Author: Tamer Güven (Abdullah Gul University)
Why did wages in Ottoman state textile factories stagnate in the second half of the nineteenth century? In Ottoman economic history, Pamuk (2000) constructed a wage series for skilled and unskilled construction workers, and Ergene (1998) did the same for agricultural workers. However, despite numerous studies that have touched upon industrial wages, no comprehensive wage series has been developed for industrial workers. This study fills that gap by constructing a new wage series based on previously unexplored wage books from state textile factories such as Hereke and Veliefendi. Established in the 1840s, these factories were intended to meet the Ottoman state’s needs in its efforts to modernize and centralize its military and bureaucracy.
In this study, I first compared the wage series I compiled for the 1848–1900 period with other domestic sectors, namely construction and agriculture. The results indicate that while wages in these sectors increased over time, factory wages remained stagnant. Next, I applied the methodology developed by Allen (2001) and Allen et al. (2011), incorporating later modifications, to compare Ottoman textile wages with those in England and Belgium. The findings reveal a similar pattern: while real wages in England and Belgium rose during the same period, wages in Ottoman state factories remained unchanged. This study seeks to explore the factors behind this stagnation.
The impact of rising international trade on Ottoman industry and wages
In the nineteenth century, the expansion of international trade reshaped economies on an unprecedented scale. As cheap imported manufactures flooded markets, many countries experienced de-industrialization. This shift affected sectors in different ways and had lasting effects on wages. Ottoman producers, confronted with growing competition from low-cost foreign goods, responded in varying ways—some struggled to compete, while others adapted to the changing conditions. Although production outside the guild system, particularly in rural areas relying on women’s and children’s labor, had existed before, it became a key strategy for cutting costs and competing with imports during this period. Similar efforts to survive and remain competitive can be seen across the Balkans, Anatolia, Egypt, and Syria, where local producers sought to adjust to an evolving economic landscape.
The Corden-Neary model anticipates sectoral shifts in countries that participate in expanding international trade as importers of manufactured goods and exporters of raw materials or agricultural products. According to the model, an increase in terms of trade occurs when export prices rise relative to import prices. Pamuk and Williamson (2011) showed that terms of trade rose in the Ottoman economy, reinforcing this trend. As a result, factors of production move away from industry to agriculture, where returns are higher. This shift leads to a decline in industrial wages, whereas agricultural wages increase. In the service sector, wage changes depend on which of the model’s opposing forces—resource movement or spending—is more dominant. While the findings align with the model’s predictions, they do not fully explain the complexities of observed economic dynamics.
Assessing the model’s assumptions: Labor mobility and wage Setting
The model relies on certain assumptions, and when applied to the Ottoman economy and state factories, their validity must be assessed. The first issue is the extent to which state factories accounted for competition from cheap imports. The second concerns whether factors of production were as fully mobile across sectors as the model assumes. Regarding the first point, evidence suggests that state factories recognized the cost disparity between their production and imported goods and saw it as a concern. Records from the Hereke Factory indicate that the state took steps to reduce costs. Factory managers were required to produce a specified amount of fabric below a fixed cost limit and were directed to take the necessary steps to meet it. These directives demonstrate that the state acknowledged and responded to competitive pressures. As for the second issue, it is difficult to argue that factors of production were fully mobile across sectors. Hereke, for instance, was a village on the shores of the Sea of Marmara, and its workforce consisted primarily of local residents. This geographical constraint suggests that labor mobility was limited, challenging one of the model’s key assumptions.
If the state was intent on reducing costs and factors of production were not fully mobile across sectors, wage-setting policies may have played a role in keeping wages. Certain conditions also made wage-setting easier to implement. Since these were state-owned factories and the workers were subjects of the Sultan, the paternalistic relationship between the state and its workers may have discouraged wage demands. Apart from a single strike attempt in 1908, there is no recorded evidence of such demands. Additionally, many workers came from rural areas and may not have developed collective bargaining practices. Moreover, tax records indicate that known agricultural incomes suggest non-wage alternatives were not particularly appealing. Furthermore, the small number of Greek and Armenian women employed in the factories may have contributed to household income, making stagnant wages more tolerable. While Muslim women were largely absent from industrial employment, they likely supported household income through agricultural work, engaging in family-based production within extended households, given the region’s rural character.
In conclusion, shifts in international trade were the main driver of wage stagnation in state factories compared to other domestic sectors and the same industry abroad. Additionally, the state’s cost-cutting efforts—made possible by specific conditions—further reinforced the persistence of stagnant wages throughout this period.
Literature
Allen, R.C. 2001. “The great divergence in European wages and prices from the middle ages to the first world war.” Explorations in Economic History 38:411–47.
Allen, R.C., J.-P. Bassino, D. Ma, C. Moll-Murata and J.L. Van Zanden. 2011. “Wages, prices, and living standards in China, 1738–1925: in comparison with Europe, Japan, and India.” The Economic History Review 64:8–38.
Ergene, B.A. 1998. “Wages in nineteenth-century Anatolia: a comparison of urban and agricultural trends.” New Perspectives on Turkey 19:125–45.
Pamuk, S. 2000. Istanbul ve Diger Kentlerde 500 Yıllık Fiyatlar ve Ücretler, 1469–1998. Ankara: T.C. Basbakanlık Devlet Istatistik Enstitüsü.
Pamuk, Ş. and J. G. Williamson. 2011. “Ottoman de-industrialization, 1800-1913: assessing the magnitude, impact, and response.” The Economic History Review 64:159–84.