1914 - 1920

OTTOMAN BANK MUSEUM - WAR AND CRISIS

SALT

“A chronological selection from the archives of the Ottoman Bank”

The Ottoman Bank Archives, one of the collections at SALT Research, not only shed light on the history of the Ottoman Bank, formerly the central bank and the treasurer of the Ottoman Empire, but also offer a representation of life during this period. The archives narrate the story of the little-known world of the late Ottoman and Early Republican period in which the bank played a central role.

 These archival documents presented in five different exhibitions in the Google Cultural Institute display the significant changes, developments and crises experienced over an 80 year period, from the Ottoman Bank's founding until 1933, when it gained a private bank status.

 Ottoman Bank Museum - 1856-1880 - The Founding Years & The Difficult Times

Ottoman Bank Museum - 1881-1894 - Redressing the Situation

Ottoman Bank Museum - 1895-1894 - The Expansion Period

Ottoman Bank Museum - 1914-1920 – War and Crisis

Ottoman Bank Museum - 1921-1931 - A New Balance & Epilogue

1914-1920 WAR AND CRISIS

Although, the Imperial Ottoman Bank's financial and economic power had reached its peak by 1910, the political and ideological changes of the time were a constant threat to its standing. Particularly, the newly growing ideology of nationalism led to a serious questioning of the bank's position and allegiances. Projects were being developed to replace this strange and hybrid institution with national banks. Yet, what really struck a serious blow to the bank was World War I. With its shareholders and the empire it operated under standing on opposite sides of the conflict, the bank was caught between two fronts. During the four years of warfare, the Ottoman Bank found itself almost in the position of a hostage, and under the effect of the economic crisis and extraordinary war conditions, its operations nearly came to a halt. Although, the Ottoman defeat brought the situation back to normal in some ways, it was obvious that the bank had lost its most valuable asset: the territories it had flourished in. 

A Bank of Questionable Allegiances 1908 - 1914

The Second Constitution, proclaimed in 1908, and the ideological turmoil it triggered brought about a questioning of the Ottoman Bank's identity. The bank had initially thought that the Constitution would bring political and financial stability to the Empire and had pressured the London and Paris committees to obtain support for the Young Turk regime. Yet, in the eyes of nationalist circles, the notion of a state bank run by British and French interests was perceived as an unacceptable contradiction. Moreover, the Young Turks were more and more drawn into the sphere of German influence. By 1914, Finance Minister Cavid Bey, one of the moderate members of the government, was probably one of the last politicians who remained in favor of the Ottoman Bank. 

An institution with the least to do with Ottomanness.A cartoon by Cem, published in the satirical magazine Cem and representing the Ottoman Bank head office with a sign bearing its name with spelling mistakes
A portrait of Mehmed Cavid Bey, the economist and Finance Minister of the Young Turk cabinet.
A bond of the first loan oragnised by the Ottoman Bank after the Young Turk Revolution, the 4 % 4,711,124-lira 1908 loan
A bond of the 1911 4 % 11,000,000-lira loan, organised and marketed by the Deutsche Banki
The obverse and reverse of the 1-lira banknote printed in Istanbul on the back of cash vouchers, and 130,000 of which were issued between 17 August and 12 September, 1914
The obverse and reverse of the 1-lira banknote printed in London, 1,437,000 of which were issued between 15 September and 29 December, 1914

The Divorce of World War 1914 - 1915

The tension between the Ottoman Bank and the government turned into a crisis when the Ottoman Empire entered the world conflict in November 1914. Upon the refusal by the London and Paris committees to satisfy the demand made by the government for an advance payment in the amount of 2,000,000 liras on 31 December 1914, Talat Bey sent an ultimatum to the bank's general manager Nias and his deputy Steeg. The minister demanded that all French and British managers of the bank resign from their offices. There was little the management could do, therefore, French and British officials withdrew and transferred the bank's administration to managers of Ottoman nationality. The compliance with ministerial orders and the continuing support from Cavid Bey saved the bank from confiscation; however, it was not difficult to imagine the conditions under which the bank would be allowed to remain in business. In fact, a similar situation awaited the bank on the other side of the conflict. A license issued by the British government had limited the bank's activities in accordance with the reduced status of “friendly” countries, banning it from any transaction with its branches in the Ottoman Empire. Virtually split into two, and stripped from its former power, the Ottoman Bank could only hope to survive the war.

