PUBLIC FINANCIAL ADMINISTRATION

OF OTTOMAN EMPIRE
BETWEEN THE YEARS 1838 - 1880 AND
MUHASEBAT GENEL MUDURLUGU
(GENERAL DIRECTORATE OF PUBLIC
ACCOUNTS)

Kulaksız, Haydar
Maliye Bakanlığı Muhasebat Genel Müdürlüğü
MOF General Directorate of Public Accounts)
Address: İlk Adim Caddesi, Dikmen, Cankaya, Ankara, Turkey
Tel: +90 312 415 17 69
Fax: +90 312 417 05 15
E-mail: hkulaksiz@muhasebat.gov.tr

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 PUBLIC FINANCIAL ADMINISTRATION OF
OTTOMAN EMPIRE BETWEEN THE YEARS 1838 - 1880
AND MUHASEBAT GENEL MUDURLUGU
(GENERAL DIRECTORATE OF PUBLIC ACCOUNTS)

ABSTRACT
The purpose of this declaration is to bring out reforms realized in
the field of government accounting in the 19th century by the Ottoman Empire
(Osmanli Imparatorlugu) during the transition to the modern financial
management and give information about the transition process underlying
the successful government accounting implementations of the Turkish
Republic in the 20th century.
At the beginning of the 19th century, neither a financial organization,
which was supposed to collect and consolidate all revenues of the Ottoman
Empire in the same pool, nor a government accounting system, in which the
financial operations of the government were supposed to be recorded and
monitored, used to be exist. In the modernization period, which started with
the Reform (Tanzimat) Firman in 1839 in order to ensure renovation of
administrative and financial institution of the government, it is known that
first of all the Ministry of Finance was established, multiple treasury was
changed into the single treasury and then the General Directorate of Public
Accounts was established in order to carry out the government accounting
service in accordance with the requirements of the period.
It is understood that restructuring activities of the Ministry of
Finance and developments in the fields of financial organization and
government accounting in the Ottoman Empire continued as per the
Constitution, which was put into effect in 1876.
In order to bring out these developments, a 40-year period in the
middle of the 19th century is considered and becomes an object for study.
Key words: Financial organization, government accounting, Reform
(Tanzimat) Firman, modernization of accounting system.

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 ADMINISTRATION FINANCIÈRE PUBLIQUE DE
L’EMPIRE OTTOMAN ENTRE LES ANNÉES 1838 – 1880
ET DIRECTION GÉNÉRALE DES COMPTES PUBLICS

RESUME
Le but de cette étude est d’examiner les réformes réalisées dans le
domaine de la comptabilité de gouvernement par l'Empire ottoman (Osmanli
Imparatorlugu) au XIXe siècle pendant la transition à la gestion financière
moderne et donner à des informations sur le procédure de transition sous-
tendant les réalisations réussies de comptabilité de gouvernement de la
République turque au XXe siècle.

Au début du XIXe siècle, ni une organisation financière, qui a été

censée rassembler et consolider tous les revenus de l'Empire ottoman dans la
même piscine, ni un plan comptable de gouvernement, dans lequel les
opérations financières du gouvernement ont été censées être enregistrées et
surveillées, ont existé. Pendant la période de la modernisation, qui a
commencé par la réforme (Tanzimat) Firman en 1839, afin d'assurer la
rénovation de l'institution financière administrative et du gouvernement,
d'abord de tout le ministère des finances a été établi, le trésor multiple a été
changé en trésor simple et alors la direction générale des comptes publics a
été établie pour d'effectuer la comptabilité de gouvernement selon les
conditions de la période.

On le comprend que les activités de restructuration du ministère des

finances et des développements dans les domaines de la comptabilité
financière d'organisation et de gouvernement dans l'empire ottoman ont
continué selon la constitution, qui a été mise en oeuvre en 1876. Pour
analyser ces développements, une période de 40 ans au milieu du XIXe siècle
est considérée et devient un objet de cette étude.

Mots clés: Organisation financière, comptabilité de gouvernement,

Tanzimat, modernisation du plan comptable.

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 1. Administrative and Financial Structure of Ottoman Empire
Until Tanzimat( Reforms) Period

1.1 Foundation and Development of the Administrative and

Financial Structure of the Government

In the middle of 15th century, the Ottoman Empire,

which was founded in the northwest Anatolia in 1299, used to
control not only a very major part of Anatolia but also the
Balkan states belonging to the ancient Byzantine Empire
stretching to Tuna (Danube). The territorial growth of the
Ottoman Empire continued until 17th century and the borders
reached from Budapest to Basra and from Algeria to
Armenia.1

One of the factors, which is considered effective and

the most important for the growth and strength of the
Ottoman Empire is the soundly- established administrative
and financial management system. Padisah (The Sultan) was
the highest level of the administration and he had the
authority to make law. The Sultan had a special council called
Divan and the members of this council was Sadrazam (the
Grand Vizier), Yeniceri Agasi (the Janissary Agha), Kaptan-i
Derya (the Sea Captain), Nisanci (the Marksman), Defterdar
(Treasurer), and two Kazaskers. Sancak Beyleri (Governors of
the districts), which were the members of the slave hierarchy
of the Sultan, used to administrate the states. Governors of the
districts were affiliated to Beylerbeyi (Beglerbeg). Each
governor of the district was head of the civil administration in
his state and the commander of the soldiers gathering there.
Governor of the district was the chairman of the provincial
council consisting of the civil servants, who were provincial
representatives of the government.

Steering Committee was consisted of the civil and

military servants and the standing army. They were the
personal slaves of the Sultan and were systematically picked
(Devsirme) method among sons of the Christian people. The
smartest of these people used to be subject to education in the
palace and employed as an administrator in the palace or
province or as a commander in the army. These people had a
chance to rise to the position of Grand Vizier. Rest of the

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 picked community (devşirme topluluğu) used to be trained as
the member of the Yeniceri (Janissary) Army.

