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| 1875–1914 |
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| THE OTTOMAN BANKRUPTCY AND PUBLIC DEBT. In 1854 the Ottoman government signed its first foreign loan agreement. It was followed over the next two decades by a succession of loans taken at increasingly adverse terms from European banks (primarily French). In Oct. 1875, when the total external debt amassed had reached some 242 million Turkish pounds, with over half the budgetary expenditures going toward its service, the Ottoman government declared its inability to meet its financial obligations. The fall in tax revenues due to bad harvests and increased expenditure made worse by the costs of suppressing the uprisings in the Balkans hastened the slide into bankruptcy. | 1 |
| After prolonged negotiations with the European powers, an agreement was reached (published in the Decree of Muharrem in Nov. 1881). It set up the Public Debt Administration, consisting of Ottoman and European representatives, to which certain revenues were assigned. This arrangement subjected the Ottomans to foreign financial control from which they failed to free themselves, in part because of continued borrowing. In 1914 the Ottoman debt in circulation stood at 139.1 million Turkish pounds, and the government was as dependent as ever on the services of European financiers. | 2 |
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| 1876, May 30 |
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| Deposition of Abdulaziz, who was replaced by his nephew Murad. The action, engineered by the war minister Huseyin Avni Pasha, came in the wake of public protests against government inaction in the face of the massacres of Muslim peasants in Bosnia and Bulgaria, as well as foreign pressures. | 3 |
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| May 30–Aug. 31 |
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| SULTAN MURAD V. Although intelligent and open to liberal ideas, the new sultan suffered from a debilitating nervousness that rendered him unequal to the task of leading an empire faced with serious external threats and domestic hardships. The war that broke out during his reign, the mobilization of the army, and the flood of Muslim refugees from the Balkans put additional strains on the bankrupt treasury. The cabinet arranged Murad's deposition on the grounds of mental incapacity and placed his brother Abdulhamid on the throne. | 4 |
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| June–1877, March |
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| War with Serbia (See 1876, July). Serbia declared war on the Ottomans (June 30, 1876), followed by Montenegro (July 2). The two hoped for Russian support and the eventual acquisition of Bosnia and Herzegovina. The Ottomans inflicted a severe defeat on the Serbs, but were forced to halt their successful invasion of Serbia by a Russian threat of intervention (Oct. 31, 1876). Serbia agreed to peace with the Ottomans, providing for a return to its prewar status (signed on March 1, 1877). | 5 |
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