Whether we refer to this city as “Constantinople”, “New Rome” or “Dersaadet”, Istanbul has always been an exceptional city. The story of Istanbul begins in the period of Ancient Greece, at a location where the Bosphorus and the Marmara Sea conjoin; it served as the capital city first of the Roman Empire, then the Byzantine Empire, and finally the Ottoman State. Today, it is still the apple of the modern world’s eye. The story of such a city of civilizations, the capital of three empires, must therefore be noteworthy not only politically and administratively, but also economically. Moreover, the archeological studies that have been carried out in Yenikapı recently show that its story goes even further back in time.

Above all, Istanbul’s most valuable asset is its geographical location, which is of great strategic importance, as it provides control over the Bosphorus on one side and opens to the Marmara Sea on the other. Most importantly, this valuable location is completed by the tranquil port of the Golden Horn. It is for this reason that from the time of the Ancient Greeks Istanbul has been an important junction point on the axis of east-west land routes and north-south sea routes. Due to the vast agricultural potential in its periphery, on the one hand, and the goods imported by means of its intimate connection with the sea on the other, the city also became a center of wealth. In fact, while these riches made available a welfare economy to the inhabitants of the city, it dazzled outsiders.

The satisfaction of the basic needs of its residents has consistently been a major issue facing Istanbul, a city that has hosted a significant population in all periods of its history. As the center of the administration, the ruling elites and civil-military bureaucracy formed a significant portion of the population, making this issue of provisioning more meaningful. In fact, before the Industrial Revolution, almost all the large cities in the world encountered both natural pressures, such as famine and drought, and manmade problems like wars, as well as transportation problems.

It is certain that the most important need of Istanbul throughout its history has been water. Following the establishment of the city, water had been supplied from wells, springs and cisterns. However, after a while these measures could not satisfy the need and water canals were constructed by the Romans. A similar effort was also made by Sultan Mehmed II after the Muslim conquest, and he solved the problem of water by having the old Roman network of water canals and aqueducts repaired. As part of this project, he had nearly 200 fountains constructed. In addition, Süleyman I took considerable steps in the matter of water network, and by seeking out new water resources, he managed to transport water to the city from the Belgrad Forest. The issue of water was addressed as an institutional issue during the Ottoman period, and it was given such importance that it was left to the supervision of a separate superintendent. Water is in fact still one of the most basic problems facing Istanbul today. While during the Roman period, water was brought from the Istranca Mountains, it is now provided from quite distant areas, such as Düzce, with the help of the Melen Watercourse.

Supplying Istanbul’s population with the staple goods, that is the provisioning system, displayed a certain continuity from the Byzantine to Ottoman times. We see that throughout this time, no disruption in provisions occurred during when the city was not overcrowded, although some serious problems were encountered when the population grew. When Istanbul was a classical Greek city with a population in the 20,000s, Istanbul’s major economic activities were agriculture and fishing. The agricultural products required by the inhabitants were brought in from Thrace. The city was rich with fish, especially bonito. When Byzantion grew and became New Rome/Constantinople, sustenance problems became more pressing. During the fourth to the sixth centuries an immense wealth accumulated in the city and the population increased a great deal. One of the important components of the provisioning policy was to distribute bread, olive oil and wine for free to the inhabitants. The city’s need for wheat was met from nearby Thrace as well as Egypt who shipped a great deal of wheat to the city as a form of taxation. Multiple actors carried out this undertaking, although essentially under the control of the state.

Istanbul was not merely a city of the Ottoman State: it was analogous to the heart of the state. Feeding the public was certainly important, but even more important was ensuring the subsistence of soldiers and bureaucrats. This held a clear strategic significance for the state. It was necessary to procure basic foodstuffs on the one hand, while providing raw material for artisans and craftsmen on the other. To meet these needs, the state started to transfer surplus material from the Ottoman periphery to the center, that is, to the capital city. From this perspective, Istanbul was consuming more than it produced. In this process, the state utilized methods that were sometimes supervisory, sometimes coercive and sometimes prohibitive. However, it cannot be claimed that the state always played an interventionist role in the provisioning of Istanbul. It behaved pragmatically in this issue: regulating the market in accordance with the shortage or abundance of goods, while the controls were variably tightened or loosened. For the most part, the aim was to make abundant, cheap and quality goods available on the market. At the same time, the procurement of the needs of the military and bureaucratic classes was consistently secured.

