514

 DIPLOMACY AND BUSINESS IN CAPABLE
HANDS: THE AMERICAN OFFICIALS WHO
SHAPED U.S.-TURKEY ECONOMIC AND


To Büşra,
DIPLOMACY AND BUSINESS IN CAPABLE HANDS: THE
AMERICAN OFFICIALS WHO SHAPED U.S.-TURKEY
ECONOMIC AND COMMERCIAL RELATIONS IN THE EARLY
COLD WAR PERIOD
The Graduate School of Economics and Social Sciences
ofde

Turkey-U.S. relations, which started to deepen at the beginning of the Cold
War, turned into a political and military partnership with Turkey's joining NATO in
1952. As another significant pillar of this partnership, an integration in economic and
commercial relations between the two countries can be mentioned. Turkey's
inclusion in the Marshall Plan announced in 1947 not only increased American
goods and services entering the Turkish market. At the same time, concepts such as
free trade and privatization, which have an important place in the American
economic model, have been adopted by Turkish decision-makers, and new laws
encouraging foreign investment have been enacted in these years. The American
political actors and economic consultants working in Turkey during this period
played key roles in such changes. It is seen that high-ranking multinational company
executives and academics from various branches of the American business world
have been appointed to Turkey with titles such as ambassador and economic
consultant representing the U.S. administrations. These actors, benefiting from their
business orientation and political titles, significantly influenced the Turkish decisionmakers
and have helped many American multinational companies to enter various
markets and business areas of Turkey. This thesis aims to provide a comprehensive
reading of the commercial and economic structure shaped between Turkey and the
U.S. in this period through these people. Based on the personal memories of
American political actors and primary sources such as company, state, and
newspaper archives, this study aims to contribute both to the literature on Turkey-
U.S. relations in the early Cold War period and to concepts such as business
diplomacy and business diplomacy that are becoming more common nowadays.
Keywords: Business, commerce, diplomacy, multinational corporations, the 1950s,
Turkey-U.S. Relations,
IV
ÖZET
Diplomasi ve İş Emin Ellerde: Erken Soğuk Savaş Döneminde ABD-Türkiye
Ekonomik ve Ticari İlişkilerini Şekillendiren Amerikalı Yetkililer

Soğuk Savaş başlarında derinleşen Türkiye-ABD ilişkileri, Türkiye’nin 1952
yılında NATO’ya katılması ile siyasi ve askeri bir ortaklığa dönüşmüştür. Bu
ortaklığın diğer bir ayağı olan ekonomik ve ticari ilişkilerde de iki ülke arasında bir
entegrasyondan söz edilebilir. Türkiye’nin 1947’de ilan edilen Marshall Yardımı
programına dahil olması Türkiye pazarına giren Amerikan mallarını ve hizmetlerini
artırmakla kalmamıştır. Aynı zamanda Amerikan ekonomik modeli içerisinde önemli
bir yere sahip olan serbest ticaret ve özelleştirme gibi kavramlar Türk karar vericiler
tarafından da benimsenmeye başlanmış, bu yıllarda yabancı yatırımı teşvik eden
önemli kanunlar çıkarılmıştır. Bu dönemde Türkiye’de görev yapan Amerikalı siyasi
aktörlerin ve iktisat danışmanlarının bu değişimde önemli bir rol aldığı
söylenmelidir. Amerikan iş dünyasının çeşitli kollarından gelen yüksek rütbeli
çokuluslu şirket yöneticilerin ve akademisyenlerin Türkiye’ye, büyükelçi ve ABD
hükümetini temsil eden ekonomik danışman gibi unvanlarla, atandığı görülmektedir.
Bu aktörler, iş dünyası geçmişi tecrübelerinden ve siyasi unvanlarından da
faydalanarak, Türk karar vericiler üzerinde önemli bir nüfuz oluşturmuş, birçok
Amerikalı çokuluslu şirketin Türkiye’nin çeşitli pazarlarına ve iş alanlarına giriş
yapmalarına yardımcı olmuşlardır. Bu tez çalışması, bu dönemde Türkiye-ABD
arasında şekillenen ticari ve ekonomik yapıyı bu kişiler üzerinden okumayı
hedeflemektedir. Bu kişilerin kişisel hatıratları ve şirket, devlet ve gazete arşivleri
gibi birincil kaynaklara dayanarak oluşturulan bu çalışmanın hem erken Soğuk Savaş
dönemindeki Türkiye ve ABD ilişkileri literatürüne hem de günümüzde daha da
yaygınlaşan ticari diplomasi ve iş diplomasisi gibi kavramlara katkıda bulunması
amaçlanmaktadır.
Anahtar Kelimeler: 1950ler, çokuluslu şirketler, diplomasi, iş dünyası, ticaret,
Türkiye-ABD ilişkileri
V
ACKNOWLEDGEMENTS
When I started the Ph.D. program, I knew that writing a thesis would be a long and
difficult road. Today I came to the end of this road and seeing that both of my
expectations came true made me smile. This process was very difficult for me
because writing a thesis was not the only thing I tried to do. In fact, I realized that
reading for hours was the simplest task. It was quite enjoyable to go on long trips to
find some archival materials, and even to spend time in towns in the middle of
nowhere, among documents that had never seen the light of day. Writing, learning,
and developing satisfied me. I got support from everyone I talked about my project. I
had mentors, they always guided me, and we corrected my deficiencies together.
They mentored most of the articles and the thesis I wrote in this process. Therefore,
hard work never challenged me; it was the distance between me and my loved ones,
diseases, and healing… Thanks to the delay in my thesis writing process, I was able
to experience many things. I found myself doing interesting jobs and working with
amazing people. I learned to be patient with things that I could not control. I have
accepted that plans and schedules can be eased and that things do not always go well.
It has been hard; it has been long.
As the process was long and difficult, I have many valuable people to thank. I would
like to thank my friends in Antalya, Egemen Alkan, Sedat Çiçek, Mahperi Uluyol
and Ayça Özen for their unending support during this process. The academic advice
and assistance of Hüseyin Gürkan, Onursal Bağırgan, and Oğuz Çetin were
invaluable during my thesis writing process. Özlü Aran's support gave me strength
when I did not believe in myself. Mert Öztürk, Abdürrahim Özer, Arda Akıncı, and
Turaç Hakalmaz made my time at Bilkent University even better. Tarık Tansu Yiğit
was not only a close friend but also a great mentor for me, with whom I worked in
the same field. So is Ahmet İlker Baş. Thank you to each and every one of them.
During this period, I worked in important institutions. I would like to thank İhsan
Doğramacı Bilkent University, Illinois State University, and TÜBİTAK for their
financial support in my research. Moreover, I had the opportunity to work with very
valuable people, I learned a lot from them on behalf of professionalism, personality,
and teaching. I would like to thank Gülşah Aykaç, the co-author of the article we
VI
worked with, for enduring my endless requests. I would like to thank Leslie Demir
for the excellent read proofing of all my articles and thesis. I am indebted to my
professors Edward Kohn, Ross Kennedy, Andrew Hartman, and Antonis
Anastasopoulos, who opened my mind while working on historiography. I would like
to thank Alan Lessoff, whom I admire not only for his intellectual background but
also for his wonderful personality and teaching, for being a very good mentor to me.
I would like to thank my boss, Eliza Gheorghe, with whom I greatly enjoyed
working and whose professionalism I exemplify. I would like to thank my committee
members, Owen Miller and Sam Hirst, for their feedback during the committee
meetings, with whom I was able to construct my thesis and put it on track. I would
also like to thank Melike Ünal and Mustafa Çağatay Aslan, who took the time to
participate and contributed to my jury during the term. I would like to thank our
Department Chair, Mehmet Kalpaklı, for his support and belief in me throughout my
ten-year student life. Finally, I would like to thank my advisor, Kenneth Weisbrode,
whom I see as an elder brother/mentor. I am very happy that I did not fail the trust of
the person whom I was proud to be his advice student for ten years.
Finally, I would like to thank my family. My mother Şükran İplikçi and my father
Mehmet İplikçi never stopped believing in me. Both became my first teachers. They
made me love reading, studying, and the teaching profession. May this day be a gift
to them when I put an end to my education life that I started at the kindergarten
where they also worked at the age of four. I thank my cat, İsmail, for being perfect
social support by purring me on my lap. I reserved the biggest of thanks to my life
partner, my best friend, and my wife Büşra İplikçi. I could write long paragraphs for
her; I could thank her throughout these paragraphs. Instead, when I close my eyes
and think about these seven years of work, I see that there is not a single moment I
had without her. Büşra, if it weren't for the love you show, your dedication, your
effort, your support, and your advice, this thesis wouldn't have finished if you weren't
always by my side. You are the architect of this thesis.
Remembering the past, I am proud of myself. I did not think that writing these lines
at the end of this adventure would make me so happy. It's been a hell of a ride; now it
is time to move on to the next chapter of my life.
VII
TABLE OF CONTENTS
ABSTRACT………………………………………………………………………………...III
ÖZET……………………………………………………………………………………......IV
ACKNOWLEDGEMENT………………………………………………………………….V
TABLE OF CONTENTS ................................................................................................... VII
CHAPTER I ........................................................................................................................... 1
1.1. Literature Review ..................................................................................................... 13
1.2. Structural Organization ........................................................................................... 28
1.3. Methodology .............................................................................................................. 33
CHAPTER II ........................................................................................................................ 34
2.1. Turkey En Route to American Influence in the Post-WWII Period .................... 34
2.2. American Goals in Turkey in the Post-WWII Period ........................................... 42
2.3. American Business-Oriented Officials Arrive in Turkey ...................................... 50
2.4. The Earlier Representation of the Marshall Plan, 1947-1949 ............................... 56
2.5. Americans Convince the RPP Leaders ................................................................... 65
2.6. The Barker Mission: American Business Seeks for Opportunities and a New
Market ............................................................................................................................... 72
2.7. The RPP Enacts a New Foreign Investment Bill Before the Elections ................. 79
2.8. Results ........................................................................................................................ 83
CHAPTER III ...................................................................................................................... 89
3.1. General Outlook of Turkey in the Transition Under the DP Government ......... 90
3.2. The Korean War and Its Reflections on Business .................................................. 96
3.3. A Milestone in Turkey’s Economic Transformation: The Privatization Law of
1951 ................................................................................................................................. 104
3.4. Initial Results of the New Law: Hilton, GE, and Squibb & Sons Projects ........ 108
3.5. New Challenges to Overcome in Business Promotion ......................................... 117
3.6. Adding a “Commercial Diplomat” to the Mix: George C. McGhee’s Arrival .. 123
3.7. Results ...................................................................................................................... 134
CHAPTER IV..................................................................................................................... 137
4.1. Concrete Steps to Privatizing the Oil and Mining Industries ............................. 137
VIII
4.2. The Arrival of “Mr. Free Enterprise” in Turkey: Clarence B. Randall ............ 151
4.3. Consummation of the Honeymoon: The Enactment of Improved Privatization
and Petroleum Laws in 1954 ......................................................................................... 161
4.4. Better Incentives, More Investments: The Golden Years of American Business in
Turkey (1954-1955) ........................................................................................................ 170
4.6. Results ...................................................................................................................... 180
CHAPTER V ...................................................................................................................... 183
5.1. Hidden Concerns of the Honeymoon Period ........................................................ 183
5.2. Changing Economic Priorities: American Investments Lose Pace in the Turkish
Market ............................................................................................................................. 188
5.3. Efforts to Reattract American Business While Restoring the Economy ............ 200
5.4. Revival of American Business Under the Third DP Government ...................... 210
5.5. Results ...................................................................................................................... 219
CHAPTER VI..................................................................................................................... 223
BIBLIOGRAPHY .............................................................................................................. 229
Primary Sources ............................................................................................................. 229
Secondary Sources ......................................................................................................... 234
APPENDICES .................................................................................................................... 242
Appendix I: Turkey’s Import and Export Rates in the Late 1940s and 1950s ................. 242
Appendix II: Economic Cooperation Agreement Between the United States of America
and the Republic of Turkey .............................................................................................. 243
Appendix III: “Yabancı Sermayeyi Teşvik Kanunu” (“Law for the Encouragement of
Foreign Investment”) Enacted on January 18, 1954 ........................................................ 256
Appendix IV: Effective Foreign/Total Tax Rates for Locally Incorporated Subsidiaries of
U.S. Corporations............................................................................................................. 259
Appendix V: Countries With Which ICA Investment Guaranty Agreements Were in
Force, December 31, 1958 ............................................................................................... 260
Appendix VI: List of Foreign Investors by 1958 ............................................................. 261
Appendix VII: List of U.S. Companies Operating in Turkey by 1958 ............................ 264
Appendix VIII: Member Firms ........................................................................................ 265
Appendix IX: An Advertisement Published in the Wall Street Journal about Minneapolis-
Moline’s Operations in Turkey ........................................................................................ 267
Appendix X: List of Guests who Attended the Meeting with Menderes in His Trip to the
U.S. .................................................................................................................................. 268
Appendix XI: List of American MNCs Investing in Turkey Between 1950 and 1960 ... 269
1
CHAPTER I
INTRODUCTION
“Several months ago your government requested the International Bank to send a
mission of this kind to Turkey. The Bank agreed to do so and spent several weeks of
careful work in choosing men to constitute this mission. In general, those men are
not members of the Bank staff. Rather, they are recognized experts and specialists
from business, professional and academic fields. They have no selfish business or
political interests to serve; they are here solely to develop and recommend a
program which will be most advantageous to Turkey.”
James M. Barker1
My father was born to a poor farming family in Denizli, a province of southwestern
Anatolia, in 1948. “I hated working on the farm,” he always grumbles when he sees an old
picture or anything else to remind him of his days in that small village. He was probably
1 James M. Barker, “Statement of James M. Barker, Chief of the Economic Mission to Turkey, on
Arrival in Turkey,” Middle East Missions, 1946-1952, Turkey, 1948-1952, Box 59, Folder 1284, May
8, 1950. James M. Barker Papers, The Newberry Library, Chicago (hereafter cited as Barker Papers).
2
not the only one who had longed for a better life in that “wasteland,” where he witnessed
financial inequality in the form of a few wealthy landowners who had the privilege of
plowing their fields with Massey-Ferguson tractors while his own family still relied on a
wooden plow pulled by an ox, just as his ancestors had done for centuries. The early
second half of the twentieth century was not different from the previous one for the poor.
My father worked his hardest in school to escape from poverty. As a reward for his
efforts, his parents sent him to the middle school in Acıpayam, the nearest town. He
remembers that the town had a limited social life, but it was still more colorful than the
village with bakeries, markets, electrified streets, and a small public cinema. The
townspeople were fortunate to have access to imported consumer goods, such as
Westinghouse refrigerators and General Electric radios. He still enjoys talking about his
Acıpayam days, which made him the man he is today. With a sense of nostalgia for
memories that are already fading, he constantly repeats himself without recognizing that
he is telling new versions of the same old stories. However, I always listened to his tales
without any interruptions until last year, when I asked a specific question to verify a piece
of information that I had come across in James M. Barker’s personal papers.
James M. Barker was an American banker and the vice-president of Sears, Roebuck and
Company. He was also a well-known figure in Turkey due to his visit in 1950 on behalf of
the World Bank. The purpose of that visit was to report on the general economic outlook
of Turkey, make recommendations on prospective investment areas, and introduce the
American and Turkish business circles to each other.2 Barker, who acquired reliable
2 Türkiye Cumhuriyeti Cumhurbaşkanlığı Devlet Arşivleri Başkanlığı, Başkanlık Cumhuriyet Arşivi
(Presidency of the Republic of Turkey Directorate of State Archives; hereafter DSA), “Barker Misyon
Raporu” (Barker Mission Report), 134-873-8, August 21, 1951.
3
knowledge about the Turkish market, business operations, and economy, conducted a
series of field trips and collected datasets about resources, gaps, and opportunities. In one
of the field reports about natural resources, Barker noted the promising manganese
deposits around Acıpayam.3 This report was the timeless bridge that brought my father,
me, and Mr. Barker together in 2020.
“Dad, what about the manganese mines of Acıpayam? Do you know anything about
that?” I asked. He mentioned one of his friends whom I had never heard of before.
The boy was the mines manager’s son, and the manager’s driver would pick up my
father and his friend in a cool American jeep, probably a Willys-Overland model.
They visited the manager in his small office a hundred meters away from the mining
area, where American machinery worked incessantly. He had meatball sandwiches
there. All of these experiences were huge privileges for a poor village boy. He was
like an old-fashioned storyteller for some time, and I was the enthusiastic listener
until he stopped abruptly. He was astonished to see my knowledge of 1950s
Acıpayam and he asked me how I knew about the manganese mines. I explained the
details of my own story: how I had dug out that piece of information from one of the
oldest libraries in Chicago, Newberry Library, while reading the memoirs of an
American financial advisor who had visited Turkey 70 years ago. When I finished,
he concluded our conversation with a most familiar cliché: “These Americans... They
were everywhere in Turkey in the 1950s.” His remark is the simplest summary of
this dissertation: how and why “these business-oriented Americans” had a pivotal
role in terms of accessing Turkey’s economic centers, providing financial advice to
the Turkish governments, and presenting detailed studies of the country’s
3 Barker Papers, “Field Trips, 1950,” Middle East Missions, 1946-1952, Turkey, 1948-1952, Box 60,
Folder 1312.
4
commercial resources, market opportunities, and disadvantages for American
business in the 1950s.
Supporting American ideals of liberal commerce and free enterprise through the help
of American business-oriented figures aligned with the U.S. foreign policy agenda in
the post-World War II (WWII) period. As representatives of the standing victor of
the postwar period, American state institutions and businesses found abundant
chances to apply their own economic and commercial practices globally. While their
European allies drained their resources and were economically exhausted by WWII,
the U.S. economy enjoyed production surpluses, especially for military machines and
equipment.4 This boom in military production and accrued capital enabled the U.S. to
launch new aid programs such as the Truman Doctrine of 1947 and the Marshall Plan
of 1948 to enhance America’s new role in international politics.
The establishment of an American economic model and attracting other states to
share this model were crucial. The Marshall Plan was accordingly used to inject
American capital, products, and services into circulation in the world’s markets. This
process eventually helped reconstruct allied economies and build up liberal markets,
preparing the best conditions for American businesses to control of the overseas
markets.5 At the same time, the plan paved the way for American-type modernization
to be theorized and executed as more urban layouts, free markets, and privatization in
less developed countries. In other words, it reflected the production modes of the
4 William A. Brown, Jr. and Redvers Opie, American Foreign Assistance (Washington D.C.: The
Brookings Institution, 1953), 123.
5 Michael J. Hogan, “American Marshall Plan Planners and the Search for a European
Neocapitalism,” The American Historical Review 90, no. 1 (February 1985): 44–72; Victoria de
Grazia, Irresistible Empire: America’s Advance through Twentieth-Century Europe (Cambridge,
2005), 5, 6, 239, 346.
5
built environment with the premises of democracy, liberalization, and
developmentalism.6 American politicians and big business owners were ardent
supporters of this interventionist policy in pursuit of creating Americanized societies
among its friends fitting into early Cold War period conjuncture.7
Unlike the capitalist Western European states, less developed participants in the plan,
such as Greece and Turkey, were introduced to American tactics for a modernized
state-building system with unleashed economic growth supported by know-how and
engineering projects for better infrastructure, which James Scott critically labeled as
“high modernization” in Seeing Like a State.8 In line with Scott, Michael Adas
argued that American agents such as bureaucrats, businessmen, and other
professionals were selling American virtues to less developed states via
technological advancements after WWII, considering those values to be generally
superior.9 The ideals of Americanization took root with the elimination of livelihoods
based on “scraping by” in other countries, with self-sufficiency being highly
correlated with larger production volumes.10 Committed since the New Deal (1933-
38) to a specific type of modernization that required state-supported, top-down mass
6 Begüm Adalet, Hotels and Highways: The Construction of Modernization Theory in Cold War
Turkey (Redwood City: Stanford University Press, 2018), 3-7.
7Gregory Fossedal and Bill Mikhail, “Marshall Plan Commemorative Section: A Modest Magician:
Will Clayton and the Rebuilding of Europe,” Foreign Affairs (May/June 1997).
https://www.foreignaffairs.com/articles/europe/1997-05-01/marshall-plan-commemorative-sectionmodest-
magician-will-clayton-and.
8James C. Scott, Seeing Like a State: How Certain Schemes to Improve the Human Condition Have
Failed (New Haven: Yale University Press, 1999).
9Michael Adas, Dominance by Design: Technological Imperatives and America’s Civilizing Mission
(Cambridge: Belknap Press, 2006).
10Nick Cullather, The Hungry World: America’s Cold War Battle against Poverty in Asia, Illustrated
Edition (Cambridge: Harvard University Press, 2013).
6
production and urban projects, U.S. institutions pursued the promotion of such
projects overseas.11
In this framework, American business circles and corporations also had significant
roles in the post-WWII reconstruction era. They sold their products, established
overseas branches, and reconstructed urban layouts. After gaining an invaluable
place in the world markets with budgets in the millions of dollars, American
businesses began identifying themselves as major powers in selling Americanism to
the world, which helped these corporations find spots on U.S. foreign and
commercial policy agendas and their leaders found crucial positions in governmental
jobs.12 These circles enabled the spread of the American type of economic and
commercial mindset for mutual prosperity among “America’s friends.”13
Including business professionals in the decision-making system is understandable to
eliminate obstacles in economic and commercial relations. The U.S. governments
tend to include actors with business backgrounds in the policy-making processes and
prioritize collaboration between the state and commerce departments to standardize
foreign policy agendas.14 For example, U.S. administrations have long relied on
11David Ekbladh, The Great American Mission: Modernization and the Construction of an American
World Order (Princeton: Princeton University Press, 2011).
12 Alfred D. Chandler and Bruce Mazlish, Leviathans: Multinational Corporations and the New
Global History (London: Cambridge University Press, 2005).
13 Mira Wilkins, The Maturing of Multinational Enterprise (Boston: Harvard University Press, 1974).
13Yahya Sezai Tezel, Cumhuriyet Döneminin Iktisadi Tarihi [Economic History of the Republican
Era] (Ankara: Yurt Yayınevi, 1982), 223–24.
14 Huub Ruel and Robin Visser, “Commercial Diplomats as Corporate Entrepreneurs: Explaining Role
Behavior from an Institutional Perspective,” International Journal of Diplomacy and Economy 1, No.
1 (2012): 42-79.
7
commercial diplomacy to improve overseas commerce.15 Since the early days of
independence, foreign and commercial policies have been intimately linked in U.S.
history. Successive U.S. administrations sought to lift restrictions barring American
ships from foreign ports and enhance export industries in which U.S. traders enjoyed
advantages over European mercantilists. “Free navigation,” “freedom of the seas,”
“the rights of neutrals,” and “commercial reciprocity” became rallying cries for
American commercial interests.16
Presidents also occasionally nominate business figures to be ambassadors. The
Department of State and Department of Commerce work together closely in foreign
policy-making to enhance foreign commercial operations. Examples of this can be
traced in evaluating Turkish-American commercial relations and the operations of
American Multinational Corporations (MNCs) in Turkey in the 1950s. American
diplomats and political and economic advisors to the Turkish post were selected from
among business executives. Financial advisors and the mission chiefs conducting aid
programs were also selected from among these circles and from academia. Besides
being tasked with governmental roles, MNCs’ managers or owners also acted as
lobbyists and advisors to help Turkey gain more commercial contracts. In addition,
American geologists, petroleum engineers, and mission chiefs had significant roles in
drafting new Turkish foreign investment incentive laws in line with the American
MNCs’ expectations. Officials of the Department of State and Department of
15 Michel M. Kostecki and Olivier Naray, Commercial Diplomacy and International Business (The
Hague: Netherlands Institute of International Relations Clingendael, 2007).
16 John G. B. Hutchins, The American Maritime Industries and Public Policy, 1789-1914 (Cambridge:
Harvard University Press, 1941); Vernon G. Setser, The Commercial Reciprocity Policy of the United
States, 1774-1829 (Philadelphia: J. B. Lippincott, 1937); Norman Graebner, “New England and the
World, 1783-1791,” in Massachusetts and the New Nation, ed. Conrad Edick Wright (Boston:
Massachusetts Historical Society, 1992), 1-34.
8
Commerce contacted both sides, delivered essential information from the Turkish
market, and prepared practical handbooks and pamphlets about Turkey for business
circles.
In addition to emphasizing skills and backgrounds in finance and business, this wide
selection of people also offered public diplomacy elements for the pursuit of
constructive commercial diplomacy. As much as they conveyed economic
intelligence to the relevant departments, diplomats also collected and collated data
about the host state’s public and their opinions. Being sensitive in dealing with others
and aiming to achieve a peaceful resolution to facilitate discussion, the actors that
use constructive diplomacy discarded force and ill-advised adventures. Knowing the
audience and acting in line with the expectations to eliminate diplomatic conflicts
helped states position themselves to cope with different conditions successfully.17
Advocacy is another important dimension of public diplomacy, whereby actors
attempt to manage the international environment by promoting particular policies.
Advocacy has long been a dominant concept in U.S. public diplomacy in terms of its
contributions to selling the idea of America and its economic culture, especially in
the late 1940s. The Marshall Planners aimed to reconstruct the markets of allies and
stir up interest in their imports. Using an economic plan to build an open, liberal, and
integrated market would help alleviate Europe’s currency gap and provide it with
dollars to buy needed American raw materials and manufactured goods.18 From this
perspective, the Marshall Plan advocated the Americanization of Europe through
American exports; in a larger sense, it advocated the development of an expanded
17 Nicholas J. Cull, “Public Diplomacy: Taxonomies and Histories,” The Annals of the American
Academy of Political and Social Science 616 (March 2008): 31-54.
18 Grazia, 346-47.
9
U.S.-led peace system among trading partners with similar economic approaches. In
Turkey, American actors reflected the working of public diplomacy in understanding
the Turkish governments’ modernization expectations, establishing trustworthy
personal relations, and selling the American economic model.
Due to the similarities between the two understandings, many authors draw a clear
line between pursuing mutual commercial relations with true public diplomacy
against dollar diplomacy practices. While “dollar diplomacy” correlates diplomacy
with exploitation and material advantages, “commercial diplomacy” is based on
mutual benefits, equal opportunities, and open doors.19 The former is labeled by
Henry Bruere as exploiting resources, relations, and people.20 These practices were
generally similar once dollar diplomacy was introduced as state policy under the
William Howard Taft administration. American diplomats, dubbed “salesmen,”21
worked diligently to promote commerce, profit, and national business overseas.
According to Frederic C. Howe, the Wilson administration utilized dollar diplomacy
methods to exploit other nations, especially the weak Latin American ones, in the
post-WWI period. Loaning money to these states through the American banking
houses in return for gaining concessions and selling ammunition contradicted
international commerce.22 After a couple of decades in another post-world war
period, the U.S. administrations came together with the American business circles
19 Oscar S. Straus, “American Commercial Diplomacy,” The Advocate of Peace 73, No. 9 (September
1911): 203-5.
20 Henry Bruere, “Constructive Versus Dollar Diplomacy,” The American Economic Review, Vol. 13,
No. 1 (March 1923): 66.
21 Henry F. Pringle, The Life and Times of William Howard Taft, Vol. 2 (New York: Farrar &
Rinehart, 1939), 679.
22 Frederic C. Howe, “Dollar Diplomacy and Financial Imperialism under the Wilson Administration,”
The Annals of the American Academy of Political and Social Science 68 (November 1916): 312.
10
and banks to finance American allies for recovering their economies, applying
American economic models, aiming commerce. However, this time, American
foreign policy and its actors aimed at neither imperializing Turkey nor establishing a
client state; ironically, however, recession in the Turkish economy, growing trade
deficits, inflation, and credit debts in the late 1950s led to such a dependency.
All the same, the intense collaboration between American business-oriented actors
and Turkish governments paved the way for more integrated political relations
between the two countries during the Cold War. Strengthening the eastern front of
the new alliance, the Truman administration valued Turkey as a significant country at
the crossroads of vital regions that should not fall to Soviet domination. As Britain
and France, the former great powers of the area, were losing their political,
economic, and military influence over the region, the U.S. was asked to replace
them. This new role was compatible with the new American foreign policy that
engaged in a liberal internationalist approach by launching new international
organizations in the post-war period. Designing a leadership role in the international
arena, the Truman administration prioritized protecting Turkey’s national integrity
and keeping this country under the newly emerging influence of NATO. Having felt
the Soviet threat for some years, Turkey willingly accepted America’s political and
military protection, which the other Allies could no longer provide on their own.
Turkey had already purchased American arms, received aid through the WWII Lend-
Lease program, and pursued good political relations with the Allies, joining them at
the last minute before the war ended. Forming such an asymmetric political and
military alliance in the 1940s also allowed the formation of similar relations in
commerce between the two states.
11
In addition to building a reliable political and military ally for the West in Turkey,
the Truman and Eisenhower administrations aimed to create an economically stable
and self-sufficient country. Turkey was first added to the American aid programs that
launched in the late 1940s, and then it was credited and supplied with American
goods and services. The assigned ambassadors, financers, and academics studied the
Turkish economy. Their reports were highly influential in shaping economic policy
and determining aid and credit programs for Turkey; they foresaw market
opportunities in Turkey’s unexploited and inefficiently utilized resources. These
agents would eventually become important figures who possessed significant
knowledge about business and the Turkish economy, and they built bridges between
the two states’ governments and business elites. They even shaped Turkey’s
economic, commercial, and legal agendas in the 1950s. This group of people
comprised diligent agents of American commercial expansionism, and the Turkish
governments, which emphasized the modernization benefits of attractive American
goods and services, pursued consistent strategies.
While these actors attained great importance in the context of American political and
military support, Turkish decision-makers also enjoyed receiving American guidance
regarding economic policy. Benefitting from both the Marshall Plan and the Truman
Doctrine, Turkey received considerable volumes of American products, services, and
credit deals in the late 1940s. The agents who operated these programs invited other
American economists, academics, and advisors to Turkey for specialization in
different areas. Starting a chain reaction, Americans influenced macroeconomic
thoughts, business approaches, modernization methods, the legal system, and
12
industrial education and training in Turkey. Describing the Americanization of the
economy as progress and liberalization, the Turkish government of the 1950s was
pleased to have access to American capital. The lower-class peasantry hardly
benefited from these projects; however, the governing party worked hand in hand
with the Turkish business elite. Both circles demanded more American products and
services, and they worked closely with American business-oriented actors who could
mediate between them and American business circles.
American businesses made a profit from the Turkish market, as well. In general, the
Marshall Plan aimed to save collapsing European economies and push them toward
convalescence. This financial aid was the economic dimension of a new, active
American foreign policy, which held that American businesses, products, and
services should pour into new markets and expand their scopes and profits with the
state’s help. After accessing Turkey’s financial reports and centers, training future
Turkish managers, and convincing the Turkish administrations to provide an
encouraging environment for a free-market economy, these American agents
expected that American vendors would find a promising market for business
expansion. American officials played a crucial role in strengthening commercial
relations by building a trustworthy reputation among the Turkish governments as
representatives of an allied country through efficient public and commercial
diplomacy practices in the 1950s.
This dissertation aims to reveal the significant commercial-diplomatic roles of key
American advisors, ambassadors, and academics that directly contributed to the
commercialization of American businesses, products, and services in Turkey during
13
the period of 1945-1960. Their participation will enlighten three main dimensions in
the relations between Turkey and the U.S. these years by demonstrating why these
people were very important and how crucial their work were for the period. First, this
argument will highlight the talented individuals’ roles in shaping bilateral relations,
and the direct impact of their background, skills, and personal traits, especially in
commerce and diplomacy. Secondly, it will validate the literature that underlines
how commercial diplomacy and American financial actors were significant tools for
the post-WWII American foreign policy goals by focusing on the Turkish
experience. Lastly, it will bring a deeper understanding to the keywords mostly used
for this period such as “Americanization in Turkey,” “the Marshall Plan,” “Turkey’s
economic dependence on the U.S.” or “Turkey’s modernization through the
American institutions.” Rather than evaluating the general framework of the U.S -
Turkey economic relations, this dissertation aims to highlight the personal
contributions of “these Americans,” who made a difference, such as Barker, George
McGhee, and Clarence B. Randall, especially to the growing economic integrity and
commercial and business relations between the two states in the early Cold War
period.
1.1. Literature Review
The existing literature highlights the post-WWII roles of American financial actors to
spread American commercial activities globally. Different administrations had
assigned such people to international posts to manage American aid programs,
supervise credit allocations, and protect investments since the early 20th century and
the trend continued after 1945. Thanks to their backgrounds in business and
14
economics, these people were good at detecting financial shortcomings and
opportunities, channeling aid and credits to relevant fields and institutions, building
strong reputations among decision-makers, and introducing American companies to
these countries.
Despite commonalities in methods and practices, the name of this type of foreign
policy and its actors has varied. “Dollar diplomacy” was coined as a term in the early
20th century to describe the use of financial tools to enhance political influence over
other states. Such policy included promoting national brands and products in new
markets, concluding aid and credit deals with other governments, and exploiting host
countries’ resources. Several authors have criticized this policy because of its
resemblance to imperialism. The financial supervision formula has been labeled as
another version of imperialism designed to exploit weaker states’ resources through
greedy profit-seekers such as private bankers, financers, and businesspeople. In the
hands of such agents, the processes of guiding foreign governments through
controlled loans, aid, and markets could only create more dependent states. Stateexercised
foreign policy goals supported by immense private sector involvement
would build authority similar to that of an imperial power. Financial imperialism
with active dollar diplomacy involved ending the “splendid isolation” of the U.S.
from questionable relations with other actors, as Frederick C. Howe explains. It
further involved a transformation of the Department of State while putting all statelevel
agencies under Wall Street’s orders together with concession seekers, munition
makers, and all those who would exploit weaker peoples under the philanthropic
assurance of promoting their development.23
23 Howe, “Dollar Diplomacy and Financial Imperialism under the Wilson Administration.”
15
Emily Rosenberg approaches the controversy of dollar diplomacy from both
perspectives. In Financial Missionaries to the World, she supports Howe’s
arguments that U.S. policy in the early 20th century evolved into a pattern of
“colonialism by contract.” The Roosevelt and Taft administrations worked intimately
with private bankers and business leaders to extend conditional loans and direct
investments toward potentially unstable and economically “primitive” countries in
the name of diplomacy. By the end of World War I, President Woodrow Wilson also
aimed to promote a U.S.-administered sphere of influence in the world enforced
through American agencies and supervisors appointed by the U.S. administrations.24
All efforts were closely connected to profit and exploitation.
Regardless of the controversy surrounding this trend in the first part of the 1900s,
Rosenberg argues that the post-WWII system required that revisions be made to
correct the contradictions of dollar diplomacy. The Truman administration aimed to
create a more integrated and internationalized alliance against communism, which
curbed the imperialistic tendencies of dollar diplomacy. The promotion of American
economic influence through loans, credits, and investments evolved to achieve
overall capitalist enhancements among America’s allies.25 Like previous efforts,
people from the worlds of business and finance fit into this new foreign policy
approach. In Spreading the American Dream, Rosenberg praises these American
actors and their pivotal roles in the decision-making processes of the early Cold War
24 Emily S. Rosenberg, Financial Missionaries to the World: The Politics and Culture of Dollar
Diplomacy, 1900-1930 (Boston: Harvard University Press, 1999), 1, 3, 253-54.
25 Ibid., 255.
16
period. Both the Truman and Eisenhower administrations believed in the power of
private enterprise, open access to commerce and investment markets, promotion of
flows of information and culture, and, most significantly, encouragement for other
governments to replicate the American experience. They assigned people with such
capabilities to key positions.26 All of these methods fundamentally targeted
international economic and political stability rather than profit maximization and
exploitation prioritized in dollar diplomacy.
Harry Bayard Price refers to the Marshall Plan as a method that aimed to bring
economic and political stability to America’s allies. The Truman administration
tasked governmental institutions, political actors, and American businesses with
restoring the health of teetering Western European economies in the post-war period.
The U.S. Department of Commerce and Department of State, Economic Cooperation
Administration (ECA), and Organization for European Economic Co-operation
(OEEC) collaborated in harmony, identified fields to be supported, and allocated
funds for development projects. International financial institutions such as the World
Bank provided cash flows to these projects and secured an investment-safe
environment for business partners. Besides European reconstruction, the plan also
developed comprehensive local outlooks and projections for economically
challenged areas such as Turkey. By understanding country requirements and
planning types of projects capable of gaining maximum enthusiasm and support,
these institutions and their actors achieved a great deal up until 1952, the year in
26 Emily S. Rosenberg, Spreading the American Dream: American Economic & Cultural Expansion
(New York: Hill and Wang, 1982), 7.
17
which the Marshall Plan concluded.27 Price describes this collaboration as a great act
of statesmanship. The American agents who took part in the process, such as
ambassadors, mission chiefs, and commercial attachés, specialized in the economic
dynamics of different countries and paved the way for the promotion of the
American economic model and business overseas.28
The Foreign Assistance Act was submitted to Congress in 1948. It tasked the
Economic Cooperation Administration (ECA) with handling the operational aspects
of the recovery program subject to the Department of State’s control in areas relating
to foreign policy.29 This draft also expanded the involvement of business managers,
industrialists, and financers in decision-making processes. Michael J. Hogan, in
“American Marshall Plan Planners and the Search for a European Neocapitalism,”
underlines that the American private sector was interested in relieving suffering and
combating communism, but achieving these goals also meant stabilizing currencies
and exchange rates, reviving industry, liberalizing international commerce, fostering
integration, and boosting productivity. Administrative positions such as those of
ambassadors and mission chiefs required expert management by men with practical
knowledge of the business, and many were ready to fill those roles. Their presence in
state operations enhanced the international activities of their affiliated businesses and
corporations.
27 Harry Bayard Price, The Marshall Plan and Its Meaning (Ithaca: Cornell University Press, 1955),
412.
28 Ibid.
29 Hogan, 54.
18
Indeed, the Marshall Plan and its actors enhanced the scope and recognition of
American products, services, and know-how capabilities. Feeling safe in making
investments, many large and small American companies alike took part in
reconstruction plans for America’s friends and enjoyed the benefits of foreign
markets. In their edited book, Alfred Chandler and Bruce Mazlish claim that
American MNCs were the ultimate winners of the post-WWII reconstruction era.
These MNCs sold their products, established overseas branches, and invested billions
of dollars in profitable foreign markets. Among essays in that book focusing on
different eras, Geoffrey Jones narrates the expansion of notable American
multinationals such as General Electric, General Motors, and Ford in the 1950s.
After gaining an invaluable place in world markets and establishing budgets in the
millions of dollars, these MNCs started to identify themselves as major powers in
selling Americanism to the world, which helped them claim space within U.S.
foreign and commercial policy agendas.30 Mira Wilkins supports Jones’s arguments
about the undeniable rise of American MNCs in the post-WWII period. However,
rather than highlighting MNCs’ roles in power dynamics, she focuses on the good
deeds that they performed, linking the spread of Americanization to mutual
prosperity and American modernization theory rather than profit maximization
ambitions.31
Authors focusing on American modernization theory practices in the 1950s share
Wilkins’s perspective. Nick Cullather describes the Marshall Plan and its architects,
such as American engineers, people in business, economists, and diplomats, as ardent
30 Chandler and Mazlish.
31 Wilkins.
19
supporters of American modernization. They believed in American virtues such as
free markets and democracy. They also encouraged traditional societies to follow a
convergent path toward American-type modernity in the 1950s. Just as “dollar
diplomacy” foresaw the safeguarding of significant political interests through
economic integration, selling American virtues could achieve the same impact with a
new purpose: the economic enhancement of an integrated alliance. Therefore, in the
wake of the Cold War, both the Truman and Eisenhower administrations supported
the ideals of these actors while mapping out foreign policy agendas, especially in
countries like Turkey, where they had limited knowledge about cultures, economic
traditions, and livelihoods. These actors encouraged U.S. institutions to embrace a
more enduring industrialist trajectory. The ideals of modernization took root as
livelihoods made by scraping by were eliminated in other countries, and selfsufficiency
through enhancement of the strengths of the host state was highly
correlated with larger production volumes.32 These agents were assigned to such
countries and were tasked with helping to achieve economic enhancement by
Americanizing mindsets, state policies, and markets.
Significantly, after American institutions and advisors increased their influence over
the Turkish economy in the late 1940s, the Turkish governments and business elite
grew accustomed to American products, methods, and services in the 1950s. The
Democrat Party (DP) government portrayed American aid, credit, and advice as a
fast track to modernization. The business class looked for opportunities to partner
with American businesses as vendors, overseas branches, or co-investors. Morris
Singer confirms this influence of American actors over Turkish political and
32 Cullather.
20
economic agendas. He relates the taste for macroeconomic liberalization through
American products and services in the Turkish market to the people’s choice to elect
the DP over the more statist Republican People’s Party (RPP) in 1950. Enjoying the
economic guidance of American actors, the DP promised more American capital and
the retreat of the state and state-owned enterprises (SOEs) from monopolized sectors.
Several American firms accordingly arrived in these sectors, such as oil and mining,
to increase efficiency and profits in an investment-friendly environment.33
At the same time, the DP’s rise to power was a natural result of increasing liberal
tendencies and economic demands since the beginning of the post-WWII period
thanks to the arrival of the first wave of American advisors in Turkey. Erik Jan-
Zürcher considers the political reform of 1947 as the turning point in this regard. The
RPP was struggling to abandon the statist economy as that policy increasingly came
under attack from Turkish business circles and Americans. Its political challenger,
the DP, made itself an apparent supporter of a liberal economic model. After Turkey
started receiving American aid, the DP’s argument was strongly reinforced by the
activities and later the reports of American advisors, pushing the RPP to make
alterations in its economic approach.34 Zürcher highlights American industrialist
Max W. Thornburg as the key influential figure in government circles, and his
economic development recommendations were certainly well respected. With
Thornburg opening the doors, new American actors worked closely with Turkish
governments; for example, Ambassador McGhee and petroleum engineer Max Ball
33 Morris Singer, The Economic Advance of Turkey 1938-1960 (Ankara: Turkish Economic Society,
1977).
34 Erik J. Zürcher, Turkey: A Modern History, 3rd Ed. (London: I.B. Tauris, 2004), 215-16.
21
were the architects of privatization laws enacted in 1951 and 1954.35 In The
Emergence of Modern Turkey, Bernard Lewis joins Zürcher in arguing that
American administrations favored private enterprise and worked against statism with
the help of their advisors.36
The arrival of Marshall Plan aid and credits empowered the American actors to join
the decision-making processes of investment projects; they even became authority
figures in Turkish modernization efforts. Until the late 1940s, the RPP administration
saw heavy industrial facilities and the manufacturing of industrial goods as the
country’s future. Turkish modernization goals were shaped by the idea of catching up
with Western democracies, especially through advancements in heavy industry, and
it was believed that state institutions should assume that task. Çağlar Keyder states
that after being funded by American aid controlled by American chief executives,
Turkey’s dreams of modernization through industrial development were replaced
with agricultural enhancement.37 Aiming to make Turkey a granary for the alliance
and believing that rural development would be a more realistic goal, American actors
first convinced the RPP government to approve this pattern in development and then
introduced American agricultural goods to the Turkish market. Keyder relates the
growing numbers of tractors in Turkey in the late 1940s to American actors’
influence in the short term,38 while Begün Adalet states that the DP continued to go
35 Ahmad, Feroz, The Turkish Experiment in Democracy, 1950–1975 (London: C. Hurst & Company,
1977), 124, 131.
36 Bernard Lewis, The Emergence of Modern Turkey, 2nd Ed. (London: Oxford University Press,
1969), 315, 317.
37 Çağlar Keyder, State and Class in Turkey: A Study in Capitalist Development (New York: Verso
Books, 1987), 119.
38 Ibid.
22
along with the recommendations of American advisors after they secured leadership.
They denounced railway-led industrialization projects, which Turkey had focused on
in the republican era. Instead, the DP budgeted for the extension of a highway
network into the hinterlands of Anatolia with the help of the U.S. Bureau of Public
Roads, as recommended in advisors’ reports.39
In addition to encouraging the Turkish administrations to adopt liberal economic
policies, American advisors and mission chiefs also helped promote American
businesses in Turkey. These people usually belonged to the private sector besides
their governmental assignments in Turkey, and they naturally tended to direct the
Turkish governments toward favoring free enterprise. The RPP governments were
even started to be convinced by American advisors about establishing a well-working
democracy, achieving modernization, and challenging the communist doctrine would
be impossible without the flow of private capital.40 Coming to power in 1950,
Menderes and DP decision-makers began handling negotiations with American
investors personally, and American advisors set up these meetings.41
American commercial actors also influenced the Turkish business elite. Wanting to
participate in more profitable industries, several wealthy Turkish business families
found a chance to partner with American MNCs while state institutions promised to
retreat. McGhee and Barker insisted that mediating between Turkish and American
businesses would benefit both sides; partnerships could familiarize Americans with
39 Adalet, 7.
40 Korkut Boratav, Türkiye İktisat Tarihi 1908-1985 (Turkey’s Economic History 1908-1985)
(İstanbul: Gerçek Yayınevi, 1998), 76.
41 Ahmad, 131.
23
this new market while the Turkish business elite could access American MNCs’
resources and know-how capabilities. Indeed, after positioning their products and
services in the Turkish market, several American MNCs expanded their investments
in Turkey by constructing factories or mines. Learning from their American partners
how to conduct international operations and adopting their know-how capabilities,
Turkish business families stepped up and filled the Americans’ shoes in Turkish
market operations, such as the Koç, Eczacıbaşı, and Sabancı families. The changes in
the political economy and the enacting of new privatization laws with the help of
American actors fueled Turkish businesses’ hunger to dive into formerly nationalized
areas.42
Forging a multidimensional sphere that included officials, financiers, and
businesspeople in economic cooperation led to the enlargement of the group
demanding Americanization in the 1950s. With increasing American influence over
the Turkish economy, new actors initiated deepening cooperation and reduced the
foreignness felt between the two sides. As new academics and businesspeople
continued to arrive, American commercial representatives strengthened their ranks.
