History of Paper Money


Long before the invention of money, early humans developed barter trading in which goods from cowrie shells to precious metals were exchanged for other goods. According to historical records, leather money was used in China in 118 BC. The first paper banknotes appeared in China in 806 AD.

In the West it was at the end of the 17th century that paper banknotes were printed and used. It is known that the first paper money was issued and put into circulation by the Government of Massachusetts in the United States of America, and by Goldsmiths in England in 1690's. After the establishment of the Bank of England in 1694 and later the other central banks, paper banknotes became widespread throughout the world.

A) BANKNOTES IN THE OTTOMAN EMPIRE

1) Kaime

In Ottoman Empire, the first banknotes were put into circulation in Tanzimat Era at a time when many administrative, social and legal reforms were on the agenda. Banknotes were issued mainly to finance the reforms during that period.

The first Ottoman banknotes were issued during the reign of Abdulmecit in 1840 under the name of "Kaime-i Nakdiye-i Mutebere- Paper Money", which were, in a sense, debt certificates or treasury bonds bearing interest rate. Not produced in a printing plant, these banknotes were hand made and stamped by the official seal. Since these banknotes could be easily faked, people's confidence in paper money weakened. Thus, Kaime banknotes were replaced with the printed notes beginning from 1842. Kaime banknotes were printed in various forms and amounts in the Ottoman Empire until 1862.

Bank-ı Osmani - Ottoman Bank, which had been established in 1856 with English capital by a Royal Edict of the King of England, became a state bank as an English-French partnership under the name of Bank-ı Osmanii Şahane Imperial Ottoman Bank in 1863. During the periods when the Ottoman State had to frequently borrow money from the European markets, England and France trusted the Ottoman Bank, which was under their management, rather than the Ottoman State and preferred to conduct their financial relations through the Ottoman Bank.

The Ottoman State granted the privilege of issuing banknotes to the Ottoman Bank for a 30 year-period. It was agreed that, within this period the government would not issue any banknotes by itself and would not allow any other institution to take up this function. In 1863, the Bank issued banknotes for the first time that were convertible to gold on demand and stamped by its own official seal and by the seal of the Ministry of Finance. The bank issued banknotes in various forms and amounts between 1863 and 1914.

Despite the guarantee given to the Ottoman Bank, the Ottoman government issued banknotes in agreement with the Ottoman Bank during the 1876-1877 Ottoman - Russia War -known as 93 War- to finance the war expenditures.

2) Evrak-ı Nakdiye (Cash Documents)

During the First World War, the Imperial Ottoman Bank rejected the demands made by the government for a loan and a new banknote issue.

The conflict was eliminated when the Bank announced that it had given up its privilege of issuing banknotes during the war period. Thus, the Ottoman government issued more than 160 million lira banknotes against gold and German Treasury Bills in seven series in four years starting from 1915. These banknotes were taken over by the Republic of Turkey under the name of "Evrak-ı Nakdiye - Cash Documents".

B - The Republican Period Banknotes

Evrak-ı Nakdiye that were inherited from the Ottoman Empire remained in circulation until the end of 1927, as the Republic was not in a position to issue its own banknotes yet in its early years.

Since banknotes are the symbols of independence and sovereignty of a state, the Turkish Grand National Assembly decided to issue the first Turkish banknotes and approved the law called "Exchange of Present Cash Documents with the New Ones" dated December 30, 1925 and number 701. By this law, the establishment of a committee was envisaged to be formed by the representatives of Ziraat, Osmanlı, İtibar-i Milli, İş, Akhisar, Tütüncüler, Akşehir and some of the other banks operating in Turkey, and under the guidance of the Ministry of Finance to determine the design of banknotes and the changeover of the old notes to the new ones. It was decided to replace Evrak-ı Nakdiye (cash documents) with new banknotes in the same amount and quality.

1) The First Issue (E1) Banknotes

The committee chaired by Abdulhalik Renda, the Minister of Finance decided to issue the First Emission Group banknotes in denomination of 1, 5, 10, 50, 100, 500 and 1.000 Turkish Lira at the end of nine month-work. The production of new banknotes was commissioned to an English printing firm, Thomas De La Rue. These banknotes were printed by intaglio technique on papers with watermark.

As banknotes of this emission group were printed before the Alphabet Revolution on November 1st, 1928, their main text was printed in Arabic letter, whereas denominations were in French.

Being the first banknotes of the Turkish Republic, the First Emission Group banknotes (E1) were put into circulation on December 5th, 1927. Also, Evrak-ı Nakdiye were withdrawn from circulation on December 4th, 1927 and lost their value on September 4th, 1928.

Foundation of the Central Bank of the Republic of Turkey

In the context of determination of the Republican government to grant the privilege of issuing banknotes to a national bank, the Turkish Grand National Assembly approved the establishment of the Central Bank of the Republic of Turkey by law dated June 11, 1930 and number 1715. After the fulfillment of necessary preparations, the Bank started its operations on October 3rd, 1931 and the privilege of issuing banknotes was granted exclusively to the Central Bank.

2) The Second Issue (E2) Banknotes

After the establishment of the Central Bank of the Republic of Turkey, the banknotes, printed before the Alphabet Revolution, were replaced with the new ones printed in Latin alphabet.

The new banknotes, which were prepared in Latin alphabet, ranged in 9 different values and 11 series, consisting of denomination of 50 Kuruş, 1, 21/2, 5, 10, 50, 100, 500 and 1.000 Turkish Lira. Denomination of 50 Kuruş was printed in Germany while the others were in England.

The Second Emission Group (E2), which contains the first issue of the Central Bank of the Republic of Turkey - 5 Turkish Lira denomination, were put into circulation between 1937 - 1944.