After the Ottoman territories were recorded on behalf

of the government, they were appropriated as a Timar (feoff)
for the sipahi. In case of need, the feoffees had to provide
certain number of soldiers in return for the usage of the land
and they used to collect the tax called öşür (tithe), which the
peasants were obliged to pay, on behalf of the government and
transfer them to the Treasury. The prosperity of the peasants and
redundancy of the tithes ensured that the feoffees could hold the
lands for a long time and the perpetuation of this situation was a
function to guarantee the government revenues.

In the empire, there used to be Greek Orthodox,

Gregorian Armenians and Jewish, who constituted non-Moslem
citizens in the semi-autonomous position. Those groups having
supernal books were sympathized and they had the right to
perform their religious exercises provided that they paid certain
taxes. The government supported the rules, which were set for
those communities by their leaders, and in consideration of this,
taxes, which had to be paid by the non-Moslem people, were
collected by the community leaders and transferred to the
Treasury. Thus, the parallelism between the interest of the
communities and of the government was established. 1

The Sultan of the Ottoman Empire was head of the

administration and actual owner of the property. In the first
years of the foundation, the Grand Vizier was responsible for the
financial issues. Then, Başdefterdarlık (Treasury) was
established in order to carry out the financial issues de facto.
Treasurer used to interfere with the entire treasury operations,
collect all the revenues and those revenues used to be paid by
the order of this department.

Head of the Treasury had the equal position to the

Rumelia Beglerbeg. Under the Head of the Treasurer, there used
to be two more officials of the Treasurers, one of whom was
Defterdar-ı Salis and responsible for the Anatolian issues and
the other one was Defterdar-ı Şıkkı and responsible for the
Rumalian issues. Afterwards, some Treasury departments were
established or merged due to the requirements. 2

1
Davidson Roderic H, Osmanlı İmparatorluğu’nda Reform, 1997, Çeviren: Akınhay Osman, s.13-58
2
Karamürsel Ziya, Osmanlı Mali Tarihi Hakkında Tetkikler, Türk Tarih Kurumu Yayını, VIII. Seri, 1940

6
 1.2. Financial management and accounting operations

There is not any detailed and clear information about

how the financial management, accounting and treasury issues
used to be carried out in the first years of the foundation of the
Ottoman Empire. However, it is possible to assume that these
kinds of operations used to be carried out by following the
principles and procedures in the Seljuk Empire. It can be said
that the Ottoman Empire established its own system with
expansion of the borders and the growth of the country.

Although there used to be a Treasury in charge of

carrying out the financial operations, it was not possible to
conduct the financial operations and accounting centrally due to
the fact that the head of the Treasury did not have an auditing
authority on other ministries and a right to interfere with their
works. In the course of time, each ministry was entitled to
collect their own revenues and incur expenses and therefore the
treasuries representing their treasury were established and this
made the financial system decentralized. Although the treasuries
could follow revenues and expenses in their own accounting
system, they could not keep the detailed accounting records
concerning revenues and expenses, which were collected and
paid in the provinces.

Treasury used to have thirty-two directorates and seven

hundred civil servants. Majority of the directorates kept the
accounts of certain ministries separately and there was not a
unit, which was bookkeeping for the whole financial operations
of the government and authorized for this issue.

1.3. Government revenues and expenses

At the beginning of the 19th century, sources of revenue

of the Ottoman Empire consisted of tax revenues, revenues of
mercenary troops, tithe (taxes on the crops as one-tenth), agnam
(taxes on the sheep being farmed as one-tenth), pig taxes (fixed
taxes for each pig being farmed), customs duty (taxes on import
and export), tobacco taxes (taxes on the tobacco being
cultivated), fishery taxes (taxes on fishery), contract charges
(taxes collected in return for the registration of the contracts
whose registration was a must in accordance with the law),
stamp taxes, taxes on alcoholic beverages, registry tax, post
administration tax, government printing office tax, revenues
from the estates belonging to the government, revenues derived
from fish traps, revenues of the farms belonging to the
government, revenues derived from the Tuzocagi (Salinas),
revenues derived from the mines, revenues of real estate sales,
fixed revenues and trade revenues etc.

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 Expenses of the government were domestic and foreign
debt interests, costs of the convoy going to Mecca for Hajj, cost
concerning the repair of camping sites, expenditures of the
palace, pensions, grants, expenditures of the court, expenditures
of Harbiye Nezareti (the Ministry of War), Bahriye Nezareti
(the Ministry of Naval), Vakiflar Bakanligi (the Ministry of
Trusts), the Ministry of Interior, the Ministry of Foreign Affairs,
the Ministry of Trade, the Ministry of Education, the Ministry of
Police, the Ministry of Finance and miscellaneous expenditures.

Revenues of the governments used to be collected by the

civil servants, who were not inspected properly, or by the
people, who were authorized by the government as in the taxes
collected from the peasants by the feoffees and taxes collected
from the non-Moslem communities by the non –Moslem leader
of the community. While revenues of the capital city used to be
transferred to the treasury, revenues of the provinces were
submitted to the cashiers located in the centre of the government
in each province.

Revenues collected in both provinces and centre could

not be recorded in detail, only the balance between revenue and
expense could be followed clearly. It was not possible to reach
an inference concerning the soundness of the tax burden on
people and tax collection due to the fact that revenue realization
and collection could not be recorded in detail and followed.

The Treasury used to make advance payments for the

expenditures made by the ministries in certain periods and these
advances were used for paying expenditures. Amount of
expenditures exceeding advance payments was tried to be met
with the bonds, which were called as display and given by the
ministries because budget estimates of the ministries could not
be done soundly and the records concerning the budget
realizations could not be kept. This situation caused the debts of
the government to increase. 3

Revenues collected in the provinces were spent for the

needs of the provinces or the other needs in the province where
they were collected by the order of the Treasury and revenue-
expense balance sometimes transferred to the Treasury in
Istanbul.