After doing business in Turkey, American MNC owners such as Conrad Hilton,
General Electric Chairman of the Board Philip Reed, and the DP’s paid lobbyist
Thomas Dewey joined the inner circle and campaigned to strengthen Turkish-
American business relations. To establish American-style businesses, American
academics arrived in Turkey with the aims of educating future managers and MNCs
to run employee training facilities and funding American-type business schools. All
42 Ayşe Buğra, State and Business in Modern Turkey: A Comparative Study (New York: State
University of New York Press, 1994).
24
of these actors contributed to the development of an American-influenced
government, market, and economic mindset in Turkey in the 1950s.
Secondary sources present the general framework of the era and of Turkish-
American economic and financial relations. However, the most significant sources
offering a foundation for this dissertation are the personal accounts of the American
actors, other eyewitnesses of Turkey’s economic transformation, the publications of
American MNCs presenting their operations in the Turkish market, and state
publications covering the period between 1945 and 1960. Many American diplomats,
financial advisors, academics, and mission chiefs who served in Turkey later
published their memoirs. Additionally, some of their Turkish colleagues and other
businesspeople recorded their memories of dealing with these Americans. These
sources provide a comprehensive narrative, including details about the Turkish
economy, business culture, and market opportunities and drawbacks in the 1950s.
Chronologically tracing all this information allows researchers to reconstruct the
stories of American actors who served in Turkey during this period. These sources
also explain why and how these actors became influential figures with the motivation
to practice both commercial and public diplomacy.
For example, American petroleum expert and economic advisor Max W. Thornburg
laid out a detailed survey of Turkish economic conditions in the late 1940s. His
preliminary study, presented to the Turkish government, proposed various pieces of
financial advice to achieve true modernization.43 Thornburg’s critical thoughts about
the statist economy and his proposed solutions generally followed a path for the
43 Max Weston Thornburg, Turkey: An Economic Appraisal (New York: The Twentieth Century
Fund, 1949).
25
initiation of liberal economy and privatization. This comprehensive work became a
guidebook for both other American advisors who arrived in Turkey and Turkish
decision-makers, the latter of whom tended to put aside their skepticism of foreign
capital and adopt liberal economic methods. Even the formerly-statist RPP
governments of the late 1940s admitted that Thornburg was not entirely wrong.44 As
a young Harvard graduate economist nominated as a fellow of the Institute of
Current World Affairs, Richard Robinson’s decade-long presence (1947–56) and
studies in Turkey made him the top American with the best knowledge about the
country. Robinson published numerous works in the fields of economy and business
in addition to his reports narrating the developments in Turkey. Taken together, these
works offer a detailed narrative of how Turkey’s agricultural industrialization
campaign was launched, how it progressed, and how American advisors like
Robinson himself took part in the process.45 Following Turkey’s first attempts to
transform its economy from a statist to a liberal one or one embracing the methods of
American MNCs, activities in Turkey were possible starting from 1947. The
chronology of Robinson’s narrative highlights significant milestones, such as the
stepping down of the RPP government to be replaced with the more liberal DP in
1950, Turkish attempts to lure American investors by enacting privatization laws in
1951 and 1954, and the arrival of MNCs to the Turkish market. It also reveals deeper
details in the process, such as the introduction of American MNCs through Marshall
Plan funds, earlier problems and drawbacks of the Turkish market and legal system,
and changing attitudes toward foreign investment. Such an organized narrative of the
44 Zürcher, 215-16.
45 This body of work comprises two books and two articles: The First Turkish Republic: A Case Study
in National Development; Letters From Turkey, 146, 149; “Tractors in the Village: A Study in
Turkey,” published in Journal of Farm Economics; and “Turkey’s Agrarian Revolution and the
Problem of Urbanization,” published in Public Opinion Quarterly.
26
period, explaining both general milestones and specific details, allows researchers to
understand how and why American business interests, and especially those of
businesses directly related to agricultural industrialization, peaked in Turkey in the
mid-1950s after the enactment of a foreign investment incentive law in 1954.
His accounts also reveal actors’ critical roles in the process. With degrees in
economics and management experience in MNCs or other various business fields,
these people could think and act according to capitalist virtues. Obtaining the state’s
support for their mission to Turkey, they adopted a realistic business-promoting
policy. Furthermore, they addressed Turkey’s problems with the aim of helping an
ally in the wake of the Cold War, worked toward building up partnerships between
American MNCs and Turkish businesspeople, and constructed a shared trust between
themselves and Turkish decision-makers. Ambassador McGhee explained how his
own background in the petroleum business and his networks among well-known
geologists such as Max Ball helped him bring together the DP government and key
Americans on business-related issues.46 McGhee’s released personal papers similarly
highlight his role as a mediator between the Eisenhower administration and the DP
government after he left his diplomatic post in Turkey. He continued to support
Turkish causes in the U.S., met with Turkish delegates, and lobbied for Turkey in
American business circles even after leaving that diplomatic post in 1953.
The personal papers of other eyewitnesses reveal further details about businesspromoting
activities and personal thoughts on those processes. For example, Barker’s
surveys and meetings with the Turkish business elite produced significant knowledge
46 George C. McGhee, On the Frontline in the Cold War: An Ambassador Reports (Westport, Conn.:
Praeger, 1997).
27
about the expectations of Turkish businesspeople and the problems of the Turkish
market in the late 1940s. To meet the demands, Barker organized meetings between
Turkish businesspeople and the agents of respected American MNCs such as
International Harvester Company and Socony-Vacuum to improve collaboration.
Eisenhower’s chief economic representative in Turkey, Clarence Randall, who was
the chairman of the board of Inland Steel Co. and a member of the business advisory
council of the U.S. Department of Commerce, provided details in his papers of his
business meetings with Turkish government officials, including President Celal
Bayar, Prime Minister Adnan Menderes, and prominent businessman Vehbi Koç. In
those meetings, Randall clarified the expectations of American business circles for
investments and suggested that the DP administration and the Turkish business elite
should think like American business circles. For improving the understanding of
American businesses in Turkey, Randall can be considered another key figure who
paved the way for the enactment of the privatization law of 1954.
This dissertation aims to fill two gaps in the existing literature. First, it focuses on the
Turkish dimension of the U.S. post-war modernization and Americanization foreign
policy with the help of American business circles. Even though the American aid and
credit plans to Turkey through the Marshall Plan and Truman Doctrine and their
impact on the Turkish economic thoughts were studied thoroughly, the role of
American business and its representatives in governmental positions have not been
enlightened in detail. As these figures are underlined as key actors in terms of
promoting American business and commerce to America’s allies in the early Cold
War period in many notable American authors’ narratives, such as Rosenberg,
28
Wilkins, and Chandler, this study reveals how and why they were influential in
Turkey during the same period.
Secondly, this study offers a comprehensive reading of the U.S.-Turkey commercial
and business relations in the early Cold War period by centralizing American
individuals whose impact on the process was crucial. Many works in this field state
American influence over the Turkish economy and conclude that American direct
investments have never reached significant amounts despite introducing incentive
laws. Turkey became dependent on American economic support for years. Still,
reading the memoirs and experiences that the American actors served in Turkey
explains how and why Turkey has advanced on these paths. Forming chronological
and logical linkages among these actors’ narratives also presents the
comprehensiveness of this story.
1.2. Structural Organization
This dissertation aims to understand several American commercial diplomats’ role in
reshaping of Turkish economic mindset and paving the way for American business to
dominate the Turkish market in the 1950s. The second part of this sentence has been
excessively discussed in both Turkish and American literature and agreed the
American influence over the Turkish economic thoughts in the 1950s. However, this
dissertation aims to fill the gap in general narratives and arguments by crediting the
true actors, who enable such an influence. To highlight these narratives and
arguments, this dissertation reviews the personal accounts, books, and papers
introduced above.
29
In light of the deepening economic integration and political closeness between the
two states with the Marshall Plan and Truman Doctrine, Turkey began to see
American actors and institutions as role models for economic development and
modernization. The U.S. was even referred to as a “big brother” in several accounts
in the 1950s.47 The drastic improvements in agricultural production, mechanization,
infrastructure, and other sectors thanks to the services and products of American
companies served to popularize anything American in Turkey, including liberal
economy, privatization, and American brands. When the Marshall Plan ended in
1952 and governmental economic aid for Turkish modernization efforts was stopped,
private investments from American MNCs appeared as replacements for sustaining
that development. The DP government and American actors met on common ground
and worked together to merchandize the Turkish market. As my father experienced,
even small towns of Turkey began gaining access to American goods and services
and were visited by Americans who aimed to design a “little America” in Turkey.
Therefore, their story and experience in Turkey became the most significant tool for
this dissertation. While this thousands of miles away unknown, developing country
was placed on the U.S. administrations’ foreign policy agendas as a potential ally, a
state that should follow the American modernization and economic mindset, and a
new market that the American business and products could enter. These actors made
all happen thanks to their commercial diplomat skills and personal interactions with
the Turkish governments.
47 See Hüseyin Bağcı’s Türk Dış Politikasında 1950’li Yıllar (Turkish Foreign Policy in the 1950s)
and “Turkey’s Foreign Trade” in News From Turkey (NFT hereafter) 1948-49 from September 1,
1949 (New York: Turkish Information Office, 1963), for such references.
30
This dissertation follows a chronological path covering the era between the end of
WW II and the 1960 Turkish coup d’état. Four main chapters are devoted to specific
subperiods, presenting milestone events and highlighting significant cases or actors.
The first main chapter evaluates Turkish and American political and economic
conditions in the early post-war years. Losing its main trade partners and political
allies in 1946 and facing the Soviet adversary alone, Turkey was appreciative of
America’s interest in Turkey’s political stance. Turkey’s inclusion in the Truman
Doctrine and Marshall Plan deepened the relationship between these two states,
which paved the way for American actors to re-enter the picture. Attracted by the
recommendations of these American advisors and mission chiefs for the economy
and modernization, the RPP government changed its old-school statist
macroeconomic thoughts in the late 1940s. The visible achievements of American
companies through the Marshall Plan, such as improving infrastructure, building
dams, and mechanizing agricultural production, influenced DP politicians and the
business class in Turkey that inviting American capital and service could be an
alternative to statist development. In early 1950, the RPP established a more liberal
cabinet and enacted an improved foreign investment law to replace strict statism with
guidance from Thornburg and ECA Chief of Staff Russell Dorr. The DP, as the
opposition party, promised more liberal laws and American capital in its campaigns
for the 1950 election. Hand in hand with Turkish business elites, who wanted to
partner with more American MNCs, the DP won the elections. It then launched
another economic campaign that included more American advisors, diplomats, and
academics.
31
The second main chapter focuses on the transition in Turkey and highlights the
critical roles of American actors working closely with Turkish decision-makers. The
rise to power of the DP in 1950 was an expected result of the increasingly changed
demands of the public. The election of a political party that prioritized a liberal
economy and privatization gave American actors a green light to intensify
Americanization in Turkey. Between 1950 and 1953, Turkish-American relations
were amicable, with similar reflections in the business sphere. Turkey renewed and
improved its foreign investment laws by working with American officials such as
McGhee and Leon Dayton in 1951. Barker introduced prospective American
investors to Turkey’s DP leaders and notable business families. One by one, new
American MNCs and investments arrived in Turkey with the promise of contributing
to Turkey’s modernization process. Turkey’s decision to join the Korean War and
NATO further enhanced the country’s political prestige among American business
circles. By late 1952, supporting a staunch ally’s economic growth had become a
significant objective for the Department of Commerce and American investors.
The period from early 1953 to the end of 1955 was a honeymoon of sorts for
Turkish-American business relations. The third chapter narrates how American
companies established excellent reputations in the Turkish market and how
American actors earned the highest trust among Turkish decision-makers. The new
foreign investment incentive law of 1954 and the privatization law on oil enacted in
the same year were designed by Americans to make American companies feel at
home in the Turkish market. Within two years of the passing of the privatization law,
many American MNCs had entered the Turkish market in different sectors such as
oil, pharmaceuticals, motor engines, and mining, bringing competition to the market,
32
providing know-how, and allowing many Turkish families and individuals to
participate in the greater business framework. That period also coincided with the
emergence of cash-flow problems in the Turkish economy due to the growth in
imports, drastic currency cuts after the aid programs ended, and a fall in the prices of
Turkish export products after the European market recovered. These newly emerging
negative indicators revealed that Turkey should produce more, import less, and
attract more foreign investments to preserve economic sustainability in the
forthcoming years.
The final main chapter focuses on the appearance of economic and political
uncertainties in Turkey in the second part of the 1950s and the changing job
descriptions of American actors. It evaluates American businesses’ responses to the
recession in Turkey and American advisors’ efforts to help Turkey find short-term
aid and credits for balancing payments. A faltering economy, a steep rise in inflation,
and the loss of value of the Turkish lira against the dollar put business investments
into a deadlock. Both American and Turkish governments and institutions relatively
lost their interest in increasing the volume of foreign investments. Instead, rapid
solutions such as agreeing on new credit deals or securing economic aid topped the
economic agenda. Significant figures such as Randall and Dewey found themselves
negotiating with the Eisenhower administration to aid America’s ally rather than
engaging in their former investment lobbying activities. Launching an economic
recovery program to limit expenses and re-regulate domestic and international
payments in 1959, Turkey restored some of its credibility in the eyes of American
business circles. The DP signed a lucrative investment contract worth $60 million
with a petroleum consortium led by Mobil Oil as the only significant business partner
33
of the period. Finally, the 1960 Turkish coup d’état ended the DP’s reign, bringing
greater uncertainties to the Turkish market and a questioning mindset regarding the
all-around Americanization of the economy.
1.3. Methodology
This dissertation generally relies on primary sources representing Turkish and
American perspectives to construct the narrative outlined above. These sources
include personal memoirs, papers, and memoranda of American actors such as
Thornburg, Barker, Randall, and McGhee. In addition to their individual memoirs
and reports, the minutes of the Grand National Assembly of Turkey (GNA),
documents derived from the Directorate of State Archives of Turkey, statistical data
obtained from the Turkish Statistical Institute (TÜİK) and the Central Bank of
Turkey (CBT), newsletters of the Turkish Information Office in New York,
American periodicals such as the New York Times and Wall Street Journal, and
newspaper articles and advertisements from Turkish newspapers such as Cumhuriyet,
Ulus, Tan, and Zafer were consulted. Documents from the Foreign Relations of the
United States (FRUS) series and National Archives and Records Administration
(NARA), data from the Statistical Abstracts of the United States series, and
publications of the Department of Commerce, U.S. Congress, American Enterprises
Association Inc., and the World Bank were also used.
34
CHAPTER II
“The outstanding characteristic of the Turkish scene is its dynamism. Turkey is
neither a war-torn country nor a decaying economy. When Atatürk pulled the throttle
wide open after the Republic was founded in 1923, he unloosed regenerative forces.
After twenty-six years of the new social, political and economic experiences into
which Turkey’s headlong transformation has plunged her, the tempo has quickened.
Turkey today is definitely on its way. The question is, Which way?”
Max W. Thornburg48
2.1. Turkey En Route to American Influence in the Post-WWII
Period
Before Turkey’s heavy economic Americanization in the post-WWII period as a
result of the influential work of American financial advisors, some American
business operations were present in the Turkish market. However, these initiatives
48 Thornburg, Turkey: An Economic Appraisal, vii.
35
were very limited due to Turkey’s economic, political, and legal restrictions on
foreign capital since the republic’s foundation. Turkey never underestimated the role
of foreign capital in modernization but considered it key to keep it under state
control. The RPP government strictly controlled imports and signed clearing
agreements with foreign states to limit the dependency on foreign capital. In
unpredictable war conditions, the government aimed to keep foreign currency and
gold assets inside the country. The post-war recession and the devaluation of the
Turkish lira, which dramatically lost value against other currencies, necessitated
tighter state control over foreign businesses.49 The business operations of foreign
investors were also restricted by two securities and stock exchange laws enacted in
1925 and 1930. These laws aimed to protect the domestic market against foreign
capital monopolization initiatives by limiting the assets, operations, and profits to be
taken away from Turkey. In such a protectionist environment, only a few American
MNCs including Ford, Socony Oil, and the American-Turkish Investment Co.
(Turkish Match Company) were willing to do business in Turkey in 1945. 50
In addition to these disincentives, strict statism was pursued as the primary politicaleconomic
orientation, limiting the maturity of national and foreign private initiatives.
Even Turkish businesspeople struggled to get the necessary loans from state banks
for large-scale investments. This group was also excluded from the state’s most
significant industrial sectors, such as oil and steel, which the state aimed to
monopolize.51 However, this rigid economic understanding began to be challenged in
49 Tezel, 184-85.
50 Roger R. Trask, The United States Response to the Turkish Nationalism and Reform, 1914-1939
(Minneapolis: The University of Minnesota Press, 1971), 134-35.
51 Korkut Boratav, Türkiye’de Devletçilik (Statism in Turkey) (Ankara: İmge, 2005), 138-39.
36
the post-war period. With financial blows suffered as a result of drafting the
workforce, reduced production, and the loss of trade and credit partners during the
difficult interwar years, Turkey fell into an economic recession.
Turkey did not join the fighting and experience the devastation of WWII. However,
it had to allocate workforce and national assets to national defense and purchase arms
from the Allies. Despite making expensive arms purchases, Turkey cited its military
weakness and lack of modern equipment as the main reason for refusing to join the
war along with the Allies.52 Furthermore, the division of loyalties, with some
sympathy for the belligerents’ policies, played a major part in keeping the country
out of the war. However, feeling insecure about the possibility of invasion caused
Turkey to summon one million men to military service, which crippled the economy
by diverting resources and taking labor away from the fields.53 Turkey could not yet
disarm itself in the post-war period despite the economic drain, but it continued to be
indebted to foreign states in credit and kind.
To reduce its growing budget deficiencies and debts and keep foreign currency and
gold reserves, Turkey mainly sought to secure clearing agreements to purchase
military equipment from Germany.54 Limits on foreign capital injection through such
deals were utilized to fuel industrialization in the 1930s. However, during the war
years, defense expenses were high. Furthermore, drafting more men and losing that
52 Selim Deringil, Turkish Foreign Policy during the Second World War (London: Cambridge
University Press, 1989), 230.
53 George Harris, Troubled Alliance: Turkish-American Problems in Historical Perspective, 1945-
1971 (Washington D.C.: American Enterprise Institute for Public Policy Research, 1972), 13.
54 Türkkaya Ataöv, Turkish Foreign Policy 1939-1945 (Ankara: Ankara Üniversitesi Siyasal Bilgiler
Fakültesi Press, 1965), 38-40.
37
workforce in industry and agriculture obliged Turkey to tax the peasantry more.55 An
unsustainable tax-based economy with lower trade volumes threatened to diminish
the currency and gold assets in the short term. It also caused social unrest. The
heavily taxed masses, primarily farmers, accounted for a large portion of the Turkish
population in the mid-1940s, and losing their favor could mean losing the right to
govern in the upcoming elections in 1946.56
Alongside these growing economic challenges, Turkey also faced larger geopolitical
problems. When Turkey approached the Soviets to re-ratify the Soviet-Turkish
Treaty of Friendship and Neutrality of 1925, Stalin proposed a counter-agreement
including harsh demands from Turkey. In a change to the accords of the Montreux
Convention Regarding the Regime of the Straits, the Soviets demanded bases on the
Bosporus. They also demanded the annexation of Kars, Ardahan, and Artvin in
northeastern Turkey, which had been part of Turkey since 1925.57
Standing alone against the Soviet threat seemed unbearable for Turkey. Moreover,
the other allies, France and Britain, were far from being capable of aiding Turkey. As
the ultimate winner of World War II and the champion of the free world, the U.S.
believed that Britain’s military presence should secure the Middle East and
neighboring regions. However, the Truman administration also accepted that the
55 Tezel, 264.
56 Leyla Kırkpınar, “Demokrat Parti ve Muhalefet Stratejisi” (“The Democrat Party and Its Opposition
Strategy”), Çağdaş Türkiye Tarihi Araştırmaları Dergisi 1 (2002): 86.
57 Stanford J. Shaw and Ezel Kural Shaw, History of the Ottoman Empire and Modern Turkey,
Volume II: Reform, Revolution, and Republic: The Rise of Modern Turkey, 1808-1975 (Cambridge:
Cambridge University Press, 1977), 400.
38
Soviets could counteract the weakened British power in the region.58 After the war,
Britain found itself in a tangled position; it still possessed much of its empire,
including the Middle East, but had minimal financial resources to maintain political
and military control over it. Desiring to share power through regional pacts and to
include a superpower in its defense framework, Britain hoped that the Truman
administration would take a larger role in Middle Eastern politics.59 The president
was also in favor of such an agreement. He believed that Turkey could be a valuable
addition to such a pact as it was already threatened by communist expansion in 1946.
Mutually, Turkey had long wanted to be accepted by the “Western Club,”60 which
consisted of European democracies and the U.S. Each Turkish government since the
foundation of the republic followed a policy aimed at establishing good relations
with the West and catching up with Western economies and modernity. In 1946, this
goal seemed more vital as Turkey found itself in political tension with the Soviet
Union.61 However, in 1946 Turkey was still far from being prepared to join this club
despite its great enthusiasm. Compared to the Western powers, Turkey had neither a
capitalist economy nor full democratic representation. Its statist economy was not
productive and its market was closed to liberal initiatives. Its army was weak and
58 Brown and Opie, 123.
59 Sylvia Kedourie, Seventy-Five Years of the Turkish Republic (London: Frank Cass, 2000), 70;
Joseph M. Jones, The Fifteen Weeks (February 21 – June 5, 1947) (New York: Harcourt, Brace &
World, Inc., 1955), 6.
60 This term was coined in the Turkish context by notable Turkish author Nasuh Uslu, who published
many works on Turkish-American relations in the 20th century. See his book titled Turkish Foreign
Policy in the Post-Cold War Period for further information.
61 Harris, 15.
39
primarily based on drafted soldiers rather than tanks and aircraft.62 Democratic
institutions were controversial, as seen in the national elections of 1946. Turkey
could be a useful addition in the fight against the communist threat in the region;
however, many were concerned about its shortcomings.63 According to the early
predictions of U.S. embassy personnel in Turkey, without a capable military and
financial support, Turkey could not realistically challenge the Soviet threat. 64
Furthermore, without establishing a liberal economy and functioning democratic
representation, it could not adapt fully to the “Western Club.”
On the other hand, the budget allocated to the military was largely devoted to
expenses for the draft and upkeep, and the purchased war machines seemed
inadequate for challenging a real Soviet military threat.65 An unhealthy economy
with escalating foreign debt would also eventually cause cutbacks in military
projects, which seemed to seriously hamper Turkey’s growing security concerns. The
further reduction of military expenses, however, was impossible in the face of the
Soviet threat. Turkey had been faltering economically since the 1940s; productivity
was relatively low, the domestic market was barely fed, and the situation was
unlikely to be improved in the upcoming years. State revenues were generally based
on excessive taxation while foreign trade had almost completely dried up.66 From the
Turkish perspective, the harsh war years halted their modernity and development
62 Johannes Glasneck, Türkiye’de Faşist Alman Propagandası (Nazi Germany’s Propaganda in
Turkey) (Ankara: Onur Yayınları, 1976), 80.
63 Denise M. Bustdorff, Proclaiming the Truman Doctrine: The Cold War Call to Arms (College
Station: Texas A&M University Press, 2008), 114-15.
64 Jones, 8.
65 Glasneck, 80.
66 Thornburg, Turkey: An Economic Appraisal, 185.
40
projects; however, American experts did not share that belief. Their early estimations
commonly underlined the position that Turkey’s statist economic model was far from
reaching Western standards and could never be efficient without private capital.67 In
light of these observations, an economically and militarily weak Turkey – by the
British, French and Turkish estimations – would be prey for the Soviets if none of
the Western powers opted to intervene.68 The State Department’s Office of Near
Eastern and African Affairs (NEA) shared all these concerns; however, this
division’s agents were reluctant to alarm authorities by suggesting an imminent
military takeover of Turkey by the Soviets. 69 Still, it seemed, the U.S. should be
prepared to intervene in the event of a real threat.
Losing Turkey to the communist Soviets in the early period of the Cold War could
damage the Allies’ interests in the region. Besides other possible political outcomes,
if the Soviets took over Turkey, they could spread the Soviet economic influence
across the Middle East and the Balkans, with the West losing significant resources
and markets. Leaving the Turkish Straits to Soviet control would raise the dangerous
possibility of Soviet financial control over a strategic route to the Middle East’s
petroleum resources. To maintain Turkey’s stability as well as that of the Near East,
the Truman administration offered Britain a joint action. It was projected that Britain
would furnish Turkey’s military forces with arms and equipment, while the U.S.
67 Such references can be seen in the reports of Max Weston Thornburg and James M. Barker, who
visited Turkey to prepare country studies in the late 1940s. Their works will be cited in the upcoming
pages in detail.
68 Foreign Relations of the United States Series (hereafter cited as FRUS), 1946, The Near East and
Africa, Volume VII, Turkey, The Ambassador in Turkey (Wilson) to the Secretary of State, Secret,
Ankara, January 22, 1946 (Washington: Government Printing Office, 2010), 810-11.
69 FRUS, 1946, “Memorandum by the Assistant Chief of the Division of Near Eastern
Affairs (Jones) to the Director of the Office of Near Eastern and African Affairs (Henderson),
Washington, August 9, 1946,” 833-34.
41
would support Turkey economically.70 However, Britain did not have enough
economic strength to help with Turkey’s military improvements.
In the spring of 1946, while the rift between Turkey and the Soviets over the Turkish
Straits continued, the Truman administration decided to launch an action, even if
only a symbolic one, to show that the U.S. had no intention of abandoning Turkey to
its fate. Washington dispatched the battleship U.S.S. Missouri to İstanbul carrying the
body of the recently deceased Turkish Ambassador to the United States, Münir
Ertegün. Returning the body of a deceased diplomat with funeral services in this way
was an unusual act of diplomacy and a meaningful gesture signifying U.S. interest in
the security of the Near East and Turkey.71 The American battleship was most
welcome in Turkey, as it showed America’s growing support for the nation’s
sovereignty. The arrival of the Missouri also heralded a gradual swing in Turkish
policy towards Washington.72
This significant milestone strengthened Turkey’s political position in the American
foreign policy agenda and accelerated Turkey’s addition to the American-led world.
Political convergence became the first step in enhancing bilateral relations. Turkey
would be more eager to adapt to greater American influence in military and
economic spheres to secure a U.S. alliance in the following years. Turkey’s symbolic
inclusion in the U.S.-led Western alliance with this diplomatic gesture in 1946 was a
70 Brown, Jr. and Opie, 125-27.
71 Joyce Kolko and Gabriel Kolko, The Limits of Power: The World and United States Foreign Policy,
1945-1954 (New York: Harper & Row, 1972), 233.
72 David J. Alvarez, Bureaucracy and Cold War Diplomacy: The United States and Turkey, 1943-
1946 (Thessaloniki: Institute for Balkan Studies, 1980), 75.
42
milestone that marked the beginning of Turkey’s forthcoming all-around
Americanization.73
2.2. American Goals in Turkey in the Post-WWII Period
George Kennan once claimed that containing communism through the support of
allies was the best strategy against the adversary.74 American businesses, through aid
plans, hoped to gain large shares from the world markets by promoting their products
and services overseas. In addition to seeking political and economic gains through
aid plans or foreign policy agendas, these actors asserted that American virtues such
as democracy and freedom were essential for shaping other nations. Internationalist
politicians and big business owners who shared the same goals were ready to dive
into unknown world markets to achieve worldwide Americanized societies in these
years.75 This was a strategy of both economic and business containment.
This new role arose from American modernization theory, which began in the late
1940s together with an emphasis on rapid economic development, sustainable growth
to achieve self-sufficiency, and the democratization of societies with the fulfillment
of the Marshall Plan. Achieving all such enhancements by following the American
ideals and utilizing American capital was the core of the plan, which necessitated an
economic integration among the allies under liberal economic thoughts and
73 Ferenc A. Vali, Bridge Across the Bosporus: The Foreign Policy of Turkey (Baltimore: Johns
Hopkins University Press, 1971), 125.
74 George F. Kennan, “The Sources of Soviet Conduct,” Foreign Affairs (July 1947).
75 Gregory Fossedal and Bill Mikhail, “A Modest Magician: Will Clayton and the Rebuilding of
Europe,” Foreign Affairs (May/June 1997).
43
commercialism banners. In contrast to the methods of the former imperialist Western
European states, less developed countries such as Greece and Turkey were
introduced to American tactics for a modernized state-building system with the
unleashing of economic growth through know-how and engineering projects for
better infrastructure.76 Saving these states from communist influence and helping
them adapt to the Western alliance and its dynamics were the main goals here. In
addition to them, empowering business circles and commercializing free and
competitive markets naturally had a strong place in post-war American economic
spread among the allies goals because such an experience had already showed its
quality in formation of American economic power.77
Drawing post-war developments together with the Marshall Plan, the implementers
of that plan, such as American engineers, businesspeople, economists, and diplomats,
played key roles. They envisaged encouraging traditional societies to follow a
convergent path toward an American type of economic modernization. Both the
Truman and Eisenhower administrations relied on reports from these actors while
mapping out foreign policy agendas, especially in countries where they had limited
knowledge about cultures, economic traditions, and livelihoods. Beyond political and
economic worldviews and their close relations in the practice of modernization
theory overseas, however, U.S. institutions also had a more enduring industrialist
trajectory. The ideals of modernization took root in efforts to eliminate poverty and
backwardness in other countries, and self-sufficiency was strongly correlated with
76 Scott.
77 Charles S. Maier, “The Politics of Productivity: Foundations of American International Economic
Policy after World War II” International Organization, Vol. 31, No. 4, (Autumn 1977): 609.
44
larger production volumes.78 The role of the middle class, which would enhance
itself through economic development and guide other classes to promote democracy
and human rights to avoid communism, was also emphasized in this process.79
Facing the communist threat and in need of modernization, Turkey was a significant
target for Americanization in the post-WWII period.
Before implementing this plan, President Truman addressed Congress on March 12,
1947, to request $400 million in economic and military aid for the Turkish and Greek
governments, two states of Eastern Europe resistant to Soviet expansion but
experiencing financial difficulties. Subsequently, $150 million of that aid was sent to
Turkey for military purposes. Truman described Turkey as a valuable country for the
region’s stability.80 This amount of aid could give Turkey breathing room in meeting
the allocated budget for military expenditures and furnishing the Turkish army with
better war machines and equipment. The RPP government welcomed the Truman
Doctrine and the American decision to include Turkey in its military aid program.81
This assistance aimed to reduce Turkey’s military expenses in 1947 to allocate more
budget for economic recovery programs and refuel the process of state
modernization, which had declined since the early 1940s.82
78 Cullather.
79 Diane B. Kunz, Butter and Guns: America’s Cold War Economic Diplomacy (New York: Simon &
Schuster, 1997), 125-28.
80 “The Truman Doctrine,” President Harry S. Truman’s Address Before a Joint Session of Congress,
March 12, 1947.
81 Mustafa Aydın, “İkinci Dünya Savaşı ve Türkiye” (“The Second World War and Turkey”), in Türk
Dış Politikası (Turkish Foreign Policy), Vol. 1, ed. Baskın Oran (İstanbul: İletişim Yayınları, 2004),
422-24.
82 FRUS, 1947, The Near East and Africa, Volume V, “The Ambassador in Turkey (Wilson) to the
Secretary of State, Top Secret, Ankara, March 4, 1947,” 91-92.
45
The aid provided through the Truman Doctrine was mainly military. Therefore, these
funds were used only for military purchases and contributed little to solutions for
Turkey’s growing economic problems. In pursuit of economic development and
industrial modernization, the RPP government questioned the relevancy and capacity
of U.S. aid, which should have aimed at supporting Turkey’s determination to build a
self-sufficient and modernized country.83 Reducing expenses through the Truman
Doctrine would be only a short-term solution if an economic leap was not achieved
in these years.
In 1947, the GDP remained low in Turkey, at around $5.2 billion. Production rates in
agriculture fell by 11.7%, and growth in industrial development remained at 5% in
comparison to 1946.84 The early indicators of 1947 showed that the low economic
and commercial growth had slowed compared to the war years. Trade growth
remained at 4.1%, while it had grown about 30% during the war years.85 1946 would
be the last year in which Turkish exports surpassed imports.86 The idea started to
appear among various bureaucrats and deputies that Turkey was unlikely to reach
productivity levels that would reinvigorate the economy without foreign incentives.87
This idea was not groundless because Turkish decision-makers had invited foreign
advisors to study the Turkish economy and recommend modernization techniques
83 Harris, 28.
84 Republic of Turkey Ministry of Development, Economic and Social Indicators 1950-2014, July
2015, 75-76. Available at https://www.sbb.gov.tr/wpcontent/
uploads/2018/11/Ekonomik_ve_Sosyal_Gostergeler_1950_2014.pdf (Appendix I).
85 Ibid.
86 Ibid.
87 Korkut Boratav, Türkiye İktisat Tarihi, 1908-1985, 80-81.
46
back in the 1930s. In addition, Turkey had accepted loans from the USSR and
Germany to establish industrial and mining grounds, bought machines, and hired
foreign professionals in these sectors. Germany became Turkey’s top partner in
modernization through credits deals and arms and machine purchases in the 1930s.88
Through these deals, Turkey settled its debts with finished products from newly built
factories. The deepening of these economic relations through clearing agreements
made Germany the top importer from Turkey in the early 1940s. Until 1945, only a
few months before the end of the war, Turkey was still maintaining a significant
trade volume with Germany, although it had decreased throughout the course of the
war due to pressure from the Allies. The U.S., particular after the Lend-Lease deal,
started to replace Germany’s role in trade with Turkey.89 However, losing its top
importer in 1945 interrupted Turkey’s foreign trade revenues and its mechanization
and modernization processes. Turkey was thus looking for a foreign trade model
similar to that it had developed with Germany to ensure continued development
progress with fewer economic costs.
On June 5, 1947, Secretary of State George Marshall delivered his famous speech
outlining a post-war aid program for war-torn European states. Such an aid plan was
necessary to finance the European states’ economic and financial reconstruction and
to safeguard them from communism. The popularization of socialist and communist
parties in France and Germany was particularly concerning; they could pose a
88 Alp E. Yalman, “Almanya ile İktisadi Münasebetlerimiz” (“Our Economic Relations with
Germany”), Tan (Dawn), January 20, 1937; Alp E. Yalman, “Alman Kliringi” (“The Clearing
Agreement with Germany”), Tan (Dawn), January 24, 1937.
89 Tezel, 184.
47
serious threat of pulling Western Europe into Moscow’s orbit.90 Turkey, as a frontier
state at the crossroads of the Balkans and the Middle East, was also under the Soviet
threat since 1945. Marshall’s speech was subsequently transformed into the
Economic Cooperation Act in 1948. This act consolidated American political
relations with Europe through the construction of economic and commercial
partnerships. The plan was to secure $12.5 to $17.2 billion in grants and loans from
the U.S. Treasury and an additional $5.8 billion from the World Bank and other
financial institutions for recovery in four years.91
The American business sector was also a significant part of the economic recovery
program. Due to the devastation of European markets, recovery was expected to be
made through American products and services. Besides aiding governments and state
initiatives, the Marshall Plan also offered an American type of corporative
neocapitalism, which pushed a laissez-faire-minded political economy.92 In this
model, states were expected to accept changing economic conditions and open their
markets to foreign – mainly American – businesses. The adoption of American
economic liberalism, including increased cooperation between public and private
leaders and economic integration among America’s allies, could be achieved with
time.93
90 Michael J. Hogan, The Marshall Plan: America, Britain and the Reconstruction of Western Europe,
1947-1952 (Cambridge: Cambridge University Press, 1987), 3.
91 Price, 43-44.
92 Hogan, “Marshall Planners and the Search for a European Neocapitalism,” 71-72.
93 Ibid.
48
The Truman administration promised to grant billions of dollar in credits and aid to
the Marshall Plan countries, to be overseen by American mission chiefs. These aid
and credit packages were to be used to buy the goods, equipment, and services
needed to stimulate these states’ recoveries. There were no binding conditions stating
that the companies to be chosen must be American. However, less war-damaged and
economically non-exhausted American companies were the most likely candidates to
help these countries get back on track with their products and services. The
governments would be the direct customers of the aid and credit, and individuals and
local companies could pay their governments for products in their own currencies.
Eventually, all would be using American products and services in return.94
In a pamphlet prepared by the ECA for American businesspeople, these roles were
clearly stated. The aid-receiving states were customers, American businesspeople
were sales associates, and the ECA was the banker.95 The Marshall Plan countries
could estimate their economic recovery needs and inform the ECA for financing.
After detailed estimations and studies, approved procurement through ECA branches
would deliver aid to these projects, either in cash or kind. The customers could then
contract for related items to be purchased elsewhere.96
American businesses would enter the scene after the ECA-approved credit and aid
authorizations as sales associates. The authorities promised to assist them in
providing commodities and services. MNCs had already settled in different markets,
94 Price, 306.
95 Economic Cooperation Administration, Information for American Businessmen on the Marshall
Plan (Washington D.C.: U.S. Government Printing Office, 1949), 1-2.
96 Ibid.
49
particularly small-scale enterprises that would be promoted overseas. The ECA
institutions in different countries would provide market intelligence and know-how
opportunities to improve their chances of becoming established vendors in new
markets.97 As they had done in the past, American companies would go after
business opportunities through private commercial channels, international trade, and
diplomacy. With the help of state institutions, they would contact foreign
customers and offer their products and services. The ECA, as the banker, would
finance those purchased commodities and services through foreign governments.
Selling in foreign markets is not easy for small companies, they needed
governmental support.98 Local American manufacturers without experience in
foreign markets would face numerous problems. The primary challenge to consider
was the lack of knowledge about the markets, sales promotion methods, local
business cultures, and product choices. Other technical details related to gaining
export licenses, ensuring efficient transportation, insurance, tariffs, documentation,
and other foreign regulations were partially the companies’ concerns.99 After
weighing all the factors involved, American businesspeople would decide whether
they were prepared to take part in the ECA’s export programs or not. Overseas
commercial markets are not built overnight, and a cursory attempt to engage in
international commerce without sufficient intelligence could result in disastrous
financial consequences. The most important allies of these companies in the foreign
markets were accordingly the ECA officers, mission chiefs, ambassadors, and
97 Ibid.
98 Olivier Naray, “Commercial Diplomats in the Context of International Business,” The Hague
Journal of Diplomacy 6 (2011): 132.
99 Ruel, 13-14.
50
professional advisors. This group of people, also known as experts, would prepare
country studies and diplomatic posts to support companies’ rights and would deal
with foreign governments on their behalf. In addition, international banks, American
chambers of commerce, and trade associations were also good sources of advice.
Besides institutional and individual help, the U.S. Department of Commerce also
issued other significant documents providing detailed information about countries,
procedures, news, and lists of prospective foreign firms.100
The Marshall Plan enriched its recipients with political and economic support to put
this theory into practice.101 Ultimately, the goal was to build a new order among the
members of the free world, which would be constructed with American capital and
advice. Commercial diplomacy and the promotion of American business overseas
were essential parts of that ideology. At the same time, the actors who would
participate in these processes were also key.
2.3. American Business-Oriented Officials Arrive in Turkey
Commercial diplomacy requires exceptional qualities from actors assigned to
different parts of the world, such as diplomatic talent, knowing the market, and
having experience in business operations. For example, the Truman administration
initially decided to appoint lawyer and later Secretary of State Dean Acheson as head
of the ECA; however, Congress challenged that decision and suggested that the
100 Information for American Businessmen, 31.
101 Şaban Çalış, “Turkey’s Integration with Europe: Initial Phases Reconsidered,” Perspectives 5
(June-August 2000): 44.
51
president pick someone with business acumen to run an economic organization.102
Truman then assigned Paul G. Hoffman, the head of Studebaker Automobile
Corporation, as the ECA chief. Hoffman was a corporate bureaucrat who argued that
European economic salvation was tied to the formation of an intra-European trade
system and the circulation of goods and capital. Former Secretary of Commerce
Averell Harriman, another respected investment banker, diplomat, and businessman,
became the primary American representative to the OEEC to oversee the ECA’s
projects and he reported directly to Hoffman.103
Truman’s cabinet and inner circle included various legal, business, and political
experts. James Byrnes, Harriman, and even Joseph Grew, the former U.S.
Ambassador to Ankara, were members of this group.104 Their wide-ranging
experiences collectively informed Truman about the general scope of the post-war
world’s economic problems. They were exceptionally qualified to provide advice
about different regions, states, and cultures, including Turkey. A business-oriented
background became a significant point of consideration while assigning the heads of
special projects in each participating country, as U.S. commercial diplomacy had
long relied on that criterion.105 These regional chiefs of the ECA were expected to act
102 Price, 69.
103 Keith Aksel, The Engineering Generation: The Story of the Technicians Who Enabled American
Cold War Foreign Policy, 1945-1961 (Ph.D. diss., University of Colorado, 2016), 40.
104 Ibid.
105 In “Commercial Diplomacy and International Business,” Michael Kostecki and Olivier Naray
discuss the role of American diplomats, who have generally had backgrounds in business, in
increasing trade. They have always worked closely with companies to promote American business
overseas and, according to Kostecki and Naray’s statistics, the U.S. seems to be one of the top
countries in terms of reliance on commercial diplomacy. Michael Kostecki and Olivier Naray,
“Commercial Diplomacy and International Business," in Discussion Papers in Diplomacy, ed. Simon
Mark, 2009
52
as diplomats to convince states to participate actively in the aid program. Heads were
just below ambassadors in the hierarchical order, and they were tasked with working
closely with governments and other country officials. Another desired criterion was
to assign people to posts where they had sufficient knowledge about the country and
its culture, market, and economic dynamics. To eliminate foreignness in a region and
provide working help to newcomer American businesses in unknown lands, these
people with business backgrounds and structural knowledge about the countries were
described as essential commercial diplomats.106
In light of the above criteria, it could be said that the best-fitting man for the job was
assigned to the ECA headquarters in Turkey: Russell H. Dorr. Dorr, a Columbia Law
School graduate specializing in international banking, was appointed as the head of
the Marshall Plan’s Turkey mission. He was not a stranger to Turkey, its culture, or
its economy before this mission. His father, Goldthwaite H. Dorr, an anti-trust
lawyer representing Socony-Vacuum as its attorney in the 1950s, was invited by the
Turkish government to review Turkey’s economic survey in 1933 within the Hines-
Kemmerer mission.107 This mission consisted of six American economic specialists
for supervising Turkey’s economic conditions and give technical advice upon
Turkey’s request. Eventually, this group submitted a detailed report on Turkey’s
financial condition, its advantages and disadvantages, and further recommendations
to enhance the economy and industry. Russell Dorr also participated in this mission
106 Michael Kostecki and Olivier Naray, “Commercial Diplomacy and International Business,” 21.
107 Roger Trask, “The United States and Turkish Nationalism: Investments and Technical Aid During
the Atatürk Era,” The Business History Review 38, No. 1 (Spring 1964): 71.
53
and visited Turkey’s economic centers and industrial fields with the group.108
Kemmerer and other professionals submitted a detailed report advising greater
efficiency in production, improvements in infrastructure, better techniques and
practical knowledge, and a stable financial system. Their emphasis was on the need
to modernize agriculture and transportation.109
His second time in Turkey, Dorr and his mission’s primary responsibility was
supervising aid and project investments in the country. Under Dorr’s guidance, the
ECA launched another survey to acquire detailed information about the state’s
economy with the aim of overcoming foreignness in the management of resources
and identifying the state’s strengths and weaknesses. In line with Dorr’s advice,
several other American financial experts were invited to Turkey to complete a
detailed country study regarding resources, opportunities, shortcomings, and further
guidance. To obtain that financial information about the country, Dorr also worked
closely with Turkish officials during the intelligence-gathering process, receiving the
necessary permission to access tables and charts on resources, laws, and decisionmaking
processes. He was even permitted to enter forbidden industrial zones.110 The
ECA secured relevant grants from the RPP government; was allowed access to
detailed financial records of Turkey’s profitable industries, products, and zones; and
108 Edwin W. Kemmerer Papers, Purdue University Archives and Special Collections, Series 3,
“Economic Survey of Turkey, 1930-1934,” Box 289.
109 Trask, “The United States and Turkish Nationalism: Investments and Technical Aid During the
Atatürk Era,” 74.
110 The Second Accord of the Economic Cooperation Agreement Between the United States of
America and the Republic of Turkey refers to this. If the National Archives of Turkey are examined
thoroughly for documents from the 1940s and 1950s, dozens of documents can be found on “Granting
access to X site for American Mr./Mrs. Y.” These people were mostly Dorr’s subordinates or
American technicians hired to conduct country studies.
54
worked on a thorough report entailing financial estimations for the future.111 As a
bureaucratic colleague of Dorr’s, Nurullah Esat Sümer, Minister of Finance, served
as the minister in charge of coordinating with the ECA operations in Turkey. Sümer
also had a finance background as the manager of Sümerbank, where he had worked
for years after participating in the bank’s establishment. Additionally, he represented
Turkey at the International Monetary Fund (IMF), where the RPP had assigned him
to work closely with other foreign bankers and creditors.
Richard D. Robinson was a graduate of the Harvard School of Business and M.I.T.,
from which he received his PhD. He spent a year at the London School of Oriental
and African Studies focusing on Turkish history, literature, and language before
arriving in Turkey in 1947. He arrived in Turkey as an associate of the Institute of
Current World Affairs (ICWA), founded by businessman Charles Richard Crane in
1925 to advance the American understanding of international cultures and affairs by
sending young professionals abroad. The selected individuals generally exhibited
diplomatic skills, sufficient foreign policy knowledge, and specialization in a
relevant subject. Robinson, who was chosen to act as a commercial diplomat,112
lived in Ankara to study Turkish economic dynamics and the American companies
that would invest in prospective markets. His main tasks were to detect concrete
111 Dorr completed a business tour of Anatolia between August 18 and September 5 in 1950. During
this trip, he met with different types of business vendors in Turkey and visited SOEs including the
Turhal Sugar Factory, Murgul Copper Mines, and port construction sites in Samsun and Trabzon. In
the end, Dorr submitted a report to the Presidency of the Republic of Turkey, which included his
observations. DSA, “Mr. Russell Dorr’un yurt içinde yaptığı tetkik gezisine ait rapor” (“A report
including a survey on Dorr’s trip in Anatolia”), 42-242-19, September 28, 1950.
