With its plains, vineyards and orchards watered by the Yeşilırmak and its tributaries, Amasya has been a city of producers for centuries. Fields of wheat and barley, sericulture built on mulberry groves, and later apples and sugar beet were the principal occupations that bound the villagers of the sanjak to the land. Working the land, however, demanded cash every season: the farmer needed money in hand to buy seed, to acquire an ox or a plough, to pay his taxes and to live until the harvest. For a long time this need was met by private individuals who lent at high interest. The organisation of agricultural credit that began in the second half of the nineteenth century gradually drew the Amasya farmer out of that system and introduced him to institutional credit.

This history passes through several stages. The country funds (memleket sandıkları) founded by Midhat Pasha are regarded as the first example of national banking; in 1883 they were placed under central control as the public benefit funds (menafi sandıkları), and on 15 August 1888 they gave way to the Ziraat Bank (Agricultural Bank). The presence of a bank branch in the sanjak of Amasya can be traced in the provincial yearbooks (salname): the branch that stood in the central district towards the end of the century had, by 1903, spread to every district of the sanjak. In the Republican period the agricultural credit cooperatives, followed by the beet growers' cooperative and the sugar factory at Suluova, created a new order of credit and production in which the Ziraat Bank also took part as partner or lender.

From Moneylender Credit to Institutional Credit

Before the Tanzimat and for a long time after it, the Anatolian villager had no institutional source of credit to turn to. Those who lent money were, besides professional usurers, tradesmen of every kind: merchants selling farm implements, wholesalers, exporters, commission agents, produce brokers and village grocers. Such high-interest private loans were known as usurer's or murabaha credit. The debt was often taken against the crop, and when harvest came the farmer handed his produce over to the creditor without ever seeing its value. The first banks to operate on Ottoman soil were funded by foreign capital and served the financial needs of Istanbul and the great commercial centres; they did not reach the small producer in the provinces.

Midhat Pasha summed up the situation when he explained why the funds were needed: farmers were obliged to turn to usurers for the loans they required, and because of heavy and exorbitant interest the owners of the land could not obtain the value of their crops; yet the country had not yet accumulated enough capital to found banks that would lend at light and moderate interest as in Europe, and so a remedy had to be found. The remedy the Pasha devised was a small credit fund operating at a local level, whose capital the villagers built up through their own labour. Some researchers see the funds less as a modern bank than as a cooperative body resting on the mutual aid the villagers called imece, and they trace the beginnings of Turkish cooperativism to these funds.

The Founding and Working of the Country Funds

The first country fund opened on 20 November 1863 in the town of Pirot, in the eyalet of Niş where Midhat Pasha was governor. A year later, when the eyalets of Niş, Silistra and Vidin were merged into the Danube vilayet (Tuna vilayeti) with Midhat Pasha as its governor, the funds multiplied throughout the province; for this reason some sources attribute the scheme to his Danube governorship. At first the funds drew their capital from the communal cultivation, by imece, of state lands in the villages that were nobody's private property. These lands were sown by Muslim villagers on Fridays and by Christian villagers on Sundays with their own implements, and the crop was sold in the district centre and its price placed in the fund. When it became clear over time that this joint labour weighed on poor villagers like corvée, the method was changed, and capital began to be collected evenly by taking roughly fifteen kilograms of wheat from each farmer for every pair of oxen he owned.

The name sandık, "chest", comes from the wooden coffers in which the money and ledgers were kept. The daybook recording daily transactions, the general ledger holding all the accounts, and the cash were stored in these chests; later, for reasons of security, crude iron strongboxes made by local craftsmen came into use. The affairs of each fund were run by four trustees elected by the participating villagers, two of them Muslim and two Christian. To borrow from the fund, which was brought out to the town market once a week, a man had to farm in a village belonging to the district, prove his need with a certificate from the council of elders, and undertake to use the money for agricultural work alone. A farmer who met these conditions could borrow up to 2,000 kuruş at one per cent a month, twelve per cent a year.