In the Progress Period of the Ottoman Empire, difference

between revenue and expense, which resulted from unsound
system in collecting revenues and incurring expenses, did not
cause a serious problem because amount of war prizes and
tributes were high. However, in addition to the adverse events in

3
Varcan Nezih, Osmanlı Maliyesi Hakkında İngiliz Raporları, Maliye Bakanlığı APK Yayını, 2000/355, s.45-57

8
the mechanism of revenue collection and expense incurrence, as
a result of the decrease in the war prizes and increase in the
expenses due to the defeats, difference between revenue and
expense became a critical problem and this condition brought
increase in the debts of the government and a heavy interest
burden as well.

2. Establishment of the Ministry of Finance and the

General Directorate of Public Accounts

2.1. Financial Reforms in the Tanzimat (Reform) Period

Firstly, reforms in the financial structure should be

considered in order to bring out developments of the
government accounting.
As of 1800s, while technologic, economic, military and
political superiority of Europe became evident throughout the
world, western countries were exercising much more influence
upon the Ottoman Empire, which was weakening day by day.
While economic and political relations with the western
countries were improved rapidly, in a western sense some
radical changes in the administration occurred with Tanzimat
(the reform) period. After 1800, structure of the society and the
government was established all over again both in the world and
in our country.
The administrative structure, which was brought by the
changes to be basis of the national administration in the republic
period, was kept with traditional structure in the field of law,
education etc. in the periods of Reform and Constitutional
Monarchy, which are the transitional periods. After that, this
duality was terminated in the Republic Period by establishing a
public administration in a western sense and our country was
included in the western culture and civilization with the reforms
undertaken.
In a similar way, integrity was ensured in the financial
management by the unity of treasury and budget with Tanzimat
(the Reform) Period and financial management was committed
to the Ministry of Finance. In this period, western institutions
and rules concerning tax, budget, government accounting
system, money, banking, stock exchange, treasury operations
and private property began to be applied in our country as of
1860s and with the beginning of close relations with the foreign
financial circles.
From 17th century various reforms had been performed
to amend the poor condition of the Ottoman Empire. From 17th
century, sultans and statesmen wanted to grant the country the
former military and political power with the reforms and to re-
establish the financial balances, but implementations concerning
the restoration of the former system could not prevent the land
losses at the end of the century. Statesmen began to accept that

9
the difference occurred between the Ottoman Empire and the
Europe, which was developing in every field after the
Renaissance Period, in favour of Europe and that some
institutions were required to be changed in accordance with the
European sample.
However, all of these reforms were one-sided until the
period of Mahmud the 2nd: To return the former and strong
system and to modernize the military system. Judicial system
and administrative and financial structure of the government
were not considered in these efforts. Mahmud the 2nd was the
first person, who understood that all the institutions were
corrupted and all of them had to be restored. Mahmud the 2nd
endeavoured to restore the central power of the government and
renew the basic institutions radically.

Because of this, Tanzimat movement, which meant “new

system” and was declared officially by his son, Abdulmecid,
Mahmud started the 2nd de facto and financial and administrative
arrangements in the central government, which were the basis of
the reforms, were realized while he was alive.

Mahmud the 2nd, who started the reform movements,

undertook radical changes from 1826 to 1839, in which he died.
He made radical changes in administrative structure, financial
management, public personnel and judicial system of the
Ottoman Empire, which had sustained its traditional structure
until 19th century. These changes carried on comprehensively
after the declaration of Reform Firman in 1839. French
administrative organization and French legislation became basis
in the reforms.

Mahmud the 2nd started a great work-sharing and

specialization in the central administration concerning the
executive power of the government and distributed the powers,
which used to belong to the Grand Vizier and his deputies, to the
council and ministries by taking example of France. Institutions,
which were working on behalf of the government, became
different ministries as Mülkiye (Civil Service), Foreign Affairs
and Judiciary. The Treasury, which used to work as a separate
department from the government, became the Ministry of
Finance in 1838 and the council, which consisted of the
ministries under the chairmanship of the Grand Vizier, was
called as Heyet-i Vükela (council of ministers).

One of the most important works of Mahmud the 2nd was

unification of the treasuries and reconstruction of the financial
management under the Ministry of Finance. In the Ottoman
Financial System, there used to be many treasuries established
to finance some military expenditure and some budget
departments to manage these treasuries. Thus, the central

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treasury was not important anymore. Consistency could not be
ensured in the field of government accounting due to the
decentralization of the financial management and financial
reports covering the entire government could not be produced.

This was realised in the course of time that there was a

decentralized administration in the financial management and
therefore treasuries and budget departments were to be merged.
Within this framework, Hazine-i Amire and Mansure Treasury
were merged and Treasuries became Maliye Nezareti (the
Ministry of Finance) in February 28, 1838. After a short time, in
1838, the Ministry of Finance was divided into two and financial
management was turned to be Treasuries again. After various
administrative changes, in May 25, 1840, all of the existent
treasuries were merged under Hazine-i Celile-i Maliye and its
management was given to the Ministry of Finance together with
all financial units. Hence, in the very beginning of the Reform
Period, multiple treasury and management period ended, system
of single treasury and single budget was adopted again and the
Ministry of Finance became the only responsible body for the
financial management. Evkaf-i Humayun and Trade Treasuries,
which were managed separately, were converted into annexed
budget institutions and affiliated to the Treasury of the Ministry
of Finance. As a consequence of these arrangements, the
Ministry of Finance attained to the position of single
administrator of the government’s cash property.

However, although the Treasury got the name “the

Ministry of Finance”, it could not be organized as in the
Western countries and former budget units kept going in the
fields of tax, budget, accounting, treasury and customs until the
new western institutions were settled in the country. In a western
sense, organization of the Ministry of Finance began with the
establishment of the modern tax and financial institutions from
the year of 1860 with the increase in the foreign debts and in
parallel with it increase in foreign pressure. The first real
ministerial organization with its central and local
administrations and affiliated institutions could be established in
1880 and its basic principles and service units have continued
without changing so much till today.