112 In his letters, Robinson explained that he was informed about the culture in Turkey, how to treat
Turks, and other such topics. According to him, it was crucial to avoid giving orders to Turks, as the
Germans and British had previously done. Reconciliation in business and approaching Turkish
partners with smooth advice instead of disdain were key aspects of success for the Turkish mission.
Institute of Current World Affairs (ICWA hereafter) Records, Robinson, Richard D., 1948-1954,
“Richard D. Robinson, Letter to Mr. Walter S. Rogers” (Columbia University Libraries, Rare Book
and Manuscript Library, New York), May 1, 1948, 3.
55
shortcomings and failures in Turkey and the Turkish economy. More crucially,
convincing Turkish decision-makers to take relevant actions was also a part of his
job.
Robinson was one of the first American advisors who believed that Turkey should
adopt American liberalism and democracy as a prerequisite for modernization and
admission to the Western Club. He spent nearly a decade in Turkey, witnessing the
changing framework of the Turkish economy from the 1940s to the 1950s and the
accompanying changes in the mindset regarding foreign capital. After arriving in
1947, Robinson was granted the privilege of traveling all over Anatolia and
accessing large volumes of data about Turkey, including statistics and information
about natural resource reserves. According to his earlier estimations about the
Turkish economy, the imbalance due to growing military spending and foreign debts
seemed a natural economic distortion of the past few years.
In line with the ICWA’s expectations, Robinson analyzed the mindsets of the
Turkish bureaucrats and adapted his behaviors accordingly. He noticed that Turkish
bureaucrats were skeptical of Western institutions and particularly of consultants
who looked down upon the Turks and their achievements. The best way to get along
with Turkish officials was not to push them to do something with strict orders;
instead, it was better to approach them with humble pieces of advice.113 The key was
always being cautious in one’s approach; even the humblest persistence might put
the Turks on guard and make them feel excessively surrounded by Americans.114
113 Ibid.
114 This feeling has been referred to as “Sevres syndrome” in the literature. From academics to
journalists, many authors have used this term to explain Turkey’s efforts to avoid being surrounded by
56
2.4. The Earlier Representation of the Marshall Plan, 1947-1949
Robinson was right about being cautious and constructive in dialogues because the
Turkish and American perspectives on the economy were decisively different in the
late 1940s. Replacing a model that the state had already built up could be expected to
be painful and involve many challenges. On the other hand, to advance into a new
era while depending more on military necessities and allying with a group of states
that had adopted a capitalist economic system, Turkish decision-makers were urged
to accept that change was necessary. However, the understandable paranoia about
foreign investments inherited from Ottoman times and the simultaneous desire to be
as developed as the feared capitalist states created a “love-hate” mentality among
these Turkish decision-makers.115 Furthermore, according to the Americans, Turks
were very stubborn about wanting to reach the “level of contemporary civilization”
through heavy industrialization when, in fact, longer-term goals were required for an
agricultural Turkey with limited efficient industrial institutions in the 1940s. On the
agenda of American advisors, shaping a Turkey with enhanced agriculture and
integration into allied markets was a realistic short-term achievement. As the
benefactors, the Americans had the privilege of deciding how to apply these funds in
Turkey. Turkey could modernize itself with American guidance and business only if
it accepted the American terms.
the former Allies of WWI or “capitalist” powers whose alleged hidden goal was to destroy Turkey
with economic, political, and military tools. For an explanation of a similar attitude in the 1940s,
please see Philip Robins, Suits and Uniforms: Turkish Foreign Policy since the Cold War (Seattle:
University of Washington Press, 2003) and Nasuh Uslu, Türk-Amerikan İlişkileri (Turkish-American
Relations) (İstanbul: Pandora, 2009).
115 “Turks Are Fearful of ECA’s Motives,” New York Times, January 4, 1949, 7.
57
The RPP government needed to follow those terms because the Marshall Plan funds
would impact Turkey differently compared to other recipients. After receiving aid,
Western Europe’s developed countries would be back on their feet; however, Turkey
needed to make its development permanent and increase its production and foreign
trade efficiency to modernize the country and balance the inputs and outputs. What
type of modernization that the U.S. expected from Turkey was related to a
governmental coordination of trade, credit, and monetary and fiscal policies to
provide an environment to attract private investment-domestic and foreign-to
selected labor-intensive industries.116 Although ambitious about modernization since
its foundation, the Turkish Republic had advanced very little compared to Western
industrialization and mass production standards. Starting a top-down development
process, ECA officials offered to direct funds to construct a solid infrastructure
network in Anatolia and sufficient technology to increase mineral and agricultural
production.117
The American advisors prioritized industrializing Turkey’s strengths, such as
agricultural and mineral production, which could also increase its exports to the U.S.
and Europe.118 The general framework of the advice urged privatization; however,
none of these reports suggested the elimination of all state initiatives or
governmental inclusion in the agricultural and mining sectors, which would have
been unrealistic. Americans could not alter Turkey’s statist perspective in such a
116 Sylvia Maxfield and James H. Nolt, “Protectionism and the Internationalization of Capital: U.S.
Sponsorship of Import Substitution Industrialization in the Philippines, Turkey and Argentina,”
International Studies Quarterly 34, No. 1 (1990): 69-70.
117 Thornburg, 4.
118 Economic Cooperation Administration, Turkey: Country Data Book, 1.
58
short time and the RPP government could not accept such a drastic change.
Privatization and the inviting of foreign investments needed to co-exist with state
initiatives in Turkey.119 Bringing in foreign investments would take time and would
be vital to pursuing a liberal, self-sufficient economy. In the long run, it would
improve production, trade opportunities, and fiscal and monetary policies while
allowing credit and capital to be secured and providing access to technology for
substitute goods for the domestic market. With the necessary adjustments and
adoptions, industrialization in different sectors could also be intensified by
introducing competition and enhancement in the market. In the end, Turkey could
free itself from its policy of import-substitution industrialization as the U.S. had back
in the late 19th century.120
The American advisors trusted in the power of privatization and American MNCs,
and the Turkish public and the RPP government began to share this vision thanks to
the visible results in agricultural production and mining and the completion of
infrastructure projects in 1949.121 Not only did American businesses introduce their
products and services and prove their capabilities successfully under the ECA’s
guarantee, but they also arrived in the Turkish market to buy Turkish agricultural
goods and raw materials. Foreign interest stimulated the market and increased the
demand among the Turkish peasantry and business elite to produce more and create
mutual exchanges among goods. This mutual commercial expectation was also
119 Economic Mission to Turkey, The Economy of Turkey, an Analysis and Recommendations for a
Development Program; Report (Baltimore: The Johns Hopkins Press, 1951), 149.
120 Mira Wilkins, “Foreign Investment in the U.S. Economy Before 1914,” The Annals of American
Academy of Political and Social Science 516 (1991): 20.
121 Central Bank of the Republic of Turkey, Annual Report 1949 (Ankara, 1950), 5-7.
59
among the ECA plans. According to early country study estimations, Turkey could
hasten the turnaround for increased productivity and efficiency.122 Companies would
receive grants to export Turkish products to Europe, necessitating better economic
cooperation through the reduction of existing trade and investment barriers.123
The Marshall Plan funds were intended to balance imports and exports and to
introduce American and Turkish businesses to each other in the short term, while
sustaining mutual market enhancement and commercial integration was the longterm
plan. According to the economic cooperation agreement between the U.S. and
Turkey, the U.S. promised to provide state-sponsored technical assistants,
consultants, and advisers to Turkey along with commodities and aid. An
economically healthy Turkey with an industrialized production capacity, which was
the ultimate aim, would be helpful for the promotion of Turkish products in foreign
markets. Specifically, Turkey’s existing agricultural and mining sectors, considered
the country’s strengths, were the ECA’s initial targets for industrialization.124 Mass
production and exportation of agricultural goods and raw materials would help
balance the currency deficit that the Turkish economy was suffering from. With the
profit received from exports, Turkey could fund its economic development and
purchase industrial goods. That goal required transformation in many economic
fields, agriculture and irrigation systems, and infrastructure. It also assumed Turkey’s
full cooperation with the OEEC. It aimed to create an economically self-sufficient
122 Economic Cooperation Administration, Turkey: Country Study (Washington D.C.: U.S.
Government Printing Office, 1949), 7.
123 Hogan, “Marshall Planners and the Search for a European Neocapitalism,” 45.
124 Thornburg, 5.
60
Turkey by 1952, when the Marshall Plan would expire.125 By that time, American
private initiatives with Turkish businesses were expected to step up and take on the
burden for both states’ institutions.
The early reports of the ECA were optimistic about achieving better economic
integration in the European markets by 1952.126 In parallel with early
recommendations, Turkey received $22.148 million from the U.S. for its agricultural
development.127 The aid was primarily aid in kind, providing farming machinery,
pesticides, and fertilizers so that Turkey could utilize them in the fields and increase
its exports.128 Wealthy Turkish landowners started to benefit from mechanization on
cultivated lands, gained improved access to fertilizers, and increased their
agricultural production after two years. As this class caught up with American
businesses and methods, the next task was to include the Turkish peasantry in this
process of adaptation. Most Turkish farmers followed traditional but primitive
farming practices, which caused low production and inefficient land use; roughly
15% of the total land was cultivated in Turkey in the late 1940s.129 A traditional
Turkish farmer’s life was based on self-sufficiency; they produced their own food
and clothing, did not or could not produce goods for commercial purposes, and had
very little interest in breaking this cycle. The most valuable agricultural products,
125 The National Archives (NARA hereafter), Records Group 469 (RG 469 hereafter): Records of the
U.S. Foreign Assistance Agencies, Europe, Turkey Division, 1948-1953, “Economic Cooperation
Agreement Between the United States of America and the Republic of Turkey,” Ankara, July 4, 1948,
3-4; Appendix II.
126 Turkey: Country Data Book, 2.
127 Price, 273-74.
128 Turkey: Country Study, 7.
129 Lewis V. Thomas and Richard N. Frye, The United States and Turkey and Iran (Cambridge:
Harvard University Press, 1951), 25-26.
61
such as cotton, sugar beets, and tobacco, with yields barely enough for domestic
consumption and surplus production, were largely purchased by the state for military
consumption rather than promoting them in world markets.130 Commercializing all
agrarian classes and industrializing their products was an important goal.
In addition to providing goods and machines for the agrarian classes, country study
reports also underlined the necessity of improving irrigation systems, building dams,
and ensuring that electrification was extended to agricultural fields for higher
productivity rates.131 The villages had limited access to ports or urban areas for
exportation. Another aim of the aid was to overcome those limits through the
construction of modernized roads and highways.132 Expanding agricultural
production by introducing American agricultural products was a significant step;
however, without access to agricultural centers and markets and without smooth
distribution and transportation, these products would be limited to the domestic
markets with less revenue and unnecessarily high upkeep costs. Furthermore, large
harvest volumes were rotting in the fields due to transportation failures, which had to
be avoided to ensure a profit. Therefore, to eliminate challenges in distribution, the
ECA advisors urgently called for the improvement of transportation in Turkey.
Turkey lacked a well-built transportation infrastructure for distributing products and
natural resources for exportation. At the same time, Turkey did not have adequate
investment funds or management personnel with experience in the relevant
130 NARA, RG 469, “Confidential, Letter to Carter de Paul and James E. Victory from Russell H.
Dorr,” July 14, 1949.
131 Ibid.
132 NARA, RG 59, General Records of the Department of State Records of the Office of Greek,
Turkish and Iranian Affairs, 1947-56, “Report About the Highway Situation in Turkey by American
Highway Mission For Aid to Turkey,” February 1948.
62
engineering fields to materialize such a vast infrastructural overhaul. The Marshall
Plan arrangements thus accelerated the construction of modern roadways with the
help of the U.S. Bureau of Public Roads. The plan was to build a transportation
network across Anatolia that would encompass all market centers, mines, and natural
resources and tie them to the commercial ports. The project was launched with U.S.
aid worth $5 million, largely in the form of road construction equipment, and Turkey
contributed 30 million Turkish lira, or approximately $11 million at that time, to
cover local needs. The project was predicted to complete 23,000 kilometers of roads
by 1957.133
The ECA reports also prioritized the improvement of mining processes. Turkey
could fuel the military industries of the West, which required various resources such
as copper, chrome, coal, and iron ore, while increasing its exports and lowering its
imports of products vital for military industries. To achieve this goal, Turkey needed
mining facilities that would be better utilized, and it needed to ease the legal barriers
to privatization.134 Except for a few small mining fields, Turkey had been home to
very limited industries operated by foreign capital since the 1920s;135 these
operations were mainly in the hands of SOEs. Limited investments were received in
the early republican era, and in the 1930s, foreign capital for the mining fields dried
133 Bayındırlık Bakanlığı (The Ministry of Public Works), Yol Davamız (Our Road Building Goal),
Ankara, 1948, 13. Contrary to conflicts generated by the ECA’s insistence on agricultural
development rather than industrialization, the RPP, like the DP that would follow, supported the
improvement of the infrastructure of Turkey. Building roads, dams, hotels, and anything else that
could be constructed was considered sacred among the Turkish governments as signs of development.
Therefore, building roads was always one of the most welcomed projects of the ECA among Turkish
decision-makers. See Begüm Adalet, Hotels and Highways, for more on this topic.
134 Thornburg, 92-94.
135 İlhan Tekeli and Selim İlkin, Dünyada ve Türkiye’de Serbest Üretim Bölgelerinin Doğuş ve
Dönüşümü (The Birth and Transformation of the Export Processing Zones in Turkey and the World)
(Ankara: Yurt Yayınları, 1987), 89-93.
63
up due to the recession of capitalist economies. There was a lack of foreign capital,
and many multinationals conducting business in Turkey left the country as operations
were costly and it was impossible to profit in such economic chaos. After 1934,
foreign business owners began returning to the Turkish market; however, business
interactions were interrupted again due to WWII.136
Not surprisingly, mining in Turkey was described as a primitive affair with little
mechanization in the ECA reports.137 As American consultants stated, statism had
caused a lack of competent managers and skilled workers; personnel needed to be
trained to better utilize schedules and the latest technological advancements and
methods. Even in the largest SOEs, American advisors found few skilled employees,
mostly American-trained engineers and managers.138 The mining enterprises were
financed by the state’s relevant development bank, Etibank; state monopolies
artificially determined the general prices without considering domestic purchasing
power or buyer motivations in international markets.
These SOEs also deterred the entrance of private enterprises into Turkish mining,
which kept the Turkish economy from receiving sufficient capital and technology to
produce the needed high technology. Therefore, the reduction of the state budget
allocated to development in this sector was proposed. The ECA recommended that
136 Tezel, 202.
137 Thornburg, 91.
138 Aksel, 225-31.
64
Turkish government institutions pursue partnerships with American mining
companies.139
Disagreements between the ECA advisors and the Turkish bureaucracy never
entirely vanished throughout the aid process. The skeptical attitude of the RPP and
Turkish bureaucracy about the advice of American consultants and mission agents
often frustrated the American advisors.140 Still, both sides generally managed to
reach common ground because they had limited options besides cooperation.
Eventually, the Marshall Plan in Turkey worked by deepening the economic relations
between the two states and promoting American business in Turkey. American
advisors’ roles in this process were crucial. In a letter to the director of the ICWA,
Robinson praised Dorr for his calm and convincing mediation between American
businesses and the Turkish government. He pursued conciliation through advice and
concrete steps, trying to find common ground between the two countries during
deadlocks in negotiations.141 The RPP government was aware that working closely
with American advisors and institutions was their choice from the beginning.142
139 Turkey: Country Study, 9-10.
140 NARA, RG 469, “Letter from Russell H. Dorr to James E. Victory,” June 4, 1949.
141 ICWA, “Robinson, Letter to Mr. Walter S. Rogers,” January 7, 1950.
142 DSA, “Bir Amerikan Gazetesi Tarafından Sorulan Suallere Başbakan Tarafından Verilen
Cevaplar” (“Answers Given by the Prime Minister to Questions Asked by an American Newspaper”),
5-23-2, April 16, 1946.
65
2.5. Americans Convince the RPP Leaders
Neither the RPP government nor President İnönü openly challenged American
economic consultation. On the contrary, they invited American aid and advisors,
welcoming the Truman Doctrine and Marshall Plan. According to Harriman’s
observations, each meeting to map out the plans to improve the Turkish economy
and reduce military costs was fruitful.143 The RPP government was generally
committed and determined to follow the American guidance and had fewer concerns
about the aid program projected by the ECA. Harriman stated that the RPP
government showed fewer signs of xenophobia in terms of economic cooperation, or
at least towards American businesses.144
Earning an important political and economic place among the aid-receiving countries
by promoting American products and companies could lead a state to power on the
world stage while producing the American-envisioned world order that most
American businesspeople desired.145 From the RPP government’s perspective,
economic liberalism resulted from the domestic and international political choices in
the post-WWII period. Initially, Turkey accepted financial and military aid to secure
itself against Soviet hostility. Following Western methods was in line with Atatürk’s
dream of economic modernization, and it also provided a security shield in the post-
WWII period. Rather than remaining politically isolated, according to Turkey’s
143 FRUS, 1949, Volume VI: The Near East, Asia, and Africa, “The United States Special
Representative in Europe for Economic Cooperation Administration (Harriman) to the Administrator
for the Economic Cooperation Administration (Hoffman),” January 6, 1949, 1638-40.
144 Ibid.
145 Kolko and Kolko, 337.
66
ambassador to the U.S., Feridun Erkin, Turkey welcomed the guidance of American
businesses and advisors in the late 1940s.146
WWII brought significant tax burdens and caused a drastic fall in production and
exports. Strict control over the economy temporarily allowed the RPP government to
hold on to gold and currency assets; however, these assets were destined to be
diminished in several years without a stable economic program being enabled.
Distaste among voters, with even some groups inside the party demanding a change
in the economic model,147 and the emergence of new political parties to challenge the
RPP’s authority made the RPP’s A-team more open to American methods and aid.
After American aid, products, and services began arriving in the late 1940s, the tone
of the demands for change intensified. Former statist cabinets of the RPP had not
initially approved of the Americans’ agricultural modernization plan and they found
the offered aid to be meager. However, a few years into the plan, these people
developed a new perspective.
After convincing Turkey to begin modernizing its agricultural production, a
significant portion of the aid was allocated to agriculture with a 21% share of the
total. The total capital secured for Turkey for agricultural investments reached nearly
$40 million after two years of the Marshall Plan.148 In addition to importing
thousands of tractors and tons of fertilizer, service and construction costs were
146 NARA, RG 469, “Letter to Feridun Erkin from George McGhee, Assistant Secretary,” October 29,
1951.
147 Bilsay Kuruç, İktisat Politikasının Resmi Belgeleri (The Official Documents of Economic Policy)
(Ankara: Siyasi Bilgiler Fakültesi Maliye Enstitüsü, 1963), 114-16.
148 DSA, “Marshall Planı ve Türkiye’deki tatbikatı hakkında muhtıra” (“Memorandum on the
Marshall Plan and Its Exercise in Turkey”), 125-801-5, January 4, 1952.
67
generally covered by these funds.149 American firms such as Federal Motor
Company, American Fertilizer Co., and International Harvester Co. sold hundreds of
tractors in the Turkish market.150 These firms also started to establish manufacturing
assembly lines for spare parts and repair shops in Turkey in later years. Initiating
industrialized methods for modern agriculture, such as the use of artificial fertilizers,
swiftly began impacting Turkey’s production and the earnings of the peasants. The
backwardness and low production of agriculture, as well as the pursuit of livelihoods
by scraping by, were gradually replaced with better production, exports, and
individual earnings. After two years of aid, Turkish agriculture had still not entirely
abandoned manual labor; mechanization remained scarce and insufficient. However,
macroeconomic indicators such as agricultural production, mechanization,
percentage of cultivated areas, and agricultural income had all increased in the space
of two years.151 The growth in the agricultural sector at the end of 1949 was 35%
compared to 1947.152 Thus, according to the Marshall Plan statistics on progress
through 1950, Turkey had less food scarcity while simultaneously exporting
thousands of tons of wheat, barley, rye, corn, and oats to various European countries.
With this trend in exports, Turkey was predicted to be one of the most significant
wheat exporters by 1953.153 All of these initial results promoted the idea among RPP
149 Ibid.
150 DSA, “Türkiye’de Marshall Planı uygulaması ile ilgili rapor” (“Report on Marshall Plan Practice
in Turkey”), 268-807-3, December 17, 1951.
151 Feridun Cemal Erkin, Dışişlerinde 34 Yıl (34 Years in Foreign Affairs), Vol. 2 (Ankara: Türk Tarih
Kurumu Yayınları, 1980), 431-34.
152 Republic of Turkey Ministry of Development, 30.
153 DSA, “Türkiye’de Marshall Planı uygulaması ile ilgili rapor” (Report on Marshall Plan Practice in
Turkey”).
68
decision-makers that a breakthrough in agricultural development could finance the
launching of heavy industrialization as the next step in later years.154
The agricultural focus of the aid encouraged some American companies in that sector
to expand their business in Turkey. British-American Tobacco, the top customer of
Turkish tobacco for a very long time, decided to establish a branch in Istanbul to
expand its export processes in 1948.155 According to the deal’s details, the branch
would be a joint-investment act and would benefit from customs policies and
regulations like a Turkish company. In addition to purchasing tobacco, the company
aimed to further its investments in the tobacco industry and contribute to exports.156
For better irrigation and to avoid destruction of crops by floods, a project to build a
dam on the Seyhan River was launched in March 1947. In this ECA-funded project,
three American companies shared the concession: Knappen Engineering Company,
Morrison-Knudsen Company, and International Engineering Company.157 The
Turkish government was informed by the embassy in Washington that these
companies were highly qualified and well known in waterworks and were certain to
provide top-quality results. Knappen’s offer was somewhat ambiguous; after an
initial payment of $25,000, the company would send a team to survey further
154 Tezel, 223-24.
155 DSA, “Merkezi İstanbul’da bulunan British-American Tobacco Company Tütün Ticareti Türk
Anonim Ortaklığının Kurulması” (“The Establishment of a Joint-Stock Company between the British-
American Tobacco Company and Turkish Tobacco Co.”), 117-56-16, August 17, 1948.
156 Ibid.
157 DSA, “Seyhan Nehri’nin ıslahı için, Knappen-Engineering Company ve International-Engineering
Company şirketleri ile görüşmeler yapılması” (“Negotiating with the Knappen Engineering Company
and International Engineering Company for Improvement of the Seyhan River”), 74-467-10, March
27, 1947.
69
expected costs and revise the offer afterward. However, the International-Morrison-
Knudsen consortium expected a cost of no more than $175,000 and promised to
construct an earth-filled dam in 1949.158 Throughout the construction process, in
terms of increasing the dam’s efficiency, International-Morrison-Knudsen would
collaborate with the General Directorate of Electrical Power Resources Survey and
Development Administration.
After losing its bid to another American multinational, Knappen did not abandon the
Turkish market and obtained another construction concession involving significant
mines in Eastern Anatolia. New copper concentrator plants were established in
Ergani (Diyarbakır) and Güleman (Elazığ) with double chrome ore flotation capacity
in 1949. The estimated cost was about $2.5 million and it would be financed by ECA
funds. The American Western-Knapp Engineering Company was selected to
supervise and install these plants. Theodore Knapp, a chief executive of the
company, arrived in Istanbul in April 1949 to work on the plant plans.159 Another
agreement was signed between Etibank and an American engineering company
called Gordon Hamilton for further development of the coalfields around Zonguldak.
Gordon-Hamilton was a drilling company, and the plans involved extending the mine
shafts around a radius of about 16 miles. The aim here was to increase exploitation
by adding 15 million extra tons of coal to the current production. The project was
overseen at a cost of about $9 million, mainly provided by Marshall Plan aid.160
Koppers Company Inc. undertook the construction of two new docks, a large
158 Ibid.
159 NFT, “Industry,” April 14, 1949.
160 NFT, “Industry,” July 7, 1949.
70
breakwater, additional railroads, new stations leading to the Zonguldak mines, and a
port on the Black Sea in the early 1950s. All of this construction was expected to cost
$50 million, and most of the operations would be financed through ECA aid. As an
extension of these projects, the U.S. Rubber Company also indirectly joined in for
the manufacturing of conveyor belts in the mines. Lignite mines were electrified by
the General Electric Company with ECA sponsorship. The equipment was
transferred in early 1950, while further negotiations with the DP government
involved the construction of a factory in Turkey for domestic production.161
Since the launch of the Marshall Plan, one of the American sectors to benefit most in
the Turkish market was construction. Many American companies completed projects
or prepared plans and reports for the further financing of development projects such
as improving mines, electrifying industries, and building dams. According to
Robinson’s report submitted to Barker, American companies were conducting eight
ongoing operations in Turkey in 1950. Highlights of these American projects were
the Sarıyar Dam project completed by International Engineering Company and the
application of Stone and Webster Corporation to oversee the power supply for
Northwest Anatolia. Knappen submitted a report on the development of the Gediz
Valley near İzmir.162 Furthermore, International Engineering was waiting for a grant
from the RPP government to construct a dam on the Seyhan River to improve the
irrigation of the fertile Adana plains.163 The ECA controlled all allocations,
American engineers led the projects, and American products were widely utilized in
161 NFT, “Turkish-American Industrial Cooperation,” February 9, 1950.
162 Barker Papers, “Robinson, Richard D., 1950-1951,” Middle East Missions, 1946-1952, Turkey,
1948-1952, Box 60, Folder 1304, April 7, 1950.
163 Ibid.
71
the process; still, none of these operations unsettled the public. On the contrary, they
helped build “American” prestige in the market, which in turn began raising
expectations about access to better living conditions.
The transformation in the Turkish perspective of American business was promising
but not fully satisfactory. The U.S. Senate expected more rapid integration of
American goods, products, and services into the Turkish market.164 American
business had established a strong presence in Turkey through credits and aid;
however, direct investments were inadequate and were still excluded from profitable
sectors. The progress of the ECA in Turkey did not meet the expectations of several
senators. A group of American senators consisting of Allen J. Ellender (D-LA),
Homer S. Ferguson (R-MI), and William E. Jenner (R-IN) visited Ankara to talk to
ECA agents and inspect the progress funded by American capital in 1949. These
senators expressed their concerns about the benefit of this aid to American business
after their departure. Based on their week-long inspection, they released a harsh
statement underlining that the Turkish economic system remained in the hands of
SOEs, much like a socialist state, after two years of work. They asked the ECA
consultants to work more on developing the private sector in Turkey.165 This
statement and the related expectations were quite unrealistic; however, the pressure
was enough for ECA agents to intensify their meetings to convince the reluctant RPP
government to accelerate the privatization process.
164 Price, 113.
165 NARA, RG 469, “Letter to Mr. James Victory from Henry W. Wiens,” January 7, 1950.
72
Dorr, Harriman, Robinson, and other American ECA officers were aware of the
importance of conducting cautious, not pushy, commercial diplomacy to succeed in
the Turkish mission. Besides introducing various American brands to the Turkish
market, the ECA successfully established functional networks between American
economists and Turkish decision-makers. While the RPP government remained
unsure about allowing American capital for investments, the best thing to do would
be to study Turkey’s overall economic situation and map out market prospects to
assess how American capital could be best utilized in Turkey.
2.6. The Barker Mission: American Business Seeks for
Opportunities and a New Market
The World Bank launched a new mission to study Turkey’s economic conditions and
promote foreign investment in late 1949. The RPP supported and co-sponsored this
mission. The World Bank assigned James M. Barker to serve as the mission chief.
Barker had already spent more than a year traveling between the U.S. and Turkey,
investigating Turkey’s potential and economic development. He was given easy
access to economic data and industrial centers, similarly to Thornburg, Dorr, and
Robinson. Barker also traveled to various industrial sites across Turkey, including
Karabük (iron and steel works), Zonguldak (coal mines), and Batman (oil wells).166
His team collected and compiled significant data about Turkey’s resources, goods,
and potential markets for investments. He held productive meetings with the RPP
166 See Economic Mission to Turkey, The Economy of Turkey, an Analysis and Recommendations for
a Development Program; Report for details of Barker’s visits to various industrial sites, mines, and
natural resources.
73
government, bureaucrats, businessmen, and distinguished merchant families of
Turkey to understand their expectations.
As Dorr and Thornburg also indicated, Barker’s report pinpointed the statist
economy as the primary reason for Turkey’s unproductive and inefficient
industrialization. Encouraging the dual progress of state initiatives and private
enterprises would help reduce the singlehandedness of Turkey’s industrialization
efforts. Additionally, the private sector would contribute to economic progress and
provide more extensive choices in domestic and foreign markets.167 Barker and his
staff described monopolies of the state as incapable of industrializing the country to
Western standards. They found Turkey’s dreams of rapid industrialization with SOEs
to be unrealistic.168
Barker’s mission favored privatization for the furthering of national development. In
addition to negotiating with the RPP government to allow privatization, Barker
approached the Turkish business elite and agents of American multinationals to hear
their expectations. His journals reveal that he listed possible American multinationals
to be invited to Turkey. According to his meeting minutes, he brought leading MNC
agents together with Turkish bureaucrats and the business elite.169 During his stay in
Turkey, Barker received many letters from both American and Turkish
businesspeople introducing themselves and their business goals.170 By meeting with
167 Ibid., 30-31.
168 Ibid., 3.
169 Barker Papers, “Survey,” Middle East Missions, 1946-1952, Turkey, 1948-1952, Box 61, Folder
1322.
170 While in Turkey, Barker received many letters from both American and Turkish businessmen,
including business cards. Keeping business letters, company pamphlets, or other operational notes can
74
high-level Turkish actors like President İsmet İnönü, his successor Celal Bayar,
prime ministers, deputies, ambassadors, and people in business, he built a significant
reputation and an extensive network in Turkey.
Many American MNCs had already entered the Turkish market via ECA funds
before Barker’s arrival. British-American Tobacco, General Electric, Socony-
Vacuum, and Federal Motor Truck Company had already opened branches and
started to sell their products via Turkish business families. Still, Barker arranged
more coordination meetings and discussions with the Turkish government and
representatives of those companies to eliminate any obstacles to further
investments.171 In addition to the American businesspeople, Barker met with Turkish
business elites and leading families to promote privatization in Turkey. According to
his memoirs, in late 1949, Barker noted common dissatisfaction expressed about the
SOEs. Barker was pleased with the interest that Turkish businesspeople expressed in
privatization. He agreed that they had been devoting too much of their capital and
efforts to paying taxes rather than acquiring sufficient credit and making profits.172
The legal basis for foreign capital had to be changed to attract more foreign
investment and give more freedom to private investors in the market.
be considered normal, but interestingly, Barker even kept many small business cards and donated
them to the Newberry Library. Barker Papers, “Field Trips, 1950,” Middle East Missions, 1946-1952,
Turkey, 1948-1952, Box 60, Folder 1312.
171 Large MNCs are often mentioned in the Barker Papers, especially regarding high-level meetings
with the Turkish government. Notable ones were Socony-Vacuum and International Harvest
Company, which was logical as the short-term goals of both the ECA and Barker entailed enhancing
Turkish agriculture through mechanization and providing oil for agricultural vehicles. Barker Papers,
“Administrative Information and Briefings,” Middle East Missions, 1946-1952, Turkey, 1948-1952,
Box 59, Folder 1284.
172 Barker Papers, “Barker, James M. - Statement Reports, 1949-1950,” Middle East Missions, 1946-
1952, Turkey, 1948-1952, Box 59, Folder 1287, December 22, 1949.
75
Barker’s suggestions did not contradict the RPP’s plans. Creating a national
bourgeoisie was one of the republic’s economic goals; however, with limited
numbers of wealthy Turkish businesspeople in the 1920s and limited credit options
to finance their initiatives, such a goal could not be obtained. The rise of statism in
the 1930s put privatization on the back burner together with the functionality of
private Turkish businesses. Being excluded from profitable industries and unable to
acquire enough credit to undertake significant initiatives, Turkish businesspeople
began feeling disappointed in the RPP government and its economic judgments.173
The arrival of more American products to the Turkish market allowed several
leading members of the Turkish business elite to establish partnerships with
American companies by being the vendors of their products in Turkey. American
multinationals like Socony Oil, General Electric, and International Harvest were also
pleased to receive financing from ECA funds. They accordingly had fewer financial
concerns while promoting their products in this market.174 Turkish businesspeople
shared in this satisfaction as they increased their profits by becoming distributors for
such companies in Turkey. According to a survey conducted by the Barker Mission
in 1950 among Turkish businesspeople, academics in the field of economy, and
bankers, over 90% of the interviewees stated that the government should leave
several sectors to private capital to bring in foreign direct investment, which was
seen as a necessity for the development of the country. The establishment of a new
173 Keyder, 118.
174 Barker Papers, “Personnel Information, 1950,” Middle East Missions, 1946-1952, Turkey, 1948-
1952, Box 61, Folder 1320. Barker was a key successor of what the ECA had started in 1947. The
ECA was intended to promote American business overseas to contribute to European recovery and
increase interest in American goods and services in underdeveloped markets such as Turkey. Starting
with aid and credits, the ultimate goal was to create an integrated market for America’s allies and new
opportunities for American investors. The first part of this strategy, aid and credits, promoted
American business well in Turkey. In 1949, Barker was there to pave the way for popularizing private
enterprises and their direct investments. Economic Cooperation Administration, A Report on Recovery
Progress and the United States Aid (Washington D.C.: U.S. Government Printing Office, 1947), 127.
76
legal system to guarantee the place of private capital in the Turkish economy was
also desired.175
One of Turkey’s leading businesspeople with a pro-American capitalist ideology was
Atatürk’s longtime trusted friend and RPP deputy Vehbi Koç. The Koç family had
been working with American MNCs since the 1920s, partnering up with notable ones
such as Ford, General Electric, and Socony-Vacuum. Koç visited the U.S. in 1947 to
meet with possible investors and entice them to establish branches in the Turkish
market; then, after his return, he met with the American ambassador to Turkey,
Edwin Wilson, to ask for his help in these efforts.176 Koç encouraged American
firms to direct more investments toward Turkey’s promising fields rather than only
purchasing Turkish tobacco and other agricultural products. As a middleman, being
both a member of the Turkish government and a business associate working with the
Americans, Koç was delighted to hear that the Marshall Plan aid would bring more
American capital to the Turkish market.177 Indeed, the amount and the impact of this
plan’s contribution to Turkey’s development in the first two years encouraged
Turkish businesspeople like Koç to demand that the government liberate the
economy to attract even more investments.
According to Barker’s memoirs, Turkish businesspeople were quite unhappy with the
statist economy and contacted him for help in building a more liberal market in
175 Barker Papers, “Barker, James M. - Reports, 1950,” Middle East Missions, 1946-1952, Turkey,
1948-1952, Box 61, Folder 1322.
176 DSA, “Vehbi Koç’un, Amerika Büyükelçisi Wilson ile yaptığı mülakat” (“Vehbi Koç’s Interview
with Wilson, the U.S. Ambassador to Turkey”), 42-250-4, December 20, 1947.
177 Ibid.
77
Turkey. Many communications were exchanged between Barker and business
contacts in Turkey who sought his help in expanding their partnerships with
American MNCs, including Vehbi Koç; International Harvester’s Turkey distributor,
Hilmi Bayındırlı; Salim Oker, the former deputy director of Etibank who actively
sought business contacts with Americans; American Eastern Corporation’s partner in
Turkey, Mehmet Sipahioğlu; and Yusuf Ziya, Mitchell Engineering Company’s
Turkish representative.178
Similarly, American companies like J. G. White & Co., General Electric, and
Westinghouse hoped to invest in the non-exploited Turkish market or expand their
business ventures there. They contacted Barker to inquire about the business
conditions.179 Other American advisors in Turkey also sensed these changing winds
in 1949; the economic climate in Turkey was shifting in favor of attracting more
American capital. The RPP would need to act soon in favor of privatization to stop
its declining popularity among the people.180 The RPP saw that insisting on less
efficient and low-profit SOEs could cause it to lose the approaching elections in
1950. An emphasis on the virtues of aid and its effective use in Turkey, even to the
extent of allowing privatization, was accordingly included in the RPP’s party
constitution.181 Following that change in the constitution, the RPP launched a
significant revision in the cabinet in 1949, removing old-school statist members and
178 Barker Papers, “Personnel Information, 1950.”
179 Ibid.
180 Even pro-RPP newspapers like Cumhuriyet (Republic) were stating that the RPP was losing
popularity because of economic dissatisfaction among voters. The DP gained 65 seats in the
parliament in the elections of 1946 and promised more freedom in the economy with increased
welfare as well as privatization, and it seemed possible that this challenger party could win the
elections in 1950. ICWA, “Robinson, Letter to Mr. Walter S. Rogers,” May 16, 1948.
181 NARA, RG 469, “Letter to Mr. Richard M. Bissell, Jr. from Russell H. Dorr,” December 23, 1949.
78
replacing them with more liberal-minded deputies. In 1949, the new Minister of
Economy, Cemil Sait Barlas, made a statement validating the new wave of the
American open-door policy in Turkey: “The door is open to foreign capital on an
equal footing with a domestic enterprise.”182 The new government was determined to
bring foreign multinationals to Turkey and believed that having more American
businesses in the domestic market would be best for Turkey’s national interests. The
new prime minister, Şemsettin Günaltay, embarked on his new duties by confirming
that the new foreign policy would involve more economic cooperation with nations
with which Turkey had good relations. Referring to American economic aid as a
powerful tool for Turkey’s growing production and industrial development, Günaltay
also promised to encourage more foreign private investments in the Turkish
economy.183 The new wave of American commercial diplomacy through aid and the
tireless efforts of Barker showed the RPP that there was another economic model that
could be applied without causing exploitation. The main factors behind such a
success were the American advisors and experts who shared their guidance and
American companies that contributed to the process by carrying out their business
ventures in Turkey under Turkish laws.
American tractors cultivated Turkish farms, American fertilizers increased
production volumes, American firms constructed Turkish roads and dams, and
American oil fueled the engines being utilized in Turkey. Any demand for American
goods would, in turn, profoundly affect the prosperity of the American people and
182 NFT, “Opportunities for Foreign Capital,” March 31, 1949.
183 NFT, “New Government’s Program,” January 27, 1949.
79
multinationals.184 The promise of the Turkish market in the late 1940s for being
targeted by American businesses was clear. Before him, Thornburg and Dorr had
also underlined the necessity of foreign capital for modernization; however, they
could not convince Turkish decision-makers to revise their economic perspectives.
Barker, on the other hand, took concrete steps to show them the reasons for change.
Partnerships with foreigners meant huge benefits derived from their machines,
technology, and capital, allowing Turkish decision-makers to demand more
investments and fruitful partnerships in different fields. Even in 1949, the RPP
started working on a new law to attract more foreign investments by easing
concessions in invaluable industries, including petroleum exploitation, and allowing
the transfer of income and assets for foreign multinationals in the Turkish market.185
2.7. The RPP Enacts a New Foreign Investment Bill Before the
Elections
During Barker’s stay in Turkey, Turkish private businesses were promised by the
RPP government that they would be included in partnerships with private capital and
state institutions. Furthermore, if foreign private investors wished to establish
partnerships in Turkey, partnering with state institutions was no longer their only
option. On September 1, 1949, as one of the administration’s final acts, Cemil Sait
Barlas as the new RPP Minister of State and Vedat Dicleli as Minister of Commerce
184 Lewis P. Todd, The Marshall Plan: A Program of International Cooperation (Advisory
Committee on Education Economic Cooperation Administration, 1950), 3.
185 NFT, “Turkey Guarantees Foreign Investments,” August 11, 1949.
80
and Economy headed to İstanbul to meet with prominent Turkish merchants and
industrialists. Both statesmen confessed that the SOEs had long benefited from being
monopolized. They had never overstepped; however, allowing private initiatives
seemed necessary under the changing political and economic circumstances. Such
enterprises would be allowed to enter lucrative fields for more efficiency and
enhanced public services.186
The first bill to serve this cause was enacted in the last days of 1949. The GNA
authorized the Ministry of Finance to guarantee up to $106 million for foreign
commitments incurred by Turkish enterprises. Credit deals and partnerships with
foreign MNCs were included, although the bill did not cover the petroleum sector,
which was kept in the hands of the General Directorate of Mineral Research and
Exploration (MTA). Still, foreign investors were allowed to bring capital as cash and
assets; in such cases, the Turkish government would provide the necessary grants and
tax redemptions.187
The RPP government’s initial attempt was promising in terms of American business
ventures. Even though the profitable petroleum industry had been excluded, the latest
developments showed that American businesses were likely to expand their presence
soon. As drilling operations in the southeastern part of Turkey continued under the
MTA’s surveillance, American MNCs took an indirect part in those processes due to
the restrictions on foreign investments. Thanks to the growing numbers of Americantrained
managers in Turkey’s state institutions, these MNCs were invited to
186 NFT, “Turkey’s Foreign Trade,” September 1, 1949.
187 NFT, “Encouragement for Foreign Investors,” December 29, 1949.
81
participate in business development projects as consultants. For instance, the MTA
allowed several private groups and experts to contribute to petroleum drilling
processes in the late 1940s. İhsan Ruhi Berent, the Director General of the MTA, had
trained in the U.S. and enjoyed working with American companies. Not allowed to
invest directly in 1948, two American petroleum companies, the United Geophysical
Company of New York and Drilling and Exploration Company Inc. of Dallas,
nevertheless accompanied the MTA in drilling operations.188 Tempted to increase oil
production through better drilling operations under the guidance of these American
multinationals, the Turkish government was closely watching their operations in
other countries, especially in Saudi Arabia.189
In addition, the RPP government allowed MTA representatives to hold meetings with
significant petroleum companies to discuss possible partnerships. Turhan Boray,
director of the Petrol Ofisi (Petroleum Office) Corporation under the Turkish
Ministry of Commerce and Economy, paid a visit to the prominent petroleum
corporations in the U.S. in April 1949. The RPP’s new cabinet favored bringing
capital and efficiency to the search for petroleum, as Turkey had already failed to
establish significant wells or high levels of production through state operations.
Boray had served in the Ministry of Commerce in different positions for a decade;
188 NFT, “Oil in Turkey,” May 27, 1948.
189 The Arabian-American Oil Company (Aramco) was founded in 1933 and had been contributing to
Saudi Arabia’s oil drilling operations. The profit in this sector was great, as indicated in reports in the
Turkish National Archives. It seems that the Turkish government was a little jealous of the success of
Aramco as most of the news on that region underlined that these lands were once only deserts and that
American Standard Oil had significantly contributed to the modernization of Saudi Arabia by
constructing hospitals, schools, and other infrastructure, not only sharing the profits. DSA, “Amerikan
Petrol Kumpanyalarının Suudi Arabistan’daki faaliyetleri” (“American Oil Companies’ Operations in
Saudi Arabia”), 182-258-5, 1946.
82
his main specialization was conducting market studies in foreign countries.190
Therefore, he understood the significance of future profit in this business very well.
During his visit to the U.S., he entered into negotiations with Socony’s Near Eastern
Manager, Louis Owen, and informed him about Turkey’s ongoing petroleum drilling
processes. In the 1950s, Boray was a key figure while establishing a business
partnership between Socony-Vacuum (known as ExxonMobil since 1999) and the
Koç family to take over several wells in Southeastern Anatolia. However, as Vehbi
Koç admitted later on, the Koç family refused to be a part of such a deal because
they had already been selling Mobil Oil’s products in the late 1940s.191 After Boray’s
important visit to the U.S., a further meeting between Socony and the RPP
government was arranged within a month. However, that meeting remained
inconclusive.192
Socony-Vacuum’s contacts and negotiations with the Turkish government were not
the only steps for promoting American direct investments in Turkey. Large numbers
of American businessmen also headed to Turkey in 1949 to research the possibility
of investments in different sectors and meet with Turkish ministers. Promising to
foster investment opportunities and permissions, the RPP initiated agreements
between American and Turkish industrialists.193 One of the most notable deals was
190 His contribution to improving commercial relations between Turkey and India in the early 1940s
was also mentioned in DSA documents. Then, in 1945, he was rewarded by being promoted to the
Directorate of the Petrol Ofisi Corporation. DSA, “Petrol Ofisi Umum Müdürlüğü’ne Ticaret
Bakanlığı Standardizasyon Müdür Muavini Turhan Celal Boray’ın tayini” (“Appointment of Turhan
Celal Boray, Deputy Director of Standardization of the Ministry of Commerce, to the General
Directorate of Petrol Ofisi”), 109-65-12, November 12, 1945.
191 Can Kıraç, “Turhan Boray Aramızdan Ayrıldı” (“Turhan Boray Has Passed Away”), Bizden
Haberler: Monthly Journal of the Koç Group 289 (April 2002): 33.
