İstanbul, Turkey

The agreement signed between the government and the Ottoman Bank. 10 March, 1924


  • Title: Agreement
  • Date: 1924-03-10
  • Transcript:
    Between His Excellency Mustafa Abdülhalik Bey, deputy of Çankırı and minister of finance, acting in the name of the government of the Republic of Turkey And Monsieur Louis Steeg, general manager of the Ottoman Bank in Istanbul, Monsieur Bellet, manager of the Paris branch and Monsieur Pearce, deputy manager of the London branch, all three fully empowered delegates acting in the name of the Ottoman Bank, It has been agreed to the following: Article 1: The concession of the Ottoman Bank has been extended under the following conditions until 1 March, 1351/1935. Article 2: The amount of the current account opened by the Ottoman Bank in accordance with Article 1 of the agreement dated 14 February, 1326/1911 has been determined at 5,000,000 (five million) liras. The said current account will be opened in the name of the ministry of finance on the date of the exchange of the present agreement. The Ottoman Bank shall also open a current account of 2,000,000 (two million) liras to Ziraat Bankası under the guarantee of the ministry of finance. The interest rates to be applied to the current accounts to the ministry of finance and to Ziraat Bankası shall be determined through special agreements and the said agreements shall be re-examined every three years. It has been decided that in the future agreements these interest rates will in any case not be inferior to five percent or superior to seven percent. Article 3: If, starting from the date of this agreement, the Ottoman Bank wishes to make use of its privilege to issue banknotes under the condition that they shall always be convertible to gold upon request at the bank. The bank will be obliged to keep half of one third of the amount of the banknotes, which it is required to possess in gold, in its safes according to Article 11 of its Act of Concession. It will be able to keep the other half, or one sixth of the amount of banknotes in circulation, in Turkish or foreign state bonds and securities, with prior consent of the minister of finance. It has been decided that the average market value for the last six months of the said bonds will be the equivalent of the value of the gold required. However, if a decrease of ten percent is registered before six months, the consequent deficiency shall be completed without awaiting for the expiration of the period of six months. Article 4: The Ottoman Bank will pay a premium of one and a half percent on the banknotes issued to the yearly amount of upto three million liras after the date of the exchange of the current agreement in accordance with Article 3, and of two percent on the amount issued above three million liras. If the third of the amount, which is required of the bank to keep in its safe is entirely in gold, this premium will be paid on one third of the average yearly amount of banknotes in circulation, and on five sixths if half the aforementioned amount is kept in bonds and securities as foreseen in Article 3. Article 5: At the end of the period of concession determined by this agreement, the Ottoman Bank will pay to the ministry of finance the amount representing those banknotes which, having either been issued before or in accordance with Article 3, belong to bearers who fail to respond to the invitation for the redemption of their banknotes in gold, and thus, be considered void. The Ottoman Bank will act in the same way if it wishes to withdraw these banknotes before the end of its concession. Article 6: The banknotes of the Ottoman Bank in circulation at the time of the exchange of the present agreement and amounting to a total of 791,475 liras will continue to be subjected to a forced exchange in accordance with the provisions of the law of 21 July 1330, and until the end of the period of concession determined by this agreement. The banknotes apart from the aforementioned 791,475 liras, which have been withdrawn by the bank, will be cancelled in order not to be recirculated. If the treasury notes previously issued by the government are withdrawn form circulation before the end of the period of concession of the bank and if the currency standard is once again reverted to the gold standard, the forced exchange of the Ottoman Bank notes will also be repealed. If, as mentioned above, the currency standard is reverted to the gold standard, the amounts of the current accounts of the ministry of finance and of Ziraat Bankası determined in Article 2 will be determined anew through an agreement between the two parties. Article 7: The yearly commission and premium of 60,000 liras, paid [to the bank] in return for [its] treasury operations and branches that had been set in accordance with Article 6 and 7 of the agreement of 4 February 1326/1911 is abolished. Article 8: The branches of the Ottoman Bank which have been closed during the war will be opened until 1 September, 1342/1926 at the latest, either in their original locations or in the provincial capitals to be determined by the minister of finance.In the event of the need for a correspondent in those places where the Ottoman Bank does not have branches, this duty will be entrusted to the local branch of Ziraat Bankası. Article 9: Starting from the next change of general manager of the Ottoman Bank, the agreement of the minister of finance will be requested during and before the nomination of general managers. Article 10: As of 1 May, 1340/1924, the three Turkish members of the council of the Ottoman Bank at Istanbul will be selected by the bank from a list of six members nominated by the minister of finance. The time in office of the said members has been determined as three years. A retiring member may be re-elected. Article 11: The Ottoman Bank will gradually increase the number of its Turkish Muslim employees to a minimum of thirty percent of all its employees in the head office and all branches in Turkey, and to half of this number at the end of the fifth year. The salaries paid to these employees at the end of three years will amount to fifteen percent of all salaries, with the exception of those of the general manager and his deputy, to twenty-five percent at the end of the fifth year and to thirty percent at the end of the seventh year. Every year, Turkish Muslim employee candidates will be sent abroad for training and their numbers will constantly be kept above ten. Article 12: The provisions of the Act of Concession and of previous agreements which are not modified by the present agreement, will remain in effect. The two copies of this agreement have been signed and exchanged in Ankara.
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