2.2. Need for Modernization of the Government

Accounting

Implementation of accounting of a wide empire is a

significant issue. Otherwise, proper and correct running of
monetary operations cannot be ensured, one cannot be sure that
all revenues of the government enter in the public treasury and
all required payments are duly made. The most effective way to

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 determine the events, which are realized by omission of regular
record operations or violation of legislation, is lost. Benefits of a
clear and comprehensive accounting system are convenience in
accessing information related to the general condition of the
country, analyses of the problems regarding source of revenues,
regulating and auditing revenues, comparing the amounts spent
under various items with the result and encouraging and
facilitating financial researches.

At the beginning of the 19th century, there was not a

proper accounting system serving for the above mentioned
benefits in the Ottoman Empire and as a result of this,
information related to financial issued were limited. Several
accounts and reports, which were assumed to be kept properly in
accordance with the needs of the Ministries, existed; but there
was not any account or report covering the whole government. 4

Even in the Ministry of Finance, where the issue of

accounting was very important, there was not a detailed record
for the revenues, whose collection was under the responsibility
of this ministry. There was not sufficient information concerning
where the advance payments given to the other ministries by the
Ministry of Finance were spent and certificate of debts given to
the bankers and tradesmen when those advance payments were
not enough and required accounting record could not be
provided.

Details of revenues, which were derived from source of

revenues appropriated for the ministries, were not included in
the accounts of the Ministry of Finance.

Under these conditions, it is obvious that sound data

related to assets, receivables, and liabilities pertaining to a
certain time cannot be obtained. It is apparent that the
government administration cannot be carried out by being
deprived of data provided by the accounting system, which is
the most important decision-making instrument in the
management process.

2.3. The General Directorate of Public Accounts

under the Ministry of Finance in Restructuring of 1838

When history of the Ministry of Finance is analysed, it

can be seen that the General Directorate of Public Accounts was
organized under several names and carried out many duties
beside its present duties.
Keeping the records regarding revenues and expenses of
the government, paying expenditures, managing revenues and
4
Varcan Nezih, a.g.e. s.48

12
 expenses, which should be recorded by each public
administration, in accordance with certain rules and systems,
keeping their records and distribution of appropriations have a
great role in the government administration.

It is not possible to speak about an advanced accounting

practice in the private sector due to the statist sense of the
Ottoman Empire. Source of accounting practices in the private
sector was the government accounting system. 5 At this
conjuncture, it is possible to say that the western countries had a
great effect on foundation of the government accounting system,
which was necessary in order to monitor the financial operations
required by the government activities too.

The term “Public Accounts” in the General Directorate

of Public Accounts was firstly recognized in the organizational
structure of the Ministry of Finance established in 1838. The
organization of the Ministry of Finance was as follows in 1838:

MINISTRY OF FINANCE
A- PUBLIC ACCOUNTS B- AKLAM

1-Finance accounting 1-Evamir Mektubi directorate

2-Exhibition accounting 2-Maliye Mektubi directorate
3-Ceride accounting 3-Enbiyyei Hansa directorate
4-Securities accounting 4-Feshane directorate
5-Mukataa accounting 5-Cizye directorate
6-Trust accounting 6-Anbar directorate
7-Zecriyye accounting 7-Zahire directorate
8-Haremeyn accounting 8-Derya directorate

Among the accounting units;

i- Finance accounting: This unit was responsible for

collection of all districts, accounting of this collection,
recording, approving and realizing revenues, making out and
controlling monthly and annual accounts and preparing budget.

ii- Exhibition accounting: It was responsible for

preparing copies of bills and documents to be paid to the
government fund.

5
Güvemli Oktay, Türk Devletleri Muhasebe Tarihi Tanzimattan Cumhuriyet’e, 3. Cilt, İstanbul YMM Odası,
2000, s.158

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 iii- Ceride accounting: This unit, which kept the records
of male population in the country, was merged with mevkufat
directorate, and after a while both of them were included in the
revenue accounting.

iv- Securities accounting: It was responsible for revenues

of Istanbul Customs, keeping their records and accounts, shares
and metalwork

v-Mukataa accounting: This unit, which was responsible

for the accounts, accounts and records of the cultivated areas,
was included in the revenue accounting later.

vi- Trust accounting: This unit, which was responsible

for the accounts and operations of the trusts, was transferred to
the Ministry of Trust.

vii- Zecriyye accounting: It was responsible for carrying

out accounting operations of alcoholic beverages.

viii- Haremeyn accounting: This unit, which was

carrying out revenues and expenses and accounting operations
of the trusts pertaining to Kaaba and its neighbourhood, was
merged with the Ministry of Trust.

The General Directorate of Public Accounts, whose

duties are mentioned above briefly, used to carry out most of the
duties of the Ministry of Finance.

The other eight directorates stated under the part of

Aklam used to be responsible for carrying out administrative
issues and executing records and correspondences.

Financial operations, which had been carried out by

people named “First Class Accountant” or “Chief Treasurer”
until Sultan Mahmud, began to be executed by the Ministry of
Finance with the organization mentioned above in 1837. 6

2.4. Establishment and Works of the Improvement

Commission for the Financial System

It is useful to divide the reforms of the Reform Period

concerning tax, budget, government accounting, and treasury
operations into two groups as “until 1860” and “after 1860”.
With the declaration of Tanzimat Fermanı (Decree of Reforms)
some financial arrangements were intended to be executed but in
the first 20 years, no improvement could be realized. The basic

6
www.muhasebat.gov.tr, Muhasebat Genel Müdürlüğünün Tarihçesi

14
 lasting arrangements could be realized and implemented after
1860. The most important reasons of it were the commitments
undertaken against the European countries with the Islahat
Fermanı (Improvement Firman) declared after the Crimean
Battle and the pressures put in order to ensure financial
discipline and realize structural reforms due to the foreign debts,
which began in 1854 and increased rapidly.

