 16th and 17th centuries, Europe experienced a large trade deficit towards Asia. European traders thus had to ship large quantities of bullion to the East; as a result, European silver coins such as the Spanish piece of eight circulated extensively in the Ottoman Empire after 1550 (p.348). Soon, substantial differences in exchange rates between different European currencies fueled the trade of coin to the East (in the mid-17th century a Spanish piece of eight was worth 12 five-sols pieces in the West, but only 8 in the Ottoman Empire, making export very beneficial). The counterfeiting of these coins with less silver and more alloy also became a very attractive business. Numerous French and Italian potentates lent their mint for the coinage of such debased currencies (p.349). Noticeably, this substandard did not circulate much in Europe and was mostly shipped East.
The lower value of the debased coins (down to 20 for a piece of eight) made them particularly suitable for daily transaction. The peak of the traffic was reached between 1656 and 1669; during this period, the Ottoman custom registered 180 millions pieces entering the Empire (worth some 10 million pieces of eight). Over 20 ships reached Izmir every year loaded with debased coins (p.350).
The Ottoman monetary system suffered from the lack of a large silver coin. There was nothing between the akçe (0.7 g of pure silver) and the gold sultani (= 55 to 65 akçes). As a result, there was a strong pressure on the ducat and medium-sized payments often had to be done with piles of akçes.
Before 1580, successful military campaigns benefited the finances of the state (p.352). Wars against the Shah and the Hapsburg blew away budget surpluses. “Since some of the stte revenues were fixed in nominal terms, the silver inflation of the sixteenth century also had adverse consequences”. The Celali rebellion adversely affected the economy and demographic expansion came to a end (p.353). This adverse trend finally led to the debasement of the akçe, it lost 44% of its silver content in 1585-6 (p.354).
Debasement was a short-term strategy meant to lighten the burden of the public debt, without much long-term strategy attached. “The frequency of correction of coinage that increase the silver content of the akçe also suggests that the government tried to maintain the standards of coinage but was unable to do so.” Debasement was particularly dangerous politically as it decreased the pay of the troublesome janissaries.
Faced with the decreasing buying power of the akçe, a demand for the more stable European coins emerged (p.357). The exhaustion of the Ottoman silver mines in Rumelie made import of bullion all the more important at a time when Europe enjoyed regular arrivals of American silver (p.358). In the mean time bullion flow to the East and continuing fiscal pressure fueled the Ottoman demand for silver. The mints themselves (specially in the provinces) experienced important troubles to acquire precious metals, the quality of their production fell further down, as the result the government was forced to close a number of them in the second quarter of the 17th century. Scarcity reach a all-times low in the 1640s but went on until the 1680s. The akçe was reduced to little more than a unit of account and replaced by European coins (p.359).
Strangely the Ottoman government did not try to foster the usage of copper coinage as numerous continental European states had done (although it would later in the 17th century when facing another fiscal crunch; p.360). It seems that as the exchange rate between the copper mangır and the akçe was fixed (one eighth), it was not worth producing for the individual entrepreneurs to whom mints were farmed out. Moreover until the 1690s, Ottoman coins were not milled but hammered which increased the production costs and limited output (p.360).
So the clients of the European merchants did not lack of wit but were happy to pay an important premium for the coins they bought because the whole Ottoman economy needed them badly. But on the long run, the European merchant also started to suffer from that trade as the outflow of bullion was deflating the price of their wares in Europe while bullion made other exports to the Ottoman Empire less economical. The Ottoman administration was pined down in the Candia War and could not engage in the expensive endeavour of cleaning the market from the debased coins. It had to make do until the war ended in 1669 (p.362).
The Ottoman government was keen on replacing the European coins by the akçe as during forty years it had lacked the ability to influence the Empire’s monetary policy since it could not impact the quantity of silver of the daily currency (p.363).