Tahqiqāt-e Târix-e Eqtesâdi (Economic History Studies of Iran)

The Evolution of the Indebted State in Iran: An Analysis of Foreign Borrowing, Financial Crisis, and the Curtailment of Fiscal Sovereignty (1892–1906)

Articles in Press

Document Type : .

Authors

Armina Hamzehpour
Michael Vahidirad

Department of History, Faculty of Literature and Humanities, Shahid Beheshti University, Tehran, Iran

10.30465/ehs.2026.54580.2099
Abstract
The financial historiography of late Qajar Iran predominantly explains foreign borrowing through the pressure of external powers or structural state weakness. It pays less attention to how foreign loans became an enduring practice in state financing and reproduced financial crises. Relying on British Foreign Office archives, diplomatic correspondence, Imperial Bank records, and employing a descriptive-analytical method alongside an institutional history approach, this study asks how foreign borrowing transformed from an emergency measure into a persistent mechanism of state financing between 1892 and 1906, and what relationship it formed with financial sovereignty.



The article argues that the emergence of the "debtor state" resulted from a convergence of internal financial crises, the political-courtly logic of resource allocation, and Anglo-Russian rivalry. This convergence turned loans from temporary crisis-relief tools into integral parts of the crisis-reproduction mechanism. Analyzing the trajectory of these loans reveals four mechanisms that exacerbated borrowing: repaying debt with debt, gradual collateralization of public revenues, foreclosure of borrowing alternatives, and political absorption of new resources. Findings demonstrate this process caused not merely debt accumulation, but the gradual erosion of the state's financial sovereignty, preemptively mortgaging its financial future and decision-making freedom to manage the present day's affairs.

Keywords

Debtor State
Foreign Borrowing
Qajar
Path Dependence
Financial Sovereignty
Political Economy
Subjects
Tahqiqāt-e Târix-e Eqtesâdi (Economic History Studies of Iran)

Articles in Press, Accepted Manuscript
Available Online from 03 August 2026

  • Receive Date 12 May 2026
  • Revise Date 27 July 2026
  • Accept Date 03 August 2026

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