In 1859, Islahat-ı Maliye Komisyonu (Improvement

Commission for the Finance) affiliated to the Ministry of
Finance was established with the contribution of the foreign
countries in order to research the reasons and the remedies of the
economic crises. The duty of this commission, which was
established by being affiliated to the Ministry of Finance with
the contribution of members sent from England and France and
turned into a council after one year, was to examine the reforms
to be realized in the financial management of the country and
revenues and expenses of the empire and to arrange the
principles and collection ways of any kind of revenues. 7 Two
English officials informed the Ottoman Empire about the
reforms which had to be realized with the reports they had
prepared in 1861. As of that date, financial arrangements were
accelerated.
The most substantial arrangements made until 1860 were
ensuring administrative unity in the financial management and
simplification of the tax system by abolishing Asar Vergisi (the
tithes). In those years, although some arrangements concerning
the budget were made these arrangements could not be
implemented until 1860.
In western sense, the first budget was made and budget
and expense legislation began to be formed in 1860s and the
pursuant years. All revenues of the government began to enter
the treasury of the Ministry of Finance, all expenses began to be
incurred from the single treasury and recorded in the
government accounting system with the abolition of the
treasuries, which had been established in order to appropriate
some revenues of the government for certain expenses. Pursuant
to this single treasury system, every year records called
muvazene (trial balance) were prepared in the Ottoman Empire
and required arrangements were executed in order to ensure to
manage revenue and expense of the government in one budget.
Firstly, 354-day lunar calendar was abolished in 1842 and 365-
day Julian calendar was decided to be used for all financial
operations and the beginning of the financial year was decided
as March. Secondly, the authority of the people, who collect tax
from people in consideration of public service, and authority of
communities to collect tax and their tax exemption were
abolished.

7
Varcan Nezih, a.g.e. s.7

15
 The principle was adopted that they would be paid
salaries from the treasury in consideration for their services.
Although budget regulations which determined the principles
concerning preparation, approval and audit of the budget were
prepared in 1855, the first budget, in western sense, could be
prepared in the financial year of 1863-1864. However revenue
and allowance estimates of this budget were not sound and were
prepared in order to meet the demands of the foreign countries
lending money.

It was provided for that general education revenues and

expenses were made out of the budget by means of education
funds in the provinces instead of treasury or government budget
due to its importance. In that period, most of the budget
allowance was appropriated for defence expenditures, principal
and interest payments of domestic and foreign debts, therefore
there was not sufficient allowance for some services such as
education, public works etc.

In terms of arranging treasury accounts, exercise method

was adopted and the principle, which the revenues and expenses
were referred to the year when they were accrued not collected
or paid. 8

Although an auditing body called Divan-ı Muhasebat

(The Government Accounting Bureau) was established in 1862
in order to audit budget transactions; this body could complete
its organization after the Constitution 1876. Nonetheless the
budgets began to be prepared in the Reform Period; the
Ministers of Finance could not undertake a regulating role over
other ministries concerning revenues and expenses and ensure
budget discipline.

In the Ottoman Empire, after the annual budget began to

be prepared, principles and procedures of the expenditures made
from the budget began to be determined at the end of the
Reform Period. During forming expense legislation, with the
decree dated 1873, firstly, it was determined how transport
allowance would be given to the civil servants being sent for
temporary positions and under which conditions civil servants
would be paid salaries and this decree was put into force. Thus,
the principle was adopted that expenditures made form the
budget had to have a legal basis.
While entering the Reform Period, budget deficit reached
to such an amount that could not be met by the short-term
borrowings from the bankers. With the Reform Period, although
single treasury began to be implemented and the Ministry of
Finance began to make payments and collect revenues through
8
Guran Tevfik, Tanzimat Döneminde Osmanlı Maliyesi: Bütçeler ve Hazine Hesapları, Türk Tarih Kurumu,
1989, s.9

16
 the revenue authorities working as revenue administration and
account office in provinces, these budget deficits could not be
prevented. The first paper money was issued in 1840 in order to
meet the deficits, but then foreign borrowing began, reluctantly
due to the fact that paper money was not enough to meet the
deficit.

Foreign debts, which began in 1854, continued for 100

years and could be paid completely in 1954 in the Republic
period, caused great crisis in the Ottoman finance and financial
management. Majority of debts having high interest rates were
spent for military and luxurious fields, which did not bring in
money, borrowings continued to meet the accumulated principal
and interest payments of the former debts. As a result of the
reports on the Ottoman financial system prepared by the foreign
countries, a central bank, named the Ottoman Bank, which was
based on foreign capital, was established and reforms were
realized in the tax system. Although realizations of revenues and
expenditures with the budget were started, re-establishment of
the decayed financial balances and conversion of debts could not
be possible until the downfall of the empire. In 1875, the
government could not pay any debts and stopped principal and
interest payments to the creditors by declaring a moratorium.

Progressive increase in foreign debts caused introduction

of new financial institutions and financial operations and also
new concepts entered in the financial literature. As a result of
this, banking and treasury operations increased and importance
and function of treasury and accounting system began to stand
out.

Money reform was realized by a law called Tashih-i

Ayar Law in 1844 and after the first foreign borrowings were
realized foreign banks came and worked directly in the Ottoman
Empire. All the banks, except from the Ottoman Bank, did not
deal with the banking services; they only derived speculative
profits by supplying loans for the government treasury. Ottoman
Bank undertook treasurership of the Ottoman Empire and
worked as a Central Bank. Hazine-i Vezne (treasury department)
was established under the Ministry of Finance in 1863 due to the
intensity of the money and banking operations. Hazine-i Vezne,
which constitutes the basis of the General Directorate of
Treasury in the Republic Period and the Undersecretariat of
Treasury today, carried out the operations concerning
stabilization of revenues and expenses in terms of place and
time and prepared debt records of the government. 9

9
Öner Erdogan, Osmanlı İmparatorluğu ve Cumhuriyet Döneminde Mali İdare, Maliye Bakanlığı APK Yayını,
2005/369, s.349-359

17
 3. Financial Management and the Ministry of Finance
during Constitutional Monarchy Period

3.1. The 1st Constitutional Monarchy Period (1876)

and Its Innovations for the Financial Management

Reform Firmans are not constitutions or human rights

declaration. In those firmans, attempts of some improvements in
the administrative, financial and judicial organizations, which
were decayed in many ways, are explained. Limiting the powers
of the sultan is not the case. Exclusively by the will of the sultan
and provided that it has a nature of grace, Firman is just a wish
to establish domestic order and security, to execute some
administrative and financial matters in accordance with
procedures and laws, to establish and improve judicial bodies, to
pass laws ensuring domestic peace and order and form an
organization to implement them. The sultan is the only person
who freely uses all powers concerning the country.