192 NFT, “International Contacts,” April 7, 1949.
193 NFT, “Foreign Investors Study Opportunities in Turkey,” November 3, 1949.
83
signed between General Electric and its partnering businessman in Turkey, Vehbi
Koç. This business partnership included an agreement to work together to build a
light bulb factory in İstanbul. The project was planned to be completed with the start
of production in 1950, which would support Turkey’s electrification and increase
exports through the sale of surplus products to neighboring countries.194 Four months
after the factory’s groundbreaking ceremony, Philip Reed, chairman of the board of
GE, arrived in Turkey and was received by President İnönü. Reed was a notable
figure in GE and American industry in general as the president of the International
Chambers of Commerce. In Turkey, Reed met with high-level personnel from the
Turkish government and banks and attended many luncheons, cocktail parties, and
dinners organized in his honor.195 Reed praised Turkey’s political and strategic role
in the world as well as its economic importance to the Near East. He was glad to take
part in the Turkish market as the head of GE; he was also pleased to be one of the
first among the multinationals to invest in Turkey and he hoped more would come.196
2.8. Results
The political necessities of the post-WWII period attracted the RPP government to
change its economic agenda. This change paved the way for a policy of convergence
with the U.S. and the pursuit of foreign aid to fuel modernization projects. Both
directed Turkey onto the path of free market capitalism. A political alliance with the
U.S., enhanced living standards thanks to American capital and products, and the
194 NFT, “Industry,” November 18, 1948.
195 NFT, “General Electric President in Turkey,” October 20, 1949.
196 Ibid.
84
spread of development projects supported by American services were beneficiaries
of this process. In 1950, the Turkish voters asked for more liberalism in the economy
compared to statism. In spite of their quick switch to liberalization rhetoric and
promises, the RPP government could not make a good progress dismantle the SOEs,
which helped the DP win the elections in May 1950.197
As much as the Turkish voters rewarded liberal economic policies, American
businesses also found the emerging market worth expanding further. First, they
enjoyed safe investments thanks to aid programs and grants for accessing new
markets. They obtained detailed country studies on how to proceed in these unknown
markets with the guidance of American professionals. Several American MNCs
found mass demand for their products, Turkish business circles looking to partner
with them, and a government pleased to finance modernization projects. Therefore,
before the 1950 elections, both the RPP and its challenger, the DP, promised to bring
more American assistance and foreign investments if they were elected. However,
these final economic liberalization attempts did not save the RPP as its opponent
fiercely defended the introduction of even more American capital and products into
the economy.198
The demand for change had become the core of Turkish politics in 1950. Therefore,
the DP’s victory in the election was not a surprise. Adnan Menderes, a champion of
rural backgrounds, and Celal Bayar, a respected liberal economist, hailed from the
same majority that they now represented. Society expected change; farmers expected
197 Ahmad, 125.
198 Tezel, 202.
85
fair prices for their crops, workers demanded better salaries and more jobs, and
business elites hoped to expand their ventures by signing agreements with foreign
capital owners. The DP promised all of this to the masses throughout the
campaigning process. Its policies diverged from the traditional emphasis on limited
industrialization with state-controlled institutions from an economic perspective. As
a liberal-minded statesman, Bayar had always supported development with foreign
capital and technical assistance. Efficiency in the production market was the first step
in a chain reaction. Increasing production would increase exports, state revenues, the
state’s purchasing power, and resources to be allocated to development projects.
Working with such a focused government would be optimal for American
commercial policy.
For the expansion of production and exports, the DP shared American visions about
creating a granary in Turkey to feed the Western alliance. The ECA was willing to
provide machinery in the form of tractors together with fertilizers to increase Turkish
agricultural production efficiency. The DP welcomed this in meeting the demands of
farmers, which they promised to satisfy in election campaigns. The tractors and
fertilizers provided through aid or purchased with credit drastically improved
agricultural production from the late 1940s. The increased presence of American
brands and goods in the Turkish market was also welcomed in the U.S. and the
results were in parallel with the expectation of the senators.199 ECA projects aimed to
create a self-sufficient and agriculturally improved Turkey to support the aims of the
free world. They also paved the way for American companies to access new business
199 Michael M. Carver, A Correct and Progressive Road: U.S.-Turkish Relations, 1945-1964 (Ph.D.
diss., Bowling Green State University, 2011), 88.
86
and market opportunities.200 After convincing the Turks to embrace foreign direct
investment, the next step would be attracting American businesses to the Turkish
market.
The role of American businesses and American actors in changing the Turkish
perspective was important. The post-war period did not cause a great economic
depression in Turkey. Although it had lost trade partners and experienced low
production due to the drafting of the workforce, the Turkish economy could still get
back on track. The majority of the population, and especially the peasantry and the
working class, was dissatisfied with the new taxes.201 Therefore, this previously
closed society could be opened while emphasizing visible changes, and the
Americans achieved that in Turkey in just a few years. America’s call for capitalism
was well received by the discontented masses in favor of altering the statist
approach. In addition to visible results, American actors, who enjoyed great respect
from Turkish circles and knew Turkey well, advertised American businesses
successfully. The Turkish national goal was modernizing along the lines of Western
economics and political standards; neither accepting a liberal economy nor attracting
foreign capital challenged Turkey’s modernization dreams.202 On the contrary,
adopting these new economic initiatives by replacing old-school statist approach
emerged as a decent alternative for rapid modernization.
200 Ibid.
201 Boratav, Türkiye İktisat Tarihi 1908-1985, 67.
202 Vojitech Mastny and R. Craig Nation, Turkey Between East and West: New Challenges for a
Rising Regional Power (Boulder: Westview Press, 1996), 9.
87
Contrary to the RPP’s late acceptance of economic liberalization and the last-minute
passing of a privatization law, the DP went into elections including an article in its
party constitution that underlined the adaptation of a broad and modern
understanding with more freedom in the economy.203 In its campaigns, the party
criticized clumsy statist economic activities and promised more privatization,
particularly in industrial fields.204 After gaining seats in the parliament in the 1946
elections, the DP adopted a more vigorous opposing stance against the RPP’s
faltering economic policies. The DP’s firm rhetoric appealed to voters in rural areas
and towns who were interested in a more lively economy to replace state-directed
bureaucratic stagnation. The DP’s party plan foresaw following the ECA mission and
its consultants’ reports. It proposed that Turkey put more emphasis on attracting
foreign capital for rapid economic growth and industrialization. Similar to the ECA,
Barker, Thornburg, and Robinson, the DP saw the future of Turkey in liberalized
trade and reduced SOE influence over profitable industries. Productive agriculture
could be obtained with more foreign capital, mechanization, and infrastructural
development. All of this could help Turkey promote its goods in foreign markets.205
Not surprisingly, the DP’s discourses on economic liberalization and advancement,
with the help of American aid, were adopted by the masses. Reducing prices
according to purchasing power, improving the living standards of both rural and
urban societies, and eliminating inefficient bureaucracy could be possible with the
203 Henri J. Barkey, The State and the Industrialization Crisis in Turkey (Boulder: Westview Press,
1990), 53.
204 William Hale, The Political and Economic Development of Modern Turkey (New York: St.
Martin’s Press, 1981), 87.
205 Mastny and Nation, 158.
88
effective use of American capital.206 Like Menderes himself, most members of
agricultural society desired greater political representation, fewer state limitations,
and more productive industrialization to help them profit from their products.207
Robinson reported that the ascent of the DP could be one of the incentives paving the
way for more trade and commercial integration between the states and
businesspeople.208 It also arguably showed that Robinson’s work and that of his
colleagues in Turkey had succeeded.
The post-war period up until May 1950, when the DP won the elections, brought
many American companies to the Turkish market or boosted their sales if they were
already present there. With the Marshall Plan and its primary focus on agricultural
production, American multinationals like B.F. Goodrich Tires, General Tire and
Rubber Co., Federal Motor Truck Company, and the Fertilization Corporation of
America had a chance to promote their products in the Turkish market with aid
support. Since the republic’s foundation, Turkey’s primary export goods had been
agricultural commodities, equivalent to approximately 90% of Turkey’s total exports.
The ECA planned to improve the production rates of cereals, cotton, oilseeds, and
tobacco in the long term and build better infrastructure to transport these goods to
buyers in foreign markets.209 The ECA further aimed to make Turkey a granary for
the Western alliance. American senators expected to see American businesses and
products find their place in Turkey. By 1950, they had created a new social and
206 Shaw and Shaw, 404.
207 ICWA, “Robinson, Letter to Mr. Walter S. Rogers,” November 1, 1948.
208 ICWA, “Letter from Richard D. Robinson to Mr. Walter S. Rogers,” May 16, 1948.
209 Turkey: Country Study, 10.
89
political consent, with the same desires being shared by the most of the voters up to
the new DP government. The next decade would see the reconstruction of Turkey in
line with American expectations.
CHAPTER III
“The Free Enterprise system has proved the best means of achieving development. I
stated that this had proven true not only in Western Europe, and later in the U.S., but
has been recently demonstrated in such a different part of the world as Sao Paulo,
Brazil. Here Brazilians, Americans and Europeans of various origins imbued with
the spirit of Free Enterprise, have taken advantage of the rich potentialities of the
90
Brazilian plateau to develop a trading and industrial center comparable to the
greatest that our own country has produced.”
George C. McGhee210
3.1. General Outlook of Turkey in the Transition Under the DP
Government
The last year of RPP governance was a landmark in terms of seeing the benefits of
foreign private investments, which catalyzed the slow process of overcoming
prejudices against foreign capital. Besides counting on the ECA plans and attracting
foreign capital to Turkey, the RPP’s final acts emphasized liberalization in the
market. The business class hailed the role of American capital, products, and services
and sought new American partners to work with in the Turkish market. Advancing to
the elections of 1950 in such a mood, the RPP promised more of the same if they
were to keep power.211
However, the RPP’s late attempts at economic liberalization and the small
improvement in privatization law did not convince the voters, who demanded
change. After experiencing strict bureaucracy under RPP administrations for two
decades and heavy taxation, both landowners and the local business class saw the
DP’s promise of more liberalization for private initiatives and attraction of American
capital to raise living standards as more appealing and realistic.212 These promises
210 George C. McGhee Papers (McGhee Papers hereafter), Box 1, “Memorandum of Conversation
Between the Ambassador and Foreign Minister Koprulu on February 1, 1952.”
211 Thomas and Frye, 109.
212 Keyder, 119.
91
paved the DP’s way to power in the next election.213 The DP won the majority in the
GNA thanks to the massive support of the Anatolian peasantry and business groups.
Both were enthusiastic about all-around change and desired better representation at
the national level.214 RPP-centric elites had long been running the government,
economy, SOEs, market, credit institutions, and pricing regulations. In contrast, the
ECA projects, hand in hand with American businesses, proved that a liberal market,
private institutions, and foreign capital could be relied upon, which contributed to the
dissatisfaction with statist control over the economy.215 Change and the national will,
especially in terms of economic liberalization, became the motto and the promise of
the DP: Yeter! Söz milletindir! (“Enough! The Word Belongs to the People!”). The
voters, in return, rewarded them with power.
In his first address to the GNA as the new prime minister, Adnan Menderes
underlined the promised changes in politics and economics within the party’s
governmental agenda. He also highlighted his government’s hope to pursue closer
relations with the U.S. The DP would continue focusing on agricultural
industrialization, road building, and irrigation projects in line with the Americans’
advice. Menderes further announced in this address that the state would gradually
withdraw from many sectors to make room for private capital. The SOEs would be
replaced with private enterprises and the Turkish business elite.216 To benefit more
213 Shaw and Shaw, 404.
214 “Demokrat Partinin, Yurdun Birçok İllerinde Seçimi Kazandığı Anlaşıldı” (“It was understood that
the Democratic Party won the election in many cities”), Cumhuriyet (Republic), May 15, 1950.
215 ICWA, “Letter from Richard D. Robinson to Mr. Walter S. Rogers,” March 14, 1950, 3.
216 Journal of the Grand National Assembly of Turkey Records (GNA hereafter), 9th Parliament, Vol.
1, May 29, 1950, 26.
92
from American capital and technical capabilities, the DP government would work on
developing a better legal basis to lure private investors to the market.217 Menderes’s
statements received media coverage in the American press. According to the New
York Times, SOEs had long been causing trouble for ECA agents in their efforts to
achieve a liberal market in which American businesses could be promoted.218 Since
Turkey now had a more pro-American government, integrating its economy into
Western liberal economies should be more feasible. As a champion of privatization
and economic liberalization, Menderes seemed to be a leader with whom
Washington could work in harmony.
However, as the leader of the first new government after years of a one-party regime,
Menderes did not use any rhetoric about a top-down alteration of state politics due to
his cabinet included old-school statesmen. Rather than taking hasty steps, a
constructive approach to building solid yet bold policies on privatization would be
safer. 219 In the DP’s first economic and political agenda, economic liberalism via the
invitation of foreign private capital was generally described as a counter-argument
against communism. The statist mentality was viewed as one of the core dynamics of
the country, and the DP barely argued against it in its first years of governance.220 In
speeches to the GNA and public statements by ruling members of the DP, such as
Menderes and Minister of Industry İsmail Hakkı Gedik, none of the cabinet members
217 Ibid., 31-32. According to these minutes, Menderes’s speech was interrupted with applause, as
noted in brackets, many times, because the majority of the assembly consisted of DP deputies.
Menderes’s reference to the U.S. as “our great friend” was well received by these deputies, as was his
reference to inviting private capital.
218 “Turkey to Reduce National Spending: Premier Says His Government Plans Cuts in Expenditures
of Every Department,” New York Times, May 30, 1950, 8.
219 Ahmad, The Turkish Experiment in Democracy, 126-27.
220 Tarık Zafer Tunaya, Türkiye’de Siyasi Partiler (1859-1952) (Political Parties in Turkey (1859-
1952)) (İstanbul: Arba, 1952), 664.
93
openly attacked statism or mentioned the dismantling of all SOEs. Rather than being
a nemesis of state initiatives, foreign private capital was underlined as being
necessary to achieve the state’s modernization and finance development projects.
Allowing private initiatives to mature in state-owned industries would reduce the
burden on SOEs and, eventually, they would leave the stage to the Turkish business
class. To help Turkish businesses improve operations, reduce underdeveloped
industries’ import dependency, and finance modernization projects such as
establishing more factories and manufacturing plants, foreign capital was necessary
in the short term.221
After spending enough time in Turkey to understand how the founding dynamics and
past experiences had shaped the republic’s politics, the slow but determined
advancement of American virtues in the country proved that the ECA mission was
succeeding.222 The agricultural trade surplus increased while American products and
services entered the Turkish market, such as pharmaceuticals, fertilizers, and
machinery. Thanks to the mechanization of agriculture and improved infrastructure,
export rates and the GDP were enjoying upward trends. In line with increases in
production and improvement in transportation, Turkey’s foreign trade deficit fell to
$22 million compared to $78 million in 1948, when the ECA had started its work in
the country.223 The exporting of more agricultural products to Western European
states and financing of imports through ECA funds were the main reasons why the
221 GNA Minutes, 9th Parliament, Vol. 1, June 2, 1950, 102-105.
222 Mehmet Vedat Gürbüz, An Overview of Turkish-American Relations and Impact on Turkish
Military, Economy, and Democracy, 1945-1952 (Ph.D. Diss., University of Wisconsin-Madison,
2002), 225.
223 Haluk Cillov, Türkiye Ekonomisi (The Economy of Turkey) (İstanbul: İstanbul Üniversitesi
Yayınları, 1972), 142.
94
Turkish foreign trade deficit had shrunk.224 Finally, the DP’s win in the 1950
elections showed that the strict statist mindset had been overcome. The Turkish
public voted for a new era that would see more American capital and business
brought to the country.
The aid was planned to be continued for two more years, and early estimations
predicted that several key ECA infrastructure projects would be completed in that
period. Expansion in various industries thanks to those completed projects, with the
enrichment of agriculture and mining production estimated continuation in increment
of the Turkish exports. By achieving production and trade at gradually growing
levels in the short term and bringing more private investments into the market for
further growth, the American economic advisors estimated that Turkey would reduce
its imports and be less dependent on aid as a result of having a sustainable
economy.225 Following the same pattern established by the ECA mission would
eventually transform Turkey’s economic ideas and structures.
Indeed, the ECA’s advice and aid programs had improved Turkey’s agricultural
productivity and infrastructural framework, which directly impacted politics, the
economy, and culture. According to Robinson, many underdeveloped and isolated
regions started to experience consumer economies for the first time in the early
1950s.226 Road work began tying the isolated villages of Eastern Anatolia to towns
224 Turkey: A Country Study, 4-5.
225 Ibid.
226 Robinson, The First Turkish Republic, 147-48.
95
and cities. Irrigation projects and tractors sold in rural areas improved the income of
the peasantry. Every achievement and completed project that Turkey experienced in
these years created more hunger among the public to have more; none of the political
parties could ever convince the peasants and businesspeople of Anatolia to reject the
benefits of foreign products and capital.227 On the other hand, unleashing such
demand would become the greatest curse of the DP in the following years. The party
would see itself stalemated, desperate to please voters at any cost and financing hasty
construction projects such as “election factories” rather than taking measured steps to
create a healthy economy.228
The progress reports, import and export rates, and advancements in development
projects reflected an inspiring picture of the path to a self-sufficient economy and
development in Turkey. Therefore, DP decision-makers in the early 1950s based
their economic policy on American recommendations and plans. Contrary to the allaround
optimism of the DP, however, American advisors had slight concerns about
the upcoming end of the aid process,229 as Turkey would have to face credit and loan
repayments in a few years. These concerns deepened with the gloomy scenario that
arose in the early 1950s; Turkey was indebted to international creditors, trying to
reduce its military spending and improve export rates while not cutting the budgets
of modernization projects. Attracting private investments to finance modernization
projects, share the costs of running plants, or operate mines efficiently could be the
227 Keyder, 127-28.
228 Ahmad, 128.
229 Thornburg in Turkey: An Economic Appraisal (254-255) and Robinson in The First Turkish
Republic (140-141) pointed out that the ECA aid and credits had helped Turkey considerably in terms
of funding imports and development projects until 1950. However, Turkey would eventually have to
rely on its own resources and methods to make its growth sustainable.
96
ultimate solution for Turkey’s economic stability. However, the immaturity of the
Turkish market and the discouraging legal system were significant obstacles to that.
Additionally, a worldwide recession and a nonproductive environment for capital
circulation were at the doors of the Western countries due to the emergence of a new
military crisis: the Korean War.230
3.2. The Korean War and Its Reflections on Business
The Truman Doctrine helped Turkey allocate less budget to military spending.
Thanks to the Joint United States Military Mission for Aid to Turkey (JUSMMAT),
Turkey’s military capabilities were better in the early 1950s compared to 1945. With
additional aid in further fiscal years, the U.S. military assistance to Turkey reached
$236 million by June 1950. With Turkey being better equipped, engaging in military
drills led by American professionals, and reducing the size of its drafted forces to
300,000 men, the American presence proved valuable in Turkey in the wake of the
emergence of the Korean War in June 1950.231
A month after the fighting began in Korea, the DP government announced on July
25, 1950, that Turkey would join the war alongside the American-led UN forces.232
230 DSA, “Cumhurbaşkanımızla, Amerika İktisadi Heyeti Başkanı ve bu heyetin iki üyesi arasında 20
Haziran 1950’de Çankaya’da yapılan görüşmeye dair not” (“Note on the meeting between our
President and the President of the American Economic Committee and two members of this
delegation in Çankaya on June 20, 1950”), 41-242-1, June 21, 1950. At this meeting, newly elected
President Bayar received Barker and his subordinates to discuss the financing of development projects
such as the Seyhan Dam and the progress of Barker’s mission in Turkey. When Bayar asked Barker’s
opinion about how to bring more foreign direct investment to Turkey, Barker underlined the
arguments given above.
231 McGhee, On The Frontline in the Cold War, 32.
232 “Korede Hizmet Etmek Üzere Birleşmiş Milletler Emrine Asker Veriyoruz” (“We Recruit Soldiers
to the United Nations to Serve in Korea”), Cumhuriyet (Republic), July 25, 1950.
97
This decision was in line with Menderes’s opening remarks, wherein he had stated
that Turkey would deepen its political relations with the U.S. Joining NATO was the
next step in politically integrating Turkey into the Western alliance and reducing the
Soviet threat against the country. While the Turkish public largely greeted the DP’s
decision as a bold yet appropriate action, the RPP, in opposition, felt left out because
the DP government had not brought this decision to the GNA or discussed this
significant commitment with the opposition.233 A few days later, after the official
declaration, Menderes acknowledged to U.S. ambassador George Wadsworth that
Turkey’s decision to participate in the Korean War was made to prove Turkey’s
political and military significance for NATO and its integration with the West.234
Joining the American coalition in Korea brought Turkey more American capital such
as aid, credit, and products. In the spring of 1951, the ECA announced new military
aid to train more Turkish military officers because the initial conflicts in Korea
suggested that the war would be prolonged for some years. This new scenario
convinced American planners to reconsider scaling back the size of the Turkish army
and its military spending.235 This unexpected turn also changed the ECA agents’
plans for financing development programs in Turkey. Having tended to neglect the
development of heavy industry in the short term, ECA experts had to revise their
233 Hüseyin Bağcı, Türk Dış Politikasında 1950’li Yıllar (Turkish Foreign Policy in the 1950s), 24.
RPP spokesman Kasım Gülek subsequently released a statement condemning the DP’s hasty decision,
made without consultation or discussion in the GNA. The RPP seemed to back the decision to send
troops to Korea after the UN’s call but maintained that the DP should have brought this issue to
parliament as it was an important national concern. “Muhalefete Sorulmadan Verilen Karar” (“The
decision made without asking the opposition”), Ulus (Nation), July 27, 1950, 1.
234 FRUS, 1950, Volume V: Near East, South Asia, and Africa, Turkey, “The Ambassador in Turkey
(Wadsworth) to the Secretary of State,” July 31, 1950, 1286.
235 NARA, RG 469, “The Economic Cooperation Administration Special Mission to Turkey, Results
of the ECA Program in Turkey: A Supplementary Report to the Data Prepared for the Visit of the
Foreign Relations Committee of the United States Senate to Ankara Turkey, Russell H. Dorr, Chief of
Mission,” July 23, 1951.
98
plans and increase the number of factories for military production or renovate those
that were already constructed to enhance their capacity. These plans necessitated
more funds to be transferred to Turkey, and early estimations predicted $1.4 million
in additional aid with an annual payment for keeping military production steady.236
In addition to military aid, the American engineering consortium of Hamilton,
Metcalfe, and Grove was invited to Turkey to begin the construction of an air base to
be known as İncirlik in the upcoming years.237
With the outbreak of the Korean War, the Truman administration had to revise its
state-sponsored aid programs and change the focus. The Mutual Security Act (MSA)
was launched as a new aid program to replace the Marshall Plan in 1951. This new
plan underlined the significance of applying rearmament programs and aid for the
improvement of military capabilities, but it also guaranteed to cover economic
programs previously launched by the ECA. The ECA had been designed to
reconstruct the European economies; however, war conditions caused the aidreceiving
countries to face dollar shortfalls, budget deficits, and inflation.238
Furthermore, the Korean War showed that reconstruction without military power
could lead to the loss of all achievements in the event of a Soviet assault. Therefore,
Congress created the MSA to replace the ECA one year before the Marshall Plan was
due to end and insisted that military rearmament be the chief U.S. foreign aid goal.239
Receiving more aid to modernize its army could be considered a decent gain for
236 Ibid.
237 Harris, 52, 66-67.
238 Melvyn P. Leffler and Odd Arne Westad, The Cambridge History of the Cold War, Vol. 1
(Cambridge: Cambridge University Press, 2010), 173.
239 Price, 159.
99
Turkey in the early period of the Cold War. On the other hand, the modernization
and equipping of the Turkish army were not investments, as they would lead to
increased costs later. As the Turkish military industry was unlikely to improve itself
in the short run, relying on more military spending might put a hold on the budgets
allocated for development projects.240 Indeed, the emphasis on foreign aid shifted
from economic to military assistance in these years.241
The new focus on military escalation also prioritized military industries. To establish
a collective defense, all allied states were asked to contribute to the process with all
possible strength. The U.S. aided and equipped other states’ limited forces and kept
American legions overseas. These states, in turn, would support U.S. military
industries with their raw materials.242 Following the expectations laid out by the
MSA, Turkey agreed to export more copper and chrome to the U.S. and Europe.243
The earlier ECA reports of 1951 underlined that Turkey was well suited for this new
role. It exported agricultural products and raw materials from agricultural fields and
mines and it intended to produce considerably larger quantities with the help of
American capital, equipment, and know-how.244
240 Helen Leigh-Phippard, Congress and US Military Aid to Britain: Interdependence and
Dependence, 1949-56 (London: St. Martin Press, 1995), 79-82.
241 Sidney Warren, “The Background of Our Aid Program,” Current History 33, No. 193 (September
1957): 136.
242 Public Papers of Harry S. Truman, “Special Message to the Congress on the Mutual Security
Program,” March 6, 1952.
243 NARA, RG 469, “ECA Special Mission to Turkey, Justification of Continuing Economic Aid to
Turkey,” July 14, 1951.
244 Ibid.
100
However, the unexpected change in American foreign policy caught Turkey
unprepared both militarily and economically. Turkish military factories and mines
were immature. Neither providing raw materials nor producing military equipment
and ammunition on a large scale was realistic in the short term. These factories were
still funded by state revenues and SOEs.245 The ECA, which called the shots in this
chaotic environment, was also caught unprepared and admitted that Turkey could not
meet the market demands for industrial finished products or raw materials.246
Turkey’s best military product manufacturing plant was that of the Mechanical and
Chemical Industries (MKE); however, this facility lacked adequate machinery and
capital to run efficient manufacturing processes. The ECA, having a long-term
solution that would be useless in the middle of an international crisis, recommended
inviting American businesses to partner up in military industrialization.247 However,
the DP government was not experienced enough in governance to attract foreign
investors to Turkey’s military industry and no American investors were eager to get
involved in such a politically and economically unknown business venture in 1951.
Earlier estimations foresaw Turkey’s balance of payments depending mainly on a
strengthened economy in the longer range. Turkish agriculture, light industry,
mining, and transportation were growing; however, they needed to be more efficient.
245 Cillov, 311.
246 NARA, RG 469, “Turkey Fiscal Year 51, Aid Programming Exercise Prepared by the U.S.
Country Team Section IV, Military Equipment Requirements,” October 29, 1951.
247 Indeed, the ECA and its successor institutions in Turkey succeeded in bringing the MKE together
with American capital in the following years. This began with the provision of aid through the
Marshall Plan. Then, particularly after a supplemental law was enacted for foreign investment
incentives in 1954, the MKE was included in the list of SOEs to partner with American
multinationals. One of the most significant such partnerships was that of the MKE with Minneapolis-
Moline to construct a tractor factory in Ankara in 1954. GNA Minutes, 10th Parliament, Vol. 1,
February 18, 1955, 405.
101
Production and distribution costs needed to be cut to bring the prices of export
commodities into line with the world markets. Unless these objectives were
achieved, Turkey could face high inflation due to rising costs of industrialization and
imports. However, none of the reports suggested darker scenarios for the future of
the Turkish economy. If constructive economic methods continued to be applied, the
future of its balance of payments appeared to be quite favorable.248 As an additional
recommendation, all reports favored inviting foreign capital to ensure the
sustainability of development and cash flows.
On the other hand, the American actors all underlined the harsh reality of the
unattractive status of the country for foreign investors. Thornburg remarked on
Turkey’s incompatible business culture, laws, and market as the leading reasons for
private companies to avoid further involvement. Without creating an investmentfavorable
environment, such as through tax exemptions or the employment of more
American professionals, American businesses would likely not be motivated to enter
the Turkish market.249 Barker’s aide in his mission to Turkey and Vice President of
the World Bank, Robert L. Garner, stated that the lack of profit-worthy markets and
industries was the main challenge in attracting American investors. It was not only
necessary to eliminate economic concerns through loyal credit payments; Turkey
should also offer convincing shares of its valuable resources to investors.250
248 The Economy of Turkey, 248.
249 Thornburg, Turkey: An Economic Appraisal, 183-84.
250 Barker Papers, “Request from the Government of Turkey for Technical Assistance, A Letter to
Ambassador Feridun C. Erkin from L. R. Garner,” Middle East Missions, 1946-1952, Turkey, 1948-
1952, Box 60, Folder 1298.
102
These concerns had their grounds. The ECA aid had brought many American
companies into the Turkish market and helped Turkey finance construction projects
and purchase American goods; however, it ended in 1951. Besides, these services
and products were mainly financed through credits and aid programs; none required
further investment commitments. The ECA agents understood that the economic
transformation of Turkey was incomplete and that economic enhancement depended
on American capital.251 Despite growing trade volumes, export ratings, and state
revenues, the Turkish market was still in the maturation process and could not cover
all of its modernization expenses itself. However, rapid development based on aid
and credits over the course of three years would bring extra expenses to the
economy, such as repayments and currency deficits. Thus, more industrialized
development escalated the need to import industrial goods and mechanization.252 In
the end, growing import rates and foreign debt would lead to higher inflation rates,
limit purchasing power, and force the DP government to consider more external
borrowing to balance the economy and finance development projects.
Indeed, compensating the costs of machinery and arms imports with agricultural
exports was not feasible; the foreign trade statistics of 1951 proved this. Turkish
exports had increased by $53.5 million more to reach $314 million in 1951 thanks to
the dramatic growth in agriculture. On the other hand, the foreign trade deficit also
grew larger, totaling $402 million as a result of increased imports and military
251 Thornburg’s and Robinson’s statements were referred to above.
252 In line with profits from commercial activities, imports almost doubled between 1950 and 1952.
Alec P. Alexander, “Industrial Entrepreneurship in Turkey: Origins and Growth,” Economic
Development and Cultural Change 8, No. 4 (July 1960): 357.
103
spending.253 The Turkish economy was still too immature to sustain high levels of
military spending and raise the Turkish people’s standard of living at the same time
while depending only on national assets, agricultural exports, and taxes.254
Eventually, when the aid incentives ended, Turkey would need to find a way to retain
capital sources with nonrecourse.
In spite of the drawbacks of the Korean War era and the increased burden on military
spending, this period also paved the way for Turkey to make subsequent political and
economic gains, notably receiving more aid from the U.S and increment in
agricultural exports. During this period, Turkey was granted more economic and
military aid in addition to planned funds.255 Furthermore, as the agricultural market
least affected by the previous war, Turkey was able to fill the European markets with
its products and set its own prices. In acquiring this agricultural monopoly in foreign
markets and increasing its production volumes, Turkey enjoyed an influx of foreign
currency through exports to be invested in development projects. Promoting Turkish
products in these profitable markets also opened a new door for more foreign
business ventures and led more American state officials to notice Turkey’s potential.
According to a handbook presenting the Turkish economic outlook in the early
1950s, prepared by American economist Hollis B. Chenery, improving the legal
framework and enacting foreign investment incentives could attract more business
253 For detailed information please see Turkish Statistical Institute (TÜİK), “Statistics of Foreign
Trade of 1951,” Ankara, 2015.
254 NARA, RG 469, “Letter to Feridun Erkin from George McGhee, Assistant Secretary,” October 29,
1951.
255 Harris, 156.
104
ventures to the Turkish market.256 Above all, Turkey’s participation in the Korean
War with the U.S. forces bolstered Turkey’s reputation dramatically. It also validated
Turkey’s admission to the Western Club, thus fulfilling a national ambition.
The DP government was proud of standing together with UN forces led by American
generals against communism, which they saw as a critical move toward joining
NATO eventually.257 Finding a place under NATO’s security umbrella could help
compensate any economic inconveniences or growing military responsibilities.
Fighting in Korea and joining NATO also enhanced Turkey’s reputation within
American business circles.
3.3. A Milestone in Turkey’s Economic Transformation: The
Privatization Law of 1951
Establishing a credible reputation as a true friend of the alliance, Turkey was
advertised as a top choice for foreign investments in the early 1950s. Turkey’s story
was heartwarming: an allied country vigorously fighting communism and passionate
about modernizing itself in line with American virtues. Turkey’s decision to fight in
Korea proved its worth for the alliance as well as the country’s strategic status for
American foreign policy, and American businesspeople were also among the
impressed parties. Its army, supported by American military aid, could valiantly
resist a Soviet attack. The DP government agreed to allow the construction of allied
256 Hollis B. Chenery, George E. Brandow, and Edwin J. Cohn, Turkish Investment and Economic
Development (U.S. Foreign Operations Administration Special Mission to Turkey, 1953), 8-19.
257 DSA, “Adnan Menderes’in Atlantik Paktı ile İlgili Beyanı” (“Statement by Adnan Menderes on the
Atlantic Treaty”), 13-76-7, September 21, 1951.
105
military bases within the country’s borders and grant access to American military
staff.258
Therefore, on the verge of departure from Turkey in 1951, ECA agents hoped that
American businesspeople would pick up where they left off. With growing political
influence in the international arena and interest in Turkish market goods, particularly
in the fields of agriculture and mining, the ECA agents believed that Turkey had
solid advantages for attracting American companies to the Turkish market.259
However, these initiatives were stalled by two main obstacles. First, the Turkish
market was not mature enough for partnerships based on foreign investments. The
SOEs were still dominating key profitable sectors such as petroleum and chrome ore
or industries such as defense. Only the tobacco industry was transitioning; a few
British and American brands had started to operate their own cultivation areas and
facilities rather than buying tobacco from Turkish SOEs. However, there is no
indication that showed private investments in a significantly growing trend. 260
Turkish business elites were still waiting to receive access to higher sums of credit
from state banks and establishing partnerships with foreign multinationals to sell
their products to the Turkish market.261 Generally, in 1951, they were only allowed
to invest in light industries.
258 FRUS, 1951, Volume V: Near East, South Asia, and Africa, Turkey, “National Intelligence
Estimate,” February 26, 1951, 1119-26.
259 According to the OEEC’s Monthly Statistical Bulletin released in November 1951, with the
opening up of previously inaccessible cultivable areas, Turkey was entering a period of extraordinary
new agricultural expansion and earned its place in European markets. Bayard presents that
information as part of the ECA plan (137-38).
260 FRUS, 1951, Volume V: Near East, South Asia, and Africa, Turkey, “Memorandum by the
Additional Advisory Council Staff Committee to the National Advisory Council,” December 6, 1951,
1186-87.
261 Buğra, 122-24.
106
Secondly, the uncertainty in world markets and the post-war period’s economic
recession prevented small and mid-sized companies from investing safely in foreign
markets. The ECA funds had eliminated these companies’ foreignness and helped
them invest in highly unknown countries like Turkey in the late 1940s and early
1950s; however, their operations in overseas markets were questionable in the face of
a global economic recession. In a meeting with Barker, newly elected President
Bayar was disappointed to see that American companies were still hesitant to invest
in Turkey even after the diligent work of the ECA and the World Bank. Barker
referred to the global economic recession as the leading reason for this.262 In the
early 1950s, only MNCs were able to take bolder steps to pursue overseas
investments. The ECA funds and market research had already given them insight into
market sizes, opportunities, deficiencies, and cultures. For these giants, a foreign
market that had already proved its worth in terms of profit would be easier to
advance in. The dollar shortage among the U.S. allies allowed American MNCs to
establish factories overseas and marketize their products.263 Still, the global
economic ambiguity and the changing dimensions of American foreign policy
reduced the number of investing companies; only a few MNCs chose to stay in the
competition for overseas markets in 1951.264 Despite this, the DP remained eager to
find ways to support its economic initiatives. Being sincere in its stance that the state
should withdraw from profitable sectors and surrender the market to private
262 DSA, “Cumhurbaşkanımızla, Amerika İktisadi Heyeti Başkanı ve bu Heyetin İki Üyesi Arasında
20 Haziran 1950’de Çankaya’da Yapılan Görüşmeye Dair Not” (“Note on the Meeting between our
President, the President of the American Economic Committee, and the Two Members of this
Delegation in Çankaya on June 20, 1950”), 42-242-1, June 21, 1950.
263 Geoffrey Jones, “Multinationals from the 1930s to the 1980s” in Leviathans, eds. Chandler and
Mazlish, 95; Wilkins, The Maturing of Multinational Enterprise, 288-89.
264 Wilkins, The Maturing of Multinational Enterprise, 300-2.
107
investors, the DP sought to fulfill its promise to voters. In late 1950, a party
commission was assembled, and it started to work on an improved foreign
investment law.265
American actors such as Dorr and Barker played important roles in shaping the DP’s
first privatization law working groups from late 1950 to August 1951. The DP
government approached Dorr during discussions of the privatization law to inquire
whether the ECA could provide consultancy and assistance in the drafting of a new
investment program.266 Barker brought American businesspeople and the DP
government together for further brainstorming sessions.267 This process became one
of his final tasks in Turkey before his departure in 1951. At a press conference in
İzmir, Dorr stated that Turkey needed private enterprises to industrialize the mining
sector and agricultural production. These goals had been a part of the ECA mission
in Turkey since 1948, introducing private capital for continuous self-sustained
development.268 Dorr proudly stated that his institution had a good run in Turkey and
that ECA initiatives had brought $3 million in private investments to the country in
the course of three years of work. This amount was low compared to the total aid that
265 This issue did not arise after the DP gained power in May 1950. In fact, this mindset was already
reflected in the DP’s party constitution in 1946, before any such pledge had been made to voters. See
“Demokrat Parti Tüzük ve Programı” (“Democrat Party Constitution and Program”), Accord 17
(1946), 50-51.
266 FRUS, 1951, Volume V: Near East, South Asia, and Africa, Turkey, “Memorandum of
Conversation, by the Assistant Secretary of State for Near Eastern, South Asian, and African Affairs
(McGhee),” January 22, 1951, 1109.
267 Dorr and Robinson were among the other American participants indicated in this document. Barker
Papers, “Barker, James M. - Reports, 1950,” Middle East Missions, 1946-1952, Turkey, 1948-1952,
Box 61, Folder 1322.
268 L.S. Moore, “The U.S. Economic Aid to Turkey Strengthens Might of Armed Forces: Sports
Exhibition Inflation Averted,” The Christian Science Monitor, March 30, 1950, 15.
108
had been offered; however, the progress of the investments in parallel to the ECA’s
advice and operations was pleasing.269
Following other advice from the ECA, the DP’s priority in its policy-making agenda
was drafting a legislative framework to attract more foreign investment in 1951.
After a year of working on foreign investment incentives, a law was enacted on
August 1, 1951. This bill was designed to enlarge the scope of economic
development in different industries such as energy, mining, infrastructure,
development, and tourism.270 The law guaranteed foreign multinationals the right to
transfer their profits abroad up to 10%.271
3.4. Initial Results of the New Law: Hilton, GE, and Squibb & Sons
Projects
The privatization law of 1951 was a significant event in Turkish legal history;
however, it did not provide an inviting environment for foreign investors. Capital,
resources, and staff transfers were still limited, and foreign investments were
excluded from several sectors, such as oil. A foreign market with such limits could
not entice many new companies to enter; on the whole, it could only hope to keep the
MNCs that were already doing business in the Turkish market. The American
business sector was represented well in the Turkish market in the late 1940s by the
infrastructure work of Knappen, Koppers, and Gordon-Hamilton; the tractors of
269 Ibid.
270 GNA Minutes, 9th Parliament, Vol. 9, August 1, 1951. On this date, the DP’s first privatization law
was enacted and announced in the Official Gazette.
271 Ibid.
109
Federal Motor Truck Company; and the agricultural products of the Fertilizer
Corporation of America. However, these corporations were selling goods and
services with the assistance of ECA aid and credits instead of investing in Turkey.
Among the newcomers, several American MNCs were worthy of notice. The
American Export Lines shipping company was invited to participate in a project to
modernize the maritime transportation of Turkey.272 Orpheus D. Baxalys, Managing
Director of the American Tobacco Company of the Orient, signed an agreement
worth $16 million to purchase approximately 11,500 tons of Turkish tobacco and
increase the company’s tobacco operations through a branch to be established. As
Turkish tobacco leaves had a world-famous reputation, Turkey hoped to increase
annual production from the current amount of 80,000 tons to gain more revenue from
exports.273 The Hilton Hotels Corporation (HHC) also sought an agreement to build a
hotel in İstanbul in 1951.
Thanks to the new incentives, American companies that had already settled in
Turkey, such as GE and Squibb & Sons, expanded their business operations. GE’s
bulb factory began production in June 1951 after a year of construction. The
contributors were pleased by the unveiling of this massive facility with consortium
leadership and the potential to employ hundreds while contributing to production.
272 “Turkey to Get American Help on Its Shipping,” New York Herald Tribune, June 18, 1950, 6.
John E. Slater, the president of American Export Lines, was approached by the ECA to contribute to
the development of Turkey’s transportation services. The construction of highways and ports was
already improving the transportation network of the country, but adding ferries to the list would be
significant in terms of modernizing Turkey. The Propeller Club of the U.S., which primarily consisted
of people in the maritime and shipping industries, also supported this project. As negotiations were in
progress between American Export Lines and the DP government, the İstanbul branch of the exclusive
Propeller Club was founded.
273 “Turkey Sells Tobacco: $16,000,000 Order by U.S. Buyer Sets Record for Istanbul,” New York
Times, January 1, 1951, 30.
110
The Koç family and GE hoped to make a profit from the finished products with
expectations of reaching a volume of six million bulbs in a year. Early estimations
showed that at least one-third of the production output would likely be sold to
neighboring countries, and the profit would be shared among the consortium trio of
the Koç family, GE, and İş Bank.274
The DP was off to a good start in its governance. Bringing in foreign capital of about
$1.8 million, creating jobs for the masses, witnessing the completion of an industrial
plant, and modernizing Anatolia by electrifying villages were all promising
achievements. The DP deputies bragged about these achievements in GNA sessions.
As long as American multinationals were convinced to carry on business in Turkey,
with GE even tending to expand its operations, providing radios and refrigerators for
every home could be the next goal.275 The same consortium had already made plans
to construct a new plant for the manufacturing of small household appliances such as
vacuum cleaners, washing machines, refrigerators, and radios in the longer run.276
Like GE, E.R. Squibb & Sons, a pharmaceutical drugs manufacturer that had been
present in the Turkish market since 1947, benefited from the new law and made
plans to construct a new plant in İstanbul in 1951. A Turkish business consortium
and company would share the costs and make a profit from the sold products. Like
274 GNA Minutes, 9th Parliament, Vol. 5, February 21, 1951, 409-10. A new electric light bulb factory
was constructed in İstanbul with partnership between General Electric Company (60%) and the Koç
family (15%). İş Bank had a 25% share in this investment, as well. This deal brought an annual
investment sum of $1.8 million to Turkey through construction and also offered the chance of Turkey
becoming one of the main producers and distributors of the Near East region. The short-term aim was
focused on the production of 6 million light bulbs in a year, which would not only meet the annual
Turkish demand for 4 million bulbs but would also increase export revenues through the share of
profits. In the long run, a new plant was planned by the same consortium for the manufacturing of
small household appliances such as vacuum cleaners, washing machines, refrigerators, and radios.
275 Ibid.
276 Ibid.
111
the light bulb factory, this initiative also aimed to liberate the Turkish market from
purchases of expensive imported medicine and increase public health with massive
production and lower prices. In advance of the plant’s construction, Squibb & Sons
aimed to cripple the markets of neighboring countries in the next few years. In both
of these campaigns, the ECA and the American embassy took the utmost care to
convince the DP government to secure the necessary grants and guaranteed these
companies’ financial reliability and legitimacy in the context of the new privatization
law.277
The expansion of these settled American business ventures was favorable; however,
the new arrival of the HHC was a particularly significant incident. Conrad Hilton
demanding a meeting to discuss the construction of a grand hotel in İstanbul was
believed to be a promising first step in attracting tourists and new urbane
development.278 Hilton shared that expectation in bringing his brand to the Turkish
market. With such reassuring development and hosting more foreigners could be a
way to lure private investors to Turkey’s financial capital of İstanbul. Moreover, this
could be linked to another sector that would increase the volume of foreign capital:
tourism. Before Hilton, Pan American Airways (Pan-Am) had a similar idea and
noted the shortcomings – and, thus, the opportunities – of the service sector in
Turkey in late 1950. In a meeting with Feridun Erkin, the Turkish ambassador to the
U.S., Pan-Am CEO Harold E. Gray mentioned the lack of top-quality hotels in
Turkey for hosting more foreign tourists and investors. Inviting notable hotel brands,
277 DSA, “Amerikan vatandaş ve şirketlerinin ülkemizde yapacakları ve ECA idaresince garanti
edilecek yatırımlar için Dışişleri Bakanlığı’na yetki verilmesi” (“Authorization is given to the
Ministry of Foreign Affairs for the investments to be made in Turkey by American citizens and
companies guaranteed by the ECA Administration”), 127-75-20, October 27, 1951.
278 Adalet, 161.
112
such as Intercontinental and Hilton, to invest in Turkey could increase the number of
foreign visitors and enhance Pan-Am’s interest in increasing the number of flights
between New York and İstanbul while reducing the prices.279
Gray’s estimations were accurate and the timing to expand the business to Turkey
was perfect. Hilton had just returned from a business trip to Turkey, having studied a
hotel project in İstanbul for improving tourist and business accommodations in
November 1950.280 Hilton was not the only business owner seeking investment
options in Turkey; a memo reached the General Directorate of the Turkish Press and
Tourism Division from the president of Intercontinental Hotels, Wallace Whittaker.
He sought to arrange a meeting with the DP government to make an offer similar to
Hilton’s.281 Hilton’s trip to Turkey had been quite fruitful. An initial contract was
signed between the two sides for the construction of a 300-room hotel in İstanbul.
The facility would be completed in 1952. According to the deal, Turkey’s share in
the construction, $5 million, would mostly be provided through ECA aid. The
building would then be leased for operations to the HHC for twenty years. In
addition to the leasing charge, Turkey would receive 10% of the annual profits.282
The hotel to be built in İstanbul would be one of the largest in the HHC’s portfolio,
involving several designers and third-party financiers as well as Turkish architects.
279 DSA, “Pan Amerikan Hava Şirketi Müdürünün İstanbul’da bir otel inşası için Washington
Büyükelçisine yaptığı teklif” (“Pan American Airways Manager’s proposal to Turkey’s Ambassador
at Washington to build a hotel in İstanbul”), 102-630-13, December 12, 1950.
280 “Hilton Plans to Operate Hotel at Istanbul in 1953,” New York Herald Tribune, December 20,
1950, 39.
281 DSA, “Pan Amerikan Hava Şirketi Müdürünün İstanbul’da bir otel inşası için Washington
Büyükelçisine yaptığı teklif.”
282 “Hilton Plans to Operate Hotel at Istanbul in 1953.”
113
Hilton’s decision to bring his hotel chain to Turkey entailed profit-seeking
objectives. An American-type hotel in the best location in İstanbul was expected to
attract many guests; however, at the same time, Hilton’s motivation was not purely
economic. People like Hilton were ardent supporters of American virtues and their
promotion throughout the world. Convincing any country to successfully pursue
American virtues in politics, economics, and the cultural sphere was a foreign policy
goal valued by all layers of society, including businesspeople.283 Investing overseas
could boost a company’s profits, but these financial missionary jobs also had a
political dimension. The Korean War proved that Turkey could be a true friend to the
U.S. and a field where projects for American institutions and virtues could be
developed. Therefore, in helping a committed ally of the U.S., just as GE’s Phillip
Reed did, Conrad Hilton was motivated to obtain a share of the Turkish market but
also became a lobbyist for Turkish political and economic issues in the U.S.