One third of the interest income was added to the fund's capital, while the remaining two thirds were left to the council of elders to be spent on common needs of the locality such as schools, roads, bridges and fountains. In this way the funds contributed not only credit but also public works to the provinces. After the scheme proved successful in the Danube vilayet, the Regulation on Country Funds was issued on 19 July 1867. Its first article laid down that the income from the sale of grain which the villagers had set aside and prepared would be placed in the funds at the district centres, and that this money would count as the property of the villagers and their capital in the fund. The funds of Ruse, Eski Cuma and Nicosia were among the earliest; with the regulation, funds began operating in every part of the empire.

The Public Benefit Funds and the Benefit Share

The funds ran on these lines for twenty years, but the shortage of capital and the flaws in practice grew steadily more evident. It was found that a considerable part of the funds' money had been spent on matters unrelated to agriculture and that abuses had occurred in some places. The government decided to remedy these failings by bringing the funds under central administration, and in 1883 it established the public benefit funds for the same purpose. Their administration was reorganised, record-keeping and accounting were put on a more orderly footing, and the funds were placed under the direct supervision of the central government. In this period the interest on loans fell to nine per cent a year.

To make the capital regular and sound, a surcharge called the "benefit share contribution" (menafi hisse-i ianesi) was added to the ten per cent tithe (aşar) taken from producers. Some studies describe this surcharge as a one per cent addition to the tithe, others as a benefit share amounting to ten per cent of the tithe; both descriptions point to an additional single point taken from the farmer's crop. The share continued under the Ziraat Bank and became the most important source of its capital. The fact that the yearbooks list a "benefit commission" (menafi komisyonu) among the official bodies at the centre of the sanjak of Amasya shows that this local organisation was also set up in the sanjak.

It became apparent, however, that funds which were relatively independent of one another, each serving its own district, still fell short of meeting the farmers' need for credit. The idea of reconstituting the existing organisation as a bank matured. A memorandum submitted by Grand Vizier Kâmil Pasha to the Council of Ministers and to Abdülhamid II stated that the public benefit funds were no longer fulfilling their functions and proposed that they be abolished and a Ziraat Bank founded in their place.

The Founding of the Ziraat Bank

With the sultan's approval of the memorandum, the Ziraat Bank was formally established on 15 August 1888 under a special regulation of forty-two articles. The public benefit funds then in operation were converted into branches of the bank, the funds' capital and the benefit shares collected up to that day were transferred to it, and future shares were assigned to the bank's capital. The founding regulation stated plainly that no cash assistance would be given to any person or enterprise outside agriculture. No second agricultural credit institution that could serve as a direct alternative to the bank emerged until 1929; together with the Istanbul Savings Fund (Emniyet Sandığı), the Ziraat Bank remained one of the two nationally owned credit institutions of the pre-Republican era.

The bank lent to farmers at six per cent interest together with a one per cent service charge. This rate was below the twelve per cent of the country funds and the nine per cent of the public benefit funds, and stood at between a third and a quarter of the interest charged by bankers and usurers. In 1888 the ceiling on the loan a branch could grant to a single farmer was set at 150 lira. At first, loans with terms longer than a year could be granted only with the approval of headquarters; a regulation of 1890 allowed the provincial branches to lend for terms of up to ten years without consulting the centre, while in district branches the term was limited to three years. The bank paid four per cent interest on deposits.

The security for credit was largely land. The farmer first applied to the village council of elders, documenting that the loan would be used only for agricultural work, the ownership of the land he would pledge, and his status as a cultivator. The bank assessed the true value of the land, after which the farmer signed a bond setting out the amount of the debt, its term and the conditions of enforcement, and the bond was certified by a notary or by the bank. For the first six years only mortgage loans were granted; after 1895 joint personal security and joint and several guarantees were also accepted, but more than ninety per cent of loans still rested on mortgages of land. The land of a farmer who could not pay his debt could be seized; in 1908 the land of 13,073 people was seized for sale, yet the land of only 460 of them was actually sold, 753 who restructured their debts had their land returned, and the cases of the rest were carried over to the following year.