Despite all of the reforms and legal arrangements before

and after the Reform Period, the Ottoman Empire could not
satisfy the West and non-Moslem communities and not prevent
European countries from interfering with internal affairs. As a
result of the discussions between the Ottoman intellectuals and
administrators, constitutional monarchy was decided in order to
solve domestic problems without having the western countries
interfered with. In this period, Bab-I Ali (the government) was
consisted of these departments beside Office of the Grand
Vizier: Hariciye (Ministry of Foreign Affairs), Dahiliye
(Interior), Judiciary, Harbiye (War), Bahriye (Naval), Finance,
Education, Trade, Şuray-I Devlet Riyaseti (Council of State),
Seyhülislamlık (Religion) and Vakiflar (Trusts). Pursuant the
declaration of Kanuni Esasi (Constitution) in 1293 (1876), the
Ministry of Finance was re-arranged by the Improvement
Commission for the Finance with a regulation called Maliye
Nezareti Heyetinin Teşkilâtıyla Vezaifini Şamil Nizamname as
per the Article 40.

According to the regulations dated January 22, 1880, The

Ministry of Finance as divided into two as Central
Administration and affiliated administrations. Heyet-i mülhaka,
which meant the administrations except from the central
administration of the Ministry of Finance, consisted of two
parts, one of which was trusts responsible for a certain issue and
other was provincial administration of finance. According to the
Province Law dated 1871, units affiliated to head of budget
department, accountant and fiscal director of a district, who

18
 were working in provinces, districts and sanjaks, constituted the
provincial administration of finance. 10

3.2. Restructuring the Ministry of Finance and the

Government Accounting System

3.2.1. Restructuring Organization of the Ministry of

Finance
A. Central Administrations
i. Board of Financial Inspection

ii. Varidat İdare-i Umumiyesi (Revenue Administration)

iii.Masarifat İdare-i Umumiyesi (Expense Administration)

iv. Düyun İdare-i Umumiyesi (Public debtor)

v. Maliye Mektupçuluğu (Letter Office of the Ministry of Finance)

vi. Sandık Emaneti (Fund Bailee)

vii. Directorate of Financial Documents

viii. Directorate of Translation and Foreign Secretariat

ix. Muhasebat-ı Atika Muhasebeciliği (State Accounting

Administration)

B. Local administrations
i. Finance officers of revenue and trust

ii. Directors of province and sub-district

iii. Fiscal officials of districts

iv. Foundation bailee

C. Branches (autonomous administrations)

i. Trust of taxes

ii. Trust of Rüsûmat

iii. Trust of Tithe and Agnam

iv. Directorate of Numismatics

10
Öner Erdogan, Osmanlı İmparatorluğu ve Cumhuriyet Döneminde Mali İdare, Maliye Bakanlığı APK Yayını,
2005/369, s.349-359

19
 3.2.2. Duties of the Ministry of Finance and Some of
the Departments under This Ministry:
3.2.2.1. Duties of the Minister of Finance

Kanuni Esasi (Constitution) delegated broad authorities

to the Minister of Finance in 1293 (according to the Muslim
calendar) or in 1876 (according to the Gregorian Calendar).
Amount of revenues were decided with the ministers after the
revenues were analysed as per the Budget Law; nature and
amount of revenue and distribution and provision were
determined with the ministries, as well.

i. The Minister of Finance manages all revenues and

expenditures of the government.

ii. The minister get the revenues-expenses, operations

and accountings of the Public Debtor done and examined; he
keeps the military and public administrations under inspection.

iii. He prepares drafts of laws and regulations pertaining

to the Ministry of Finance and passed them into law.

iv. He executes financial laws and regulations. He

arranges tables of budget by having them brought from the
related administrations and prepares and submits the final
account to Divan-i Muhasebat (The Government Accounting
Bureau).

v. He appropriates allowances belonging to the ministries

and other administrations as per the Budget Law.

vi. He monitors and inspects the treatments of the

financial officers. He monitors the submission of revenues to the
provincial funds and cash office of the Ottoman Bank. He gets
the ledger accounts of the Public Debtor kept.

vii. He gets receivables of the government, which are on

the debit side, collected by filing a suit.

viii. He arranges drafts concerning increasing revenues

and meeting expenses and submits them to the Prime Ministry.

Regarding the responsibilities of the Ministry of Finance,

According to Kanun-i Esasi (the constitution) each minister was
responsible to the sultan or parliament. But the Minister of
Finance dominates other ministers.

Despite the legislation, in practice the Ministers of

Finance could not dominate the irregular implementations of the
palace and other ministries and kept the budgets under control.

20
This situation continued until the 2nd Constitutional Monarch
Period, but it rather changed by the first modern budget prepared
in 1909 and adoption of budget preparation and implementation
rules with the General Accounting Law dated 1910.

