How was the Central Bank established?

A country in ruins, having just emerged from war,

No money, 

No people, no labor force; most of its young men were lost in an 8-year bloody war.

No capital.

Nothing left in hand.

No engineers, architects, or doctors. No brain trust. They, too, were lost in the Gallipoli Campaign.

In Gallipoli, we lost “an entire Darülfünun, that is, a university generation.”

No midwives, no medical staff; women were giving birth to their children among crops, cows, and sheep, in some places in cold fields.

No schools, no teachers, no knowledge.

96% of the 11 million population was illiterate.

You may have established the state with officer and general cadres, but how would the economy be established?

No experience, no experts.

We said there was no money at the beginning. The money in circulation was 155 million TL, and that was currency left over from the Ottoman Empire.

Debt was high; 84.6 million TL remained to be paid from the Ottoman era. Including other debts, it was a country with a total debt of 107.5 million TL.

In other words, the debt was two-thirds of the money in circulation. How would it be paid?

There was a lot of debt, but no despair.

As soon as the war ended, before even 3 months had passed, Atatürk organized an economic congress in İzmir in 1923 and sent the message that a "national state bank" needed to be established. He wanted to establish a “Central Bank,” but there was no example of this in the world.

At that time, there was only the FED in America and the Bank of England in the UK.

Markets were being controlled through these. But it was unknown whether this system would suit Turkey or not. There was no monarchy in Turkey anyway. It had fled.

Well, there was only the Ottoman Bank, but that was in the hands of foreigners. In other words, it was null and void.

None.

Atatürk did not give up; he brought one of the greatest banking experts of the period, the German Dr. Schacht, and his assistant Karl Müller, to the country. He had them examine our market to establish a Central Bank. The German experts conducted their examinations and finally made a decision. They said that “it was still too early to establish a Central Bank.”

They even said, “do not establish it.” 

Outside, there was an American economic crisis in 1929 called “Black Thursday.” It was ravaging the whole world. Turkey was also getting its share of this crisis. The Central Bank and such were not working in America against this crisis. It was useless. That is why world economists were indecisive. Should there be a Central Bank or not? There were also those who thought that if there were one, it would have worked in America.

Atatürk was not an economist, but he urgently and insistently wanted the Republic to have a Central Bank. Because he thought, “the value of the Turkish Lira must be protected against external economic waves, and interest and inflation must be brought under control in the domestic market.”

He thought of what many economists could not think of. But there was no tangible good example of this either. The Ottoman National Credit Bank (İtibar-ı Millî Bankası) was established in 1917 for this purpose, but it did not work.

It went bankrupt.

Atatürk did not care about the naysayers; finally, in 1927, he gave a directive to Minister of Finance Abdülhalik Renda to establish a Central Bank. He started the work. This time, Dr. G. Vissering, a member of the Board of Directors of the Central Bank of the Netherlands, was invited to the country. After finishing his examinations, he prepared a report and said that an independent Central Bank that is not affiliated with the Government should be established.

An independent Central Bank.

There was no other example in the world besides the American FED Bank. 

Atatürk was not satisfied with the Dutchman Vissering. This time, he asked the Italian expert Count Volpi in 1929. When he also stated that a Central Bank was essential to ensure the stability of the Turkish currency, he took action. With the contributions of Prof. Leon Morf from the University of Lausanne, the Central Bank was established by the Grand National Assembly of Turkey on June 30, 1930.

That is how the Central Bank was established.

Thank God they established it.

And now it exists in all developed countries in the world.

Just think about the state of our country if the Central Bank had not been established.

Normally, in countries where there is no Central Bank, the money market is controlled by state banks. Think again now about the nation's and the state's money being entrusted to a Halk Bank, whose General Managers' names were involved in massive corruption. A Ziraat Bank that gives millions in interest-free loans to gas cylinder dealers and others and cannot collect them, determining market interest rates. And think about Vakıflar Bank, whose name is involved in many rumors, directing the country's money.

If there were no Central Bank, God forbid, who would control the market?

Of course, these state banks we named would control it. Think about who would control the dollar. We would be at the mercy of Tahtakale. Even with the Central Bank, interest rates skyrocketed, the dollar skyrocketed. If there were no Central Bank, who would hold the dollar and interest rates? If it were 30 liras, it would be 300 liras.

It is a good thing that a statesman with high foresight like Atatürk emerged in time and managed the country, and established the Central Bank in that scarcity. Now, despite all the delusions and mismanagement, we are trying to keep our market under control, for better or worse, with this Central Bank.

I say in that scarcity, because in those years, the nation was smoking weeds instead of tobacco.

No one said, what is the need for a Central Bank in this poor country? No one said, we have İş Bank, isn't that enough for us? While no one could think of it, they thought of it. And they did not complain in that scarcity. They did not show despair. They established it.

But is it like that today?

Just yesterday, a sense of despair came over Ms. Gaye Hafize Erkan, who came from Manhattan. Because she had a small child, she did not like the Central Bank lodgings in Ankara. She was staying at Beysu Konakları. And according to an allegation, she was making the state pay the monthly rent of 49 thousand liras.

What can we say,

from a generation that established the Central Bank by giving birth to their children among crops and sheep, in cold fields,

to a generation of administrators who do not like warm lodgings because they have a child.

That is exactly why this country does not develop.