Arthur Nias, general manager of the Imperial Ottoman Bank in 1915, who was forced to leave the country due to his British nationality
A copy of the banking license delivered to the Ottoman Bank by the British Home Office, defining and limiting the bank's operations
A copy of the decision transferring the administration of the Imperial Ottoman Bank from its French and British managers to Ottoman mamagers. 13 January, 1915
Louis Steeg, deputy general manager of the Imperial Ottoman Bank in 1915, who was forced to leave the country due to his French nationality
Talat Bey (later Pasha), Minister of the Interior and Minister of Finance ad interim, one of the strongest figures of the Young Turk regime.

The Bank During the War 1914-1918

One of the greatest difficulties the bank faced during the war was preserving the gold stocks despite the pressing demands of the army. Believing that the Ottoman Bank was not fulfilling its duties as a state bank, most government officials put an increasing pressure on its administration. In the fall of 1918, when the Ottoman Empire was finally defeated and occupied by Allied forces, life was back to normal for the Ottoman Bank. The exiled managers returned and reclaimed the administration of the bank. Nevertheless, it was obvious to all that the situation had not regained its former stability. Taking into consideration the possible success of the resistance movement in Anatolia, the bank's management took precaution by making some advances to the Kemalist troops, thus trying to act with as much foresight as possible with regards to the uncertain future of the country.

A portrait of Cemal Pasha with his son, one of the leaders of the Union and Progress party, Navy Minister and commander of the Fourth Army
The solution found to the depreciation of Treasury bills in Syria by Cemal Pasha in May, 1917
Remarks made by Muri Bey, member of the Ottoman Bank Administrative Coumcil, on the participation of the bank in the 1918 domestic loan. Despite Nuri Bey's proposal for a participation of 1,000,000 liras, the bank would eventually limit its support to 300,000 liras
Georges Cartali hands back the management of the bank to its exiled managers, Arthur Nias and Louis Steeg. 7 December, 1918
A first example of advances made to the Kemalist troops in Anatolia in 1920, as it appears in the minutes of the borad of directors. 3 November and 8 December, 1920

Paper Money, Again 1915-1918

The Ottoman government had hastily entered the war and was unprepared to meet the financial burden of the war effort. As it became clear that the Ottoman Bank could not, or in better terms, would not offer its support, once again, issuing paper money appeared to be the only solution. The Ottoman Bank surrendered its privilege to the government. The first series of Treasury bills were printed in July 1915. As a precaution, the first series was backed by its gold equivalent, however, from the second series on, this measure was abandoned. There followed an ever-increasing quantity of issue of Treasury bills in several denominations. The notes were printed in Germany and were of a mediocre quality, and when coupled with the chaotic situation of the financial market, it encouraged all sorts of fraud and forgery. Until the end of war, a depreciation of up to 80% of the currency against gold was taken place. 

A sheet of twenty ½-lira Treasury bills
The issue (left scale, in liras) and depreciation (right scale, in paper piastres to the gold lira) of Treasury Bills, July, 1915-December, 1918
Treasury bills of 1, 2 ½, 5, 10, 25 and 50 liras issued from 10 July, 1915 onwards
Forged Treasury bills of ½, 10, 25 and 50 liras, cancelled with a "FAUX" (FORGED) stamp
Credits: Story

Kurgu ve anlatım / Concept and narrative — Edhem Eldem, Boğaziçi Üniversitesi

Credits: All media
The story featured may in some cases have been created by an independent third party and may not always represent the views of the institutions (listed below) who have supplied the content.
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