The bank's final statement of accounts covering its first twenty years gives an idea of how widely credit reached into the provinces. Between 1888 and 1908 the bank extended loans exceeding one billion three hundred million kuruş; at the end of 1908, 964,497 farmers appeared on its books as debtors. According to a calculation by Donald Quataert based on German archival documents, about one per cent of Anatolian farmers benefited each year from these low-interest and comparatively long-term loans. Modest as the figure may seem, it shows that a system was spreading through the provinces in which the villager could for the first time borrow under state guarantee, against a written bond and at a fixed rate of interest.

Bank Branches in the Sanjak of Amasya

In the years when the Ziraat Bank was founded, Amasya was a sanjak of the vilayet of Sivas; its districts were central Amasya, Merzifon, Maden-i Sim (Gümüşhacıköy), Lâdik, Osmancık, Köprü (Vezirköprü), Mecidözü and Havza. Sabit Genç, who has worked on the Sivas provincial yearbooks, lists the Ziraat Bank branch among the official bodies at the centre of the sanjak, together with the benefit commission, the chamber of agriculture and commerce, and the offices of the Ottoman Public Debt Administration (Düyûn-ı Umûmiye) and the tobacco Régie. The bank branch is not mentioned in the yearbook of 1884; in 1891 there was a bank branch only in the central district of Amasya, and by 1903 Ziraat Bank branches had been opened in every district of the sanjak. The researcher himself reminds the reader that yearbook data may at times be incomplete or inaccurate; even so, the overall picture clearly shows that the bank first organised itself at the centre of the sanjak and within ten years spread to the district towns.

This expansion matches the development across the empire. The bank's branches and funds, numbering 331 in 1888, reached 466 of the 666 districts by 1908, rising to 482 in 1909 and 485 in 1911. Each branch was run by a salaried director and deputy director appointed by headquarters, and its board included two members from the municipality and the chamber of commerce and agriculture and one of the local agricultural inspectors. District branches reported to the branches in the provincial capital, while branches of greater economic weight could report directly to Istanbul. The fact that the yearbooks also record a chamber of agriculture and commerce in Amasya suggests that local representatives to sit on the branch board were present in the city as well.

The ledgers kept at the branches did not merely record transactions; they were also used to prevent bank officials from lending off the books at high interest. Inspectors examined these ledgers in unannounced audits and compared the loans granted with the branch's cash position, and it is recorded that a special court was even set up to deal with abuses. Branches and funds with surplus cash could lend at four per cent to branches whose collections had faltered because of drought or natural disaster, and the borrowing branch lent this money on to farmers at six per cent. This internal balance meant that in years of poor harvest credit was not cut off entirely in a sanjak like Amasya that depended wholly on agriculture. The largest source of the bank's capital was the benefit share collected from farmers along with the tithe; in other words, the Amasya villager was building up the capital of his own credit institution through the tax he paid.

During the Ottoman period the Ziraat Bank did more than lend. Shares of its profits were set aside for agricultural schools, model farms, and the salaries of agricultural teachers and inspectors; the accounts for 1908 include an allocation for the model farm at Sivas. It has been argued that, despite the prohibition in its founding regulation, the bank in time channelled resources into non-agricultural purposes such as roads, railways and the financing of the treasury, that the law of 1916 provided the legal basis for these practices, and that the bank functioned less as an agricultural credit institution than as a state bank.