This emission group contains both Atatürk and İsmet İnönü (second President of the Republic) portrayed banknotes.

Banknotes that were not be put into circulation during the Second World War

In the second Emission Group (E2), the denominations of 50 Kuruş and 100 Turkish Lira, printed in England and having had İnönü portrait, were damaged on its way to Turkey by a ship attack in the Port of Pireous. Also, the denomination of 50 Turkish Lira could not be put in circulation because of an air raid that damaged the printing plant in London.

3) The Third Issue (E3) Banknotes

The Third Emission Group banknotes, all of which bearing the portrait of İsmet İnönü, were put into circulation between 1942 and 1947 in 7 series and in 6 different values, consisting of denomination of 21/2, 10, 50, 100, 500 and 1000 Turkish Lira. This group of banknotes was printed in England, Germany and the United States of America.

4) The Fourth Issue (E4) Banknotes

The Fourth Emission Group banknotes, which has the least number of denominations and series in the ninth emission groups, were printed in the United States of America in different 2 values, 10 and 100 Turkish Lira, in 3 series. These banknotes, all of which bearing the portrait of İnönü, were put into circulation in 1947 and 1948.

5) The Fifth Issue (E5) Banknotes

The Fifth Emission Group banknotes were printed in 32 series and 7 different values consisting of denominations of 21/2, 5, 10, 50, 100, 500 and 1000 Turkish Lira. They were put into circulation between 1951 and 1971.

Attempts to establish a banknote printing plant in our country were started at the end of 1930's but postponed due to the Second World War. In 1951, works started again, and in 1958 the Banknote Printing Plant was established and started producing banknotes.

Some of the Fifth Emission Group banknotes were printed in England and some were in our Banknote Printing Plant. The denomination of 1.000 Turkish Lira, named by people as "Purple Thousand" is also in this emission group.

The banknotes used to be printed in United States of America, England and Germany before the establishment of Banknote Printing Plant in 1958. The denomination of 100 Turkish Lira in third series of the Fifth Emission Group (E5) is the first banknote that printed in Turkey.

6) The Sixth Issue (E6) Banknotes

The Sixth Emission Group banknotes were issued in 7 different values and 18 series, consisting of denominations of 5, 10, 20, 50, 100, 500 and 1.000 Turkish Lira. They were put into circulation between the years 1966 - 1983. Among these banknotes, the first series of 20 Turkish Lira was printed in England and the others were printed in Turkey.

7) The Seventh Issue (E7) Banknotes

The Seventh Emission Group banknotes were put into circulation in 1979, in 36 series and 15 different values, consisting of denominations of 10, 100, 500, 1.000, 5.000, 10.000, 20.000, 50.000, 100.000, 250.000, 500.000, 1.000.000, 5.000.000, 10.000.000 and 20.000.000 Turkish Lira as of 2002. All of these banknotes were printed in Turkey.

E7 Emission Group banknotes were withdrawn on January 1st, 2006 and will lose their values at the end of their 10-year-redemption periods.

8) The Eighth Issue (E8) Banknotes

According to the Law on the Currency Unit of the Republic of Turkey (Law No: 5083, dated 28.01.2004), in the framework of six zero-dropping operation which was realized for the first time in our country, the eighth emission group were put into circulation on January 1st, 2005, in six different values consisting of denominations 1,5,10,20,50 and 100 New Turkish Lira.
All of these banknotes were printed in Turkey. The Eighth Emission Group banknotes will be withdrawn on January 1st, 2010 and lose their values at the end of their 10-year-redemption periods.



9) The Ninth Issue (E9) Banknotes

According to Article 1 of the Law on the Currency Unit of the Republic of Turkey, numbered 5083, the Council of Ministers was authorized to remove the prefix "New" from the "New Turkish Lira" and from the "New Kurus". The council determined that this change would take effect on January 1, 2009, as published in the Official Gazette on May 5, 2007.

The Ninth Emission Group Turkish Lira banknotes with their renewed designs, systematic size variation and advanced security features have been put into circulation on January 1, 2009, in six different values consisting of denominations 5, 10, 20, 50, 100 and 200 Turkish Lira. The Ninth Emission Group second series 10, 20 and 100 Turkish Lira banknotes were issued on December 24, 2012. The Ninth Emission Group second series 5, 50 and 200 Turkish Lira banknotes were issued on April 8, 2013. Other than the change in dominant color of second series 5 Turkish Lira and change in signatures of 5, 10, 20, 50, 100 and 200 Turkish Lira banknotes, E-9 Emission group second series banknotes are identical to the first series banknotes. E9 Emission Group is composed of two series and six denominations. The Ninth Emission Group second series banknotes are concurrently in circulation with the first series.  

Since the foundation of the Republic, banknotes have been put into circulation in 24 different values, 132 series and in 9 issue groups. All of the banknotes in the first six emission groups and some of the banknotes in the seventh group were withdrawn from circulation at various dates and lost their values at the end of their 10-year redemption periods.

General Directorate of Banknote Printing Plant, which has been producing our banknotes since 1958, is capable of making original composition and plates in contemporary standards that requires a long experience. All of the design, plate making and printing works of denominations of 5, 10, 20, 50, 100 ve 200 Turkish Lira from E9 Emission Group are successfully carried out by its own experienced staff and equipment.

 


Bibliography:

Akyıldız, A. (1996): Osmanlı Finans Sisteminde Dönüm Noktası, Kağıt Para ve Sosyo-Ekonomik Etkileri - Eren Press

Köklü, A. (1947): Türkiye'de Para Meseleleri - Milli Eğitim Press

Tekeli, İ. - İlkin, S. (1997): Para ve Kredi Sisteminin Oluşumunda Bir Aşama Türkiye Cumhuriyet Merkez Bankası - General Directorate of Banknote Printing Plant.