In Byzantine Istanbul, there were a few examples of institutions that resembled charitable foundations, although their statuses are not well understood. In truth, the activity of charitable foundations began with the conquest of Istanbul by the Ottomans. By means of these foundations, a plethora of important activities were enacted, such as town planning, reconstruction, infrastructure services and public works; the commercial and industrial activities carried out in stores, bazaars and workshops; transportation services by means of roads and bridges; the religious activities in the mosques; education services occurring in schools and madrasahs; public and health services undertaken by alms houses, medicine schools and hospitals; and social insurance, credit and finance services by means of cash-waqfs. The establishment of water facilities and construction of water fountains, dams and wells were mostly fulfilled by means of such charitable foundations.

While Istanbul acts as a junction between the Balkans and Anatolia, the Black Sea and the Mediterranean, its most prominent feature at this junction has always been commerce. From earlier periods onwards, the city started to become a commercial center and, especially in the Byzantine period, it became one of the important metropolises of the world. With the dense population it housed, the city not only created a marvelous wealth, but also became an enormous center of consumption, helping to considerably develop commerce there. During this period, the squares of Sirkeci, Çemberlitaş and Beyazıt all became commercial centers. On the other hand, with the help of highly convenient maritime trade facilities, Byzantine Istanbul became the center of transit trade carried out with other countries. The Golden Horn acted essentially as a trade port.

In many respects, commerce in Ottoman Istanbul was similar to and a continuation of the commerce of Byzantine Istanbul to a certain extent. After the conquest, locations such as the Golden Horn, Beyazıt-Kapalıçarşı and Sultanahmet-Çemberlitaş continued to function as trade centers. The important commercial areas of Istanbul were çarşıs (market places) and bedestens (covered bazaars). During the reign of Mehmed II, the Kapalıçarşı (the Grand Bazaar) was created on the axis of two covered bazaars (bedesten). Apart from covered bazaars, another type of commercial place were khans. Moreover, the arastas (shops of the same trade built in a row) were the arcades that beautify today’s Istanbul. The kapans, which acted as storehouses for goods, were mostly located on both sides of the Golden Horn. Yağkapanı (storehouse for oil and butter) was in Galata, Balkapanı (storehouse for honey) was in Tahtakale and Unkapanı was located in the location that today bears the same name. Customhouses were important actors in the organization and monitoring of domestic and foreign trade in Istanbul. The commodity customs was located at the Yeni Cami region. For the goods that came from Anatolia, , the port of Üsküdar and the Galata pier were used for maritime customs, while the customs in Karagümrük served for land customs. Starting in the middle of the nineteenth century, the international character of economic and commercial life in the city became more prominent and varied. Looking to Western examples, new ministries and councils started to be established. These new state institutions were naturally located in Istanbul, the capital city. Thanks to the foreign capital and the dynamism initiated by domestic and foreign companies, the importance of Istanbul as a trade center became even more prominent at this time.

During the Byzantine period of Istanbul, the stores were densely packed on a line that stretched from Hagia Sofia to Aksaray; tradesmen carried out their activities in this location as well. The lime pits, paint shops and pottery and glass workshops were moved outside of the city, where they began their production. There was also a group of craftsmen who were employed by the state for the construction of water supply system, buildings and roads. Around the palace, some small businesses that produced weapons, jewelry, fabric and yarn convened. All kinds of tradesmen, including those who produced luxury goods, like silk and perfume, were registered to the guilds, as were the butchers and bakers who met the daily needs of the residents.

Following the conquest, some workshops, which could be considered places of industrial production, were founded in Istanbul. These workshops made products such as gunpowder, muskets, artillery and ships; in particular, they were set up to meet the needs of the military. Within this context, during the Ottoman classical period the Imperial Gunpowder Factory (Baruthane), the Imperial Dockyards (Tersane), and the Imperial Cannon Foundry (Tophane) came to the fore in Istanbul as centers of heavy industry. Parallel developments in the fields of construction, paper and textiles show that industrial production was not limited to military goods. Mints, mills, bakeries and workshops that produced ceramics, cotton fabric and silken clothes serve as similar examples.