In addition to the strong reputation of the Hilton brand, Conrad Hilton’s political
stance in favor of Turkey pleased the DP government. Not missing any chance to
praise Turkey’s fierce struggle against communism and underlining its significant
place in NATO, Hilton was never quiet about his positive feelings for Turkey.284
After being granted the hotel project in early 1951, Hilton became a true friend of the
country. Welcoming Turkish journalists in the U.S. and giving public speeches about
Turkey’s business opportunities, Hilton worked to convince his fellow business
283 See Emily Rosenberg’s Spreading the American Dream: American Economic and Cultural
Expansion, 1890-1945 for her arguments about the part that American businessmen could play in this
regard.
284 Adalet, 2.
114
associates to invest in the country.285 In addition to these flattering public statements,
Hilton wooed members of Turkish society living in the U.S. by organizing dinners
for Turkey’s national holidays at the glamorous Waldorf Astoria. The Republic Day
reception of 1951 was celebrated there with the attendance of both Turkish and
American bureaucrats and highly notable American businessmen such as Henry
Luce.286
In 1952, the GE-Koç-İş Bank consortium launched a new business with the
construction of an oxygen and nitrogen factory, aiming to gain another share of the
rapidly developing health industry in İstanbul.287 Meanwhile, Thompson-Starrett Co.
of New York, in cooperation with one Turkish and three German corporations, was
contracted to build a dam on the Sakarya River. This was a significant step in
electrifying the steel and manufacturing industries. Most of the cost would be shared
between ECA aid and the Turkish associates; still, Thompson-Starrett was asked to
provide equipment valued at $11 million. The construction was scheduled to be
completed in four years.288 Squibb & Sons also expanded the amount of their
investments. This company promised $300,000 as capital and renamed its operations
in Turkey “E.R. Squibb & Sons İlaçları Anonim Ortaklığı” (or “Pharmaceuticals
285 Adalet, 171.
286 Ibid.
287 DSA, “General Elektrik TAO’nın Hissedarlarından Vehbi Koç’a ait hissenin Amerikan Aksiyoner
International General Electric Co. Inc. Şirketi’ne devri” (“The share belonging to Vehbi Koç, one of
the shareholders of General Elektrik TAO, was transferred to the American Actionist International
General Electric Co. Inc.”), 129-50-20, April 29, 1952.
288 “Thompson-Starrett Heads Building of Dam in Turkey on E.C.A. Funds,” New York Times,
February 27, 1952, 35.
115
Corporation” in English) with the inclusion of new Turkish investors.289 The new
consortium, alongside flows of capital, would contribute to patent licenses,
packaging and distribution processes, technical data, and technical training in return
for royalties on sales. Furthermore, the construction of the new plant was in line with
Turkish modernization goals as well as the creation of a self-sufficient Turkey.
Noting that the biochemical market was limited in Turkey and medicines were
expensive, both the company and the Turkish government were eager to emphasize
the improvement of the health sector. Production in Turkey would reduce medicine
imports, lower market prices, facilitate better health care for citizens, and provide
training opportunities for Turkish personnel and technicians.290
In the early 1950s, both the DP government and ECA agents appreciated these
foreign investments, even though they were still low, and they believed the law
enacted in 1951 was only a beginning and more development was necessary. In
terms of American businesses, numerous mid-scale American companies were
already working in the Turkish market thanks to ECA funds, and their personnel and
products had achieved top success in many sectors.291 In early 1952, only a few
sectors remained in Turkey that had not yet received an inflow of American products
or services. According to Robinson, the many American advisors working with
289 DSA, “Merkezi İstanbul olmak üzere ER Squibb and Sons Anonim Ortaklığı’nın kurulmasına izin
verilmesi” (“Allowing the establishment of the E.R. Squibb and Sons Joint Stock Company,
headquartered in İstanbul”), 124-98-2, January 22,1951.
290 Ibid.
291 Hiring foreign advisors to benefit from their experiences and know-how capabilities in various
sectors was highly popular in Turkey even before the ECA funds were secured. The beginning of
ECA activities in Turkey was a true milestone, however; dozens of American experts in various fields
subsequently arrived to the country. The DSA documents track these people as they were granted
access to business fields by the Turkish governments, revealing the clear growth in the numbers of
such personnel after 1947 in Turkey.
116
different organizations and agencies had the combined capacity to exert American
influence over the Turks in all sectors, ranging from road construction to
meatpacking.292 Furthermore, these advisors were generally financed by ECA funds
and American enterprises, and their work in Turkey was valuable in terms of
standardizing American methods in Turkish businesses. Many respected American
colleges and universities, such as Brown University, the California Institute of
Technology, Harvard, and Michigan State University, began financing their scholars
for sabbatical leave in Turkey to conduct academic research on market opportunities
and business development plans.293 Having been Americanized in methods and
choices of products and services, Turkey would advance on the road of being a “little
America”294 in the next years with the help of yet more American capital and
investments.
Indeed, 1952 was a milestone year for Turkish-American relations. State agents,
officials, and bureaucrats had already been working to improve Turkey’s economy in
line with U.S. foreign policy, making it a valuable ally for NATO.295 There had
previously been debates and challenges regarding Turkey’s role in the context of the
Marshall Plan; however, after 1952, Turkey earned its role in the American-led
alliance and strengthened its position within the constraints of American foreign
292 ICWA, “Letter from Richard D. Robinson to Mr. Walter S. Rogers,” June 1, 1952, 1.
293 Ibid.
294 This term was first used by Nihat Erim in 1949 when he was a deputy of the RPP. As discussed
above, the RPP was delighted with American methods in their last years of governance and wanted to
turn Turkey into a “little America” in line with their Western-style modernization goals. In the 1950s,
this term was associated with the DP government’s pro-American policies; Bayar used it in 1957 in a
public address. William Hale uses this phrase in The Political and Economic Development of Modern
Turkey (p. 88), as well.
295 Robinson, The First Turkish Republic, 137-41.
117
policy, similar to any other NATO member. Taking on political, economic, and
military responsibilities for Turkey may have sounded ominous from the perspective
of American resources; however, assigning a role to Turkey in the state agenda
would be of value to any American who wished to see the U.S. triumph over
communism.296 Therefore, especially after 1952, American businesspeople and
multinationals found themselves in a position to contribute to the national
development of an important allied country while simultaneously pursuing profitseeking
goals.297
3.5. New Challenges to Overcome in Business Promotion
Despite accepting a great deal of Americanization in its economic mindset, Turkey
still had more work to do to attract foreign investments. The results of the first five
years of these efforts were quite convincing; new laws could now be enacted and the
committed DP government could pursue further improvements in market conditions
in its next terms. It was necessary to generate similar enthusiasm toward the Turkish
market among American business circles. However, this was difficult for American
institutions and actors considering the obstacles and drawbacks of that market.
Although they arrived with decent amounts of knowledge about Turkey, each
American advisor, diplomat, businessman, or politician reaching the country for the
first time was likely to fall into despair after experiencing Turkey’s conditions
firsthand. Thornburg, Dorr, and Barker referenced the incompetent business culture,
lack of profitable sectors to invest in, and possibility of growing debt and inflation in
296 NARA, RG 469, “Job Profile for Turkish Mission Chief,” July 7, 1953.
297 NARA, RG 469, “A letter by Russell H. Dorr to N. C. de Paul,” June 29, 1952.
118
the Turkish market just as often as they underlined the market opportunities.298
Comparing Turkey’s economic conditions and industrial capabilities with those of
the U.S. and Western European countries was particularly dangerous, and convincing
American businesses to invest in this economically and culturally controversial
market was accordingly challenging. For instance, the Marshall Plan helped to shift
Turkey’s economic framework over the course of five years, but for the
consolidation of American economic virtues to make American investors feel at
home, this plan and its outcomes needed considerably more influence in the long
run.299 As indicated above, the ECA agents left Turkey proudly after all that they had
achieved, but they also carried concerns about the future of what they had managed
to build.
Their replacements, the MSA agents, had the same disappointment as the ECA
agents when they first arrived in Turkey. They found the economic conditions to be
uninspiring. Their initial thought was that the ECA aid had helped Turkey only a
little. Turkey was still battling with transformation pains; it seemed unlikely that an
engaging environment for American investors would be secured in the short run, and
more American aid would probably be needed in the upcoming years to bring more
order to the country’s military spending.300 These assumptions were generally
confirmed; for example, Turkey did indeed face a financial crisis in the second half
of the decade. The earlier economic expectations of American consultants, advisors,
and Congress members conflicted with the actual results due to constraints on quick
298 See Barker’s mission report or Thornburg’s economic appraisal.
299 Price, 221.
300 NARA, RG 469, “Memorandum Concerning the Preliminary Visit of Mr. Leon Dayton to Turkey,”
May 31, 1952.
119
resolutions and overly theoretical approaches, with plans being altered by changing
American foreign policy goals. In such an environment with many ambiguities, it
was unrealistic to expect a sustainable leap forward from Turkey, particularly
considering that even the “developed European countries” had not achieved full
economic recovery according to the timeline originally predicted by the ECA.301
The elimination of incompetency in business culture and the forging of a liberal
market allowing fair competition would need more time. Despite achieving success
in projects in Turkey since late 1948, only larger MNCs such as Ford, GE, and
Socony chose to remain in the Turkish market, where they generally kept selling
their products, while many mid-scale contractor companies decided to withdraw after
completing their projects. With reliance on the ECA funds, two parties would share a
contract, fulfill the requirements, and then conclude the partnership. Challenges were
even experienced in the process of receiving payments during the ECA’s transition to
the MSA. Upon the MSA’s arrival to Turkey as the newly authorized state
institution, many American companies conducting business in Turkey besieged the
MSA with letters of complaint, notes, and memos about the troubles they had in
completing projects or meeting financial requirements, generally blaming their
Turkish counterparts.302 Failures in communication due to the language barrier were
also harshly criticized in these correspondences.
301 NARA, RG 469, “David T. Killough, Final Report on Cotton Production and Quality Improvement
Programs for Turkey,” 1951.
302 NARA, RG 469, “Memorandum Concerning the Preliminary Visit of Mr. Leon Dayton to Turkey”;
“Letter to William H. Draper and Paul R. Porter from Leon M. Dayton,” September 13, 1952.
120
Throughout late 1952 and into 1953, the MSA agents evaluated the Turkish
achievements and shortcomings of the previous five years. They also noted that the
burden on American state institutions and revenues to finance Turkey was too large
to be sustained.303 With the altering of the previous American foreign policy that had
aimed to reenergize allied economies in the post-WWII period by focusing on
military enhancement, the financing of Turkey’s economic modernization was not
the MSA’s concern. However, these efforts could possibly be transferred to other
American organizations.304 The earlier challenges of the American economic goals in
Turkey included replacing wooden plows with tractors; that had been a convincing
success. Since the beginning of the Marshall Plan, Turkey had received more than
6,000 tractors, an insufficient but nevertheless significant number. However, these
machines brought additional costs with them, such as the costs of spare parts and
petroleum.305 Concerning outcomes such as high inflation, the need for constant
foreign capital flows, and importations for rapid industrialization had already become
the reality of the growing Turkish economy. These were expected results; however,
there was no longer a U.S. administration offering economic cooperation to bail
Turkey out of its cash-flow deadlocks. The MSA had new aid responsibilities and the
continuation of Turkey’s economic modernization would need to be taken up by
other American organizations.306 **
303 Killough, “Final Report on Cotton Production and Quality Improvement Programs for Turkey.”
304 FRUS, 1952, Volume VIII: Eastern Europe; Soviet Union; Eastern Mediterranean, “Memorandum
of Conversation, by the Ambassador in Turkey (McGhee),” October 24, 1952, 902-905.
305 That was one of the earliest observations of any American advisor, expert, or institution entering
the country. McGhee indicated that a similar need could emerge in the following years in one of his
early meetings with the DP government after he was assigned as the ambassador to Turkey. McGhee,
123-24.
306 “Memorandum Concerning the Preliminary Visit of Mr. Leon Dayton to Turkey.”
121
The DP government did not share the concerns of these American institutions. The
increase in gross national product, improvements in public satisfaction and living
standards, positive trends in agricultural production, and growing export rates were
all pleasing results.307 The American aid and credits from international institutions
had allowed the government to allocate a budget for new projects, such as
Thompson-Starrett’s cooperation with German and Turkish corporations on the dam
project for the Sakarya River or Squibb & Sons’ new pharmaceutical manufacturing
plant. DP decision-makers expected more capital to continue arriving as long as they
continued taking constructive steps to offer more incentives.308
Believing that the market would attract more private capital in the long run, the DP
considered the budget deficits and rising inflation to be the short-term results of rapid
industrialization. The U.S. and other international creditors, they felt, should tolerate
these setbacks until Turkey could complete its development.309 The efforts being
made for Turkey’s economic leap forward and its integration into the alliance should
be rewarded and supported by stakeholders of the alliance, and particularly the U.S.
Thanks to American-provided machinery, improved infrastructure, and cooperative
weather conditions, Turkey’s agricultural exports would allow the credit deals to be
repaid in the upcoming periods. Furthermore, with this rapid industrialization
spreading to other business sectors, Turkey could pursue a sustainable economy.
Therefore, in 1952, Menderes gently criticized the American fears of the budget
307 Boratav, Türkiye İktisat Tarihi 1908-1985, 80.
308 Maxfield and Nolt, 69-70.
309 NARA, RG 469, “Memorandum of Conversation at the Ministry of Finance,” September 8, 1952.
122
deficit by emphasizing Turkey’s export achievements.310 For example, Turkey grew
about 6 million tons of wheat in 1952, the volume having doubled in two years, and
at least $60 million worth of wheat sat in warehouses in İstanbul waiting to be
exported.311 Based on this simple statistic, gloomy and pessimistic estimations about
the collapse of Turkey’s achievements were rejected with confidence.312 The DP
government planned to continue relying on its ally to devise solutions as it had
always done.313
Indeed, Turkish products achieved success in the world markets in 1952. Due to the
wartime devastation of cultivation areas, loss of workforce, and economic
destruction, the European markets were desperate to import Turkish agricultural
products in the early 1950s. However, this would change with the recovery of
Turkey’s agricultural competitors in the international market, such as the
Netherlands. With its return to the competitive market, the Netherlands knocked
down the prices set for Turkey’s primary products like grain and wheat. The
bitterness in this rivalry alerted Turkey to the need for producing larger quantities of
exportable agricultural commodities and dropping unit prices to stay in foreign
markets.314 The DP government reluctantly revised crop prices and accepted internal
losses rather than letting Turkey lose its position in the world markets. Asking
310 “Memorandum of Conversation at the Ministry of Finance.”
311 TÜİK, “Statistics of Foreign Trade of 1951,” Ankara, 2015.
312 NARA, RG 469, “Meeting with Ministry of Foreign Affairs,” September 9, 1952.
313 “Memorandum of Conversation at the Ministry of Finance.”
314 NARA, RG 469, “MSA to the Department of State, Annual Economic Review Turkey (1951),”
February 25, 1952. Turkish wheat had been selling for $136 per ton, $40 above the world market cost,
and cotton at $0.35 per pound, down from $0.60 per pound. Part of this was due to market
readjustments following a sharp rise in demand during the Korean War, when Turkish cotton could be
sold for $1.20 per pound.
123
farmers, their primary voters, to lower prices on their products was a losing
proposition. However, the DP was enthusiastic to see Turkey adapting to competitive
markets by setting better standards for production, quality, and the reliability of
products and fighting aggressively to keep a strong position in the world markets.315
Becoming more competitive would be a long process, but the DP government was
eager to do whatever would be necessary for that goal.
This combination of an economic leap, eagerness, and MSA reports highlighting the
importance of sharing the burden with other actors brought the two sides together to
work on foreign direct investments in late 1952. The enactment of a recent
privatization law and the founding of the Industrial Development Bank of Turkey to
finance development projects were in line with such a focus. Furthermore, 1952 was
a significant year as the Turkish government began seriously considering opening up
Turkey’s most sacred industries and sectors, including petroleum, to private capital
to make more profit and improve production to the highest possible levels.316
3.6. Adding a “Commercial Diplomat” to the Mix: George C.
McGhee’s Arrival
Dealing with a government determined to attract foreign investments, the
Department of State needed to assign a commercial diplomat to Turkey. The current
American ambassador, George Wadsworth, who was not a businessman, planned to
315 Ibid.
316 “Petrol Politikası” (“Oil Policy”), Zafer (Victory), August 14, 1952, 2; “Petroleum Operation
Institution is Established,” Cumhuriyet (Republic), December 7, 1952, 1.
124
retire in late 1951. Truman selected George McGhee, a vivacious Texas oilman with
a geology degree, to be the next ambassador to Turkey. McGhee had made millions
from his oil business. As a businessman, he knew how to promote American business
overseas, conduct market research for companies, and convince his business
colleagues to enter the Turkish market.
Furthermore, like Dorr, McGhee was not a stranger to Turkey. Before being assigned
as ambassador, McGhee had served as Assistant Secretary of State for Near Eastern
Affairs and as the head of the U.S. Aid Mission to Turkey, which allowed him to
learn diplomacy, understand Turkey’s business opportunities, and build a network
among Turkish decision-makers.317 McGhee was thus returning to Turkey in
February 1952.
McGhee’s appointment to the Turkish mission could be evaluated as the beginning
of the golden years of American enterprises in Turkey for several reasons. First, as a
former agent of the ECA, he was familiar with Turkey’s economic activities,
upcoming needs, and concerns, which helped him skip any adaptation period for
learning about the Turkish dynamics. Just as the ECA had feared, McGhee realized
that the growth of the Turkish military made it very difficult to allocate any budget
for development programs. Quick industrialization would increase the demand for
industrial products such as petroleum and machines, which would hamper the
Turkish economy and cause higher inflation. In modernizing the country, agricultural
317 From his first arrival to Turkey in the late 1940s, McGhee built strong ties with Turkish decisionmakers
including İnönü, Menderes, and Bayar. He was one of the most ardent supporters of Turkey in
its efforts to join NATO. He even bought a summer house in Alanya, a small town within the province
of Antalya, in the early 1950s and spent many summers there until the house was donated to
Georgetown University in 1989.
125
enhancement, the import of foreign oil for imported tractors, and spare parts and
fertilizers for better cultivation were all needed. Shortages of aid would jeopardize
the sustainability of the economy.318 Opening up new lands for cultivation and
increasing agricultural production caused drastic growth in the importation of
fertilizers and tractors. To make those machines work smoothly in the fields, oil
products and spare parts also needed to be purchased, raising the import costs in
comparison to exports. Despite the exciting progress in agricultural production and
industrialization, sustainability was in danger without aid, according to McGhee’s
diagnosis.319
Having a solid background in business and knowing Turkey’s economic problems,
McGhee was one of the best men for the position, well equipped for solving
Turkey’s emerging capital problems without depending solely on the U.S. economy.
His initial thoughts show that McGhee was optimistic about Turkey’s economic
future due to its impressive export rates in recent years thanks to agricultural
production. Potential markets could be exploited by matching them with reliable
American multinationals. In the end, such attempts could reduce future levels of
assistance.320 However, the removal of Turkey from aid programs, at least in terms of
military aid,321 was unlikely in the immediate future. On the other hand, McGhee
318 FRUS, 1952, Volume VIII: Eastern Europe; Soviet Union; Eastern Mediterranean, “The
Ambassador in Turkey (McGhee) to the Department of State,” January 21, 1952, 865-66.
319 Ibid.
320 FRUS, 1952, Volume VIII: Eastern Europe; Soviet Union; Eastern Mediterranean, “Memorandum
of Conversation, by the Ambassador in Turkey (McGhee),” February 10, 1952, 873-80.
321 Turkey received $100 million in military aid, besides other aid, credits, and grants, in 1952.
126
shared the Truman administration’s economic concerns and agreed that Turkey
should start considering alternative policies to improve its budget allocation.322
The enactment of a more incentivizing privatization law clearly showed that the
Turkish leaders were determined to apply the rules of the free market. Both President
Bayar and Prime Minister Menderes were ardent supporters of using private
enterprises to launch a competitive market. However, McGhee believed that
Turkey’s inexperience with such an economic mindset had stalled the liberalization
process. Additionally, he stated, overturning an already established economic system
was not among the realistic short-term plans.323 Still, the DP government seemed
passionate about pursuing change and bringing more foreign capital to the Turkish
market. The Industrial Development Bank, established in March 1952, encouraged
costly development projects and progress toward a more open investment
atmosphere. Investing in a business was not common in the culture of Turkish smallbusiness
owners; only the wealthy elite had previously shown interest in applying for
credit to invest in their enterprises.324 New banking regulations in the fiscal year of
1952 also favored easy-credit options for the business world. According to the
national budget declaration for that fiscal year, Turkish banks were committed to
providing $18 million to finance private initiatives after the enactment of the law in
1951. Priority would be given to massive development projects such as hydroelectric
plant construction and business enterprises supporting the public welfare.
322 McGhee Papers, Box 1, “Transmitting Memorandum of Conversation Between the Ambassador
and Prime Minister and Foreign Minister on February 10, 1952,” February 18, 1952. The same
document was also included in RG 469.
323 McGhee, 123-24.
324 “Report on Domestic Investment in Turkey.”
127
Furthermore, in collaboration with the Turkish Information Office, the MSA
prepared and distributed pamphlets about “Doing Business with Turkey” for
American multinationals. These pamphlets contained information about Turkey’s
business culture and market opportunities, key business destinations and tips, and
even suggestions about where to stay and what to eat.325 Bringing American foreign
companies together with Turkish capitalists for cooperation through existing Turkish
companies would eventually help Turkey shape a genuine capitalist Turkish
character and perspective.326 After February 1952, McGhee would be at the heart of
such a networking system.
Benefitting from his positive reputation among both American and Turkish circles
and his ambassadorship, McGhee conducted productive meetings with Turkish
decision-makers and American business owners in 1952. Turkish cabinet members
highlighted their eagerness to attract American capital, primarily focusing on public
welfare and development. Visible results of such development included the
construction of dams in Anatolia, improved highways, electrification of the country
thanks to GE, and Squibb & Sons’ contribution to Turkish public health; however,
the DP expected more. Initially, McGhee offered to promote a joint program,
including an improved treaty of friendship and commerce between the two states, but
he insisted that this treaty be prepared with the direct inclusion of both Turkish and
American business owners in the process.327 After publishing standard business
325 Doing Business with Turkey (New York: Turkish Information Office, 1951) was produced for
Americans to learn about the culture of Turkey. This 46-page pamphlet included significant business
tips, illustrations of Turkey, and valuable travel advice.
326 Ibid.
327 McGhee Papers, Box 1, “Transmitting Memorandum of Conversation Between the Ambassador
and Foreign Minister Koprulu on February 1, 1952,” February 7, 1952.
128
pamphlets, business committees and decision-makers from Turkey could visit the
U.S. to represent themselves and Turkey’s market opportunities as another key
initiative. McGhee promised to play his own part in that process by setting up
meetings with American investors and encouraging them to bring their business
vendors to Turkey.328
McGhee was keen to keep that promise and expressed his intentions of bringing
America’s leading cotton giant, Anderson, Clayton and Company (ACCO), to
Turkey in a discussion with Menderes on February 18, 1952.329 This company was
founded in Oklahoma City; however, it had moved its operations, including research
and development facilities, to Texas, where McGhee established connections with its
owner. William Clayton was a notable figure for American commerce overseas. He
supported the promotion of American businesses in international markets and he also
played a direct role in shaping the Marshall Plan.330 After fifty years in business,
ACCO had become one of the most powerful cotton-product monopolies in the U.S.,
providing 12% of America’s production in this field in the 1950s.331 The provision of
know-how in irrigation, fertilization, and mechanization was also included in the
company’s services. Furthermore, ACCO was securing loans for its operations
abroad332 to contribute to developing countries’ agricultural production. After
jumping into the whole-foods industry in 1952, ACCO sought other destinations for
328 Ibid.
329 William Argue, “History of Anderson, Clayton and Company,” Journal of the American Oil
Chemists Society 37 (1960): 4-5.
330 Ibid.
331 Ibid.
332 In the 1950s, ACCO expanded its operations in Brazil, Mexico, Paraguay, Peru, Argentina, and
Egypt.
129
the construction of massive plantations rather than simply the distribution of
commercial products or raw materials. Its newest target was the cotton cultivation
areas around Adana, Turkey.
McGhee, in the aforementioned meeting, approached Menderes about ACCO’s
interest in entering the Turkish market; its limitless capabilities and extensive
experience in the cotton industry could help standardize and sell Turkish cotton to
the world in large quantities.333 McGhee also mentioned ACCO’s success in
constructing a giant plant for food merchandising in Sao Paulo, Brazil, and in
cultivation areas in Egypt in his efforts to impress Menderes. The prime minister was
already convinced, though, and was pleased with McGhee’s offer to set up a meeting
between Turkish decision-makers and Clayton himself in the upcoming weeks.334
McGhee was a master of networking and it could be said that his best trait was his
ability to earn the trust of his business partners. After consecutive conversations and
meetings with parliament members,335 McGhee convinced them about the sincerity
of American capitalism and its prospective advantages for the Turkish economy,
which, he assured them, had nothing to do with the imperialism of the 19th century.
In previous discussions with Minister of State Enterprises Enver Güreli, Permanent
Representative of Turkey to NATO Ambassador Zorlu, and Menderes, he had made
good progress in improving the privatization law of 1951,336 reshaping it to loosen
333 McGhee Papers, Box 1, “Transmitting Memorandum of Conversation Between the Ambassador
and Prime Minister and Foreign Minister on February 10, 1952,” February 18, 1952.
334 Ibid.
335 Zorlu, Menderes, Bayar, Güreli, and even former president İnönü were among the discussants.
336 Especially during the discussion on ACCO’s prospective arrival to the Turkish market, McGhee
stated his concerns about the 10% profit take-away rule and advised that this limit be relaxed so as not
130
the limitations on profit sharing and transfer. Securing improvements to that law
could yield better legal grounds for bringing more American multinationals seeking
profitable deals to the Turkish market. McGhee specifically predicted that the
petroleum industry could be the most profitable field in this regard.337
Doing its best to keep its promises to voters, the DP was searching for any promising
way to attract foreign investments to Turkey, achieving this to some extent in
agriculture, infrastructure, and mining. Sensing an opportunity to generate more
revenue, Ankara seriously started to consider the development of the petroleum
sector. This sector had not reached the expected standards in the past three decades.
Developing such a valuable and potentially profitable sector could solve all
government revenue problems, reduce dependency on petroleum products with
improvements in mechanization, and enable self-sufficiency in military spending.338
The MTA’s explorations had uncovered petroleum deposits along Turkey’s borders
with oil-rich countries like Iraq and Syria, encouraging Turkey and American MNCs
to continue drilling operations to reveal the full potential.339 However, as all
American advisors and ECA agents had previously indicated, this valuable sector
should be liberated from the hands of clumsy “statist” institutions. If Turkey could
ensure efficiently operating petroleum wells and decent production volumes, it could
generate the necessary revenues for industrialization and cut back on the sums spent
annually on imports of foreign oil. McGhee chose to focus on this aspect.
to repulse possible investors. McGhee Papers, Box 1, “Memorandum of Conversation Between the
Ambassador and the Minister of Economy and Commerce,” October 1, 1952.
337 Ibid.
338 McGhee, 126.
339 Ibid.
131
In an informal lunch with Menderes and Bayar at the Marmara Kiosk in Atatürk
Orman Çiftliği on June 5, 1952, McGhee found an excellent opportunity to talk to
Turkey’s top leaders about enacting a separate privatization law for petroleum
research operations. Professionally skilled at turning the topic to business in
conversations with Turkish leaders, McGhee was prepared, supporting his
suggestions by downplaying the results of Turkey’s 30 years of operations around
Mount Raman. He then praised Standard Oil’s achievements in Venezuela, Saudi
Arabia, Iraq, and Kuwait, as that corporation had received an initial investment of
$50 million and was currently enjoying average annual profits of $150 million from
the petroleum business.340 On the other hand, states that kept petroleum resources
nationalized, such as Argentina, Mexico, and Chile, had lost their places in the
international market due to inadequate production without private help. McGhee was
also familiar with Turkey’s long struggles with petroleum drilling operations as well
as its desire to fuel the economy with dollars in the event of generating excessive
numbers of barrels in the production process.341
Talks between the DP government and the American embassy about the privatization
of the petroleum fields342 were steaming ahead in late 1952; however, the RPP
challenged these talks. As a minority party, the RPP was already left out of
significant acts of parliament, such as the DP’s decision to send troops to Korea in
340 McGhee Papers, Box 1, “Transmission of Ambassador’s Memorandum of Meeting with President
Bayar, May 28, 1952,” June 5, 1952.
341 McGhee Papers, Box 1, “Memorandum of Conversation with the President, Prime Minister, and
Foreign Minister,” November 13, 1952.
342 Not only the top members of the Turkish parliament but also American Charge d’Affaires Gerald
Keith, Consul William M. Rountree, and Commercial Attaché Victor von Lossberg attended these
high-level meetings.
132
1950. Hoping to receive the nationalists’ support, the RPP demanded that the DP
clarify its petroleum policy to the public. However, these calls did not make the
expected impact. Turkish public opinion, especially among the agrarian society and
the business elites, reflected contentment with the floods of increasing income and no
objections to foreign capital. Similarly, the public did not quarrel with the expansion
of business with Americans.343 Minister Güreli had released a statement after
meeting with McGhee a month previously. This statement underlined the
insufficiency that had plagued petroleum research and drilling processes since the
early republican era. In spite of the large amounts of money spent on this sector, the
gains were minimal. The ultimate goal, with the help of foreign capital and technical
assistance, was to exploit more petroleum wells and products and accordingly reduce
the budget being allocated for the importing of petroleum products.344 The law to be
developed would preserve the roles of the state or Turkish businesspeople in the
control of these resources; however, help from reliable MNCs was necessary to
achieve efficiency in this sector.
Many newspapers with more pro-statist or pro-RPP stances evaluated this decision as
rolling out a red carpet for a return of the Ottoman Public Debt Administration and
an inexcusable violation of Atatürk’s memory and his statist reforms. It was believed
that the DP government was playing a dangerous game with the capitalist powers by
encouraging the introduction of foreign capital into the Turkish oil sector. However,
the DP continued defending their decision.345 The RPP’s opposition to this policy,
343 GNA Minutes, 9th Parliament, Vol. 13, February 28, 1952, 1212-22.
344 McGhee Papers, Box 1, “Memorandum of Conversation Between the Ambassador and the Minister
of Economy and Commerce,” October 1, 1952.
345 GNA Minutes, 9th Parliament, Vol. 13, February 28, 1952, 1218-19.
133
however, was also controversial. Only three years previously, when the RPP was in
power, working with foreign multinationals and getting help from them was being
discussed. The president of the MTA conducted negotiations with Socony agents
regarding a prospective partnership and future investments in the sector.346 During
heated debates about the petroleum issue in GNA sessions from 1952 to 1954, DP
parliament members commonly attacked the opposition about the RPP governance
during the one-party regime. They blamed the RPP for filling the ranks of the MTA
with RPP supporters, causing inefficiency in such a valuable industry. They also
emphasized that the RPP was the governing party that had first approached U.S.
institutions and multinationals back in the 1940s. The DP continued campaigning for
reforms in this sector, underlining the promise to bring prosperity and capital to
Turkey.347
The DP government released a statement in October 1952 that stressed the
insufficiency present in petroleum research and drilling processes since the early
republican era. This statement gave McGhee the green light to intensify his focus on
the Turkish oil sector. He spent 1953 reading reports about drilling operations and oil
deposits along the Syrian border, visiting work sites, and contacting other American
professionals for better land surveys and legal advice. Not impressed with the results,
he ardently advised sponsoring separate legislation to encourage foreign oil
companies to share the rights of oil discovered in Turkey. Further operations
346NFT, “International Contacts,” April 7, 1949.
347 GNA Minutes, 9th Parliament, Vol. 13, February 28, 1952, 1209-28.
134
conducted by professional companies with advanced research techniques could
reveal the extent of the sector’s potential.348
The petroleum law of Turkey enacted in 1926 only authorized national institutions to
conduct drilling operations, which had to be changed according to McGhee. A new
law, prepared by considering the current conditions and precedents of foreign
investment laws of other countries, was needed to attract American multinationals.349
McGhee was ready to contact well-known Americans with experience in oil
legislation if the Turkish decision-makers were interested. He initially proposed
Herbert Hoover Jr., who was running an oil exploration company called United
Geophysical Company Inc. in these years and assisting Iran in establishing new oil
concessions.350 However, Hoover was assigned as a special envoy to Iran to find a
middle ground between Iran, Britain, and the U.S. after the 1953 coup d’état in Iran.
McGhee’s next suggestion was the former director of the Oil and Gas Division of the
Department of the Interior, Max Ball, who also happened to be his good friend.351
3.7. Results
In the first three years of the DP government, Turkey and the U.S. enjoyed a
honeymoon of sorts in terms of both political and military relations and economics
and business. After the DP, as an ardent supporter of American financial guidance
348 McGhee, 127-28.
349 FRUS, 1952, Volume VIII: Eastern Europe; Soviet Union; Eastern Mediterranean, “The
Ambassador in Turkey (McGhee) to the Department of State,” May 31, 1952, 890-93.
350 Ibid., 892.
351 McGhee Papers, Box 1, “Advisor to Turk Government on Petroleum Legislation,” March 23, 1953.
135
and privatization, was elected as the governing party in 1950, the reluctance and
hesitations regarding liberal economic policies started to be replaced by sincere
invitations to foreign capital. While the state enjoyed foreign financing and credit
opportunities for its modernization and infrastructure processes, individuals such as
farmers and the business class were delighted to increase their revenues through
better agricultural production and partnerships with American companies and
products to enhance their businesses.
The promising improvement in economic welfare among the voters and the visible
results of the ECA funds in terms of state modernization were direct reasons for the
DP government to enact a new foreign investment law in 1951. The government also
showed signs of enacting other improved liberal laws and expanding privatization in
various sectors in the upcoming years. It was known that the Marshall Plan was
about to end, taking with it the flows of currency and imported products to the
Turkish market, and both the DP government and ECA agents believed that
attracting more foreign direct investment would be an appropriate solution.
Therefore, both sides eagerly came together to work on drafting a bill in 1951.
American economists such as Dorr and Barker actively participated in the drafting
processes, sharing their knowledge and ideas about attracting American investors.
With no reservations about their advice, the DP government generally approved the
proposals.
The number of American companies entering the Turkish market did not meet the
demand but did show promise for the future. In line with Turkey’s industrial
modernization goals, the construction of factories and assembly lines for products
136
such as drugs and light bulbs contributed to the national prestige. The
Americanization of Turkey through improved production and construction became a
political motto. The interest of Pan American Airlines and Hilton Hotels in Turkey
suggested that more American businesses would be visiting Turkey soon.
Ambassador McGhee convinced the DP leaders to involve American MNCs in
Turkey’s petroleum research operations. Socony, which had been selling its products
for years in the Turkish market, was waiting for an opportunity to expand its business
activities. Seeing the potential in the Turkish market and embracing the country’s
struggle to become a “little America,” American investors in Turkey started to
transform into lobbyists for the country among their own circles. In late 1952, there
were only a few fields, such as oil drilling operations, in which the Americans did
not actively participate in Turkey, allowing anyone to see why this period was like a
business honeymoon between these two states.
137
CHAPTER IV
“In talking to the Turkish dignitaries, ‘When my government asked me what I
thought I could do for Turkey, I said, I can bring rain, so they said, go on out to
Turkey.’ The reference, of course, is that Turkey last year had a bad wheat crop for
lack of moisture.”
Clarence B. Randall352
4.1. Concrete Steps to Privatizing the Oil and Mining Industries
By late 1952 and early 1953, privatization efforts were focused on the oil sector.
Public statements by DP leaders, debates between deputies in the GNA minutes, and
columns in both Turkish and American newspapers all signaled that Turkey would
352 Clarence B. Randall Journals (Randall Journals hereafter), Box 7, Turkey 1956, January 28-March
6, “Saturday Morning, February 11th, Barclay Hotel, New York,” 29.
138
announce a revolutionized privatization bill for the oil sector, meeting the American
expectations.353 Although it was emphasized less in these debates, the DP was also
working on another private investment incentive law to cover all sectors, including
mining. Scattered across Anatolia, Turkey’s iron, manganese, chrome, and
wolframite fields, fifteen of which were commercially promising, had been operated
by SOEs, were not modernly equipped, and were well below the standards for
extraction volumes.354 The new law, if enacted quickly, would charter mining
concessions for private initiatives by both Turkish and foreign companies, allowing
the deposits to be exploited for a period that would range from 40 to 99 years. The
first two years of the contract would cover the supervision process. If the contracted
company failed to extract the agreed tonnage, the mine would be terminated.
Promising to surround all sectors for equal competition in the market, the DP
government hoped to introduce a new mining law to encourage the growth of private
investments in that sector in 1954.355
American geologists and experts who took part in the Thornburg and Barker
expeditions had already hypothesized that Turkey could increase its volumes of
mining products as well as its currency earnings through exports to NATO allies in
353 Welles Hangen, “Turkey Preparing Private Oil Code,” New York Times, May 17, 1953; GNA
Minutes, 9th Parliament, Vol. 13, February 28, 1952, 1218-1226; DSA, “Yabancılar tarafından Petrol
kaynaklarımızın tesbiti, çıkarılması işletilmesi için gerekli işlemlerin yapılması” (“Foreigners
carrying out the necessary procedures for the detection, extraction, and operation of our petroleum
resources”), 130-81-3, November 12, 1952; DSA, “Hükümetimizin yeni petrol siyaseti ile ilgili
olarak, New York Journal of Commerce gazetesinde çıkan makale” (“An article published in the New
York Journal of Commerce on our government’s new oil policy”), 102-639-11, December 18, 1952;
Cumhuriyet (Republic), “Yeni Petrol Politikamız Yurtdışında İlgi Yarattı” (“Our New Oil Policy Has
Created Interest Abroad”), January 12, 1953.
354 NARA, RG 469, “Extracts from Report IR/SRE (Mr. Samuels, Director) on BMP Discussion
Between Mac Goodman and MSA/Turkey,” December 22, 1952.
355 “Turkey Preparing Private Oil Code.”
139
their former reports and country studies.356 Turkey was a significant exporter of
chrome and its iron ore was also popularized thanks to increased extraction volumes,
notably in the Dutch and Italian markets in the early 1950s.357 However, the MSA set
higher expectations for the Turkish market to increase the variety of exported
products. Enhancement in the mining sector could facilitate such a leap.
Additionally, the extraction of more ore could reduce Turkey’s military dependence
on the U.S. by allowing development in military production industries like
machinery and ammunition.358 As NATO’s policy priorities evolved into more
military spending to stop adversaries, the efforts to improve the Turkish mining
sector and integrate its manufactured products into allied markets also gained higher
priority. Stimulating private enterprises for that purpose could simultaneously allow
Turkey to dominate several other sectors besides chrome in the foreign markets.359
As the MSA reports predicted, such improvement in the mining sector would require
more cash flow, credit options, and know-how; they urged the necessity of new
regulations from the Turkish government and financial institutions such as the
Industrial Development Bank.360 In line with the MSA’s advice, the bank established
a Mining Branch to provide credit to Turkish and foreign private investors as a
356 Both Thornburg and Barker devoted a chapter in their reports to the promise of the oil sector in
Turkey. Both also underlined that Turkey should consider better research operations with the
involvement of foreign private companies for more success in this sector.
357 James Morris, “Recent Problems of Economic Development in Turkey,” Middle East Journal 1,
No. 14 (1960): 6.
358 NARA, RG 469, “Office of the Special Representative in Europe Airgram, no: Torep A-171,
From: MSA/Ankara, To: MSA/SRE PARIS, SUB: Defense Production Study, OSP FY 54,” April 28,
1953.
359 FRUS, 1952-54, Volume VIII: Eastern Europe; Soviet Union; Eastern Mediterranean,
“Memorandum of Conversation, by the Ambassador in Turkey (McGhee),” February 10, 1953, 878.
Morris, in “Recent Problems of Economic Development in Turkey,” also refers to such increases in
volumes of extracted minerals (5-7).
360 NARA, RG 469, “From: Mutual Security Agency, To: National Advisory Council, SUB: Turkish
Basic Materials Project,” June 15, 1953.
140
supplemental regulation for the new Turkish mining law, making more loans of up to
$25,000 available as a short-term solution.361
A new privatization law for the mining industry and other natural resources was
reviewed in the GNA in May 1953. The submission of a draft was expected in
anticipation of enacting it before the end of the year. However, Menderes and his
cabinet preferred to prepare a carefully considered and detailed draft in consultation
with advisors they would approve.362 Eventually, the law would require the most
updated and appropriately adapted terms of international law while tempting foreign
investments. As the former privatization law in 1951 had some flaws with limitations
on transactions of capital and materials for business owners and could not satisfy the
demands, the DP decided to handle this process delicately.363
Oil privatization was a separate topic in these discussions because the Turkish
governments have always been cautious about inviting foreign investors to this field,
and McGhee, as a specialist in that sector, mainly conducted meetings with the DP
government and his own entourage. After six years of work in Turkey, McGhee had
built up a notable reputation among Turkish decision-makers. He convinced the DP
leaders to invite organizations with foreign capital and know-how to increase the
efficiency of oil research operations. In 1953, he earned a position on the law
361 NARA, RG 469, “Letter to Mac Goodman, SUB: Turkish Basic Materials Program, Records of the
US Foreign Assistance Agencies,” March 13, 1953.
362 In Investment in Turkey: Basic Information for United States Businessmen, which was published in
1954, the foreword highlighted the direct roles of Richard Robinson, H.J. Cummings (the director of
the Near Eastern and African Division, Bureau of Foreign Commerce), Rasim Cenani (a Turkish
lawyer specializing in foreign investment matters), and Jasper Streeter (a British businessman with
many years of experience in Turkey) in the law-making process. See Appendix III.
363 Ahmad, 132.
141
drafting committee, just as Dorr had done in discussions about the privatization law
of 1951. The DP leaders knew that McGhee had a background in the petroleum
business and a significant network among both Americans in oil and lawmakers. He
could help Turkey get in touch with qualified geologists and lawyers to retain their
services. Indeed, McGhee worked closely with the Department of State on this issue
and a list of notable American geologists was provided to the DP government in
December 1952. Max Ball, the former Director of the Oil and Gas Division of the
Department of the Interior and a good friend of McGhee, topped the list after Hoover
Jr. was assigned to Iran.364 In addition to furthering its negotiations with Ball, the DP
also invited geologists and agents of several American multinationals together with
Dutch Shell Co. to work in the oil fields around Mount Raman. The embassy in
Ankara was pleased to be involved in this process and to see American advisors and
companies taking part with optimistic thoughts about the new bill.365
Inviting foreign investments in the oil sector was still a delicate issue. The GNA
sessions of the last term on privatizing the oil industry witnessed harsh debates
between DP and RPP deputies. Considering the heated debates in GNA sessions and
aggressive articles in the Turkish press in previous years, the DP now intended to
avoid broadcasting any plans that would generate clashes between foreign
investment topics and the nationalistic feelings of the public. Therefore, the
prospective privatization of petroleum reserves largely remained an inner-circle
364 McGhee Papers, Box 1, “Advisor to Turk Government on Petroleum Legislation,” March 23, 1953.
365 Ibid.
142
discussion. That inner circle consisted of the leaders of the DP government and U.S.
embassy officials in 1952, but not RPP members.366
These prospective new regulations about oil concessions fueled talks about
denationalizing the oil reserves of Turkey. The ultimate goal was to encourage
private foreign oil companies to assist Turkey in drilling and production operations
without losing the state’s support in the market. Meanwhile, debates in GNA
sessions on the possibility of new reforms favoring foreign capital deepened. During
the budget discussions of the 1953 fiscal year, increasing state revenues by allowing
foreign businesses to invest in more sectors in the market was a particularly hot
topic. DP deputies underlined that extracting more oil with the help of multinationals
with experience in that sector would enhance the Turkish economy and reduce the
amounts spent on petroleum products.367 Trying to detract attention from the
nationalistic criticisms of RPP deputies, DP members regularly emphasized the
standardization, organizational, and efficiency benefits of the upcoming law for all
mining and natural resource sectors in addition to increased state income. Moreover,
trying not to remain in the shadows once again, the DP government was determined
to convey these developments to American businesses by marketing Turkey in the
U.S. DP members mocked those who viewed the new law as solely a petroleum bill
and opposed it from a statist perspective. On the contrary, this law was only the
beginning, and the DP would do anything to offer incentives for further investments
366 Talks between the DP government and American officials on opening Turkey’s oil resources to
foreign investment were referenced often in the McGhee Papers, the Randall Journals, and FRUS
1952-54, Volume VIII. In GNA sessions, the opposition intensified the tone of criticism against those
secret meetings, particularly in 1954, after Ball’s arrival in late 1953 to work on a revised petroleum
law.
367 GNA Minutes, 9th Parliament, Vol. 20, February 16, 1953, 9.
143
from the U.S., establishing new campaign offices in major prosperous American
cities.368
Heated debates were moved to the sidelines in both the Turkish and American press.
Even though nothing had been announced publicly, Cumhuriyet delivered exclusive
news that struck a nerve with the nationalists: the agents of foreign multinationals
had already started to visit Turkish oil facilities for inspections. These agents were
taking on pivotal roles in exploration and drilling operations.369 That had never been
a secret; asking for foreigners’ counsel and inviting private companies to map out a
working oil policy had been a part of the Turkish oil program since the early
republican era. In particular, American experts had always been granted permission
for visits to the economic centers of Turkey.370 However, the opposition was once
again quite disturbed by being excluded from the discussions. The RPP was informed
about news in this field when the Americans were already at the center of the
process. This news revealed that the DP government was no longer hesitant to grant
permits for pipeline construction or the renting of warehouses to American
multinationals openly, even before the talks about the new law were concluded.
Moving beyond simple advice about drilling operations, the MTA agreed with the
Ralph M. Parsons Company on the construction of a 26-mile-long pipeline and
368 After establishing a press and commercial office in New York, new offices to be built in
Philadelphia, New Orleans, Chicago, and San Francisco were agreed upon in the minutes. Ibid., 46.
369 “Yeni Petrol Politikamız Yurtdışında İlgi Yarattı.”
