Academic journal article International Journal of Turkish Studies

The European Competition to Electrify Istanbul in the Early Twentieth Century

Academic journal article International Journal of Turkish Studies

The European Competition to Electrify Istanbul in the Early Twentieth Century

Article excerpt

Electric lighting became widespread in the cities of Europe and the United States in the last quarter of the nineteenth century, and electrical technology rapidly spread through other parts of the world, from Chile to Congo and from Spain to the Ottoman Empire and Iran, in the early twentieth century. For instance, the government of Chile had approved projects for a telephone service in Constitucion city and for electrical supply in San Vincente by 1911.1 In 1910, Cradock municipality in South Africa decided to adopt electric lighting,2 and electrification of the railways and development of hydroelectric works in Uruguay took place the same year.3 Because the early twentieth century was such a time of electrification worldwide, historians have suggested using the term "global electrification" to describe the diffusion of electricity during the period. 4

Among the pioneers of global electrification, the multinational companies of Germany and the United States, which were backed by international finance, played a prominent role in the development of electrical technology. According to Timo Myllyntaus, along with international finance, "increasing world trade, the mushrooming growth of multinational companies such as Siemens & Halske, Allgemeine Electricitats Gesellschaft (AEG), Edison's companies (later General Electric) and Westinghouse, resulted in the emergence of an electro-technical knowhow"5 throughout the world.

After electrifying major cities in Europe and the United States, multinational companies sought new markets abroad,6 which necessitated the support of international finance to overcome the burden of high costs of electrification projects. Then, "once the electric utility was in operation, the shares of the company were floated in the market bringing other investors."7 In addition, the companies required good skills in management and finance to handle the complexities of the concession process to obtain electrification rights; construction of the plant and urban network; and arrangement of the supplier companies to provide meters, cables, manage the distribution of electricity, and electrify urban transportation. That is why companies such as AEG and Siemens of Germany established "financial holding companies to manage and finance electric utilities."8 Major destinations to register for these multinational holding companies were Switzerland and Belgium, which provided them various legal advantages ranging from management to tax issues,9 and ultimately they resembled the trusts formed "in continental Europe for financing of major railway companies and their projects."10

The functioning of the electrification business on a global scale, I argue, should be taken into account when analyzing the transfer of electricity on an urban scale into any country. Specifically, for the construction of the first power plant of istanbul, various partner companies formed consortiums to accomplish the electrification project; financial institutions played an active role in financing and managing this consortium; and the consortium had multinational character, as the center of registry did not necessarily identify the nationality of the company, only the place that had offered tax advantages to the businesses.

In the Ottoman case of electrification, therefore, this article will underline the multinational and multipartnered character of the business as well as the role of 4 5 6 7 8 9 10 financial organizations in the diffusion of foreign investment into the Ottoman lands. In doing so, it will differ from accounts of Ottoman economic history that have stressed the absolute subordination of the empire to the European powers during the nineteenth and early twentieth centuries. Far from explaining how foreign investment flourished and was organized in the Ottoman Empire, moreover, these studies have depicted the financial institutions merely as the loan providers, obscuring their managing role in winning the concessions and so the dominant role played by Deutsche Bank as the financial backer of AEG and Siemens. …

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