The factory-scale industrialization attempts that were realized during the nineteenth century in Turkey were also initiated in Istanbul under the guidance of the state. The factories of Beykoz Çuha (broadcloth, 1805), Eyüp İplik (silk thread, 1827), Beykoz Deri (leather, 1830), Feshane (fez factory, 1835), Zeytinburnu Demir (iron, 1846) and Veliefendi Basma (cotton fabric, 1848) were established as pioneering state factories. After the Tanzimat, the coastline lying between Yedikule and Küçükçekmece was organized as a new industrial area. Afterwards, technologically advanced state factories were opened. The Paşabahçe Cam (glass, 1884), Yıldız Porselen (porcelain, 1892) and Beykoz Kağıt (paper, 1886) factories are principal examples of this new period. Apart from these state-owned factories, there were also some others supported by private funds.

From the conquest to the Republican period, Istanbul became a center of finance, where coins were minted, monetary decisions were made and trends in precious metals were shaped; those in need of financial support were satisfied by means of financial intermediaries hosted by the city. Among the most prominent financial intermediaries that were operating in Istanbul were the money changers. These money changers, who were organized under the Sarraf Loncası (guild of money changers), were especially active in the area of Galata; hence the appellation “the Galata Bankers.” These money changers were mostly Ottoman subjects of non-Muslim origin including Jews, Greeks or Armenians. With the implementation of the köşe sarraflığı (petit money-changer) practice, these petit money changers started to become active in almost all districts of Istanbul. Like money-changers, bankers also played a role in financial intermediation. Bankers differed from money-changers as they practiced banking activities in addition to monetary tasks. These people, who were known as “Galata bankers”, satisfied the state’s need for short-term loans. Many banks, acting as the third group of intermediaries, were established in Istanbul, such as the Dersaadet Bank (1849), the Osmanlı Bank (1851), the Bank-ı Osmani-i Şahane (1863), Ziraat Bank (1888) and Türkiye Milli Bank (1909).

During the years of when the Turkish Republic was being established, Istanbul was always of secondary importance in terms of development and industrialization. Only two of the factories founded at that time, Paşabahçe Cam Fabrikası (glass factory) and Bakırköy Mensucat Fabrikası (textile factory), were constructed in Istanbul. In the meantime, many companies in Istanbul were taken over by the state. As a result of the economic contest that developed between Ankara and Istanbul, the First Economic Congress was convened in İzmir in 1923, yet the greatest number of attendees was from Istanbul. Moreover, of the 201 joint stock companies that were established in Turkey between 1920 and 1930, 119 of them were based in Istanbul. Among these companies, those with foreign financing were in Istanbul and those that were supported with domestic capital were in Ankara. Because this was the case, Ankara was the center of the public banks that were established during the Republican period.

Istanbul was also affected by certain negative financial results World War II. A rationing policy for staple foods, such as flour, oil and sugar, was first introduced in Istanbul. After the war, in 1947, the Istanbul Tüccar Derneği (Istanbul merchant association) was established. In order to make the voice of the merchants in Istanbul heard, this association made great efforts when the Demokrat Parti (Democrat Party) came to power. Again, with the attempts of the Istanbul Tüccar Derneği, the second Congress of Economy in Turkey was convened in Istanbul in 1948. As a result of the decisions taken at this congress, it came to be understood that the strict etatism of the earlier period could no longer be maintained. In 1946, the transition to a multi-party system was realized and Istanbul started to grow and develop once again, with policies that favored import-substitution industrialization. This policy that had been implemented in Turkey between 1950 and 1980 caused Istanbul to become a center of the assembly industry. The new economic and industrial policy adopted in 1980, known in the historical literature as 24 Ocak Kararları (decisions of January 24th), focused on the long- neglected sector of finance and Istanbul gradually became a financial hub. A large part of the country’s foreign trade started to be carried out in Istanbul. At the beginning of the twenty-first century, the city returned to its former glory days, when it was the capital city of the Ottoman State.

Although from time to time Istanbul had undergone economic decline throughout the course of history and under the sovereignty of different states, it has always been a dynamic and developing city, thanks to its geographical location. In contrast to the situation after the conquest, when the city became more dynamic due to new inhabitants who came to city from different parts of the Ottoman lands, the departure of a large number of non-Muslim people from the city during the Republican period caused the economic variety and dynamism to decrease. With the foundation of the Republic, a conflict between Ankara and Istanbul appeared; this tension could be overcome only after a generation. Istanbul, which became Ankara’s “other” in the 1920s, got rid of this domination in the 1950s and from the 1980s onwards, became a center of attraction. Starting in the 2000s, as an overpopulated city, its overbearance in the Turkish economy became difficult to manage. The capital city of an empire at the beginning of the twentieth century, Istanbul regained its previous power only after a century had passed; now it demonstrated that with its economic potential, Istanbul could be one of the most important centers for the global economy.