370 According to the Turkish state archives, hundreds of foreign professionals were granted work
permits to participate in road building, oil drilling, and electrification, all in industrial and
infrastructural fields. The number of foreign advisors had increased, and especially Americans, after
the Marshall Plan and the ECA programs. This method was a common approach in Turkey for
adopting new know-how techniques before the DP’s privatization laws were enacted to abolish limits
on employees and tool transfers of foreign multinationals.
144
refinery in the area around Raman and Garzan. According to this deal, the MTA
would work jointly with the American company, which promised to complete the
construction of facilities for oil processing, refining installations, storage tanks, a
laboratory, repair shops, and a pipeline in two years. Turkey would provide $7
million of the costs. After completing the project, Parsons would operate the entire
facility for a year, train Turkish personnel for the upcoming takeover of the facility,
and participate in drilling operations.371 The facility would be handed over to SOEs if
Parsons could not fulfill its contractual obligations. In April 1953, Socony received a
similar grant from the Ministry of State Economic Enterprises to join drilling
operations in Eastern Anatolia under the MTA’s surveillance. Socony was working
on expanding its branch in İstanbul and had begun moving machinery for drilling
operations through customs.
In the GNA minutes of April 9, 1953, RPP deputies acknowledged their discomfort
about the DP assigning several empty warehouses belonging to the Municipality of
İstanbul to Socony for business purposes. Socony’s machines for better drilling
operations and petroleum products were stored in these warehouses to be sold in the
Turkish market; however, the RPP accused the authorities of allowing these business
activities to be conducted illegally by exempting them from taxes.372 Inviting Socony
agents to the region to study the geological conditions of soil and monitor operations
was not the source of this rift, nor was the presence of other multinationals’
agents.373 Learning about the drilling equipment and foreigners taking leading roles
371 “Coast Man Wins Contract for Turkish Oil Refinery,” The Arizona Republic, January 23, 1953, 22.
372 GNA Minutes, 9th Parliament, Vol. 21, April 9, 1953, 302-4.
373 NFT, “American Geologists Arrive in Turkey,” April 2, 1953, and April 23, 1953.
145
in the operations even though MTA directors should have been in charge was what
bothered the opposition the most.374
The DP responded to these accusations by reminding the RPP of Socony’s unique
place in the Turkish business world. The company had been present in the Turkish
market since Ottoman times as a subsidiary of Standard Oil, before anti-trust laws
dissolved that company. In 1952, Socony and the DP government agreed to
nationalize the Turkish subsidiary and rename it “Sokoni-Vakum Petrol Anonim
Ortaklığı,” or Socony-Vacuum Petroleum Inc.375 Turkey needed Socony’s capital
and know-how to pursue more effective drilling and exploration operations. Talks
between the Turkish governments and Socony agents had been pursued since the late
1940s. Looking for a reliable source of support to bolster the MTA’s struggling
efforts, however, Turkey could not find common ground for signing a deal with
Socony for some years. Lacking adequate laws for the protection of foreigners’
assets, putting limitations on profit transfers, and providing no tax incentives for
imports from foreign multinationals, Turkey did not reflect a good market image
before the 1950s. Socony’s nationalized branch in İstanbul had some privileges, such
as assigning agents to observe research operations or selling machinery to the
MTA.376 However, the law at that time neither allowed this company to be an
independent investor in drilling operations nor permitted it to import machinery with
tax exemptions and store it in municipality warehouses. However, having always
374 Ibid., Carl Smith and E.T. O’Connell arrived in Turkey as project managers on April 23, 1953.
375 DSA, “Merkezi İstanbul olmak üzere Sokoni-Vakum Petrol Anonim Ortaklığı'nın kurulmasına izin
verilmesi” (“Granting a permit for the establishment of Sokoni-Vacuum Petrol Anonim Ortaklığı,
with its headquarters in İstanbul”), 125-25-8, March 15, 1952.
376 Ibid.
146
viewed the various Turkish administrations favorably,377 Socony continued to
transfer goods, tools, and personnel to Turkey. According to the founding deal signed
in 1952, Socony agreed to bring investments worth 15 million Turkish lira
(approximately $5.3 million by the exchange rate of 1953) to Turkey, open an office
in İstanbul, and contribute an additional $3 million in investment capital by 1954.378
This deal between Turkey and Socony was not optimal. Foreign oil companies had
no freedom in the Turkish market in contrast to Standard Oil operations in Iraq,
Saudi Arabia, or Israel; the MTA had to be the top institution in all drilling and
research operations. Remaining in the shadow of the MTA, an inefficient SOE, the
oil sector of Turkey was far from yielding sufficient volumes, and Socony would not
immediately impact the production considering the restrictions that it faced.
Therefore, Turkey required a more functional petroleum law to end the MTA’s
monopoly on oil and to offer a more considerable share of the profits, most likely an
amount that would be much more than what Turkey earned from national production,
to foreign companies. This put Ball into a vital position as an esteemed oil and gas
consultant. Arriving in Turkey in early May 1953, he spent ten days in Ankara,
primarily filling his schedule with examinations of former field research and
discussions with the DP government and MTA directors on how to draft a
prospective oil policy to address the international petroleum sector’s demands.379
377 DSA, “Bazı yörelerdeki Sokony Vacuum Kumpanyası’nın satıcılarını ve satışlarını incelemek
üzere Amerikalı 3 uzmanın bu yerlerdeki 2. yasak bölgeye girmesine izin verilmesi” (“Permitting
three American experts to enter the Second Forbidden Zone in some places to examine the sellers and
sales of the Socony Vacuum Company in these regions”), 122-35-16, April 13, 1950.
378 DSA, “Merkezi İstanbul olmak üzere Sokoni-Vakum Petrol Anonim Ortaklığı'nın kurulmasına izin
verilmesi.”
379 FRUS, 1952-54, Volume VIII: Eastern Europe; Soviet Union; Eastern Mediterranean,
“Memorandum of Conversation, by the Ambassador in Turkey (McGhee),” May 2, 1953, 924-25.
147
Ball’s initial conclusions about Turkey and its oil reserves were not promising.380
Generally in line with what Barker and Thornburg had indicated, Ball asserted that
Turkey should liberate all operations from state control if it wanted to join the ranks
of oil-producing countries. After diagnosing the underdevelopment of Turkey’s oil
industry, Ball described the Turkish operations as slow and impotent, broadly
contradicting the nature of oil exploration in capitalist markets. The strict
bureaucracy, generally issuing single determinant judgments, was not willing to risk
financing costly research processes unless the initial drilling operations promised
large oil deposits in the region of the operations.381 Turkey had achieved little
recently in this sector, which received little funding and limited technology and
mechanization for professional exploration. The 1500-2000 barrels being produced
per day were far from enough to meet the domestic market’s demands. In his report
to the Department of State, Ball connected these inadequacies to the state’s nonfunctional
monopoly, which he called the most flawed instrument for finding oil,
guaranteeing that it could never compete with private capital resources.382 However,
he preferred to keep these thoughts between himself and U.S. institutions in general
so as not to upset Turkish-decision makers before conducting constructive
meetings.383
380 ExxonMobil Historical Collection, Exxon Corporation, 1909-2000, Series I, Box, 2.207/L13B,
“Ball, Max W. (oil and gas consultant), 1953 Turkey’s Oil Outlook, May 20, 1953”; “Türkiye’nin
Petrol Kaynakları Acil Geliştirilecek” (“Turkey’s Petroleum Resources to be Urgently Developed”),
Zafer (Victory), May 23, 1953.
381 Turkey’s Oil Outlook.
382 Ibid.
383 “Türkiye’nin Petrol Kaynakları Acil Geliştirilecek.” In a press conference, Ball and Minister of
State Enterprises Yırcalı released a joint statement and then proceeded to a Q&A session. Yırcalı
asked Ball if he believed that foreign companies would participate in oil drilling processes in Turkey.
Ball hesitatingly replied that the present works conducted by foreign oil companies and the imminent
148
In addition to complaining about the lack of private investments, former reports and
research results were also disappointing for Ball in terms of the chances that Turkey
had large-scale oil deposits in the exploration areas. Ball urged more research to be
conducted around the petroleum reservation sections of southeastern Turkey,
particularly in areas exhibiting geological structures suggestive of substantial oil
deposits. The information previously gathered from the region was inadequate for
any clear conclusions.384
Ball’s recommendations were highly appealing to the DP government, which
revealed its faith in Ball and its trust in his prospective draft of the petroleum law.385
The DP’s supportive attitude toward Ball’s progressive ideas strengthened the
interest of new oil multinationals in the Turkish market. Socony and Shell had
already settled in the region, conducting surface reconnaissance around Mount
Raman. Caltex was on its way because all indicators suggested that the old law
enacted in 1926 would be replaced soon.386
Furthermore, both agricultural industrialization and military enhancement had raised
the demands for petroleum products in Turkey. In 1952, Turkey had mechanized its
military forces with jeeps and tanks, imported more than 35,000 farm tractors, and
legislation to encourage greater participation by foreign interests would both likely grow. Israel had
subsequently granted exploration licenses to six different oil companies after enacting a related law,
and each company announced its intentions to spend at least $5 million; after enacting the law, he
predicted, Turkey could achieve the same.
384 Ibid.
385 “Turkey Hires U.S. Oil Expert to Draft Laws,” The Washington Post, May 23, 1953, 12.
386 “Turkey Preparing Private Oil Code.”
149
expanded its road and railroad networks for better transportation. Eventually, the
total import value of petroleum products reached about $45 million.387 This amount
was nearly 60% of Turkey’s export income and had to be reduced soon. Turkey was
in a position where it might face a deepening oil import crisis in the upcoming years,
with oil being an essential product for industrialization and development progress.
Ball’s short visit was concluded with success and promise. Both parties agreed to
hold another meeting in September 1953 to polish the law’s final draft; the GNA,
controlled by the DP, would then put it to vote before convening for the winter
session.388
In the months after Ball’s departure, the DP continued to work on manufacturing
consent in GNA sessions, ardently supporting and justifying the necessity of a new
mining law to expand state revenues to finance huge development projects. Any
nationalist could be proud to see the completion of dams, electrification,
enhancements in infrastructure, and the expansion of industrial fields. During these
discussions, the completion of the Seyhan Dam project started in 1947 by an
American consortium and the works of Morrison-Knudsen and GE strengthened the
DP’s hand in the debates.389 Thanks to the visible results of the contributions of
American businesses to Turkish modernization, such as the Seyhan Dam and road
improvements, the DP urged Turkey to attract more foreign input. En route to this
policy, the state needed to set equal conditions for free competition, including
387 Ibid.
388 McGhee Papers, Box 1, “Outstanding Problems, Interesting U.S. and Turkish Comments,” June 18,
1953.
389 Richard D. Robinson, Developments Respecting Turkey; A Summary of Events and Statistics with
Bibliographical Notes (New York: American Universities Field Staff, 1954), 23. That consortium was
also awarded a new contract to undertake a hydroelectric project worth $35 million in the same area.
150
lowering taxation and abolishing commercial limitations on foreign investors by a
new regulation in line with internationally accepted accords. Similar laws applied in
other countries like Saudi Arabia had enriched those states in terms of investments.
Foreign MNCs were denationalized after entering a market and working toward
profit maximization with the host state. The ARAMCO-Saudi Arabia partnership, for
example, allowed both parties to grow together; Turkey could do the same with
Socony or other reliable multinationals.390 In June, the DP’s persistence, growing
discontent among party delegates, and the need for a compelling promise to attract
voters before the next election in 1954 broke the RPP’s rigid opposition to the law.
Concluding its party convention, Turkey’s opposition party promised to ensure equal
treatment for foreign private investors, including in the oil sector, if it were to regain
power. The New York Times evaluated this change by associating it with the hope of
gaining more popular votes in the upcoming election.391 As the agents of major
MNCs like Caltex, Socony, and Shell were already present and their equipment and
products were already being used, the RPP was convinced that there was no benefit
in battling these giants. The public had already given its support to the DP in this
regard.
In June 1953, American companies were also drastically increasing their operations
and investment amounts in the Turkish market. Two years previously, departing
ECA executive Dorr was proud to acknowledge that total American private
investments in Turkey had reached $3 million after the Marshall Plan. Following the
DP’s privatization law in 1951, U.S. investments reached $33 million in 1953, still
390 McGhee Papers, Box 1, “Transmission of Ambassador’s memorandum of meeting with President
Bayar, May 28, 1952,” June 5, 1952.
391 “Ankara Opposition Switches Policy,” New York Times, June 27, 1953, 4.
151
just a drop in the bucket of state expenses but showing significant potential.392
Furthermore, a balance in export and import amounts between the U.S. and Turkey
was secured in 1953, suggestive of the possibility that Turkey might liberate itself
from American aid sooner.393
4.2. The Arrival of “Mr. Free Enterprise” in Turkey: Clarence B.
Randall
In July 1953, only one month before he would be sent as Chief of the Special U.S.
Economic Mission to Turkey, Clarence Randall was unsure about this challenging
job.394 He had neither experience nor knowledge about Turkey or the business
climate in the country. However, the director of the Foreign Operations
Administration (FOA), Harold Stassen, convinced him to accept this offer from
newly elected President Eisenhower. In fact, the Turkish mission after the
replacement of the ECA with the MSA was not a promising position. The MSA’s
estimations showed that Turkey would eventually need American private capital
besides credits and aid; it had not yet been able to attract enough businesspeople to
invest. Both the MSA and Eisenhower administration, however, had strong faith in
“Mr. Free Enterprise” to change the conditions of this unpromising environment.395
392 Frances C. Mattison, A Survey of American Interests in the Middle East (Washington D.C.: Middle
East Institute, 1953), xiii. Only $17 million was directly invested in business operations, covering the
petroleum sector, tobacco, and machinery. The rest of these funds generally supported philanthropic
works such as American-sponsored schools and hospitals.
393 Ibid., xiii-xiv. The import-export balance was secured at around $62 million in 1953.
394 Randall Journals, Box 1, Commission on Foreign Economic Policy, 1953, Vol. 1 (August 1-
October 20, 1953), Trip to Turkey, “Memorandum of the Complexities of July 1953,” 2.
395 Randall Journals, Box 6, Turkey in 1953 (August 22-28, 1953), Private investment in
underdeveloped countries; travelogue on a trip to Turkey; climate and geography; P.M. Menderes;
Polatkan, Minister of Finance; Celikbar, Minister of Commerce, “Prologue,” 2.
152
As Randall built up his reputation through his previous publications A Creed for
Enterprise and Freedom’s Faith and his experience in ECA as a steel consultant to
the industry division, FOA Director Harold Stassen nicknamed him “Mr. Free
Enterprise.” According to Stassen, Randall was the best man to help both the
Eisenhower administration and the DP government find ways to attract American
businesses to Turkey. As a successful businessman and the chairman of the board of
Chicago’s Inland Steel Co., Randall was a favored agent for this job. His books had
become a staple of U.S. businessmen’s libraries. In that book, Randall explained U.S.
capitalism’s philosophy and operating efficiency.396 He believed that anywhere in the
world was not far from Chicago and American businesspeople should hunt for
opportunities under certain conditions.397 Turkey, still unable to attract enough
American business interest in late 1952, would surely welcome this miracle man, and
the Eisenhower administration’s expectations of him were the same. As he said to the
Turkish delegates in meetings, Randall had done his homework before his arrival; he
read as many books and reports about Turkey as he could. His objective was to
determine the factors that limited the flow of private investments.398
396 “National Affairs: A Creed for Enterprise,” Time, August 24, 1953. This article’s translation was
delivered to the prime minister’s office in Turkey on August 27, 1953. DSA, “BAD Yabancı
Memleketler Ekonomik Siyaset Komisyonu Başkanı ve FOA Başkanı Mr. Clarence B. Randall
hakkında Time Mecmuası’nda çıkan yazı tercümesi” (“Translation of an article published in Time
magazine related to Mr. Clarence B. Randall, Chief of Special U.S. Economic Mission to Foreign
Countries and FOA”), 13-79-16, August 27, 1953.
397 DSA, “BAD Yabancı Memleketler Ekonomik Siyaset Komisyonu Başkanı ve FOA Başkanı Mr.
Clarence B. Randall hakkında Time Mecmuası’nda çıkan yazı tercümesi” (“Translation of an article
published in Time magazine related to Mr. Clarence B. Randall, Chief of Special U.S. Economic
Mission to Foreign Countries and FOA”), 13-79-16, August 27, 1953.
398 Randall Journals, “Prologue,” 2.
153
Randall was assigned as the chief of a very talented group of businessmen, including
Graham Mattison, an investment broker from New York; Redvers Opie, a British
economist who had trained at Harvard, worked closely with the famous John
Maynard Keynes, and took part in the establishment of the IMF and WB; and Leon
Dayton and William Rountree, who had already been serving in Turkey and were
familiar with the environment. His first meeting was with the Turkish government,
led by Menderes, on August 26, 1953. In his memoirs, Randall remembers being
very excited and rehearsing his entire speech, which he had already been practicing
for a month.399 He was relieved to meet a very friendly committee, noting the same
excitement in the delegates’ eyes.
Further meetings with members of the government continued in the following days.
What pleased Randall the most was the determination of the DP government to bring
American business to Turkey and to take necessary steps for that goal. Randall,
having already determined a strategic road map, listed his demands as the revision of
the existing privatization law with improvements, permitting foreign companies to
bring their own personnel, assuring free competition in the market, and marketing
Turkey as a trademark together with its business opportunities in the U.S.400 The
Turkish delegate was familiar with those necessities, having received long lectures
about them from any American advisor who had ever visited Turkey before. Thus,
they did not challenge these points and generally just asked questions about how to
399 Randall Journals, Box 6, Turkey in 1953 (August 22-28, 1953), Private investment in
underdeveloped countries; travelogue on trip to Turkey; climate and geography; P.M. Menderes;
Polatkan, Minister of Finance; Celikbar, Minister of Commerce, “Memo No. 6,” August 27, 1953, 22-
23.
400 Randall Journals, Box 6, Turkey in 1953 (August 22-28, 1953), Private investment in
underdeveloped countries; travelogue on trip to Turkey; climate and geography; P.M. Menderes;
Polatkan, Minister of Finance; Celikbar, Minister of Commerce, “Memo No. 7,” August 28, 1953, 25-
26.
154
proceed. Randall was surprised to see such an ambitious attitude toward changing the
characteristics of collectivism, which he described as the nemesis of capitalist
thought. Having never seen such determination to abandon collectivist approaches in
his previous missions in Germany and France, Randall Conbelieved that he could
really be successful in eventually merging the Turkish market and American
investors.401
Contrary to McGhee, Randall approached this case with a pure business sense,
working to push state initiatives and bureaucracy out of the way of private
investments. Although the DP government had announced that it was following
American guidance in previous years, the ECA and the DP government clashed on
several projects and disagreed about what to finance and how. Whether or not the DP
could convince ECA members about the projects they hoped to pursue or the
amounts of payments to be secured, it still benefited from some aid and services from
well-known American companies and their products in this period. However, private
investment needed a compatible business environment, less state intervention, and
more profit opportunities. Unless a company was guaranteed to make a profit from a
market, it would continue seeking the best market opportunities, incentives, and
freedom for investments. Randall shared the same perspective as a business-minded
corporate CEO.402
401 Randall Journals, Box 6, Turkey in 1953 (August 22-28, 1953), Private investment in
underdeveloped countries; travelogue on a trip to Turkey; climate and geography; P.M. Menderes;
Polatkan, Minister of Finance; Celikbar, Minister of Commerce, “Memo No. 10,” August 28, 1953,
36-37.
402 DSA, “Mr. Calarance [“Clarence” was misspelled throughout the document] B. Randall’ın Türkiye
ziyaretiyle ilgili hazırlanan rapor” (“Report prepared on Mr. Calarance B. Randall’s visit to Turkey”),
26-153-1, August 28, 1953, 3-4. In the first meeting, Randall clearly stated that he was not primarily a
state agent and that he acted as an ordinary businessman.
155
According to Randall’s road map, the first objective was “selling Turkey to the
Americans, and the Turks must do it.”403 Despite the pamphlets printed and delivered
to corporations in the previous years, Randall admitted that too many stereotypes
about Turkey, fueled mainly by the Greek and Armenian diasporas in the U.S., still
remained in American society, including topics such as polygamy, veiling, camels, or
issues regarding cigarettes.404 American businesspeople had very limited knowledge
about Turkey itself, beyond the business opportunities they had learned about. Such
stereotypes or ignorance needed to be eliminated through work from both sides;
however, Turkey and its prospective agents should be the ones doing the harder
work, for which Randall urged hiring lobbyists or organizing strong efforts among
the Turkish diaspora.405
Secondly, Randall suggested eliminating the limits on foreign investment operations,
including the scope of sectors, profit transfers, and tax regulations. These all shared a
common purpose in his mind: making American businesses feel at home. Randall
pointed out that American firms were doubtful about expanding their operations
overseas due to too many uncertainties in foreign markets; his fellow Chicagoan
businessmen even had reservations about expanding into Canada.406 In particular, the
Turkish market contained too many ambiguities; it was too far from home,
presenting many obstacles, limitations, and uncertainties in terms of culture,
403 Ibid., 5-6.
404 Ibid., 16. The Turkish image marketed by Camel cigarettes was discussed in a meeting between the
DP government and Randall’s group. When Prime Minister Menderes blamed Greeks and Armenians
in the U.S. for perpetuating stereotypes about Turkey and its products, Randall agreed.
405 Ibid., 15. Randall stated that Turkey needed an organization and people to sell the Turkish market
in New York.
406 Ibid., 12.
156
economy, language, and methods.407 For instance, standardization of export products
was still lagging in Turkey despite having achieved more significant production
amounts. In traditional competitive markets, product failures would be intolerable
and cause customer loss, which Turkish agricultural products had started to
experience after their competitors returned to the international markets. Being one of
the essentials of industrialization as well as a national goal of Turkey, standardization
of export products also required better know-how, packing facilities, and
transportation. Filling key corporate positions with American-trained Turkish
managers should be a long-term goal. Randall underlined the necessity of either
sending more bright candidates to the U.S. for education or establishing Americantype
business schools in Turkey to train such talent at home.408 All of these points
reflected the importance of partnerships with capable foreign investors or
multinationals.
Image problems and a lack of advertising were obstacles that Turkey had failed to
overcome for years. Simply being eager to change and adapt to Americanized
economics, business culture, and management was not enough to complete the
transformation. Turkey had done its best in recent years to embrace agricultural
industrialization, be helpful for the alliance’s economic policies, and allow
privatization of oil research. All of these were significant leaps. However, these
accomplishments did not hastily resolve Turkey’s capital problems and they did not
improve the country’s image among its desired audience. Randall described the
difficulty of attracting businesses to Turkey in 1953 with a case study. He sketched a
407 Ibid., 13-15.
408 Ibid., 5, 11.
157
profile of an imaginary American business owner who approaches relevant Turkish
institutions with a business inquiry in a hypothetical scenario. Realistically, the
answer was always “no” to questions such as “Can I organize a company in Turkey
that I already have at home?” or “Can I have Turkish investors participate in the
company just like American investors who will put their money in?”409
Turkish counterparts would have answered “yes” if relevant laws were enacted for
business purposes. However, even those guarantees would not be enough to attract
American business; shaping a newly Americanized culture with effective advertising
seemed to be a prerequisite for investment flow. However, there were too many “ifs”
in Turkey. Without achieving a balance with capital inflows, Turkey’s short-term
financial health was debatable with the country on such an all-around modernizationbased
track of spending.410 Bayar, Menderes, and other participants in decisionmaking
processes did not fall into despair due to growing demands. They promised
that new privatization and petroleum laws to be prepared with American consultants
in an American way would pass through the GNA in the upcoming terms.411
Randall, generally sharing the excitement of the Turkish government, experienced
his most unpleasant confrontation in Turkey when he met with the Turkish business
elite on August 28, 1953. This was a top-level business meeting including Turkish
businesspeople like Vehbi Koç, who had already partnered with American firms.
409 Ibid., 11.
410 Ibid., 13; NARA, RG 469, “Memorandum of Conversation, Participants: Prime Minister Menderes,
Ambassador McGhee, Mr. Leon Dayton Chief, MSA,” May 2, 1953.
411 DSA, “Mr. Calarance B. Randall’ın Türkiye ziyaretiyle ilgili hazırlanan rapor,” 18.
158
Many others would follow the same pattern in the upcoming years.412 Members of
parliament, the Minister of State Enterprises, executives of SOEs, and agents of
American companies conducting business in Turkey were also in attendance.
Contrary to his previous meeting with the DP government, these people were
Randall’s true audience for discussions of the future of private business in Turkey.
Members of the government considered foreign direct investments as additional
capital to be secured from the U.S., whereby the providers would be civilians rather
than state institutions as they used to be before. Receiving respectable amounts of
funds from aid, grants, credit, and know-how via state advisors, the DP itself did not
need to put much faith into the investments of civilians or private companies;
however, the Turkish business circles would need to do so. As prospective and direct
beneficiaries of these investments, these people expected a great deal of Randall and
hoped that he would make the best of his title, “Mr. Free Enterprise.”
However, after presenting the same framework to the Turkish business elite, Randall
was met with disappointed and frowning faces rather than the positive responses he
had previously enjoyed.413 The common expectation was that Randall should use his
governmental position to convince American businesses to enter the Turkish market
and then match those investors with Turkish businesspeople. As these people were
accustomed to following the rules of Turkish governments, with both limits and
412 Ibid., 1-27. In this meeting, notable Turkish businessmen such as Refik Bezmen, Eli Burla, and
Ferit Eczacıbaşı were present. Despite the initial disappointment after this inconclusive meeting with
Randall, all of them would establish partnerships with significant American multinationals such as
B.F. Goodrich and Pfizer in later years.
413 Ibid. Included in the same document was a memorandum on the meeting at the Ankara Palace with
state and private businessmen. Both Turkish and American businessmen attended this long meeting to
discuss current problems, solutions for enhancing American investments in Turkey, and further
expectations. However, Randall remained restrained and did not attempt to sell hope, sticking instead
to a realist’s framework. September 1, 1953, 1-27.
159
allowances for business, they likely assumed that Randall and the American
government could apply similarly heavy-handed tactics to American businesspeople.
At the very least, Randall could underline the opportunities of the Turkish market or
praise Turkey’s position as a committed ally to American businesses to capture their
interest. Randall attended these meetings with the title of Chief of the Special U.S.
Economic Mission to Turkey; however, he was functioning there as a typical
businessman rather than a commercial diplomat. Unlike McGhee, Dayton, or Dorr,
Randall only relayed the ways to attract American business, positioning himself as a
business patron seeking profit. Turkey, a trustworthy ally of the U.S. and a staunch
enemy of communism, might realistically have limited attraction for business
owners. In turn, being repeatedly questioned about Turkey’s anti-communist political
stance or efforts to join NATO affected Turkey’s perspective of American
businesses. Randall emphasized that these were all important points but not ultimate
game-changers. Just as he had listed them to the DP government before, he pointed
out the improvements in the laws, advertising, and business culture; overall, he
assured his audience, time would be the best medicine for Turkish business. The
Turkish business elite was not pleased with Randall’s realistic stance. They had
expected him to use all possible state tools to convince American businesses to invest
in Turkey as they themselves had done with their own government.414
Upon returning from his first short trip to Turkey in September 1953, Randall was
still unsure about whether his mission would be successful or not.415 Although the
Turkish business elite did not share the enthusiasm, the DP government seemed
414 Ibid.
415 Randall Journals, Box 6, Turkey in 1953 (August 30-September 14, 1953), P.M. Menderes; foreign
investments; Randall’s job, “Memo No. 11,” August 30, 1953, 39-44.
160
determined to follow Randall’s methods while they were disappointed with his
capabilities. They had likely expected a business miracle. It had been hoped that
Randall would give his word to convince many American business owners and
multinationals to bring their capital to Turkey as soon as he returned to the U.S.
However, he merely drew a direct, realistic framework of how American capital
could be attracted to Turkey. That framework highlighted the enacting of new laws,
increased campaigns to introduce Turkish market opportunities in the U.S., and, most
significantly, convincing hesitant American investors that they would feel welcomed
in Turkey. Above all, it had to be accepted that business initiatives needed time to
mature and intensify. Although Randall was unsure about his accomplishments in
Turkey, former ambassador McGhee congratulated him on his success during a lunch
at the Metropolitan Club on October 14, 1953. Learning the details of the meeting
from Rountree, McGhee was pleased to hear that Randall had earned the DP
government’s respect.416
McGhee was correct in his judgment that Randall did a remarkable job in Turkey. A
few days after Randall returned to the U.S., Menderes issued a new declaration of
principles to improve the acceleration of free enterprise. He organized a party
committee among DP deputies to work on all of Randall’s recommendations.417 In
two months of work within this inner circle, the DP government drafted a bill
416 Randall Journals, Box 1, Commission on Foreign Economic Policy, 1953, Vol. 1 (August 1-
October 20, 1953), “Dictated in Shoreham Hotel on Wednesday, October 14, 1953,” 3-4.
417 Randall Journals, Box 6, Turkey in 1953, (August 30-September 14, 1953), P.M. Menderes;
foreign investments; Randall’s job, “Memo No. 11,” August 30, 1953, 39-40.
161
designed to remove obstacles to foreign investment in Turkey, and Randall took the
credit.418
4.3. Consummation of the Honeymoon: The Enactment of Improved
Privatization and Petroleum Laws in 1954
1954 was another significant year in commercial relations between the two states. It
brought along many landmark events, including top-level official visits, the passing
of new business-promoting laws, the opening of sacred resources to foreigners, and a
significant leap in the number of American businesses in Turkey. The first important
visits were scheduled for the last month of 1953. President Bayar announced his
intentions of traveling to the U.S. He would be the first Turkish president ever to do
so. The released statement included notes about the president’s schedule; this official
trip would take a month, filled with top-level meetings with members of the
American government, Congress, and heads and delegates of international
organizations such as NATO and OECD.419 Bayar briefly explained the purpose of
the visit as setting out a new agenda for financing mutual military objectives and
obtaining direct military assistance if possible. Should the Eisenhower administration
permit Turkey to utilize U.S. funds to expand, export production would be the
second goal, and that could further generate funds to purchase military equipment.
Bayar hoped to convince Eisenhower to grant funds to enhance Turkey’s primary
418 Robinson, Developments Respecting Turkey, 25.
419 See the DSA documents related to Bayar’s official visit to the U.S. (“Cumhurbaşkanının Amerika
Gezisi ile ilgili intibaları” (“President’s impressions about his visit to the U.S.”), 40-238-15; “ABD’yi
ziyaret edecek olan Cumhurbaşkanı Celal Bayar’a refakat edecek heyet” (“The delegation to
accompany President Celal Bayar, who will visit the USA), 134-105-7”)). These documents include
Bayar’s official itinerary as well as his attendants on this trip.
162
export fields, such as grains, cotton, and mining products.420 McGhee, Randall, and
Dayton had identified the same needs and expressed their support for these fields to
the Department of State.
Throughout his visit, Bayar took every opportunity to convince U.S. decision-makers
of the versatility of Turkey in supporting U.S. foreign policy, underlining its
committed struggle against the spread of communism in the region and its
willingness to allow NATO bases inside its borders.421 He did not forget to praise the
invaluable contributions of unparalleled U.S. economic and military assistance in his
address to Congress. His descriptions of American capital in Turkey with precise and
appropriate statistics impressed the American decision-makers.422 Consequently,
Bayar returned to Turkey after securing an additional $30 million on top of the initial
$76 million for the fiscal year of 1955 to further relieve the pressures of military
upkeep.423
Bayar’s visit was not purely political; it also included significant meetings with
American business associates and nongovernmental organizations. On January 31,
1954, Bayar was invited to a reception organized by the American Jewish
Committee. Jacob Blaustein, the founder of American Oil Company (AMOCO),
which had merged with Standard Oil of Indiana, personally asked Bayar to honor
420 Hangen, “Turkish Head Puts Economic Aid Above Military Help From U.S.,” 2.
421 “Bayar for Atomic Pool,” New York Times, January 29, 1954, 5; “Cumhurbaşkanının Amerika
Gezisi ile ilgili intibaları” (“President’s impressions about his visit to the U.S.”), 40-238-15, January
17, 1954.
422 “Turkish President’s Address to Congress,” New York Times, January 29, 1954, 3.
423 “Bayar Visit Adds to Aid for Turkey,” 5. According to Dana Adams Schmidt’s “U.S. Will Double
Arms Aid to Turkey, Speed Up Delivery” in the New York Times on June 6, 1954, the verbal deal
between the two presidents in January was officialized by the approval of Congress in June 1954.
163
that gathering with his presence, which was also a decent opportunity for Bayar to
address notable American businesspeople.424 Blaustein was not a stranger to the
Turkish petroleum business, having had several meetings with the RPP government
back in the 1940s, and with the former Turkish ambassador to the U.S., Münir
Ertegün, for a zone of possible agreement.425
As the president of a pro-privatization government, Bayar had meetings with
American business elites in 1954 that were cooperatively fruitful, as well as visiting
the Turkish News Office in New York and the District of Columbia Chamber of
Commerce.426 He addressed American businessmen in these meetings, encouraging
them to rely on Turkey’s market potential while never missing a chance to refer to
the country as a staunch ally of the U.S. He also promised that more proactive
investment laws would be enacted soon to attract American capital.427 While Bayar
was diligently networking “to sell Turkey in the U.S.,” as advised by Randall a few
months previously, Ball returned to Turkey to polish the new investment law with
the aim of establishing an inviting environment for privatization in the mining
sector.428
424 Collected Personal and Business Papers of Louis and Jacob Blaustein (Blaustein Papers hereafter),
Box 2.134, Q-1-5, Meeting with President Celal Bayar of Turkey, January 1954, “A letter from Jacob
Blaustein to Ambassador of Turkey, Feridun Cemal Erkin,” 30.
425 Blaustein Papers, Box 1.16, 241, Turkish Oil Concessions, “Memorandum Talk; JB & KFS with
Turkish Ambassador Ertegun (?) and Turkish Minister Alhan Chevky, at Turkish Embassy, 1601 23rd
Street, Washington D.C., February 9, 1944,” 50.
426 “City to Welcome President Bayar,” New York Times, January 24, 1954; John Molleson, “Bayar
Honored in City, Starts on Tour Tonight,” New York Herald Tribune, February 1, 1954, 17; Peter
Kihss, “Bayar Affirms Minority Rights,” New York Times, February 1, 1954, 3; “Bayar, Here, Cites
Turk Freedom,” Daily News, February 4, 1954.
427 Ibid.
428 “Turkey Discloses Its Oil Policy Details,” Oildom No. 13 (January 20, 1954): 62.
164
The DP deputies were at work emphasizing in their GNA speeches that more
privatization would reduce the importation of substitute goods, which would directly
achieve currency savings, provide more know-how through multinationals’
technological infrastructures, and bring diversity to production sectors.429 From a
historical perspective, DP members asserted that the U.S. had become an economic
superpower through foreign direct investments in the late 19th century; Turkey could
achieve a similar leap by applying the same economic pattern.430 On the other hand,
RPP deputies feared that making concessions to these already developed industry
giants present in Turkey, and especially for equal treatment, would crowd out the
existing small Turkish industrial organizations and business elite.431
Having the majority in the GNA, the DP deputies successfully passed the law on
January 18, 1954. According to this new law, foreign investors could gain access to
any market that was also available to Turkish investors. Foreign multinationals
would be able to transfer employees and products without restrictions or tariffs. All
profits made in Turkey could be transferred out of the country, in contrast to only
10% by the privatization law of 1951.432 This law was considered one of the most
liberal and encouraging privatization laws of the time, not only in comparison to
existing laws in Turkey but on a global scale. Both American state representatives
429 GNA Minutes, 9th Parliament, Vol. 27, January 11, 1954, 106-119; GNA Minutes, 9th Parliament,
Vol. 27, January 15, 1954, 184-186; GNA Minutes, 9th Parliament, Vol. 27, January 18, 1954, 212-
35.
430 GNA Minutes, 9th Parliament, Vol. 28, January 13, 1954, 145-50.
431 GNA Minutes, 9th Parliament, Vol. 27, January 11, 1954, 106-19.
432 See the text of Law No. 6224, “Yabancı Sermayeyi Teşvik Kanunu” (“Law for the Encouragement
of Foreign Investment”) enacted on January 18, 1954. Robinson in Developments Respecting Turkey,
July 1953-October 1954 also provides information about that law and explains its benefits for
American businesses in detail (p. 12). See also Appendix III.
165
and advisors had played a crucial role in the entire process, including McGhee,
Randall, Dayton, Rountree, Robinson, and Ball.433 The Eisenhower administration
was also pleased to see Turkey advancing toward a liberal market economy to
overcome another obstacle to achieving a free and competitive market. This law
would be a feasible way to test the theory of whether having a sufficient foreign
investment law could fill the gap created by the termination of direct American
economic aid or not.434
Turkey’s new privatization law enlarged the market and investment sectors and
introduced advanced tax incentives for foreign investors. According to the new law,
foreign initiatives were allowed to freely import tools, spare parts, and raw materials
as long as they were supplied as investment parts. Limitations on investible sectors
and capital transactions were abolished. Foreign investors were granted the principle
of equal treatment with Turkish business owners. According to a chart showing the
effective foreign tax rates on U.S. corporations in other countries, Turkey stood out
as one of the best options for these multinationals to invest in with 23.5% taxable
income.435 In the end, an American company operating in Turkey would be able to
transfer 71.5% of net profits home after the U.S. tax rate was also applied.
Furthermore, agreements had already been made to allow foreign firms to convert
their assets and take their profits out of the Turkish market. Turkey also put an
expropriation law into force in 1957 to guarantee the investments of these foreign
433 Welles Hangen, “Turkey Will Spur Inflow of Capital,” New York Times, January 17, 1954, 26.
434 Ibid.
435 Appendix IV; Ralph I. Straus, Expanding Private Investment for Free World Economic Growth
(Washington D.C.: The Department of State, 1959), 39-52.
166
companies. These guarantees were extended to protect foreign assets from risk and
under conditions of war in later terms.436
In 1954, lawmakers in Turkey and the DP legalized a compelling policy that allowed
them to take another step toward achieving the “little America” dream. Since the
DP’s acquisition of power in 1950, the number of SOEs had fallen, now accounting
for only roughly one-fourth of Turkey’s industrial production; the intention in 1954
was to further diminish their control over the Turkish markets and fill their spots
with more foreign investors.437 The next step would be completing the last piece of
privatization by facilitating foreign investors’ operations in Turkey’s oil sector
without restrictions or limitations. In the long run, the ultimate aim was to eliminate
fundamental missteps by encouraging investments in industry, applying better plans
for investment projects, and training more Turkish managers according to American
educational standards to create an experienced managerial class to run these
industrial operations.438 American institutions and advisors were eager to purge
economic statism from the Turkish mindset and replace it with a fully modern
industrial perspective.439
436 Ibid., 58-59; Appendix V.
437 Robinson, Developments Regarding Turkey, July 1953-October 1954, 12.
438 George Eugene Bates Papers (Bates Papers hereafter), Box 4, Series VIII, Institute of Business
Administration, University of Istanbul, Turkish Program: Reports, Memos, Financial, undated,
Robinson, Richard D., 1955-1958, “Turkey: Challenge to American Business: A Letter from Richard
D. Robinson,” American Universities Field Staff, New York, September 10, 1957.
439 “Turkey: A Friend in Trouble,” Time, October 24, 1955. According to this article, Turkey both
allowed new plants to be built by American companies and kept constructing huge projects in
Anatolia. Unlike American factories seeking profit as a priority, the DP tended to erect these facilities
without considering their costs to keep voters happy. This hunger for modernization and
industrialization was appreciated by the Americans. However, unorganized and misguided operations
for enormous projects were perceived as wastes of money that would not alleviate Turkey’s financial
ills. On the other hand, the DP was willing to listen to high-level American businessmen, which was
another positive aspect of foreign investments. Thomas and Fyre, 121.
167
The DP invited Max Ball to Turkey to finalize the oil law draft in late 1953. Ball
arrived with an aide, Elmer E. Batsell, a lawyer and former General Counsel of the
Petroleum Administration for Defense. Ball had already built a reputation as the
creator of Israel’s recently passed petroleum bill. A law similar to the one that Ball
had drafted for Israel, including approval of exploratory work by foreign companies,
was finalized to be applied in Turkey so that concessionaires could start drilling
almost immediately.440 Ball feared that the DP might challenge 50-50 income sharing
and would object to multinationals gaining access to all areas that had once been
restricted.441
On the contrary, the government impressed Ball and Batsell with its willingness to
grant such rights to both small- and large-scale oil companies as long as they were
competent to drill and operate more wells. The DP accepted the bill, expressing
excitement about working with professional oil companies that could bring
creditworthiness, good reputations, and technical abilities to the exploratory
reconnaissance efforts in Turkey.442 First reviewing the draft among the DP’s inner
circle and then discussing it in GNA sessions, Menderes asked the DP deputies to
complete the task by voting the law into effect by early March. The final draft passed
smoothly in the GNA (266 to 17) even though the opposition claimed that the law
would allow American companies and “Wall Street” to exploit Turkey’s oil for their
440 Ibid.; “Petroleum Law for Turkey,” December 18, 1953.
441 Indeed, even some DP members were skeptical about the new bill and its further consequences,
clearly thinking about imperialism. GNA Minutes, 9th Parliament, Vol. 29, March 4, 1954, 257-58.
442 NARA, RG 469, “Foreign Service Dispatch, From: American Embassy, Ankara, To: The
Department of State, SUB: Draft of a Proposed Petroleum Law for Turkey,” November 2, 1953.
168
own benefit.443 The law granted exploitation concessions for forty years, and those
deals could be extended for another twenty years. Exploration rights were limited to
six years if specified demands were not met. A single company could exploit
400,000 hectares at most. Private operators would pay a one-eighth royalty on annual
crude oil production and give the state up to 50% of the profits after they recovered
their original investments.444
Keeping his promises of four years ago by enhancing the living standards of Turkish
peasants and enacting laws to privatize the Turkish market, Menderes built up his
reputation among the voters before the 1954 elections. He pledged his commitment
to economic liberalization and development and acknowledged the value of enduring
collaboration with the West, especially with the U.S. Eventually, he aimed to achieve
economic self-sufficiency and create a stable Turkey without American aid.445
Menderes also assured voters that the U.S. administration shared these goals and was
willing to help his government find ways to reach them in the next four years if
Menderes were to be reelected.446 In May 1954, Turkey went to the polls and gave
Menderes a more commanding victory than in 1950. The DP received 58.4% of the
votes and 503 of the 541 seats in the parliament. After this landslide victory,
Menderes reaffirmed his commitment to agricultural development and national
443 Welles Hangen, “Turkey Opened to Search for Oil; Foreign Concerns Get Incentives,” New York
Times, March 8, 1954, 1; the Turkish National Petroleum Company (TPAO) was also founded in the
same year so as to not exclude the state from this business entirely.
444 “Yabancı Sermayeyi Teşvik Kanunu” (“Law for the Encouragement of Foreign Investment”);
these limits and codes gave equal rights to foreigners as well as also considering American laws.
445 NARA, RG 469, “Memorandum from R. L. Hirshberg to M. L. Dayton,” February 16, 1955.
During Menderes’ trip to the U.S., Turkish and American officials discussed the possibility of Turkey
becoming financially autonomous by 1958. This scenario was deemed overly optimistic in 1958; at
that time, these parties specified 1960 as the earliest possible date of ending the U.S. financial support.
446 NARA, RG 469, “Report on the Mutual Security Program in Turkey for the Six Month Period
Ending,” June 30, 1954.
169
industrialization with more privatization. The intensification of such partnerships
offered promises of increased agricultural production, standardization in exports, and
completion of the state’s roads, bridges, electrification, dams, and hydroelectric
projects, which would all directly contribute to the living standards of the citizens.447
Menderes planned to visit American officials and businesspeople to secure more
capital to achieve all these goals.
First, in June 1954, he visited the U.S. and met with Eisenhower to discuss further
economic and military aid for Turkey. Having received validation from the Turkish
public for four more years, Menderes convinced the Eisenhower administration to
increase military aid to Turkey to $200 million in the fiscal year of 1955 and to
hasten the delivery of equipment and arms in 1954, worth about $500 million.448 At
home, Menderes often visited the business organizations and clubs frequented by
managers of the American companies operating in Turkey to conduct productive
meetings aimed at solving problems in the domestic market and attract other U.S.
companies.449 Sharing the same goals, an American delegation consisting of 52
notable businessmen was received in Turkey to learn more about the market
opportunities and business culture.450
447 GNA Minutes, 10th Parliament, Vol. 1, May 24, 1954.
448 “Turkish Premiere Here to Push Aid,” New York Times, June 2, 1954, 8.
449 The U.S. İstanbul Branch of the International Propeller Club was established in 1951 as the oldest
American NGO in Turkey. All notable members of American society in Turkey, including
businessmen, and the Turkish business elite were members of this exclusive club, and Menderes
joined their gatherings annually to discuss politics, economics, and business. DSA, “Propeller Club
Başkanı G.S. Farguhar’ın Başbakan Adnan Menderes’e gönderdiği davetiye mektubu” (“Propeller
Club President G.S. Farguhar’s invitation letter to Prime Minister Adnan Menderes”), 18-105-12,
October 21, 1953. See also another letter with the same title, 123-785-3, September 16, 1954.
450 Robinson, Developments Respecting Turkey, 29
170
4.4. Better Incentives, More Investments: The Golden Years of
American Business in Turkey (1954-1955)
The laws enacted in 1954 made a notable impact on American business interests in
Turkey; several major multinationals such as General Tire, Minneapolis-Moline
Tractor Company, B.F. Goodrich, and Abbott Laboratories decided to construct
factories in Turkey to benefit from the new investment incentives and gain a share of
this promising market close to other markets in the Middle East and Eastern
Europe.451 Ford, which had been in the Turkish market since the 1920s, decided to
expand its operations by building a new tractor factory in Ankara.452 Seeing that the
Turkish government had taken a committed step forward to attract American
business, the U.S. Foreign Operations Administration (FOA) collaborated with the
governmental Industrial Assistance Commission. This commission launched a
program to provide technical and legal advice for newcomer entrepreneurs looking to
make the most of their investments. Turkey was also determined to make these laws
more visible and enhance its commercial capabilities by opening a branch office of
the Turkish Unions of Chambers of Commerce, Industry, and Commodity Exchanges
in New York. This new office would serve to further educate U.S. investors who
were pondering projects or seeking new markets about Turkey’s opportunities. A
group of respected American businessmen who had already launched operations in
Turkey would also be present to counsel these new investors and make the country
appear more enticing.453
451 Ibid., 6-7.
452 Ibid., 63, 100. Besides deepening its investments in the Turkish market, Ford was financing several
non-business initiatives in Turkey, such as establishing a new Academy of Architecture in Ankara,
funding social welfare organizations, and building high schools specialized in teaching English.