The War Years and the Law of 1916

The territorial losses that began with the Tripolitanian and Balkan wars also shrank the bank's branch network. While the First World War was under way, a new Ziraat Bank Law came into force on 20 March 1916 with the approval of the sultan, the grand vizier, the acting minister of finance and the minister of commerce and agriculture. Its first article stated that the bank had been founded to assist farmers and to help agriculture develop. The bank could now issue bonds, become a partner in agricultural enterprises, procure seed, livestock and farm implements and supply them to farmers for cash or on credit, and if necessary distribute to farmers land it had purchased. With this law the scope of a bank that had lent only to farmers from 1888 to 1916 was widened.

During the Turkish War of Independence, Ziraat Bank branches and funds made cash advances against bonds to the Kuva-yı Milliye (National Forces) detachments, to the provincial administrations and to military units. The Regulation on Agricultural Obligation (Mükellefiyet-i Ziraiye Nizamnamesi), issued on the instructions of Mustafa Kemal Pasha, set out the principles of the aid the bank would give to the families of farmer-soldiers at the front, and also entrusted the bank with distributing the farm implements and seed held at the customs. After the war, in 1924, when malaria had become an epidemic, quinine too was distributed through Ziraat Bank branches, which kept registers of its issue. Thus the bank branch became, beyond credit, one of the arms through which the state reached the villager in the country town.

Agricultural Credit in the Early Republic

In 1923 the number of branches and funds was raised from 110 to 300, and the bank was provided with capital of nearly two million lira. Under the budget law adopted in March 1924 the bank was turned into a joint-stock company; the articles of association adopted in July 1926 also authorised it to grant commercial loans. Between 1924 and 1928 the number of branches fell from 320 to 256, showing that this was a period of recovery and reorganisation. Under Law No. 3202 of 1937 the Ziraat Bank was given the status of a state economic enterprise, its funds were renamed "agencies" (acente), and the Istanbul Savings Fund was absorbed into the bank. During the Depression of 1929 and the years of the Second World War the bank distributed money boxes to encourage saving and supported courses teaching farmers new agricultural techniques.

Within the first decade of the Republic it had also become clear that a single bank could not meet the villagers' short-term credit needs on its own. The Regulation on Production, Purchase and Sale Partnership Cooperatives issued in 1923 provided for the Ziraat Bank to lend to cooperatives. The Law on Agricultural Credit Unions (İtibari Zirai Birlikler Kanunu) of 21 April 1924 aimed to do away with moneylenders by creating unions engaged in credit and in buying and selling. The Agricultural Credit Cooperatives Law was passed on 5 June 1929; then, on 2 November 1935, Law No. 2836 on Agricultural Credit Cooperatives and Law No. 2834 on Agricultural Sales Cooperatives were enacted. At the end of 1935 there were 668 agricultural credit cooperatives in the country.

The Agricultural Credit Cooperatives

Law No. 2836 enabled agricultural credit cooperatives to extend credit to their members in kind and in cash, to buy tools, equipment and consumer goods wholesale and distribute them, to acquire agricultural machinery and provide services to their members, and to engage in the storage and marketing of produce. Members' liability in the cooperatives was unlimited, meaning that members stood surety for one another's debts. The cooperatives' resources came largely from the Ziraat Bank, and until 1972 they operated as dependants of the bank. The aim of this arrangement was to free the small farmer from the moneylender even in villages without a bank branch.

After the Second World War the number of cooperatives rose rapidly. Agricultural credit cooperatives, numbering 879 at the end of 1949, had reached 1,356 by the end of 1954, and their membership grew from 411,204 to 773,739. The credit extended by the Ziraat Bank to these cooperatives, 88 million lira in 1949, had reached 278 million lira by the end of 1955. In the following decades, thanks to the bank's cheap credit, tractors, combine harvesters, chemical fertiliser, selected seed and pest control reached the villages; the bank also led the way when a Turkish-American company in which it was a partner produced the first domestically built tractor. The bank also granted loans for land improvement, irrigation and fruit growing; the credits given to orchards helped to diversify exports. Amasya's fruit growers, above all those of the Misket apple, together with its grain and beet cultivators, carried on their production within this credit system.