Due to the fact that the governments had to ground their

actions on the revenue-expense balance by comparing the
annual revenues and expenses in order to duly execute their
duties, the most important duty of the Minister of Finance was
to ensure this financial balance. Ministries prepared their own
budgets and sent them to the Ministry of Finance with this aim.
The Minister of Finance examined these budgets and forms the
general budget of the government by adding expense budget and
general revenue budget of its own ministry. After the budget
being formed was accepted by the Council of Ministers and
approved by the National Assembly, the Minister of Finance
notified it to the departments in order to implement it at the
beginning of the financial year. Ministries could not exceed the
allowances appropriated for them and the Minister of Finance
did not permit a payment above the allowance. Also, the
Minister of Finance could not distribute or collect tax without
basing on a law. No borrowing was permitted provided that it
was stated in a special law or based on a written permission in
the budget law, even if it was short-termed. Every draft law,
which effected revenues and increased expenses, had to have the
signature of the Minister of Finance. Due to this case, the
Minister of Finance kept an accounting director (head of budget
department) in each ministry in order to control commitments
requiring expenditure and its conformity to the budget. This
accounting director was auditor of the Ministry of Finance and
appointed to execute the accounts of the related ministry and
arranged final account of the minister.

Previously, there used to be separate cash office in each

ministry and accounting director, who had the title of
accountant, used to be both a civil servant of the related ministry
and the director and authorized accounting officer of the cash
office. The Minister of Finance used to make payments to every
department over the allowances according to their budgets. In
other words, the Minister of Finance used to give just money
and not interfere where and how this money was spent.
Ministries used to spend adding their special revenues belonging
to the ministry and inform the Directorate of Public Accounts
about their expenditures by means of their accountings.

With the 2nd Constitutional Monarchy Period (1909), this

system was abolished and cash offices in the departments were
abolished except from cash offices of rusumat and post offices.
The Minister of Finance began to make payments to the
departments on the accrual base not over the allowances. As per

21
this procedure, ministers were in a position of authorizing
officer and not involved in collection and payment. In other
words, related administrations could execute their services, incur
debts on behalf of the government, prepare the document of this
debt and sent it to the Ministry of Finance by arranging the
payment order. General cash office of the Treasury examined
this payment order with its documents and gave the money
directly to the claimant upon its approval. According to it, while
the Minister of Finance was responsible to collect and manage
all taxes, levies and revenues in force, pay them to the required
places, keep the accounting records concerning these operations,
other ministers were responsible to duly execute and manage
their services. The Minister of Finance performed the collection
and payment through the responsible accounting officer.

Pursuant to the end of each year, after the Minister of

Finance added its own expense account and general revenue
account to the final accounts, which were sent by each minister
to indicate operations in that year, examined and compared them
with the accounts of the accounting officers, he brought forth its
own final account. This final account was submitted to the
National Assembly as a draft law and then it was passed as a law
after being discussed.

3.2.2.2. Duties of the Undersecretary of the Ministry of Finance

The undersecretary consulted with the minister and

executed orders and notifications. He monitored performances
of the officials in the centre and province and headed the
Finance Commission. This commission convened with the high
level authorities of the Treasury twice a week, discussed issues
requiring solutions with them, chose and submitted civil
servants, who were appropriate to substitute the finance officials
to be discharged.

3.2.2.3 Board of Financial Inspection

The Board of Inspection was under the authority of the

minister. It was established with the regulation called Teftiş-i
Muamelat-ı Maliye dated 1295 (1879) taken from the French
Board of Financial Inspection and arranged its works in
accordance with the principles written in the special regulations.
The duty of the board was to inspect accounts of the all officials
assigned to collect and spend of the properties and expenditures
of the government; i.e. accounts of the accounting directors,
fiscal directors of districts and fund bailees, officials of rusumat,
land registry, forest and mine, mail and telegraph in the
provinces and districts, and of the accounting officers of the
official institution branches located in Istanbul. Financial

22
inspectors investigated type and amount of the existent fund,
cash, bills and bonds and gave information to the Ministry
concerning how the financial operations were carried out.

3.2.2.4. Revenue and Expense Administrations

3.2.2.4.1. Duties of Varidat İdare-i Umumiyesi (Revenue
Administration)

The most important units of the Ministry of Finance are

revenue and expense administrations as is the case in every
country. In the organization of the Ministry of Finance in 1840,
revenue and expense accountings were separate. In the
regulations of 1296 (1880) “revenue administration” and
“expense administration” were stated separately. After that, in
the organizational change of 1304 (1888) these two
administrations were merged under the name of the organization
called Muhasebe-i Umumiye-i Maliye.

Duties of the Revenue Administration are as follows:

i. To arrange table of revenue, which would be added in

the draft budget every year, in accordance with the records to be
obtained from departments and provinces.

ii. After approval of the budget, to arrange and submit a

revenue table indicating type and amount of revenues to the
expense administrations and exercise record operations of
sending and delivering to the places stated by the Treasury,

iii. To prepare draft law and regulations concerning

imposing, distribution and collection of revenues and ensure
execution of their provisions,

iv. To record and correct figures of revenues accrued

during the year in accordance with the official information
obtained from trust of tax, tithe and agnam,

v. To examine general lists of collection, exercise

collection and arrear,

vi. As per the article 105 of Kanuni Esasi (Constitution),

to prepare table and information regarding general condition of
revenues to be submitted to the Sultan by the Directorate of
Public Accounts quarterly,

vii. In case that revenues were above or below the figures

stated in the Budget Law to explain the reasons,

23
 viii. To execute operations concerning leasing, bidding
and auctioning farms and other real estates under the
administration of the Treasury (Branch of National Estate)

ix. To manage heritages of the people, who died without

determining an inheritor, and to deliver the heritage to the
people, who showed up later as an inheritor,

x. To compare accounting data of the year obtained from

departments and provinces ever year with the records and make
out general revenue final account until the end of the August.

