Summary:

In the 19th century, the Ottoman Empire introduced paper money known as kaime to strengthen its own finances and lower dependency on silver coin. Though considered a European-inspired reform, this disastrous policy created chaos in regions where trade depended on silver and gold especially in Albania.

Merchants were skeptical to the the new paper notes, which quickly lost value and traded despite government rates. Taxes and trade often still demanded silver, which led to high risks for traders as paper money was not as reliable. As a result, many Albanian merchants refused kaime altogether, stopped trade, and temporarily shut down their shops.

The market collapsed, credit stopped, and everyday commerce slowed down in several towns. These events were part of wider Ottoman financial instability during the 1840s–1870s, particularly during the Crimean War and the 1870s crisis. This was when paper-money lowered the confidence in the market. Albanians preferred hard currency and were affected most.

Ottoman authorities try new experiments

During the mid-19th century, the Ottoman Empire experimented with a new instrument of state finance: paper money, known as kaime. Introduced during the Tanzimat reform era, these notes were intended to stabilize public finances and reduce dependence on silver coinage. Instead, they triggered sharp economic disruption — nowhere more visibly than in Albania, where the introduction of paper money with a fixed exchange rate brought local trade almost to a standstill.¹

Why it failed

Several factors combined to make the kaime deeply unpopular in Albanian markets:

Lack of trust

In regions like Albania, where trade remained dependent on silver (gurush/kuruş) and gold coin, merchants and buyers were suspicious of this new paper. The paper money’s value was volatile, and often traded at a discount, despite the government’s attempts to enforce a fixed rate.²

Unstable pricing and payment

Because merchants were obliged to accept the new currency at its official value, while suppliers and tax collectors demanded payment in metal, Albanian traders faced immediate losses. Prices shot upward, loans and debts became unstable, and local credit nearly collapsed.³

Historical monetary habits

Albania had long traditions of trade through gold and silver. Foreign coins circulated widely, and various local notables had previously issued small tokens or coins. This made the population even more skeptical to accept Ottoman notes whose value depended solely on state authority.⁴

Consequences for Albanian markets

Contemporary observers, along with later monetary studies, describe a dramatic regional reaction: Merchants refused the new notes or accepted them only at steep discounts. Shops closed to avoid losses. Trade halted in many towns as sellers waited for stable silver coin to return.

Prices and credit froze, since no one wanted to try and calculate the value of paper money that ofen changed. In effect, Albanians experienced a local financial chaos: goods remained unsold, tax collection became difficult, and the economy slowed down.⁵

When did this occur?

These episodes occurred in the 1840s–1860s, when the Ottoman government started with this and some crises continued into the 1870s, especially during wartime. For Albania, the mid-19th century was the period when the introduction of paper money affected commerce negatively.⁶

Conclusion

The crisis illustrates a central problem of 19th-century Ottoman monetary reform: paper money cannot succeed if the public refuses to treat it as money. In Albania, where economic life was deeply rooted in metallic currency, the sudden appearance of kaime with a fixed, unrealistic exchange rate created immediate market dysfunction. For historians, the episode highlights how regional traditions and local confidence could override imperial policy — and how modernizing reforms could fail when imposed too quickly on traditional economies.

Footnotes

1. Şevket Pamuk, A Monetary History of the Ottoman Empire — analysis of kaime issuance and economic effects.
2. Ibid.
3. Ibid.; Ottoman Bank Museum, “History of the Imperial Ottoman Bank and Ottoman Monetary Instruments.”
4. Bank of Albania, Money and Banking in Albania – from Antiquity to the Present.
5. South-East European Monetary and Economic Statistics (SEEMHN), monetary conditions in Balkan provinces.
6. Pamuk, A Monetary History of the Ottoman Empire; SEEMHN database.