The role of accounting in the industrialization efforts of the Ottoman Empire in the 19th century

Batuhan Güvemli


When the need for industrialization surfaced in the 19th century, Ottoman Empire aimed to establish state-led, profit-oriented enterprises after the Imperial Edict of 1839, which is also known as Tanzimat. Experienced accountants of the state tried to do the investment calculations of an iron factory in the 1840s (Istanbul) by benefiting from the merdiban accounting method, which was initially developed to record the revenues and expenditures of the state. This study contributes to the relevant literature by analyzing the adequacy of this statist-centralist accounting method within a profit-oriented environment and its role in this failed attempt towards industrialization. Merdiban allows the separation of investments as actual construction, still projected and shows the payment status of investments in details. As one of the first profit oriented investment project in the history of the Ottoman Empire, accountants mislead critical pieces of information like plans for procurement of raw materials, projected sales, payback time, capacity and depreciation. Findings indicate that neither accountants nor the method were ready to operate in a for-profit organization, eventually resulting diminish of this old accounting method in 1879.

Cuando en el siglo XIX surgió la necesidad de la industrialización, el Imperio Otomano se propuso establecer empresas dirigidas por el estado y con fines de lucro después del Edicto Imperial de 1839, también conocido como Tanzimat. Contadores experimentados del estado intentaron hacer los cálculos de inversión de una fábrica de hierro en la década de 1840 (Estambul) al beneficiarse del método de contabilidad merdiban, que se desarrolló inicialmente para registrar los ingresos y los gastos del estado. Este estudio contribuye a la literatura relevante mediante el análisis de la adecuación de este método de contabilidad estatista-centralista dentro de un entorno orientado a los beneficios y su papel en este intento fallido de industrialización. Merdiban permite la separación de las inversiones como construcción real, aún se proyecta y muestra el estado de pago de las inversiones en detalles. Como uno de los primeros proyectos de inversión con fines de lucro en la historia del Imperio Otomano, los contadores confunden datos críticos como los planes para la adquisición de materias primas, las ventas proyectadas, el tiempo de retorno, la capacidad y la depreciación. Los resultados indican que ni los contadores ni el método estaban listos para operar en una organización con fines de lucro, lo que finalmente disminuyó el uso de este viejo método de contabilidad en 1879.

* I am pleased to acknowledge the financial support for this research provided by the Scientific Research Projects Division (TÜBAP) of the Trakya University, Republic of Turkey. I am also grateful to the participants at the 13th World Congress of Accounting Historians, Newcastle, U.K., and the two anonymous referees for helpful comments on earlier drafts. 

Palabras clave

Industrialization; Ottoman Empire; Merdiban Method; Accounting History

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