3.2.2.4.2. Duties of Masarifat İdare-i Umumiyesi

(Expense Administration)

Duties of the Expense Administration are as follows:

i. To arrange expense table, which would be added to the

budget draft law prepared ever year,

ii. To arrange and transfer expenditures belonging to

each department and administration, usual an unusual
expenditures resulting from the necessity when the General
Assembly did not convene to the departments,

iii. To prepare new draft laws and regulations concerning

expenditures and ensure execution of the provision related to
them,

iv. To examine the collective tables coming from

departments and provinces, if the spending exceeded the budget
appropriation to get it back,

v. To prepare and send a book indicating expenses and

payments made by the Treasury every month, type and amount
of the urgent expenditures, which had to be made in the next
month,

vi. To arrange tables and information indicating

realizations of expenditures presented to the Sultan by the
Directorate of Public Accounts as per the article 105 of Kanuni
Esasi,
vii. To pay costs of the guests coming from the inside
and outside of the country,

viii. To execute operations regarding the salaries and

transport allowances of the civil servants and issues belonging to
the bailment of the civil servants, who were subject to bailment,

24
 ix. To collect sal muhasebesi kesin cetvel (the tables)
indicating that expenditures made in provinces and in Istanbul
and the amount required to be spent according to the Public
Debtor had to be paid, compare it with the documents and
records and make out general expense final account of the
government by the end of August,

3.2.2.5. Düyun İdare-i Umumiyesi (Public Debtor):

After the moratorium, which was declared due to the fact

that the government could not pay its debts in the late 19th
century, duties of the debt administration, which was established
by the creditors to organize the collection from the government
revenues, are as follows:

i. To prepare a balance book indicating shares with

domestic and foreign debts, mukataat, feud, feoff, ,interest and
amounts of orphan properties and amount of railway guarantee
committed by the government and give it to the Expense
Administration,

ii. In case of new domestic or foreign borrowing, to

deliver the amount to the Fund Bailee or another unit in charge,

iii. As per the Budget Law, to prepare a copy of daybook

of the sum given from the Treasury on its appropriation or given
from the Ottoman Bank in cash and amounts given from
province property, to execute and examine the public debtor and
current account operations and accounts of the Ottoman Bank on
daily basis and to give a copy of the daybook to the Expense
Administration and the part related to the revenues to the
Revenue Administration,

iv. By the end of the year to prepare general final

account indicating the amount accrued at the end of the year in
accordance with the records and future final accounts of the
expenditures made both in Istanbul and provinces and in foreign
countries from the annual budget concerning the debts and to
give it to the Expense Administration.

3.2.2.6 Fund Bailee:

Duties of this department, which carried out accounting
records of the cash management, are as follows:

25
 i. To add treasury properties, borrowings and the
amounts, that had to enter in Hazine-i Celile Sandığı and to
record them as revenue in the day-book daily,

ii. To make payment in consideration for the official

documents to be given from the Expense Administration and to
give information to the authorities everyday by recording them
in the day-book,

iii. To keep day-book indicating collections and

payments of the cash office, to ensure daily collection-payment
balance and submit daily notes to the authorities.

3.2.2.7. Muhasebat-ı Atika Muhasebeciliği (State

Accounting Administration):

Duty of accountancy was carrying out and examining the

former works and performing the required operations.

The Ministry of Finance, whose duties we have

mentioned above, consisted of 650 people except from the
officials included in the central government branches. It was
provided for that for the administrations, which carried out and
sent financial issues in writing, the number of personnel could
not exceed the number stated in the regulations and the people,
who violated this provision, would be responsible. However,
this rule was not obeyed in the pursuant years. 11

3.3. The General Directorate of Public Accounts

Under the Ministry of Finance in the Period After 1880

With the above-mentioned organization, central and local

administration, collection of revenues, incurring expenditures,
keeping accounts, preparation of budget and management were
determined in detail.

Units of Expense Administration, Düyun İdare-i

Umumiyesi (Public Debtor), Sandık Emaneti (Fund Bailee) and
Muhasebat-ı Atika Muhasebeciliği (State Accounting
Administration) unit, which were considered in the central part,
constituted the central administration of the General Directorate
of Public Accounts and units under the provincial administration
constituted local administration.

11
ÖNER Erdoğan, A.g.e., s.363-381

26
 This organizational structure was improved according to
the changing needs and continued until the foundation of the
Turkish Republic in 1923. In the Republic Period, significant
changes occurred in financial structure and government
accounting. However, the General Directorate of Public
Accounts has been modernized and perpetuated its existence
until today.

4. Conclusion
In the Ottoman Empire, financial organization used to be
always important and this is one of the reasons for long-lived
empire. However, financial organization couldn’t supported by
an advanced government accounting sytem. The need for
restructuring administrative and financial structure of the
government and accounting system occurred in the 19th century.
It is understood that innovative atmosphere brought by Tanzimat
(the Reform) Firman was benefited for this purpose.

In the middle of 19th century, it is considered that

financial organization and government accounting reforms,
which were realized in a 40-year period, had an important role
in the modernization activities of the Ottoman Empire. These
reforms resulted in significant developments in the accounting
idea and implementation of the government accounting and it is
concluded that the Ottoman Empire entered the 20th century
with a structure appropriate for the needs of that period by the
help of these reforms.

Also, it is necessary to indicate that the reforms realized

in the 19th century underlies the successful financial
organization and accounting implementations of the Turkish
Republic founded in 1923.

27
 BIBLIOGRAPHY

Davidson Roderic H, (1997), Osmanlı Imparatorlugu’nda Reform1856-1876,

Translated by Akinhay Osman, İstanbul.
Karamürsel Ziya, (1940), Osmanlı Mali Tarihi Hakkinda Tetkikler, Turk Tarih
Kurumu, VIII. Seri, İstanbul.
Varcan Nezih, (2000), Osmanlı Maliyesi Hakkinda Ingiliz Raporlari, Maliye
Bakanligi, Ankara.
Guran Tevfik, (1989), Tanzimat Doneminde Osmanlı Maliyesi: Butceler ve Hazine,
Turk Tarih Kurumu, Ankara.
Oner Erdogan, (2005), Osmanlı Imparatorlugu ve Cumhuriyet Doneminde Mali Idare,
Maliye Bakanligi, Ankara.
Güvemli Oktay, (2000), Turk Devletleri Muhasebe Tarihi Tanzimat’tan Cumhuriyet’e,
Cilt 3, Istanbul Yeminli Mali Musavirler Odasi, Istanbul.

28