In this chapter, the economic history of Istanbul is discussed in three major parts. In the first part, the pre-Ottoman Istanbul, Ancient Greek and Roman-Byzantine periods are discussed in chronological order, with a special focus on the economic basis for the rise of Constantinople. Issues pertaining to the city, such as its provisioning, commercial system and trade networks, economic institutions and the monetary system in use form the content in this sub-section. The subject of the second sub-section is the issue of the water supply, which was the most urgent need of the city. An attempt is made to discuss the problems pertaining to water sources and the supply system during the Roman period, not merely in terms of economics, but also in its technical and architectural aspects. This part is completed with a frame article that takes up fish and fishery as one of the most basic foodstuff in ancient Istanbul.

The Ottoman State, of course, has a distinct and significant place in Istanbul’s history. The second part of this chapter begins with a sub-section that deals with the subsistence of the city throughout Ottoman history. The procurement of the basic necessities of the inhabitants of the city, was indeed the essential problem in all periods. In particular, meat, wood, vegetables, fruit and, particularly, cereals were the basic items supplied in the city. Supplying water was a major challenge in Ottoman Istanbul, as it had been during the pre-Ottoman period. In a sub-section, this issue is addressed with a long-term perspective starting from the conquest to the Republican era. Relevant policies and measures in water management during this period of time are summarized, which almost amount to a concise history of water in Istanbul.

In the third sub-section of this second part, the relationship between the city and its waqfs is discussed in detail, and the role of these waqfs in Istanbul’s life is analyzed. There are then two frame articles that complete the issue of provisioning: one that explains how cereal, the raw material of that most basic need of the public, bread, was procured via the Zahire Nezareti (the Grain Administration); the other article narrates the story of how wheat became bread in the mills of Istanbul.

The analysis of the structure of trade constitutes the subject of another article that deals with the methods, places, and actors of trade in the capital city of the Ottoman Empire as well as the role the state had in trade. A separate article gives the scope on the importance of the sea for Istanbul and the maritime trade. Another article explores the traditional patterns of artisanship and craftsmenship that emerged with the conquest of Constantinople and persisted until the period of industrialization. In addition, it focuses on the industrial transformation of Istanbul that became accustomed to factories in the new era. The subjects of the fourth sub-section are textile, glass and paper industries and the institutions in these sectors, while the fifth sub-section encompasses the economic history of Istanbul, in which bankers, banks and money are the main actors to be discussed. The section concerning trade has four articles in boxes, entitled “The Bedestens of Istanbul”, “Istanbul Chamber of Commerce, “The Prices of Basic Foodstuff in Istanbul” and “Limited Companies Established in Istanbul”; the section that deals with industry has three articles in boxes entitled “The Sergi-i Umumi-i Osmani” (The Ottoman General Exhibition), “Yıldız Porcelain Factory” and “Zeytinburnu Iron Factory”; and to the discussion on finance are attached two articles in boxes entitled “Darphane-i Amire” (the Imperial Mint) and “Dersaadet Vergisi” (the Istanbul taxes).

The third and last part of this investigation into the economic history of Istanbul is reserved for Republican Istanbul. This part is composed of three different essays. The first one deals with the nature of the industrial, commercial and financial heritage Istanbul received from the Ottoman times after the foundation of the Republic. It discusses the changes related to the loss of its political status as the capital city as well as the commercial, industrial, and financial inventory of the city in the present day. The second essay describes the state of the charitable foundations in the transition from the Ottoman to the Republican period and the institutional and legislative changes these institutions underwent in all these years. The third and the final article treats the water supply problem, which continues to be one of the fundamental problems in the Republican period as well. It explores the ways in which this problem was tackled.This part is completed with four frame articles, which are entitled “Istanbul Chamber of Industry”, “Mecidiyeköy Liqueur Factory”, “Nuri Demirağ Aircraft Factory” and “Touring and Automobile Club of Turkey”, providing fragments from the commercial and industrial panorama of the Republican period.

It should be noted that in order to draw a complete picture of Istanbul’s economic history, the chapters entitled “Population” and “Transportation”, which are two separate sections, should be evaluated together with the present section. By the same token, some essays in the section entitled “Daily and Social Life” should be considered in relation to the present section as well.

This article was translated from Turkish version of History of Istanbul with some editions to be published in a digitalized form in 2019.