Since the Otoomans introduced banknotes there have been many changes in currency, including changes in monetary units, but never devaluation. After thirty years of economic chaos, we are now in a period of single figure inflation and this process should give Turkish money more respect and stability.
The end of the old Turkish Lira reminds us of the kaime - the first Ottoman banknotes. The US and Europe introduced banknotes in the 1690s, but the Ottomans did not bring in the Kaime until 1840.
Kaime banknotes began circulation in the Tanzimat Period. There was need for cash this period and opportunities to acquire foreign currency were very limited, prompting the production of Ottoman banknotes. In 1840 the first banknotes, called "Kaim-i Nakdiyye-i Mutebere" were put in circulation. Those banknotes, known as "kayma" and "kayme", were in the public domain for many years. Even today, you can find old people who still call money by those names.
Kaimes were bills of debts and treasury bonds rather than money. There was an official seal on the handwritten banknotes, whose value could be anything up to 160 thousand liras. Because they were handwritten, though, counterfeit bills soon began to appear and their value dropped. They then began using printing presses, and new kaime were issued in denominations of 50,100, 250, 500 and 1000 kurus.
After a while, they began to issue a new kaime, the "Army Kaime", to meet the expenditure of the Crimean War. This began inflation as they lost 30 percent of their value in a short time. Measures to protect their value included a loan of 3 million British pounds in 1854 to meet the increasing war expenditures. The tax revenue from Egypt was put as a guarantee for the loan, which has been seen as the first step in losing Egypt from the Empire.
Various kaime were produced for different reasons between 1840 and 1862. The Ottoman Bank, which was formed with British capital in 1856, became a state bank in 1863 and was given the right to print banknotes. The bank borrowed from both the British and the French while they were at war with each other, so it ended up leading Ottoman foreign relations.
A new kaime was needed when the Ottoman-Russia war broke out in 1876 The government had to coin 3 million lira worth of kaime by agreement with the Ottoman Bank. The appearance of counterfeit kaimes and poor progress is the war decreased the value of these kaimes.
With the First World War in 1914, the Ottomans were allied with Germany against Britain and France. The Ottoman Bank was ordered to print banknotes showing the debts borrowed from Germany as a guarantee, but the bank, under the control of British and French shareholders, rejected this demand. Thus the Ottoman administration printed 160 million liras worth of banknotes showing German and treasury bonds as a guarantee. Those banknotes, called "Evrak-i nakdiye", were transferred to the Turkish Republic after the collapse of the Ottoman Empire.
The first Turkish Lira banknotes were put into circulation on December 5, 1927. These superceded the Ottoman "evrak-i nakdiye" with 1, 5, 10, 50, 100, 500 and 1.000 lira denomination notes. Expressions on the banknotes are in Turkish and French because they were coined before the Capital Reform. Evrak-i nakdiyes were taken out of service on September 4, 1928.
After the formation of the Central Bank in 1931, old banknotes with old Turkish script and French were replaced by new banknotes with Turkish written in the Latin alphabet. These banknotes kept their worth until the economic turbulence of the 1970s.
In the first years of the Republic, one TL was worth more than one US dollar; 81 years later, however, 1 dollar is worth nearly 1,500,000 Turkish Lira. Now one dollar will be nearly 1.5 YTL. I hope we don't see so many zeroes again.
October 9, 2004