453 “Ankara Licenses Alien Investors,” New York Times, January 4, 1955, 86.
171
In keeping with the expectations of the DP deputies, these laws brought momentum
to the competition in the Turkish market.454 The profit made by Squibb & Sons lured
Abbott Laboratories, another American pharmaceutical giant, to the Turkish market.
That company submitted an official application to construct a second pharmaceutical
factory in İstanbul and pledged an initial investment worth $500,000 to the Turkish
Ministry of State Economic Enterprises only four months after the enacting of the
new privatization law.455 Pfizer would be the next to apply in 1955. Since 1948, the
Turkish market had been filled with Federal Motor’s tractors. In 1954, this market
welcomed another American motor truck manufacturer, Minneapolis-Moline. The
agents of that company set an agenda to manufacture tractors and spare parts with the
construction of a plant near Ankara by early 1955, joining the race to collect the
spoils of this agriculturally industrializing market.456 The enhancement in that sector
also expanded the scope of relevant products entering the Turkish market. A New
York-based tire manufacturer and repair company called Central America Trading
Co. applied to build a plant in İstanbul with initial capital of $250,000 in July 1954457
to challenge B.F. Goodrich. The latter had signed a contract worth $5.75 million with
the Ministry of State Economic Enterprises in January and intended to construct a
454 GNA Minutes, 9th Parliament, Vol. 28, February 18, 1954, 446-455; GNA Minutes, 9th
Parliament, Vol. 29, February 19, 1954.
455 DSA, “Amerika’da bulunan Abbott Laboratories Near East Limited Şirketi’nin Türkiye Şubesi’nin
kuracağı Fabrika için 500000 dolarlık ayni ve nakdi sermayenin 6224 sayılı Kanun hükümlerinden
faydalandırılması” (“Benefitting from the provisions of Law No. 6224, the Turkey Subsidiary of U.S.-
origin Abbott Laboratories Near East Limited Company’s factory to be established with $500,000 in
kind and cash capital”), 135-42-16, April 20, 1954.
456 Robinson, Developments Respecting Turkey, July 1953-October 1954, 6-7.
457 DSA, “New York’da Central America Trading Co. Firması’nın memleketimizde kurmak istediği
otomobil, bisiklet lastiği ile kauçuk eşya fabrikası için getirilecek anyi sermayenin 6224 sayılı Kanun
hükümlerinden faydalandırılması” (“Benefitting from the provisions of Law No. 6224, Central
America Trading Co. of New York wants to establish, with capital to be brought, an automobile,
bicycle tire, and rubber goods factory in our country”), 136-64-9, July 10, 1954. All these initiatives
were also mentioned in Robinson’s Developments Respecting Turkey, as well (p. 34).
172
tire and tube plant in İstanbul.458 Central America Trading Co. would not be the only
American rival of B.F. Goodrich, however; General Tire had been negotiating with
the Turkish authorities with the same aim since March 1954.459 Throughout 1954,
thirteen American companies applied to invest in Turkey, promising to bring capital
worth $12 million. That amount was close to the total of American direct
investments since the Marshall Plan had been applied in Turkey. Thus, in terms of
the arrival of more American firms and their capital, 1954 was off to a promising
start.
Besides boosting competition, these laws also paved the way for Turkish business
elites to bolster their reputations in international business circles. American investors
were tempted by the opportunities and the assurances of the new laws; however, they
were still generally unfamiliar with the market and culture. That foreignness led them
to connect with Turkish businesspeople, who were also looking for opportunities to
expand their business ventures in Turkey and abroad but lacked the necessary capital
or technological know-how. In 1954, many Turkish businesspeople seized chances to
partner with American companies. Erol Beker, an American-trained Turkish
economist who made a fortune in the phosphate industry, helped his company, the
Fertilizer Corporation of America, invest in Turkey by constructing a second factory
458 DSA, “Eli Burla Şirketi’nin, İstanbul’da Amerikan B.F. Goodrich Otomobil Lastik Fabrikası’nın
katılmasıyla kuracakları fabrika için getireceği $405000 sermayenin 5821 sayılı kanundan
faydalandırılması” (“Benefitting from the provisions of Law No. 5821, B.F. Goodrich Automobile
Tire Factory will establish a factory in İstanbul with the participation of Eli Burla Company with
$405,000 capital to be brought”), 134-111-8, January 19, 1954.
459 DSA, “Türk Ekspres Bank’ın The General Tire and Ruber Co. ile müştereken kuracakları otomobil
kamyon ve traktör lastiği fabrikası için getirtilecek olan yabancı sermayenin 6224 sayılı kanundan
faydalandırılması” (“Benefitting from the provisions of Law No. 6224, General Tire and Rubber Co.
will provide foreign capital and jointly establish an automobile truck and tractor tire factory with
Turkish Express Bank”), 135-24-4, March 20, 1954.
173
after having already built one thanks to the law enacted in 1951.460 Eli and Daniel
Burla, Turkish-Jewish businessmen and brothers who happened to be the top
importers of domestic appliances in Turkey, became partners of B.F. Goodrich in the
Turkish market.461
The long-standing efforts to transform Turkish business culture and adapt it to
American virtues also accelerated in 1954. American companies were able to transfer
their engineers, employees, and managers to Turkey thanks to the provisions of the
new privatization law; however, their operations would be even easier if an
American business culture were to take root in Turkey. From the early years of the
republic to the 1950s, numerous Turkish students traveled to the U.S. to be trained to
American standards, including notable individuals such as İhsan Ruhi Berent,
Director General of the MTA, and Vecdi Diker, Head of the General Directorate of
Highways. The NEA office approached American businessmen in Turkey and
academics at Harvard University, seeking a business school in Turkey to help
increase the scope of American-style business education. According to a
memorandum sent to George E. Bates, a professor of investment management at the
Harvard Business School (HBS), the NEA was interesting in launching such a
project to capitalize on the new privatization law.462 The new law provided numerous
benefits for American investors, including sponsoring American-Turkish
460 DSA, “Amerika’da bir firmanın, İstanbul’da Erol Beker firması ile birlikte ülkemizde suni gübre
imal etmek üzere kuracakları teşebbüs için ithal edilecek yabancı sermayeye muafiyet uygulanması”
(“Application of exemption for foreign capital to be imported for the enterprise to be established by a
company in the USA to produce artificial fertilizers in İstanbul together with the Erol Beker Company
in our country”), 137-101-12, November 26, 1954; Robinson, Developments Respecting Turkey, 37.
461 Ibid.
462 Bates Papers, Box 4, Series VIII, Institute-Official, 1953-1960, “Office Memorandum From: David
Meyer, S/TIM and Harris P. Dawson, Jr. O/NEA/GT, To: Mr. Harry Frite and Mr. William Gage -
ITAD, SUB: TA 77-199 Private Capital for Industrial Investment,” April 29, 1954.
174
partnerships in business and eliminating these companies’ foreignness in the Turkish
market. Several American business operations that were already present in Turkey,
such as Socony, GE, and Ford, had long been employing small numbers of Turkish
managers and working with Turkish investors familiar with American standards in
business. Randall had also previously underlined the necessity of developing an
entrepreneurial system and effective business management in countries like Turkey.
In this regard, the NEA pursued contacts with American professionals experienced in
such markets to oversee a business administration school in Turkey.463
A few months after the aforementioned memorandum, several Harvard professors,
including Bates, arrived in İstanbul to establish an İstanbul University-mandated
business school. They drew up an American-type syllabus for this new institution to
educate Turkish students about researching business administration problems and
collecting data for further research. Eventually, the graduates of this program should
be able to take over the roles of the Harvard academics as future teaching staff and
private sector managers and respond to demands from the government, public, and
private enterprises on matters relating to business administration.464 According to the
initial plan, various Turkish and American institutes and establishments participated
in the project, including respected universities such as Middle East Technical
University, Ankara University, and İstanbul Technical University. The Ministry of
State Economic Enterprises, Turkish Chamber of Commerce, Chamber of Industry
Stock Exchanges, Etibank, Sümerbank, İş Bank, and Ziraat Bank were financial
463 Ibid. This document mentioned Ken Iverson, the Near East Representative of the Ford Foundation,
who asked for consultation to open a business school in İstanbul jointly funded by the Ford
Foundation, Turkish businessmen, and the government.
464 Bates Papers, Box 4, Series VIII, Institute of Istanbul Business Administration (University of
Istanbul Faculty of Economics), “Statute,” Istanbul, 1954.
175
contributors. In addition to governmental organizations and banks, Turkish business
families like Koç and Burla and American multinationals like Squibb & Sons, GE,
and Ford also provided funds for this institution.465
The Business Administration Department of İstanbul University, or the “Turkish
Institute” as it was called in the Bates Papers, raised the expectations for the
Americanization of Turkey, chiefly through instilling an American-type business
mindset in its graduates. If these students could obtain important positions in the
governance and management of various industrial sectors and banks, the adaptation
to American policies and methods would be more smooth. Now considered a
specialist on Turkey, Randall continued to meet with American business owners
about developments in Turkey, and they were eager to consult him about the
opportunities in the country. On November 21, 1954, he had a strange yet exciting
meeting related to his consultation on that topic. Morehead Patterson, the chairman
of American Machine and Foundry (AMF), was anxious to see him and learn his
views on a prospective initiative in Turkey. AMF was not an investor; it only owned
a sales office in İstanbul, selling machinery for tobacco production in the Turkish
market. The topic on Patterson’s mind was far removed from expanding such
business ventures. Hearing the news that American institutions were educating
Turkish managers and engineers, Patterson surprised Randall by asking whether
Turkey might be a suitable place to establish a nuclear energy research unit to
465 Bates Papers, Box 4, Series VIII, Institute of Istanbul Business Administration (University of
Istanbul Faculty of Economics), “İşletme İktisadi Enstitüsü Birinci İşletme İdaresi Kursu Mezuniyet
Programı” (“Faculty of Economics, First Business Management Course Graduation Program”),
January 31, 1957.
176
develop more power supplies.466 Being one of the largest recreational equipment
manufacturers of the U.S., AMF had become a significant part of Eisenhower’s
“Atoms for Peace” program with the aim of constructing reactors for research
overseas.467 Patterson accordingly approached Randall to see whether he could play a
part in this ally’s journey to Americanization while upholding the interests of
American foreign policy. After a short talk, Randall concluded that Patterson did not
understand Turkey or its current capabilities beyond knowing that American
institutions were educating Turks and that American businesspeople supported such
initiatives. Nevertheless, Randall was excited about the idea. Although he did not
foresee a nuclear plant in Turkey anytime soon, such an inquiry from U.S. business
circles confirmed that all these American advisors, institutions, and businessmen,
including himself, had been able to create strong enthusiasm toward Turkey in the
U.S. in the 1950s.468
Creating an investment-friendly environment allowed the positive trend of foreign
investors bringing their operations to the Turkish market to be maintained in 1955.
Notable American firms that were granted permission to operate in Turkey included
Remington Rand to produce typewriters; Westinghouse Air Brake Company to
manufacture electronics, drilling equipment, and portable compressors; and
Newmont Mining to research and operate mines. Similarly to previous arrivals, these
466 Randall Journals, Box 2, Washington, 1954, Vol. 6 (November 4-29, 1954), Turkey, “Sunday
Afternoon, November 21st, The Shoreham Hotel,” 4-6.
467 AMF was installing reactors and military-industrial complexes in Israel and Pakistan in late 1955.
Some valuable information about that work can be found in Avner Cohen and William Burr, “The
U.S. Discovery of Israel’s Secret Nuclear Project,” Wilson Center, April 15, 2015, available at
https://nsarchive2.gwu.edu/nukevault/ebb510/.
468 Randall Journals, Box 2, Washington, 1954, Vol. 6 (November 4-29, 1954), Turkey, “Sunday
Afternoon, November 21st, The Shoreham Hotel,” 6.
177
companies partnered with Turkish investors, and many of them adopted Turkish
names to eliminate feelings of foreignness and to benefit from tax incentives for the
subsidiaries of foreign companies.469 In line with the growing GDP and the
increasing hunger for consumer products, American companies began to bring their
business ventures to Turkey. Hickman Price, President of Willys-Overland Motors,
visited Turkey to negotiate an automobile manufacturing plant in April 1955.470 The
most well-known products of this manufacturer were jeeps, which also had a
considerable reputation in Turkey, and particularly the military versions. Access was
granted to Willys-Overland in May 1955; however, this deal was based on more
militaristic purposes rather than providing cars for personal use. This plant would
reduce the purchasing and repair costs of military jeeps in Turkey.471
According to the foreign investment list provided by İstanbul Ticaret Odası
Mecmuası (Journal of the İstanbul Chamber of Commerce) in 1955, forty-one
American companies had applied and were granted permission to invest in Turkey
after the privatization law of 1954 was enacted. The total foreign investments of
these companies reached $38 million in two fiscal years (1954-1955); these
investments were provided in different ways such as cash, kind, and loans.472
Compared to the total U.S. private investments abroad, worth around $29 billion in
469 Ibid.
470 Robinson, Developments Respecting Turkey, 252
471 DSA, “Kara Ordusu Amerikan yardım dışı birlik ve Kurumlarının ihtiyacı için, Station, Wagon, ve
Willys Jeep otolarının pazarlıkla temini” (“Negotiable supply of American non-aid station, wagon,
and Willys jeep cars for the needs of Turkish army troops and agencies”) 138-117-19, February 11,
1955; DSA, “Merkezi İstanbul’da olmak üzere Türk Willys Overland Fabrikaları AŞ’nin kurulmasına
izin verilmesi” (“Permitting the establishment of Turkish Willys-Overland Factories Inc. within its
headquarters in İstanbul”), 142-22-3, March 10, 1956.
472 Appendix VI; Sinclair Weeks and Loring K. Macy, Investment in Turkey: Basic Information for
United States Businessmen (Washington D.C.: U.S. Department of Commerce, 1956), 177-79.
178
the 1955 fiscal year, this amount seems negligible. On the other hand, considering
that the total American economic aid to Turkey in the 1955 fiscal year was $100
million,473 receiving an additional $26 million in the same year from foreign
investments was a promising development.
According to statistics for the 1955 fiscal year, the number of active American
business ventures in Turkey was thirty-nine.474 They had all spread to different
commercial centers and they led the numbers of foreign firms and foreign
investments in Turkey from different countries. All these operations, the distribution
of American products and services, and the creation of a liberal market signified that
the Marshall Plan had attained success in Turkey. Nevertheless, the promotion of a
Western-minded business culture and the transformation of the economic mindset
remained goals for the longer term. Between 1950 and 1954, almost every economic
indicator displayed positive trends in production, amounts of foreign investments,
GDP, or growth rates.475 These changes were related to the presence of American
capital and the adoption of American economic methods, which maintained their
critical places in the government’s agenda. As American companies were the direct
providers of both of those, luring more American companies to the Turkish market
and easing their arrivals became further concerns of academic research.
473 FRUS, 1955-57, Volume XXIV: Eastern Europe; Soviet Union; Eastern Mediterranean,
“Memorandum of Conversation, Department of State,” June 8, 1955, 647.
474 Appendix VII; Sinclair Weeks and Loring K. Macy, Investment in Turkey, 181-82.
475 See TÜİK, Economic and Social Indicators 1950-2014 (Ankara: Kalkınma Bakanlığı, 2015) for
detailed information about these indicators.
179
The establishment of a business school in 1954, the comprehensive research being
conducted, and the education of future chief executives had immense impacts on
American economic thought finding a stronghold in Turkey. The teaching activities
in this program were revolutionized, with Turkish students studying American
methods in macroeconomics. Trending topics such as consumer preferences and
advertising were discussed in survey classes, and take-home exams based on existing
firms and their case studies were given to students.476 More Turkish students who
applied to the program graduated from it in each academic year, and more of them
filled respected positions in various industries. They were appointed to management
positions in the Turkish subsidiaries of American multinationals. The most talented
students eager to pursue graduate programs were also encouraged to apply to
Harvard University for further studies.477 Reaping the benefits of all this in the
1960s, the “Turkish Institute” and its American professors, such as Robert E. Stone,
another visiting professor from HBS, were proud to see their graduates claiming top
jobs and governmental positions in Turkey.478 After ten academic years of educating
American-trained managers and integrating these fresh graduates into key positions,
that institute could fully finance itself thanks to the contributions of various funds
from the state and Turkish or American private firms.479
476 Bates Papers, Box 4, Series VIII, Turkish Program, 1955, “Management of Foreign Operations
Assignment Sheet - Turkish Section.”
477 Don Lebold, “HBS Aids Turkey In New “B” School,” Harbus News, March 1, 1957.
478 Bates Papers, Box 4, Series VIII, Turkish Program, 1961-1966, “From: Mehmet Misirli, To: Prof.
Robert E. Stone,” April 5, 1961. These included Bülent Yazıcı as President of İş Bank and Chairman
of the Board of the Industrial Development Bank, Şahap Kocatopçu as Minister of Industry, and
Behçet Osmanağaoğlu as one of the top executives of Koç Holding.
479 Bates Papers, Box 4, Series VIII, Institute of Business Administration, University of Istanbul,
Turkish Program: Reports, Memos, Financial, undated, “Institute of Business Administration, Annual
Report 1963-64.” See Appendix VIII.
180
4.6. Results
Six years of financial aid and credits, promotion of products and services through
American companies, support for the Turkish army with American weapons and war
machines, and, most significantly, thousands of hours of consultation, diplomatic
initiatives, field research, networking, and mediation by American actors finally paid
off in these years: the Americans created a junior ally that would eagerly follow
American financial advice and adopt its business culture as well as accepting its
corporations as investors. The enactment of two privatization laws, one of which
opened up the oil sector, one of the least likely sectors to be denationalized in
Turkey, was evidence of this.
American actors shone throughout the process. Both McGhee and Randall played
their parts as commercial diplomats successfully. They not only convinced the DP
government to privatize the Turkish market by applying free-market rules and fair
competition; they also mediated between Turkish business elites and other American
professionals. The results were promising; within two years, many American
companies such as General Tire, Minneapolis-Moline Tractor Company, B.F.
Goodrich Tires, Willys-Overland Motors, and Abbott Laboratories had applied to
invest in Turkey and build new partnerships with Turkish banks and businesspeople.
Companies such as GE and Ford that were already present expanded their
investments thanks to the new customs and corporate tax incentives. After his short
trip, Randall was not fully convinced by the results; having the mentality of a
corporate businessman, he was focused on the fact that Turkey still had a long road
ahead of it in terms of privatization. On the other hand, according to the writings of
Randall as discussed above, McGhee, as a commercial diplomat, confirmed that this
181
was all they could do. After the newly enacted privatization laws and the expansion
of American business and culture, taking root through American-trained Turkish
managers, the next task would be networking among American business circles to
arrive in the Turkish market.
In this period, defined as a honeymoon in the relationship between the U.S. and
Turkey, American actors should not be given all the credit for the achievements.
Ankara was pleased to be under American wings, especially in terms of economic
guidance. The DP leaders developed a belief that Turkey would continue to be
financed through U.S. institutions as long as they went along with the advice of
American actors. Regardless of whether the cash flow was coming from the
Eisenhower administration as aid and credit or from private American businesses as
investments, Turkey would use the capital to fuel state modernization with costly
projects, cover its military expenses, and settle budget deficits due to imbalanced
import and export volumes. Bayar’s visit to the U.S. to negotiate with President
Eisenhower for more aid and to meet with possible American investors was in line
with that mentality.
Saying “yes” to anything and sweeping problems under the carpet were natural parts
of this honeymoon period. However, when certain expectations went unmet,
problems could reveal themselves. The problem of dependency, for example, would
raise its head in the Turkish-American economic marriage in the upcoming years.
Due to the deepening economic recession in Turkey in 1955, Turkey’s focus would
shift back to acquiring quick aid and credit from the U.S. rather than waiting for
private investments. The Eisenhower administration, on the other hand, was reluctant
182
to finance an economically dependent Turkey for an extended period of time and
would keep directing Turkey toward other financing options, such as cutbacks on
modernization projects and imports. In this new era’s relationships, American
commercial diplomats would develop another task for themselves besides mediating
between American business circles and Turkish decision-makers. As Turkey changed
its focus to obtaining as much aid and credit as possible, these American actors
would try to convince their government and other financial creditors to continue
financing this troubled ally.
183
CHAPTER V
“What we need is a dramatic program for stabilizing and making more secure
international business relations, not a program for ever-increasing
intergovernmental aid. Nor do we need any more preaching to foreign governments
– such as the Turkish – about how they must solve their economic problems. Frankly,
too few of us really understand what their problems are. In short, our challenge is
not so much to effect immediate change in foreign investment climates, but to make
private international business a more viable institution so that it becomes a workable
alternative to totalitarian development in countries such as Turkey. At the moment, it
would seem that it is not.”
Richard D. Robinson480
5.1. Hidden Concerns of the Honeymoon Period
Despite successes in business promotion, 1954 began a darker period that Turkey had
expected to face based on previous predictions. Growing credit debts, loan
repayments, and export costs with rapid spending on modernization brought new
burdens to the Turkish economy, which could only be reversed with quick, large cash
480 Richard D. Robinson, “Turkey: A Challenge to American Business,” American Universities Field
Staff, September 10, 1957, 14.
184
flows. Whether direct investments could arrive in time was questionable. The DP
government kept its optimism, believing that Turkey was doing its part for American
business. However, time was running out for Turkey’s ongoing economic
development. The visits of Menderes and Bayar with their entourages to the U.S. in
1954 succeeded in relieving some of the financial pressures as valuable military aid
and new credit deals were obtained. Still, these delegations failed to secure the
desired sums to maintain the country’s economic development while making
payments for its growing expenses. More so than receiving aid, DP delegates were
primarily lectured by the Americans to undertake economic reforms if Turkey
expected American aid in the future.481 The DP delegates were confused by this
response because they had already been doing whatever their ally’s advisors
recommended to them.
After 1955, American institutions began facing what might have been the worst-case
scenario for Turkey en route to agricultural enhancement. Their estimations had
always underlined the possibility of growing pains in the Turkish economy due to
higher import rates and inflation. In the early 1950s, it was possible that increased
agricultural exports, the extraction of more mining products, and the opening of
profitable sectors to foreign investments could reduce Turkey’s future struggles with
external credit and import payments.482 However, tying all hopes on agricultural
exports and the arrival of private capital brought too many “ifs” into the equation.
481 NARA, RG 469, “Letter from M. L. Dayton to Mr. Hikmet Turat,” August 10, 1954; “Letter from
M. L. Dayton to Mr. Foy Kohler,” September 23, 1954; “Letter from M. L. Dayton to Adnan
Menderes,” September 30, 1954. Dayton advised Menderes to put off costly major projects until their
viability and expenses could be properly ensured. Dayton was thinking about devaluing the lira to
bring about stabilization and looking for an opportunity to casually raise this point in the course of
meetings with DP leaders.
482 NARA, RG 469, “Memorandum Concerning the Preliminary Visit of Mr. Leon Dayton to Turkey,”
May 31, 1952.
185
The fall of prices in the foreign markets due to the economic recovery of Turkey’s
competitors, increasing military expenses since the Korean War, budget allocations
for massive infrastructure projects, and droughts in 1954 could be counted as reasons
why the Turkish economy entered a period of crisis in 1955. According to Robinson,
DP leaders were well aware of the growing domestic and foreign debts and were
deliberately indifferent to soaring inflation. They had no interest in abandoning
costly infrastructure projects because they knew that however far the country might
slide downhill, the Americans would bail them out eventually.483
Turkey did not neglect the significance of private direct investments in these years
and did its best to create a friendly business environment where American investors
would feel comfortable by working closely with American advisors. Establishing a
legal framework for the privatization of the oil sector and instituting more incentives
for foreign capital were steps that Turkey took as preconditions for a successful
economic atmosphere.484 The DP, just like the RPP when it was in power, was
convinced by the successful overseas operations of American multinationals like
ARAMCO that inviting foreign investments in these industries could maximize state
profits as well as reducing the growing industrial import volumes. Allowing foreign
investors to participate in 50-50 profit sharing was as huge a decision as
denationalizing the sector. It was also a significant way to show that Turkish
politicians had abandoned their mindset of strict skepticism toward the longlingering
ghost of “Western imperialism.”
483 Robinson, Developments Respecting Turkey, 32.
484 The American Enterprise Association, Inc., American Private Enterprise, Foreign Economic
Development, and the Aid Programs (Washington D.C.: Government Printing Office, 1957), 58, 60-
65.
186
These ideas and attempts partially contributed to the promotion of the Turkish
market in 1955. With that aim in mind, Turkey provided more legal and
infrastructural incentives and stood its ground politically as a staunch ally of the U.S.
Through news and campaign offices in different major cities of the U.S., Turkey also
launched better advertising activities to attract American businesspeople.
Furthermore, Menderes hired American and British professionals who had
experience in Turkey’s economic evaluations and networks in the U.S., such as
Thornburg and Opie, as economic advisors.485 In addition to enlisting these economic
advisors, hiring the former presidential nominee of the Republican Party, Thomas
Dewey, as Turkey’s lobbyist was a significant move.
Building a positive image of the country and spreading information about its
investment-friendly climate were at the top of the list of significant non-financial
investment incentives.486 These non-financial incentives could be as influential as the
financial ones existing in a market, such as preferential tax rates or exemptions,
grants, and loan guarantees. Still, without appropriate fiscal and political measures,
such motivations would not be able to generate sufficient investments.487 A favorable
business environment usually includes a sufficiently stable economy and a stable
political system. In 1955, Turkey had a stable government; after its landslide victory
in 1954, the DP had consolidated its power. As the DP seemed to be the party that
485 Robinson, Developments Respecting Turkey, 49-51, 63, 94; Randall Journals, Box 2, Washington,
1955, Vol. 9 (March 28-April 26, 1955), Turkey, “Tuesday Morning, April 5th, Executive Office,” 5.
486 See Louis T. Wells and Alvin G. Wint, Marketing a Country: Promotion as a Tool for Attracting
Foreign Investment (Washington D.C.: International Finance Corporation, 2000).
487 Florence Hubert and Nigel Pain, “Fiscal Incentives, European Integration and the Location of
Foreign Direct Investments,” The Manchester School 70, No. 3 (2002): 336-363.
187
the U.S. administrations would continue to interact with, the Eisenhower
administration reluctantly agreed to provide an additional grant worth $30 million
after Menderes’s visit.488 However, from a private business perspective, political
stability meant the credibility of a government, principally in terms of securing
financial prerequisites like a balance of payments and loyalty to credit agreements.489
According to Robinson, at the end of the 1954 fiscal year, Turkey’s Economic Policy
Uncertainty Index deficit was calculated as 206.2 million units, over four times
greater than its 50 million unit quota.490
All bleak estimations and predicted problems for the Turkish economy in the early
1950s started to become reality after 1955; beyond struggling with repayments of
U.S. loans or those from the World Bank and OECD, Turkey’s earliest economic
failures in the scope of foreign business occurred in June 1955. Turkey lacked the
$50 million needed to pay four oil companies. Having only a week’s oil in reserve,
Turkey approached U.S. institutions for mediation between Caltex, Socony, and
Turkey. This incident fueled rumors that Turkey might go bankrupt, with a negative
impact on the faith of American businesses in the country.491
488 Schmidt, “U.S. Will Double Arms Aid to Turkey, Speed up Delivery.”
489 Harry N. Howard, US Policy in the Near East, South Asia and Africa, 1954 (Washington D.C.:
Department of State Publication, 1955), 41.
490 Robinson, Developments Respecting Turkey, 31.
491 “Turkey: A Friend in Trouble.”
188
5.2. Changing Economic Priorities: American Investments Lose Pace
in the Turkish Market
As the economic downsizing and short-term debt problems of 1955 unfolded,
expectations of productive growth in the Turkish economy in the next fiscal year
became unrealistic. Turkish currency reserves and state revenues continued to
dwindle in early 1956; the profits of the previous harvest of 1955 had already been
spent on construction projects, imports, and military. The droughts of previous years
also precluded larger volumes of agricultural production. On the contrary, with the
country earning less from exports, its imports continued to increase and credit
repayment due dates were fast approaching, leaving the DP government in need of
quick cash injections into the economy. As it struggled to cover short-term payments
for imports and debts,492 the Turkish economy could not recover unless the DP
government could find quick aid or secure new credit deals. In this unsettling
scenario, attracting foreign direct investments started to lose its priority in the
macroeconomic agenda.
Besides sending warning signals to foreign investors and companies about the
insecurity of the Turkish market, the DP government was on the verge of losing its
domestic support, especially among the peasantry. Not having enough financial
resources to complete construction projects such as hydroelectric plants, sugar
refineries, or factories had never been anticipated before. These projects were visible
references of modernization to please the voters. Having failed the rural population
before by asking them to cut their agricultural prices to improve export rates in
492 Robinson, Developments Respecting Turkey, Volumes 3-4, 61. Turkey’s total foreign debt was said
to be 3 billion lira (approximately $570 million) in early 1956.
189
foreign markets, the DP needed to restore its credibility among the masses to stay in
power. However, the agricultural population was hit by the realities of credit
repayment, mainly through Ziraat Bank, without having earned sufficient income due
to droughts in 1956.493
In 1956, the DP faced a double dilemma. On the one hand, American advisors were
pressuring DP leaders to begin economic downsizing by limiting construction
projects and domestic credit to the peasantry, who struggled to cover their debts of
the previous years.494 On the other hand, such limitations would bring financial ruin
to thousands of farmers who were only scraping by, attaining just enough resources
for cultivation. The DP needed an immediate plan before it lost the agricultural
population’s support. President Bayar promised to launch immediate financial plans
that would not slow the development, financing for the masses, or modernization
projects.495 Bayar planned to approach the American government for further aid or
loans to cover the short-term deficits, which could help Turkey bounce back in the
following terms.
Minister of State Zorlu flew to Washington in January 1956 to lobby for a loan worth
$300 million to cover the growing expenditures; however, the Eisenhower
administration specified several conditions in response to the DP delegate’s request.
The DP was expected to take the necessary steps to balance the faltering economy by
493 See Ahmad’s Turkish Experiment in Democracy 1945-198 (150-161) for further information about
the DP’s policy of unrestricted loan distribution through Ziraat Bank and how it backfired when the
peasantry failed to make repayments.
494 FRUS, 1955-57, Volume XXIV: Eastern Europe; Soviet Union; Eastern Mediterranean, “Statement
of Policy on Turkey,” February 28, 1955, 624-25.
495 GNA Minutes, 10th Parliament, Vol. 8, November 1, 1955, 6-20.
190
cutting the budgets of modernization projects, liberating state revenues from budgetdraining
SOEs, and restricting and regulating credit distributions.496 Washington
compromised with Zorlu, agreeing to provide $30 million as a grant in 1956, but
continued to insist that the DP should undertake more economic reforms that would
stabilize the state budget while continuing to reduce the scope of the SOEs. Not
pleased with the amount of funds secured and disappointed to be declined in such a
way, Turkish decision-makers said that the attitude was not what they deserved after
doing everything the Americans had asked them to do.497
Changing expectations from one another in the U.S.-Turkey economic relations in
1956 was a result of several internal and external reasons. The Eisenhower
administration, as well as Randall’s economic advisee committee, has been battling
with Congress to lower trade tariffs to balance the trade between the U.S and its
allies. Restricting the “Buy American” act, which has been the core of American
commercial policy since the Marshall Plan, was not welcomed by the business circles
and business-oriented Congressmen.498 In addition to that, Turkey, after having a
terrible year in agricultural production, had no financial position to continue buying
American in 1956. While the foreign investments in Turkey started to dry out, both
governments were forced to consider quick cash installments that could balance the
Turkish economy. The DP government naturally applied to its ally for salvation.
Knowing American business circles were no longer helpful in Turkey’s case, the
496 A.C. Sedgewicks, “Deficit Pressure Menaces Turkey,” New York Times, November 15, 1955, 3.
497 Randall Journals, Box 3, Thomas Dewey-lobbyist for Turkey, briefings for trip to Turkey, internal,
politics, military, economy, and trade of Turkey, Vol. 12 (January 4-26, 1956), “Tuesday Morning,
January 17th, Executive Office,” 5.
498 John D. Morris, “Ike Asks Power to Cut Trade Bans in Interest of U.S., World Security,” The
Atlanta Constitution, January 11, 1955, 1.
191
Eisenhower administration secured limited economic aid but more advice as
reducing import and public investments in Turkey.
In the face of the demands listed above, politics and macroeconomic constraints
shaped and dominated the alliance between Turkey and the U.S. in 1956. The DP
government had already prioritized aid and credit options to save the country from
falling into economic despair. Interestingly, the Eisenhower administration and
American advisors in Turkey, even the committed civilian businesspeople who
preferred not to be named as state representatives, were all on the same page: Turkey
could be rescued only through quick financial aid. That idea supplanted the
significance of attracting business and foreign investment initiatives in their agendas.
In such a political environment with changing economic objectives, altering the job
titles of the American personnel assigned to the Turkish mission became an apparent
necessity. Thornburg became a personal advisor to Menderes, tasked with lobbying
in the U.S. to help Turkey get more aid and credits. As a lobbyist of Turkey, Dewey
also adopted a similar role. In his second trip to Turkey between January and March
1956, Randall focused on mediating credit and aid negotiations between Turkey and
the U.S. rather than business promotion.499
Between February and March 1956, Randall met with the decision-makers of
Turkey, barely discussed business activities or foreign investments with them, and
generally worked on solving the state’s cash-flow problems rather than meeting with
and listening to the concerns of the Turkish business elites. After his previous visit in
499 FRUS, 1955-57, Volume XXIV: Eastern Europe; Soviet Union; Eastern Mediterranean, “Telegram
from the Embassy in Turkey to the Department of State,” January 17, 1956, 668. This mission was
defined as an investigation of the Turkish economy and had no focus on business promotion.
192
1953, Randall had continued to build upon his reputation among Turkish decisionmakers
as being highly trustworthy. Turkish Ambassador to the U.S. Haydar Görk
told Randall in a lunch meeting that Randall was the only foreign advisor in Turkey
who had been received with genuine enthusiasm and asked to come back.500
However, Randall was now returning to Turkey with unpleasant recommendations.
The Department of State had assigned Randall to convince the Turks to take strict
measures such as restricting public spending, limiting individual credits and export to
put their economy back on track. Randall would not be discussing ways to attract
American business this time. Instead, he was assigned to research the Turkish
economy, diagnosis the problems, and convince the DP government to make
cutbacks in state spending and credit distributions.501
The main objective of Randall’s task was to convince DP leaders to devaluate the lira
because the disparity between Turkish prices and American business was severely
impacting trade and investments.502 Besides the struggle that foreign businesses
faced in getting payments from Turkish vendors, fixing the dollar to 2.8 Turkish lira
in transactions caused disturbances in doing business in Turkey. Losing the interest
of American investors and experiencing currency problems at home, the DP began to
cling to SOEs again.503 According to Randall, Menderes eagerly listened to his
proposals but negotiated for a compromise; applying financial reforms in line with
500 Randall Journals, “Tuesday Morning, January 17th, Executive Office,” 5-6.
501 Randall Journals, Box 7, Turkey, 1956, Vol. 12 (January 28-March 6, 1956), “Confidential,”
March 6, 1956, 1-9.
502 Ibid., 4.
503 Ibid.
193
American advice would come at a price.504 At the same time that this conversation
was occurring, the Eisenhower administration had turned down Turkey’s request for
$300 million, as previously described; when that news arrived, the meeting room
froze.505
In the following days, Randall found himself with the difficult task of trying to
convince the DP government to accept economic reforms while asking the
Eisenhower administration to reconsider its decision of not providing additional aid
to Turkey. Randall adopted a mediating diplomatic role this time rather than
assuming the position of a businessman with a to-do list to attract investors to the
market. He praised Turkey’s strategic position in the Middle East and its role as a
staunch ally against Soviet expansion. He emphasized to the Eisenhower
administration that Turkey’s support of the U.S. in the region was invaluable and
should be rewarded.506 The only way to save this ally from economic disaster at this
point was the injection of quick credit worth around $100 million. Turkey could be
directed to the IMF and Organization for Economic Co-operation (OEEC) for more
funds and spread its debts across a more extended period. Besides reiterating the
political value of Turkey for American foreign policy, Randall relayed his
504 Randall Journals, Box 7, Turkey, 1956 (January 28-March 6, 1956), “Saturday Morning, February
11th, Barclay Hotel, New York,” 40-41. Menderes was certainly pro-American; however, he was also
good at bargaining with the Americans regarding Turkey’s needs and offers. According to Randall,
Menderes kept the conversation at the highest level and repeatedly stressed that Turkey was sincere in
its resistance against communism and Russia. Furthermore, he said that even if Randall had not helped
Turkey to get more aid, he still would have been remembered as a friend of the country.
505 Ibid., 43.
506 Randall Journals, Box 3, Council on Foreign Economic Policy, 1956, Vol. 12 (September 25-
October 23), Turkey, Thomas Dewey, “Tuesday, September 25th, Executive Office,” 1-5; DSA,
“Amerika Birleşik Devletlerinin eski Ankara Büyükelçisi George C. McGhee’nin konuşması” (“The
former U.S. Ambassador to Turkey George C. McGhee’s speech”), 127-823-2, January 26, 1956.
194
impression that Turkish decision-makers would be loyal to his advice and apply a
strict economic program to take the necessary steps to stop the rot in the economy.507
A future scenario in which Turkey would not be injecting foreign currency into the
market might have led to a full-blown disaster for the Turkish economy rather than
merely slowing development progress. In addition to growing expenses and debts,
Randall noted that Turkish businesses were struggling to fulfill contractual
obligations with their foreign partners. Officially, 1 dollar was fixed at 2.8 Turkish
lira in the early 1950s; however, that was far less than the actual value in the market.
One dollar was equal to 5-6 lira in the market and could even rocket to 9.7 in the
black market.508 In the midst of such insecurity, few American businesses showed
interest in selling products or investing in Turkey. Rather, most U.S. companies
operating in Turkey approached Randall and demanded that he convince the Turkish
government to devaluate the lira for fair transactions.509 Fighting a similar battle,
Dewey could not sell the opportunities of the Turkish market to American
businesses, either.510
The American companies’ direct investments had never even reached significant
amounts, but now, due to the currency problems, the existing investments started to
507 FRUS, 1955-57, Volume XXIV: Eastern Europe; Soviet Union; Eastern Mediterranean, “Letter
from the President’s Special Consultant (Randall) to the Secretary of the Treasury (Humphrey) and
the Under Secretary of State (Hoover),” March 6, 1956, 669.
508 Ibid., 673.
509 Randall Journals, Box 5, Vol. 8, Council on Foreign Economic Policy, 1956, Volume VIII (May 1-
June 11, 1956), Turkey, “Monday, June 9th, Executive Office,” 1-3.
510 Randall Journals, Box 3, Thomas Dewey-lobbyist for Turkey, briefings for trip to Turkey, internal
politics, military, economy, and trade of Turkey, Vol. 12 (January 4-26, 1956), “Friday Morning,
January 13th, Executive Office,” 5-6.
195
be withdrawn after 1956. In addition to the economic impracticality of business in
Turkey, political instability was returning and the DP’s credibility received blows in
that year. Frustrated with economic downsizing, the DP government began making
other controversial decisions challenging the democratic balance of the country as
highlighted in papers of foreign press and official correspondence in 1956. The
deterioration in living standards, caused by the limitations put on the importation of
consumer goods and increasing inflation, caused unrest among the people, and even
among the peasantry, the DP’s loyal supporters.511 With cutbacks in state credits and
the impossibility of buying imported tractors, this group started to lose its foothold in
agricultural production while the elite landlords rose. A much more severe problem,
however, was the crumbling of support among intellectuals and members of the
bureaucracy. This group mainly consisted of middle-class individuals such as civil
servants and educators, who were hit by the higher inflation and began to have
economic difficulties. For instance, Turhan Feyzioğlu, Dean of the Faculty of
Political Science of Ankara University, publicly criticized the DP government for
getting involved in the blocking of the promotion of a colleague due to that
colleague’s critical articles about the state’s economic policies.512 Menderes ordered
the Minister of Education to force the academic senate of Ankara University to
dismiss Feyzioğlu for his politically charged comments. Although the Senate
declined to fire him, the Minister of Education overran that decision and dismissed
him. This standoff between the government and Ankara University ended with more
academic resignations and the arrest of 300 students in protests. Eventually, the DP
511 Zürcher, 229.
512 “Education: Freedom & Turkey,” Time, December 17, 1956, 54.
196
passed a law to negate the authority of university senates and give control to the state
in December 1956.513
Increasingly concerned voices joined in a protest organized by workers in January
1956. Low wages and growing inflation brought the labor unions together; however,
protests were suppressed harshly and the participating unions were shut down.514
Many leading party members also questioned the party’s politics and Menderes’s
growing authoritarianism. They were either dismissed or willingly resigned. Leaving
the DP in late 1955, these ex-members came together in December to form the
Freedom Party (Hürriyet Partisi) with an agenda of restoring economic planning and
greater democratization.515
After shutting down the labor unions, the DP’s reputation was shaken among its
liberal supporters; however, ignoring all criticisms, the DP stepped up its crusade
against any questioning of state politics, including questions from RPP members and
the press. Several journalists were arrested and prosecuted after publishing critical
stories about the DP and the prime minister. Menderes defended those actions and
called the arrests a necessary suppression of a plot to bring about a revolution and his
removal from office.516 Newspapers published caricatures of Menderes and other
leading DP figures that were deemed insulting and found themselves facing trial.517
513 Ibid.
514 Shaw and Shaw, 412.
515 Ibid.; Feroz Ahmad, Making of Modern Turkey (London: Routledge, 1993), 54.
516 “Police in Ankara Detain Newsmen,” New York Times, April 30, 1956, 2.
517 “Turkey: Costly Joke,” Time, July 30, 1956, 20; Robinson, Developments Respecting Turkey, Vol.
4, 1.
197
RPP officials experienced their share of these arrests, as well. Attacking the DP’s
policies on every trip to Anatolian cities while addressing the local people, some
opposition deputies claimed that Menderes would suspend the elections in 1957 –
indeed, he postponed the elections for a few months – and accused him of turning
into an authoritarian figure. The RPP’s Secretary-General, Kasım Gülek, a passionate
speaker, complained relentlessly about the DP’s failing economic policies,
limitations of freedom, and arbitrary judicial policies; eventually, he became
Menderes’s nemesis.518 Already arrested once the year before and kept in custody for
a day, Gülek was sentenced to four months of house arrest in June 1956 for insulting
the GNA’s legal status for the second time. Meeting with Randall a few years later,
Gülek sarcastically apologized that he could not meet Randall on his earlier visit to
Turkey because he was in jail.519 Throughout 1956, Menderes found it very hard to
accept criticism and his authoritarianism grew, which fueled the opposition’s distaste
for his government.520
All of this unpleasant news about Turkey’s faltering economy and democratic
shortcomings continued to be published in American newspapers and shared in
correspondence between state officials in the following terms, and all of this news
critically damaged perceptions of Turkey’s business-supportive environment.
Questioning Turkey’s economic capabilities, democratic institutions, and loyalty to
the law, American investors were overwhelmed with business concerns; most of
518 Robinson, Developments Respecting Turkey, Vol. 3-4, 3; “A Scalp for the Taking,” Time, August
13, 1956, 18.
519 Randall Journals, Box 7, Turkey, 1956 (January 28-March 6, 1956), “Memorandum of Mr.
Randall’s Conference with Kasim Gulek, February 7, 1956,” 1-2.
520 Ibid., 229-30.
198
them hoped only to be paid for their services and products, and many others
preferred to distance themselves from this market.521 In late 1956, the DP, the
opposition, American advisors, and Turkey’s lobbyists all agreed on a common idea:
expecting the arrival of more foreign investments and businesses was quite
unrealistic in this chaotic period. Disappointed with the conditions, Randall met with
the Turkish business elites of the Rotary Club only once in his 40-day stay in Turkey.
Rather than projecting a strong perspective of realism, as in his previous meeting
with these gentlemen, he reluctantly praised the unshakable alliance between the
U.S. and Turkey and suggested that solid ties between the states might soon bring
more American investments to Turkey. In his journals, he wrote that painting a
hopeful framework for these businessmen, rather than presenting the gloomy
economic scenarios he had discussed with the DP government, was easier for
himself.522 Battling with the economic recession and payment insufficiency, Turkey
was no longer attractive for the American business these years.
Although business promotion was not their priority, the DP leaders were also upset
to see the lack of foreign investment after so much effort had been exerted to
improve the business environment for foreigners by enacting incentive laws. As a
final attempt to make the Turkish market appealing, the DP enacted a new regulation
providing industrial guarantees ensured by both the Turkish state and the
International Cooperation Administration.523 The aim was to create a trustworthy
521 Randall Journals, Box 7, Turkey, 1956 (January 28-March 6, 1956), “Memorandum of Mr.
Randall’s Conference with Ambassador Gork, February 7, 1956,” 3.
522 Randall Journals, Box 7, Turkey, 1956 (January 28-March 6, 1956), “Saturday Morning, February
11th, Barclay Hotel, New York,” 36.
523 GNA Minutes, 10th Parliament, Vol. 13, July 9, 1956, 139.
199
environment once again for foreign businesses, similar to that they had enjoyed while
their investments were guaranteed by Marshall Plan funds. However, Turkey’s
economy was no longer on a progressive road. Other negative catalysts, such as the
controversies over political suppression and democratic institutions, were more than
enough to convince American businesses to stay away from this problematic market.