With Law No. 1581 on Agricultural Credit Cooperatives and Unions, enacted in 1972, the cooperatives began to be gathered under regional unions and a central union; the regional unions were founded in 1975 and 1976 and the central union in 1977, and the agricultural credit organisation separated from the Ziraat Bank to become an independent farmers' body. Thus the two branches that had grown out of Midhat Pasha's funds, the bank and the cooperative, went their separate ways. Today the agricultural credit cooperatives continue to supply their members with fertiliser, feed, seed and similar inputs as well as credit.

The Beet Growers' Cooperative and the Amasya Sugar Factory

The field in which agricultural credit bore its most tangible fruit in Amasya was sugar beet. When it was decided in 1951 to expand Turkey's sugar industry, it was judged better for beet growers to organise themselves into cooperatives and take part in the capital collectively rather than become shareholders in the factory one by one. Amasya's beet producers carried out one of the first initiatives of this kind and in 1951 founded the Amasya Beet Growers' Cooperative. Amasya Şeker Fabrikası A.Ş. (the Amasya Sugar Factory company) was founded on 12 August 1952 with a capital of ten million lira divided into ten thousand shares of a thousand lira each, as a partnership of the Amasya and Turhal beet growers' cooperatives together with Türkiye İş Bankası, the Ziraat Bank and Türkiye Şeker Fabrikaları A.Ş. In this venture the Ziraat Bank was not simply the institution that lent to the farmer; it was among the factory's founding partners.

The factory's foundation stone was laid at Suluova on 13 September 1953 and it began operating on 11 September 1954. Initially processing 1,890 tonnes of beet a day, the factory had its capacity raised to 2,400 tonnes in 1965 and 4,800 tonnes in 1968. The cooperative's share at the founding and its share today are given at different rates in different sources; according to local records, the cooperative's holding on behalf of the farmers was 23 per cent at the outset and later rose to 71.5 per cent. All eleven sugar factories founded between 1953 and 1956 were established as private joint-stock companies, but the economic circumstances of the producers at the time allowed cooperatives to join the capital only in Amasya, Adapazarı, Kayseri, Konya and Kütahya. Managed by Türkiye Şeker Fabrikaları A.Ş. until 1991, the Amasya Sugar Factory became in that year the first sugar factory to take over its own management entirely.

After the factory was founded, beet growing came to rest on contract farming. Sowing plans, sowing, tending and lifting were carried out by the factory's agricultural service through its regional organisation, and the cooperative in turn supplied its members with inputs through its sales stores. This arrangement was a new form of finance resting on contracts and the assurance of delivery, and it tied the producer to a regular market and to the money economy. Some thirty thousand farmers are said to grow beet in about four hundred villages. The cooperative today has ten sales stores: in the centre, Suluova, Kayabaşı, Göynücek, Merzifon, Gümüşhacıköy and Taşova, as well as in Vezirköprü and Havza in Samsun province and Erbaa in Tokat province. Within Pankobirlik, the umbrella union founded by the beet cooperatives in 1972, Amasya stands as one of the five cooperative-owned sugar factories.

Its Contribution to the City's Economy

The spread of institutional credit changed the economic life of Amasya step by step. The money economy reached the villages, a written bond and a fixed rate of interest replaced debt taken against the crop, and the farmer could take his produce to market without being forced to hand it to a creditor at harvest time. Together with the founding of the Suluova sugar factory, the arrival of the railway and the mechanisation of agriculture, agricultural credit played a central role in the region's development. By collecting deposits, distributing money boxes and channelling small savings back into production as credit, the bank also helped the habit of saving and investment take root.

The history of agricultural credit in Amasya traces, on a local scale, the path of a mutual aid fund that began with a wooden chest at Pirot, became a public benefit fund, then a bank on an imperial scale, and later extended to cooperatives and a farmer-owned sugar factory. From the benefit commission at the centre of the sanjak to the bank branches that had spread to every district by 1903, and from the beet growers' cooperative founded in 1951 to the factory opened in 1954, each stage supported the city's agricultural identity with new institutions and tied the Amasya farmer to the modern economy.

Chronology

1863: Midhat Pasha, as governor of Niş, founded the first country fund in the town of Pirot (20 November).

1867: The Regulation on Country Funds came into force (19 July); the funds spread across the empire.

1883: The country funds were placed under central supervision as the public benefit funds; the benefit share was added to the tithe.

1884: The Sivas provincial yearbook recorded no bank branch in the sanjak of Amasya.

1888: The Ziraat Bank was founded under a regulation of forty-two articles (15 August); the public benefit funds were converted into bank branches.

1890: Provincial branches were authorised to grant loans with terms of up to ten years.

1891: In the sanjak of Amasya there was a bank branch only in the central district.

1903: Ziraat Bank branches had been opened in every district of the sanjak of Amasya.

1908: The bank had a branch or fund in 466 of the 666 districts; 964,497 farmers were in its debt.

1916: The Ziraat Bank Law came into force (20 March).

1923: The number of branches and funds was raised from 110 to 300.

1924: The Ziraat Bank was turned into a joint-stock company; the Law on Agricultural Credit Unions was enacted.

1929: The Agricultural Credit Cooperatives Law was passed.

1935: Law No. 2836 on Agricultural Credit Cooperatives was enacted (2 November).

1937: Under Law No. 3202 the bank became a state economic enterprise.

1951: The Amasya Beet Growers' Cooperative was founded.

1952: Amasya Şeker Fabrikası A.Ş., with the Ziraat Bank among its founding partners, was established (12 August).

1954: The sugar factory at Suluova began operating (11 September).

1972: Law No. 1581 on Agricultural Credit Cooperatives and Unions was enacted; Pankobirlik was founded.

1991: The Amasya Sugar Factory became the first sugar factory to take over its own management entirely.

Bibliography

Primary sources

  • Amasya Chamber of Commerce and Industry, "Amasya Tarihi" (History of Amasya).

Academic studies

  • Emine Kaya, Esra Kadanalı, "Geçmişten Günümüze Lider Tarımsal Kredi Kuruluşu: T.C. Ziraat Bankası", Muhasebe ve Finans Tarihi Araştırmaları Dergisi, 19 (2020), pp. 131-152. ziraatbank.com.tr
  • Ömer Yazan, "Ziraat Bankası'nın İlk Yirmi Yılına Ait Bazı Kayıtların İncelenmesi", AİBÜ Sosyal Bilimler Enstitüsü Dergisi, 17/4 (2017), pp. 221-237.
  • Sabit Genç, "Amasya Sancağının İdari Durumu ve Nüfus Yapısı (1880-1915)", Kırıkkale Üniversitesi Sosyal Bilimler Dergisi, 11/1 (2021), pp. 57-80.
  • "Midhat Paşa", TDV İslâm Ansiklopedisi (Turkish Religious Foundation Encyclopaedia of Islam).

Official sources

  • Ministry of Trade of the Republic of Türkiye, "Kooperatifçiliğin Tarihçesi" (History of Cooperativism).

Other sources

  • T.C. Ziraat Bankası, "Bankamız Tarihçesi" (History of the Bank).
  • Şeyma Dereci, "Osmanlı Döneminde Ziraat Bankası'nın Tarım Dışı Uygulamaları", Vakanüvis, 8/1 (2023), pp. 415-458.
  • Agricultural Credit Cooperatives of Türkiye, "Köklü Geçmişimiz" (Our Long History).
  • Amasya Beet Growers' Cooperative, "Tarihçe" (History).
  • Suluova Chamber of Commerce and Industry, "Şeker Fabrikası" (The Sugar Factory).
  • Wikipedia (Turkish), "Ziraat Bankası" and "Türkiye Tarım Kredi Kooperatifleri" (supplementary source).

Online sources