In a private meeting with Randall, Bayar complained that only two years before, he
had met the CEOs of many American industrial giants such as Randall’s own
company, Inland Steel Inc., and AMF. All of them had promised to establish
production plants in Turkey, but none delivered.524 As Barker had also previously
told Bayar in a private meeting, Randall insisted that this outcome was not the fault
of Turkey’s laws or efforts; the conditions were just not right.525 Even Dewey, the
paid lobbyist of Turkey hired by Zorlu, admitted to Randall that he struggled to find
investors in the U.S. and could not convince American businesspeople that Turkey
had the best climate for overseas investments.526 Dewey accordingly changed his
objective and began spending more time with members of the U.S. Congress and
officials of the Eisenhower administration in hopes of securing more credit and aid
for Turkey.527
524 Randall Journals, Box 7, Turkey, 1956 (January 28-March 6, 1956), “Memorandum of Mr.
Randall’s Conference with President Bayar at the President’s Palace on Saturday, February 4, lasting
from 12 until 1:20 P.M.,” 1-6.
525 Ibid.
526 Randall Journals, “Saturday Morning, February 11th, Barclay Hotel, New York,” 46-47.
527 Ibid.
200
5.3. Efforts to Reattract American Business While Restoring the
Economy
The deepening recession and political disturbances started to alienate American
investors in Turkey; the DP government, in turn, lost its enthusiasm toward them.
However, American advisors did not abandon their attempts at mediating between
the Turks and American businesses, and investors did not abandon the market. The
Department of State assigned Randall to investigate Turkey’s macroeconomic
problems rather than investment promotion, and his working team required new
business specialists to fill his shoes. Dr. C. Edward Galbreath, General Counsel of
International Harvester Company, dealt with the problems of American business
owners in Turkey and suggested solutions.528 Besides his role accompanying the
Randall-led delegation, Galbreath spent most of his time in Turkey with business
circles, listening to and taking notes about their problems. He also provided his own
evaluations about possible business opportunities in Turkey, most notably in the
sectors that had the potential to flourish after economic recovery, with petroleum
operations and agricultural mechanization topping his list.529 Not wanting to burden
Randall and his delegation with too many assignments, the Department of Commerce
tasked five prominent American businessmen, led by Herbert J. Cummings, Chief of
the Middle East Section of the Bureau of Foreign Commerce, to research the
business conditions in Turkey.530 After spending a month in Ankara and İstanbul,
meeting Turkish and American business leaders and examining promising sectors,
528 “Letter from the President’s Special Consultant (Randall) to the Secretary of the Treasury
(Humphrey) and the Under Secretary of State (Hoover),” 669-71.
529 “Saturday Morning, February 11th, Barclay Hotel, New York,” 33-37.
530 Robinson, Developments Respecting Turkey, Vol. 3, 82.
201
Cummings suggested positive results. By 1960, he estimated, Turkey would achieve
$200 million in annual income in foreign exchange (including tourism revenues),
sales of tobacco products, and mineral exports if it managed to attract investors.531
Moving beyond such promises and expectations, several American MNCs did step in
to invest in Turkey in these years. Remington Rand agreed to bring capital of
$300,000 to Turkey to establish the country’s first typewriter manufacturing and
assembly plant in İstanbul.532 Having already sold manufactured products for railroad
construction equipment to Turkey worth $32 million, Westinghouse Co. (both the
Air Brake and Electric branches) also promised to expand its manufacturing facilities
in Turkey to reduce production and transfer costs and capture a profitable market for
Westinghouse products.533
In addition to the newcomers, companies that were already present proceeded with
their plans for manufacturing plants in Turkey.534 Willys-Overland’s new assembly
line near Tuzla (İstanbul) was among them. Their completed plant was projected to
manufacture 5,000 jeeps per year. According to initial pricing estimations, a jeep
from that plant would cost $379 less than those imported from the U.S. and would
allow Turkey to save about $1.2 million per year.535 Minneapolis-Moline also
531 Robinson, Developments Respecting Turkey, Vol. 4, 65.
532 “Turks to Produce Our Typewriters,” New York Times, July 16, 1955, 19.
533 “Westinghouse Air Brake Unit Awarded Contract by Turkey,” Wall Street Journal, June 28, 1955,
3.
534 DSA, “Merkezi İstanbul’da olmak üzere Türk Willys Overland Fabirkaları AŞ’nin kurulmasına
izin verilmesi” (“The establishment of Turkish Willys-Overland Factory Inc., with its headquarters in
İstanbul, was allowed”), 142-22-3, March 10, 1956.
535 Ibid.; Robinson, Developments Respecting Turkey, Vol. 3, 71.
202
completed its first round of manufacturing that year and released 850 tractors to the
domestic market.536 As oil production had recently reached 1 million barrels of crude
oil per day,537 Parsons received state grants and started to expand its oil research into
Thrace, the northwestern part of Turkey. Squibb & Sons and GE also expanded their
plants to improve production capacity.538 To compete against Squibb & Sons and
Abbott, Pfizer began planning a plant in İstanbul to produce antibiotics, subsidiary
products, and medical alcohol from sugar beets. A list of the targeted medicines was
also sent to the prime minister by Pfizer Chairman John Elmer McKeen.539
In spite of those advancements, the oil sector received the most attention. Since
1954, with the enactment of the new law, twelve foreign oil corporations had arrived
in Turkey, with Socony, American Overseas Petroleum Ltd., and Esso Standard
being particularly notable American firms investing in the country. They were
536 GNA Minutes, 10th Parliament, Vol. 10, February 28, 1956; Wall Street Journal published an
advertisement about the latest developments concerning Minneapolis-Moline’s operations in Turkey
on January 24, 1956. Many other advertisements continued to be published in the next years to
motivate Turks to purchase Minneapolis-Moline tractors to contribute to domestic production.
Appendix IX.
537 DSA, “Batman rafinerisinin çalışması hakkında Parsons Şirketi namına Ahmet Neyzi imzasıyla
Celal Bayar’a gönderilen telgraf sureti” (“A copy of the telegram sent to Celal Bayar with the
signature of Ahmet Neyzi on behalf of the Parsons Company about the operation of the Batman
refinery”), 111-701-2, March 27, 1956. Ahmet Neyzi was a graduate of the Business School of
İstanbul University who had just started a career with Parsons in Turkey, which may be considered an
exciting coincidence.
538 DSA, “E. R. Squibb and Sons İlaçları Anonim Şirketi ana Sözleşmesinin 5. maddesinde değişiklik
yapılması” (“Amendment to Article 5 of the Articles of Incorporation of E.R. Squibb and Sons İlaçları
Inc.”), 144-81-4, October 2, 1956; DSA, “Türkiye İş Bankası, Türk Tecim AŞ ve Vehbi Koç’un
Amerika’da bir firmayla birlikte memleketimizde kurdukları General Elektrik TAŞ vasıtasıyla kurmuş
oldukları fabrika için istenen sermaye” (“The required capital for the factory established by Türkiye İş
Bankası, Türk Tecim AŞ, and Vehbi Koç together with a company in the U.S. through General
Elektrik TAŞ”), 143-54-19, June 29, 1956.
539 DSA, “Pfizer ilaç fabrikasının Türkiye’de açılması” (“Opening of the Pfizer pharmaceutical factory
in Turkey”), 6-30-19, June 8, 1956; DSA, “Orta Şark Ticaret TAŞ ile Amerikan Pfizer müessesesi’nin
İstanbul’da fabrika kuracakları,” (“Orta Şark Ticaret TAŞ and American Pfizer Foundation will
establish a factory in İstanbul”), 1-9-1, September 19, 1956.
203
conducting drilling operations, operating wells, and processing crude oil products.540
These companies dramatically increased the exploration operations by expanding
their work into all seven regions of Turkey. The total number of sites explored
reached 68 in late 1955.541 In 1956, that number was expected to be 140 with further
business applications and grants from the relevant ministry giving authorization to
both currently present firms and potential new ones.542
Amid the struggles to find resources or willing partners to finance various business
sectors in Turkey, the oil industry was an exception due to its potential for profits.
The competition in other private investment sectors was relatively low in comparison
to foreign oil companies’ interests in Turkish resources. They did not need to partner
with Turkish businesspeople to overcome their foreignness in the market.
Furthermore, the majority of oil giants like Socony, Esso, and Shell had fewer
challenges or reservations in terms of covering operation costs, machine transfers, or
financing payments for assigned professionals. Any initiative to attempt joining the
race for oil in Turkey was quickly concluded through relevant credit deals via
American banks and finance organizations. For example, after financing Parsons’s
new operations in Thrace, William Blair Co., an investment banking institution from
Chicago, also sponsored Turkish oil importers’ refinery construction projects in
Turkey.543 Profitability was key in this sector while many other sectors dried up.
Rumors underlined that a huge consortium of oil giants would emerge soon to make
540 Robinson, Developments Respecting Turkey, Vol. 3, 57.
541 GNA Minutes, 10th Parliament, Vol. 10, February 28, 1956, 247.
542 Ibid, 248.
543 “Second Oil Refinery Planned in Turkey,” New York Times, May 1, 1956, 43.
204
the most significant investments that the Turkish petroleum sector had ever seen.544
The arrival of more foreign investments, and especially those involving the promise
of larger profits, would be celebrated by the DP government and American actors
like McGhee and Randall as evidence that their dedicated work was still paying off.
However, neither the number of investments nor their long-term advantages could
ever draw enough attention among those who were desperately seeking quick
resolutions to Turkey’s growing cash-flow problems.
In late 1956, no common ground was found in the discussions of the economic aid
program, and economic problems continued to deepen while the government insisted
on suppressing the opposition. DP deputies continued to raise concerns among
themselves about Menderes’s governing style, economic policies, and increasing
authoritarianism. While some DP members left the party,545 others asked Menderes
to step down. In fact, he was willing to agree to that demand, but his decision to
resign was rejected by Bayar, who instructed the beleaguered prime minister to
assemble a new cabinet rather than abandoning his post. Despite the growing distaste
for him among his opponents, particularly liberal intellectuals, he was still the
champion of rural voters and business elites with the unwavering support of the
masses.546 Relying on his voters’ support, Menderes ignored criticisms about
economic constraints, budget deficits, and authoritarianism and decided to continue
pursuing his initial economic vision for Turkey. Forgetting his promises to American
544 Robinson, Developments Respecting Turkey, Vol. 4, 73.
545 The resignation of one of the party’s founders and long-time Minister of Foreign Affairs Fuad
Köprülü was a particularly significant loss. He was known for his disapproval of Menderes’s growing
impatience toward the opposition and criticism. Joseph O. Haff, “Turkish Foreign Minister Resigns
Post; Move Laid to Clearing of Foe in Inquiry,” New York Times, June 20, 1956, 5.
546 Shaw and Shaw 412.
205
advisors and other international creditors about downsizing, Menderes first heralded
the completion of several dams, irrigation projects, and manufacturing and power
plants. He then promised more projects to be started for modernization, apparently
expecting the results to please the voters. Meanwhile, as described by Robinson,
these attitudes were apt to destroy the esteem of the government.547
After reconsolidating power in the inner circle of the party, Menderes returned to
domestic politics to face the economic realities. The national elections to be held in
1958 were approaching; in addition to possibly saving the Turkish economy,
Menderes’s next steps would determine whether he could also preserve his power.
The best solution was to accept the American demands and secure the amount
needed to halt the economic downswing quickly. Returning to his old tactics,
Menders conducted an election campaign similar to the previous one, following what
he perceived to be automatic steps for victory. Having already convinced Randall
about his intentions to manipulate the economic conditions and further negotiations
with the IMF and OEEC for credit deals, Menderes was likely to get what he needed:
an injection of hot cash to halt the economic recession. He worked at maintaining
Washington’s good graces, which were highly correlated with his chances of getting
more aid from the U.S., by granting unlimited access to Turkish military installations
for U.S. personnel.548 This approach helped Menderes attain first military aid and
subsequently credits from the U.S. in 1957. The funds secured by following these
steps allowed him to utilize the cash flow and gain short-term popularity among
voters. In 1957, Menderes primarily devoted his efforts to consolidating his voters by
547 “Turkey: A Challenge to American Business.”
548 “Turkey: The Impatient Builder,” Time, February 3, 1958.
206
showing them signs of economic recovery and solving their short-term economic
problems. That summer, he ordered the accelerated completion of construction
projects, such as schools, highways, and mosques, as tangible evidence of his
successful governance. He also issued a circular granting a one-year moratorium on
debts owed to the state by farmers and business elites.549
After restoring voters’ confidence over the course of a few months, the DP, led by
Menderes, held a snap election in September 1957. By injecting cash into the
markets and catching the opposition unprepared, the DP secured its third consecutive
election victory. This particular victory was less convincing than the others; the
margin of votes between the DP and the opposition was narrower than in 1954. Still,
it was a massive relief for the DP as it indicated more than the validation of voters.
First, it showed that despite shortcomings in the economy and the balancing of the
budget, the DP should continue pursuing what it had been doing for the last seven
years, even if it meant blocking out all criticisms of the economy, democratic
shortcomings, or excessive budgets for massive projects. Menderes used the motto
“Nothing will slow us down at all” during the election campaigns and, to preserve his
own position, put himself on a political path that he would not change in the
following years.550 However, while his political opponents’ rising voices did not
force him to make adjustments, the consequences of the economic crisis would
necessitate some changes in this term, especially in the economic realm.
549 Ahmad, Making of Modern Turkey, 77.
550 Ibid., 77-81.
207
A few months after the elections, the DP had to contemplate taking control of credits,
repayments, and state revenues. A new circular approved by the GNA included price
controls, restraints on accessible credit, and budget cuts for existing SOEs’
operations.551 American officials praised these stringent new regulations and
described them as a harsh necessity to save the country from bankruptcy.552 The
Turkish lira was devalued, which caused a dramatic loss of its worth; 1 dollar was
equal to 9 lira in 1958, while it had been 5.25 for the official currency only one year
ago. That drastic change made it nearly impossible for Turkish importers to allocate
significant funds for foreign purchases; however, that was not a unique outcome of
the devaluation. It had been a recurring problem in Turkish business since 1956. The
levels of imports had to be reduced because the sales of even minerals and
agricultural goods were faltering in recent years. After 1958, they would no longer be
sufficient to maintain the import-export balance.553 The droughts of recent years
made the volumes of exported crops such as wheat and cotton fall by one-third
compared to previous harvests, which raised local prices and also reduced this
sector’s competitiveness in terms of international market prices.554
Upon experiencing the worst recession of the 1950s, Turkish officials concluded that
achieving a self-sufficient economy was impossible. Economic development could
only be maintained through a combination of domestic production, foreign aid, and a
551 GNA Minutes, 10th Parliament, Vol. 27, November 28, 1957.
552 FRUS, 1958-1960, Volume 10: Europe; Finland; Greece; Turkey, “Operations Coordinating
Board Report,” January 28, 1958, 741-42.
553 “Turkey: Silence Please,” Time, February 17, 1958, 29-30.
554 NARA, RG 59, General Records of the Department of State, Bureau of Near East and South Asian
Affairs, Office of Greek, Turkish and Iranian Affairs, Office of the Officer-in-Charge, Turkish
Affairs, Supplemental Subject Files Relating to Turkey, 1954-1958, “Memorandum of a
Conversation,” October 9, 1957.
208
solid stabilization plan.555 In May 1958, Bayar sent Eisenhower a letter requesting
more financial aid. After being denied long-term credits from the U.S., Turkey could
not settle its credit agreements with international organizations like the IMF and
OEEC. Without the ability to obtain the necessary gas and spare parts for tractors,
even agricultural production faced a bottleneck. Foreign currency reserves were
melting away, and the remaining currency was allocated to installment payments of
debts for development projects.556 In reply to Bayar, Eisenhower suggested a more
international solution, advising that they await the conclusions of the IMF and OEEC
delegates currently making assessments in Turkey.557 After establishing a
standardized road map with these institutions and agreeing on an immense
contribution of $100 million to the OEEC, the U.S. also approved assistance to cover
Turkey’s growing demands for imported goods in July 1958.558
Along with the OEEC’s $100 million, the IMF provided additional credit worth $25
million and the U.S. another $234 million. In addition to international organizations,
American creditors such as William Blair Co. and even business firms such as GE
were eager to offer long-term credit to Turkey to finance the market. Leon Dayton,
formerly the chief of the MSA, visited Turkey in July 1957 with a new title. Moving
on to private business, he had become the Director/Advisor of Pan American’s
Investment Bureau and Intercontinental Hotels Corporation. Through Dayton, Pan
555 FRUS, 1958-1960, Volume 10: Europe; Finland; Greece; Turkey, “Operations Coordinating Board
Report,” January 28, 1958, 754.
556 FRUS, 1958-1960, Volume 10: Europe; Finland; Greece; Turkey, “Letter From President Bayar to
President Eisenhower,” 748.
557 Ibid.
558 NARA, RG 59, “From: John Leddy, To: Mr. Dillon, Subject: Turkish Stabilization Program,” July
1, 1958.
209
American proposed a $40 million credit deal for Turkey to help with the growing
import expenses.559
Thus, the U.S. provided the most considerable contribution to the Turkish economy.
Despite conflicts about the aid amount, the DP government also accepted that
Americans would step up to bail Turkey out of any economic problems it might
face.560 The aid package of $359 million was provided following Turkey’s
acceptance of a stabilization program and a solution for Turkey’s short-term debt.
Accepting such loans in return for economic and political concessions proved both
Turkey’s increasing dependence on foreign aid and the fact that the DP’s policies had
failed to manage the state’s finances.561 Still, both the DP and Americans kept their
faith that restoration could be achieved through the new wave of aid, which aimed to
revive economic activities and reassure increasingly anxious foreign business
communities.562 Turkey, now able to pay its previous debts and place more orders for
imports, could improve its fortunes and reattract the interest of concerned business
owners.
559 Robinson, Developments Respecting Turkey, Vol. 4, 104.
560 NARA, RG 59, “Finance Minister Polatkan’s Statement on Foreign Aid and Credits, Released,”
August 4, 1958.
561 “Operations Coordinating Board Report.”
562 FRUS, 1958-1960, Volume 10: Europe; Finland; Greece; Turkey, “Memorandum of a
Conversation,” September 10, 1958, 758.
210
5.4. Revival of American Business Under the Third DP Government
Menderes kept his economic promises to foreign creditors to regain trust from
foreign businesses. The cash flow secured for the Turkish market to cover short-term
debts slightly improved Turkey’s business reputation. Upon the receipt of
authorization from the relevant institution, Pfizer started constructing its first plant
for pharmaceutical production in September 1957.563 The amount to be invested in
cash was very limited at only 1 million Turkish lira; still, the mechanization products
to be provided could be counted as an economic gain. Squibb & Sons launched its
third enlargement process in the same year. Thanks to the high demand, the
pharmaceutical market was still profitable in Turkey and only a few big pharma
companies were feeding the market. Therefore, Squibb & Sons brought Olin
Mathieson Chemical Co., its partner in the U.S., to help expand operations in Turkey
by injecting an additional 1.5 million lira from their share in the partnership.564 GE
also began planning for a new bulb plant to be constructed due to the increasing
demand in the domestic market and provided a small contribution worth $110,000 as
its investment.565 All of these American direct investments were actually expansion
projects of companies that were already settled in Turkey; these companies still had
563 DSA, “Bir ABD firmasının Orta Şark Ticaret TAŞ ile birlikte ülkemizde vitamin ve hormon
ilaçları imal etmek üzere kuracakları fabrika için getirilecek sermayenin 6224 sayılı Kanundan
yararlandırılması” (“Benefitting from Law No. 6224 for capital to be brought for the factory to be
established by a U.S. company to produce vitamins and hormone drugs in our country with Orta Şark
Ticaret TAŞ”), 147-50-20, September 30, 1957.
564 DSA, “E.R. Squibb Sons İlaçlar Anonim Şirketi’nin karından şirketin ortağı olan Olin Mahieson
Chemical Co.in hissesine düşen miktarın şirketteki sermayesine ilave edilmesi ve 6224 sayılı
Kanundan faydalandırılması” (“Benefitting from Law No. 6224 for the capital to be added to the share
in company by Olin Mathieson Chemical Co. to the profit of E.R. Squibb & Sons İlaçlar Inc.”), 145-
117-5, March 13, 1957.
565 DSA, “General Elektrik TAO’nun, bir Amerikan şirketi ile ortaklaşa kuracakları Ampul
imalathanesi için yabancı şirketin ithal edeceği yabancı sermayeye muafiyet tanınması” (“Granting
exemption to foreign capital that will be imported by a foreign company for the bulb factory to be
established jointly by General Elektrik TAO with an American company”), 146-32-2, June 18, 1957.
211
motivations for relying on Turkey and its market potential. The only newcomer to
the Turkish market at this point was Philco-Amcor Co., an appliance manufacturer
specializing in refrigerators and cold storage depots, with a capital investment worth
$200,000.566 This company had recently expanded to the Middle Eastern market by
constructing a refrigerator plant in Tel Aviv,567 and it hoped to launch a similar
facility to dominate the Turkish market, which did not yet have any manufacturing
plants for large household appliances.
None of the above activities would cure Turkey’s short-term economic problems; the
only business sector with that level of potential was oil. Thanks to the law enacted in
1954, foreign firms from different countries brought their operational assets to the
Turkish market and helped expand upon the MTA’s limited drilling and exploration
regions. All of these developments strengthened the hope of the DP government that
Turkey might earn significant amounts of profits by exporting petroleum products.
Having similar hopes themselves, foreign oil firms kept their faith that production
rates would continue to grow as long as the scope of operations expanded. For
example, to expand the oil sector in Turkey, Socony and three other oil
multinationals started to design a massive refinery to be built in Mersin in 1957. The
refinery was scheduled for completion in early 1961 and was expected to meet a
566 DSA, “Amerikalı Philco-Amcor Co. firmasının iki Türk ortakla kuracakları soğuk hava depoları,
elektrik cihaz ve aletleri imal edecek teşebbüs için yabancı ortağın ithal edeceği sermayeye muafiyet
tanınması” (“American Philco-Amcor Co. granted exemption to the capital to be imported by the
foreign partner for the enterprise that will establish cold storage, electrical devices, and appliances to
be established by the company with two Turkish partners”), 146-19-14, April 12, 1957.
567 In fact, Amcor was an Israeli company that had merged with Philco in Israel, “Philco” being short
for Philadelphia Storage Battery Company.
212
significant part of the Turkish demands for automotive gasoline, diesel fuel oil, and
heavy industry fuel oil.568
In March 1957, the details of that agreement were still unclear; the most certain thing
was that this investment project would be the greatest one that Turkey had ever seen.
Four giant oil multinationals, Socony, BP, Shell, and Caltex, agreed to establish a
consortium and early projections suggested that the total investment would be around
$50 million.569 Socony, as the long-time official partner of the Turkish state in this
field, would have the leading share in this consortium; another American firm,
Caltex, would follow it in second place.570 The DP government attributed great
importance to this investment project; Turkish Ambassador to the U.S. Haydar Görk,
in a radio program in Washington, expressed the Turkish government’s gratitude for
the extensive investment project and the profits that it promised.571 From among the
total investments, Socony promised to expand know-how education, introducing
another technical program to educate and prepare Turkish youth for jobs in the oil
sector with the help of Robert College.572 With 1,300 Turkish personnel already
employed in Socony’s various operations in Turkey, a new refinery project would
increase that number all the more.
568 Mobil Oil Corporation, Mobil Corporation: Mobil Annual Report 1957, New York, 1975, 18-19,
30-31.
569 “Refinery for Turkey,” New York Times, March 30, 1957, 27.
570 “Four Oil Companies Announce Plans for Refinery in Turkey,” Wall Street Journal, April 11,
1957, 26.
571 ExxonMobil Historical Collection, The Dolph Briscoe Center for American History, The
University of Texas at Austin (ExxonMobil HC), Mobil Corporation, 1872-2003, Geographic Files,
1890-1983, Box 2.207/E186, Turkey, “Radio Reports, Inc., Full Text,” February 14, 1957, 7.
572 Ibid.
213
Additionally, the consortium agreed to cover all the construction expenses of a
functional facility, including loading and unloading facilities, warehouses, docks,
tanks, transfer lines, electrical distribution systems, and telephone and radio
communications.573 Even the construction of highways and railroads into the region
would be their responsibility. Praising the Turkish-Socony partnership that had
developed in 1954, Brewster Jennings, chairman of the board of Socony-Mobil Oil
Co. and a participant in the planning process, acknowledged that Socony would
apply for a huge investment in Turkey. Rather than simply selling more products in
the market, the ultimate goal was to enhance both the business partnership and the
profits.574
Turkey had been importing vast amounts of crude oil and was having difficulties
purchasing the necessary amounts due to economic downsizing. New drilling
operations could allow Turkey to produce its own oil products in the future, while
processing imported crude oil in a new refinery would embed Turkey in the
international oil sector with benefits such as eventual surpluses thanks to sales of
crude and refined oil products.575 More importantly, the plan promised quicker
results. Lifting the burden on the only refinery in Batman, the new one would be able
to meet all of Turkey’s domestic petroleum needs. This investment could be a
suitable way to restore Turkey’s recently shaken credibility among foreign
businesses on top of bringing in profits. This planned refinery would offer new and
573 ExxonMobil HC, Mobil Corporation, 1872-2003, Geographic Files, 1890-1983, Box 2.207/E186,
Turkey, “Mr. Charles Baker Radio Interview Station WABC, Monday, April 22, 1957,” 5-6.
574 “Radio Reports, Inc., Full Text,” 8.
575 “Mr. Charles Baker Radio Interview Station WABC, Monday, April 22, 1957,” 3.
214
valuable proof that foreign capital could still enjoy good profits and safe investments
in Turkish business sectors.
The Ministry of Economy and Commerce released an investigative report in July
1957 about the progress made in foreign direct investments. According to its
statistics, 217 foreign firms had approached the Turkish authorities, although only
105 of them were actively conducting business in Turkey at the time of that
research.576 The total number was in line with the expectations, as well as the amount
of total capital that had arrived in Turkey. It was easy to explain this in 1957; Turkey
no longer had a favorable economic climate. Under the DP government, Turkey had
worked fervently to attract foreign capital, even enacting one of the most
accommodating incentive laws compared to the rest of the world in 1954. However,
in the economic conditions of 1957, few of those incentives mattered. The country’s
untapped resources, investment incentive laws, and pro-capitalist government should
have been attractive; however, business promises could never be fully upheld
without a stable economy and currency. Turkey’s exports were increasing and its
industrial sectors grew compared to the 1940s. However, Turkey’s credit debts,
military expenses, and import volumes also boomed in these years. The droughts of
1954–55 were economically painful not only for the peasantry, who could not repay
their credit debts to the banks due to lack of sales, but also for the DP government,
which had to postpone payments and pay back these debts from state revenues while
earning less from exports in these years. Lastly, the recovery and return to the
international markets of agricultural export states such as the Netherlands lowered
the prices of Turkish exports. All of these economic problems drove up the inflation
576 Robinson, Developments Respecting Turkey, Vol. 4, 102.
215
rate and caused the devaluation of the lira within a decade. Therefore, Turkey began
failing to import the foreign components and raw materials that it needed.577 A group
of American companies owed money by Turkish institutions, including General
Electric, Remington Rand, and Federal Motor Truck, were up in arms, demanding
that the U.S. government work out a repayment plan and pressure its ally to comply.
The repayment plan was arranged by the U.S. Export-Import Bank, which
guaranteed to cover the debts in the Turkish market. The total Turkish debt to these
companies was around $121 million.578 Similar to the previous breakdowns of
negotiations between oil manufacturers and Turkey a few years ago, several
American companies refused to provide further products to the Turkish market
unless they received their payments.579
These import failures brought new economic uncertainties to the market. The
uncertainty of obtaining orders for production and foreign currency cash flows
prevented companies from making long-term business commitments. In turn,
increases in manufacturing capacity or business enhancement were difficult to
predict without long-term commitments. For instance, a well-organized, settled, and
financially responsible American company conducting business in the U.S. or
Western Europe could make commitments for raw materials or imports, plan the
utilization of its own production facilities, assign competent staff, and expand the
577 FRUS, 1955-57, Volume XXIV: Eastern Europe; Soviet Union; Eastern Mediterranean, “Statement
of Policy on Turkey,” February 28, 1955, 624-26.
578 “Turkey’s U.S. Creditors Oppose 8-10 Year Repayment Plan Now Under Negotiation,” Wall Street
Journal, December 8, 1958, 6.
579 DSA, “Karayolları Gn. Md. ile Amerika’da İnternasyonal Harvestor Export Co. firması arasında
muhtelif inşaat makinesi yedek parça temini konusunda yapılan anlaşmanın fiyat artışı sebebiyle
meydana gelen gecikme yüzünden” (“An agreement between the General Directorate of Highways
and International Harvester Export Co. due to the delay caused by the price increase of the supply of
spare parts for various construction machinery”), 274-5-4, January 28, 1959.
216
business due to the advantages of operating in a stable economy with solid currency.
The same company would still spend similar amounts to stay in a market with less
profit due to unpredictable currency conditions and demands for its finished
products, a logically less appealing choice. As agricultural and pharmaceutical
industries generally produced essential life-sustaining products rather than consumer
goods and they could obtain raw materials from the domestic market, they were the
only ones to survive as the economic crisis deepened in 1958.
The DP government finally launched an economic stabilization program on August
4, 1958, which included planned economic steps, more reliance on domestic
resources, and utmost control over the budget. Among the measures taken through
this program were restricting credit for the peasantry and investors without
guarantees, slowing the rising currency rates, and imposing penalties for imports
with substitutes in the domestic market.580 If successful, this plan could have halted
inflation and restore the health of the business atmosphere. Building a welcoming
environment could have attracted new investments and make the Turkish market as
appealing as it was when the foreign investment incentive and oil laws were enacted
in 1954.581
In May 1959, ten months after the initiation of the stabilization program, the Turkish
economy started to show signs of recovery. The inflation that had been growing
since 1954 halted at around 20%, and statistical reports claimed that the halt was
580 Memduh Yaşa, Devlet Borçları (National Debts) (İstanbul: Has Kurtulmuş Matbaası, 1981), 43.
581 Bates Papers, Box 4, Series VIII, Institute-Official, 1953-1960, “Doing Business in Turkey by
William F. Foss,” 1-6.
217
reflected in actual price level reductions.582 Devaluation of the lira and credit
limitations raised confidence in Turkey’s currency at home and abroad, albeit more
so at home. Most significantly, industrial products for development programs were
available for Turkish consumers. Having been concerned about the shortcomings of
the economic reform and stabilization program, many Turkish businessmen
nevertheless accepted the necessity of these changes. They were back in the
international markets in late 1959. The DP government examined the initial results of
these programs and was quite optimistic about the rallying of domestic and foreign
investments.583
Indeed, private investors began to lose their reservations about the Turkish market
after Turkey began liberating itself from the strangulating currency exchange rates in
1959. After covering short-term foreign debts with most of the available credit in the
previous year, the DP was now determined to allocate the rest to industrialization
projects and partner with foreign investments. First, a contract was signed with the
consortium of Koppers, Westinghouse Co., and Blaw-Knox Co. to finance the
second steel mill to be built as an expansion of Karabük Iron and Steel Works.584 The
entire construction cost would be around $185 million; it was agreed that this sum
would mostly be financed by Turkey. The DP government approached the U.S.
Export-Import Bank to secure a loan for that project.585 As was the case for the
refinery deal, this construction consortium agreed to complete the facility and the
582 See inflation rates by years in TÜİK’s İstatistiki Göstergeler 1923-2011 (Statistical Indicators).
583 GNA Minutes, 11th Parliament, Vol. 12, February 19, 1960.
584 “3 Concerns to Equip Turkish Steel Mill,” New York Times, November 29, 1959, 64.
585 Ibid.
218
infrastructure that would make the work at the steel mill possible.586 Westinghouse
predicted that the new iron and steel facility would provide Turkey with more flatrolled
finished products and triple ore extraction in the region by 1963.587 With cash
to spend in the business market, Turkey could then reattract American businesses.
The launching of these two extensive investment projects, the oil refinery and the
steelworks expansion, would lure others. Ford Motors announced its plans to build a
third assembly plant in İzmit, near İstanbul. Federal Motor Trucks, which had
complained about Turkey failing to meet the responsibilities of their partnership a
year ago, now decided to expand its operations by constructing another assembly line
plant. GE and British-American Tobacco were also in line for such enlargements.588
Having been stimulated by the initial contract signed between the Turkish
government and the oil giants in 1957, the oil sector in Turkey was also generally on
the rise, and Socony was ready to make a tremendous leap. By the end of 1958, the
total investments that Socony had made in Turkey reached about $33 million, but
more significant amounts were projected for investments in successive terms.589
According to an intra-company memorandum, Socony was willing to invest $40
million in exploration operations, $20 million for its share in the refinery
586 DSA, “Devlet Demiryolları Genel Müdürlüğü ile Westinghouse Air Brake International Co.
arasındaki sözleşme ile ilgili olarak gönderilen mektup” (“The letter sent regarding the contract
between General Directorate of State Railways and Westinghouse Air Brake International Co.”), 7-39-
31, July 2, 1959.
587 “Three U.S. Concerns to Get $144 Million Contract to Build Steel Mill in Turkey,” Wall Street
Journal, November 25, 1959, 7.
588 John R. Gibson, “Omens of an Economic Rise in Turkey: Nuts, Shirts, and Mr. Yalcuk,” Wall
Street Journal, December 7, 1959.
589 ExxonMobil HC, Mobil Corporation, 1872-2003, Geographic Files, 1890-1983, Box 2.207/E186,
Turkey, “Development of the Petroleum Industry in Turkey by Mobil Companies,” 3-4.
219
construction, and $15 million for new marketing facilities and equipment to be
transferred.590
All of these new investment initiatives and the economic recovery encouraged
Menderes to make a new trip to Washington to meet the president and possible
investors. His second official visit to the U.S. was planned for November 1959; in
addition to meetings with leaders of the U.S. government, NATO, and CENTO, his
scheduled program also included meetings with American business leaders. As
reflected in his itinerary, Menderes devoted a significant part of his stay to spending
time with American business associations and addressing notable firms’ agents about
market opportunities in Turkey.591 His speeches generally began with the recovery of
the Turkish economy after the implementation of the stabilization program to
reconsolidate Turkey’s business credibility. He then praised the previous and current
successes of American business in Turkey and concluded his speeches by
underlining Turkey’s unshakeable alliance with the U.S.592
5.5. Results
In 1959, the political mood in Turkey was tense and the economy was still in
recession. The stabilization program of August 1958 had little effect in stopping the
growth of inflation. Early election talks were fueled once again with the need to
resolve the political stalemate by the middle of June. Contrary to September 1957,
590 Ibid.
591 DSA, “Başbakan Adnan Menderes’in Amerika ziyaret ile ilgili yazışmalar” (“Correspondence
about Prime Minister Adnan Menderes’s visit to America”), 4-21,8, October 13, 1959. See Appendix
X for a list of corporations, institutions, and guests who attended the meeting.
592 Ibid.
220
the economic situation was not promising and the DP could not risk holding byelections
in the prevailing atmosphere.593 Instead, the government tried to suppress
the increasing political frustration by suspending public meetings and stopping RPP
campaigns.594 The press was put on trial; several opposition newspapers were closed
down and dissident journalists were imprisoned. 1959 was a disastrous year for
democracy in Turkey. Just as much as this political environment unsettled American
officials, American businesses also naturally lost interest in the market of such a
country.
In the economic dimension, rescue operations based on international credits provided
a vital injection of foreign currency into Turkey’s faltering economy. However, this
was a short-term success that did not restore the confidence of foreign businesses to
bring their operations to Turkey. First, due to devaluation, Turkish partners would
have future difficulties meeting the demands of such partnerships. In these years, GE,
Federal Motor Truck Company, and Remington Rand all had payment problems with
their Turkish partners and approached the Eisenhower administration to request that
it pressure the allied Turkish government to cover private sector debts. In addition to
the financial weakness of Turkish businesses, Turkish customers would also have
difficulties buying manufactured products in Turkey.
Secondly, reducing imports to balance foreign exchange reserves would negatively
affect industrialization. Even though American plants in Turkey processed the raw
593 Ahmad, Making of Modern Turkey, 62.
594 Nadir Nadi, “Kaparsa Ne Olur?” (“What happens if he closes it down?”), Cumhuriyet (Republic),
September 23,1959, 1. Cumhuriyet’s editor-in-chief refers to Menderes as “he” here and discusses
whether or not he will order the closing of the RPP.
221
materials and released the finished goods in the market in Turkey, those materials
still needed to be imported. Minneapolis-Moline tractors were assembled in Turkey,
for example; however, most parts had to be purchased from the Minnesota factory.
Their partner in Turkey, MKE, was not mature enough to manufacture these parts.
Finally, after a short honeymoon period with high hopes and expectations about the
arrival of American investments, the harsh reality of economic recession and
inflation hit both the DP government and the American commercial diplomats and
advisors. The DP leaders had always pinned their hopes on American capital and
know-how in their pursuit of modernization. In general, their primary concern was
accessing these resources on demand. Especially after slipping into a dependentpatron
relationship as of the late 1940s, the DP adopted an accept-all policy toward
American demands. Enacting privatization laws in line with American
recommendations was a significant part of that policy. However, attracting foreign
direct investments was never a task-based process; it entailed many dimensions.
First, it necessarily depends on profit-seeking intentions. The Turkish market
required several opportunities in its untapped conditions. American tractor,
pharmaceutical, and oil companies enjoyed monopolizing this newly emerging
market in the 1950s. However, many others could not find investment-worthy fields
because compared to their projected profits, standardization, transportation, and
mechanization costs in the Turkish market reduced interest. Secondly, unlike the
Turkish expectations, private investment is directly related to free will, not state
intervention. Such an incompatibility between the Turkish and American
understanding can be traceable in Randall’s accounts. Randall was accounted as a
222
“rain bringer” to the Turkish market because he was representing the Eisenhower
administration; however, he was not. He could only advise the DP government and
the Turkish business leaders on how to attract American investors, but he had no
power over these circles. Enacting law incentives and introducing tax exemptions
were significant efforts; however, when political and financial problems emerged in
Turkey and credibility among state institutions or business partners was lost,
incentives remained ineffective.
Changing financial priorities and policies between 1956 and 1959 also reshaped
American actors’ assignments. McGhee was already a diplomat with a business
background; he mediated between the DP government and American businesses to
settle official agreements. Not only did he advise enacting privatization laws, but he
also approached the Truman administration about supporting Turkey’s economy and
military. In contrast, Randall’s mission underwent the most visible change if his first
and second visits to Turkey are evaluated. Having arrived as a talented businessman
to give tips to Turkish decision-makers and business elites about how to attract free
enterprise in 1953, Randall behaved more similarly to McGhee in his second visit to
Turkey in 1956. Realizing that bringing American MNCs for investments in this
ambiguous market was a farfetched scenario, Randall became a mediator between his
government and the DP leaders in talks on aid and credits.
223
CHAPTER VI
Conclusion
In one of the last sessions of the GNA before the military coup of May 1960, DP
deputy Cemal Zühtü Aslan took the floor to discuss Turkey’s industrialization
throughout the 1950s. As a mining engineer from the Black Sea region, he presented
Karabük Iron and Steel Works and its development over the years as a case study for
his arguments. In the 1940s, while this company was in the hands of Etibank and the
state-assigned bureaucrats of the MTA, the facility’s productivity was drastically low
compared to its operations in 1960, he reminded his audience.595 Even when $25
million in aid was allocated to this facility through the Marshall Plan in 1947, its
directors could not spend that aid efficiently to increase productivity. The American
companies and their capital and know-how were behind any improvements. Aslan
also praised a new American initiative that had started field studies to assess coal and
595 GNA Minutes, 11th Parliament, Vol. 12, February 28, 1960, 918-919. According to the statistics
Aslan shared, after inviting the Americans to conduct field studies on Turkey’s mining reserves in
1950, Turkey’s reserves became clearer together with its extraction amounts. The MTA estimated 38
million tons of iron, 200 million tons of lignite, 1 million tons of boracite, and 18 million tons of
copper. In 1960, these reserves revealed 182 million tons of iron, 683 million tons of lignite, 8 million
tons of boracite, and 32 million tons of copper after detailed regional research and reports.
224
iron reserves around Zonguldak and sent several American professionals to the
region. After further studies revealed the potential, millions of dollars of investments
would arrive in the market. He underlined that the American professionals and
advisors played key roles for this profitable partnership since 1947.596 Indeed, they
did.
One year before Aslan’s speech to the GNA, Zorlu had met Randall and Barker in
Chicago while touring the U.S. for official meetings. In March 1959, Randall had
already been approached by the Department of State and informed that Zorlu wished
to meet him to consult with him about a topic, as the DP leaders admired him
greatly.597 A month later, Barker, Randall, and Zorlu met at a luncheon given for
Zorlu by the Chicago Council on Foreign Relations. Zorlu mentioned a new field
study that Turkey planned to undertake to evaluate the iron, steel, and coal reserves
in the Zonguldak region and asked whether they could help.598 One of these two
Americans, Barker, had conducted a detailed survey of the region and underlined the
significance of improving mining activities through privatization in 1950. Randall,
meanwhile, was the CEO of Inland Steel as well as a notable figure who had helped
Turkey enact the privatization law of 1954. Zorlu had met the right people.
The expansion of Turkish mining in the Black Sea region was addressed in a toplevel
meeting in Turkey when Eisenhower visited the country in December 1959. He
596 Ibid.
597 Randall Journals, Box 5, Foreign Minister Zorlu of Turkey, Vol. 11 (February 4-April 7, 1959),
“Thursday, March 3rd,” 3-4.
598 Randall Journals, Box 5, Foreign Minister Zorlu of Turkey, Vol. 11 (February 4-April 7, 1959),
“Tuesday Afternoon, April 7th, Inland Steel Office,” 8.
225
stated that he had asked Randall to study the project. Randall was on the job, meeting
with private investors and creditors in the U.S. and hoping to attract private capital of
around $125-130 million.599 In April 1960, the Turkish ambassador to the U.S. was
authorized to sign a contract that would allow Westinghouse to help expand the
operations of Karabük Iron and Steel Works with total aid of $15 million provided
by the Eisenhower administration.600 This would be one of the last examples of how
and why American actors were crucial for the promotion of American business and
Turkish modernization projects during the DP era.
In 1960, a military coup closed the DP’s chapter in Turkish political history, and the
new government consolidated its economic agenda with the establishment of the
State Planning Organization. State institutions would tighten their control over new
projects’ budgets and private investors. However, there would be no additional or
arbitrary limitations of foreign direct investments as long as they obliged with the
specifications of Law No. 6224 on privatization.601
The new government blamed the DP’s disorganized economic policies for the
economic recession of the late 1950s. Relying too much on credit and American aid
599 FRUS, 1958-1960, Volume 10: Europe; Finland; Greece; Turkey, “Memorandum of Conference
with President Eisenhower,” December 6, 1959, 823.
600 DSA, “ABD tarafndan yapılacak hibe ve kredi yardımından Karabük Demir ve Çelik Fabrikaları
Karabük ve Divriği tesislerinin genişletilmesine dair projelerin finansmanına tahsis edilmek üzere
Export-Import Bankasıyla mukavele imzalanması” (“Signing a contract with Export-Import Bank that
grants loan and aid from the USA to the financing of the projects for the expansion of Karabük Iron
and Steel Works’ Karabük and Divriği facilities,” 154-88-10, April 13, 1960.
601 Devlet Planlama Teşkilatı (State Planning Organization), Kalkınma Planı: birinci beş yıl (1963-
1967) (Development Plan: First Five Years) (Ankara: Devlet Planlama Teşkilatı, 1963), 237-39.
226
created a dependency from their perspective.602 That idea also led the new decisionmakers
to distance themselves from foreign investments, which remained insufficient
to provide cash for the needy Turkish market after all that had been done. Over the
course of 13 years, about 50 American companies had entered the Turkish market
with different commercial interests. All brought various amounts of foreign capital,
products, and expertise in cash and kind to Turkey. The resulting American foreign
direct investments in Turkey totaled less than $50 million. However, the total
American capital that had arrived through aid, grants, and credits in Turkey since
1947 had reached over $1 billion.603
The multidimensional aims of American business promotion in the late 1940s
enabled significant shifts in the political, cultural, demographic, military, and
economic realms in Turkey. The Marshall Plan and the arrival of American
companies and products to the Turkish market brought Turkey out of its skeptical
shell, and particularly eased the skepticism it had felt toward capitalist countries.
Having tended to avoid excessive integration with those countries since the founding
of the republic, statist RPP governments found themselves unable to entirely reject
the benefits of capitalism, the free market, and foreign capital in 1949. Thanks to the
Marshall Plan funds and American products and services, the visible economic
enhancement of the country strengthened the reputation of all things American in
Turkey. The consortium of Knappen Engineering Company, Morrison-Knudsen
Company, and International Engineering Company had constructed the Seyhan Dam.
602 Asım Erdilek, Direct Foreign Investment in Turkish Manufacturing: An Analysis of the Conflicting
Objectives and Frustrated Expectations of a Host Country (Tübingen: Mohr, 1982), 27.
603 Baran Tuncer, Türkiye’de Yabancı Sermaye Sorunu (The Foreign Capital Problem in Turkey)
(Ankara: Ankara Üniversitesi Siyasal Bilgiler Fakültesi Yayınları, 1968), 81.
227
Gordon Hamilton and Koppers had expanded the mine shafts around Zonguldak,
while Squibb & Sons had launched Turkey’s first foreign pharmaceutical plant in
İstanbul. General Electric had increased the electrification of far-flung Anatolian
towns. American engineers and businesspeople took part in various infrastructural
development processes. These developments were not considered a part of foreign
direct investments; however, they paved the way for further investments in the
1950s.
In the 1950s, the Turkish market was largely Americanized. Besides the significant
investments of GE, Squibb & Sons, Pfizer, Willys-Overland, and Minneapolis-
Moline in the Turkish market, Socony joined the oil drilling research and contributed
a more focused perspective to the operations. These companies brought not only their
products and services to Turkey but also technical know-how to be learned by
Turkish businesses and state initiatives. All of the American capital pouring into the
Turkish market in cash, kind, and services manufactured significant consent in
Turkey. Providing know-how allowed the growth of many Turkish brands in
different sectors in this period, such as Sabancı’s textile giant BOSSA, Eczacıbaşı’s
partnership with Pfizer, and Koç Holding’s enlargement in multiple sectors with
General Electric, Mobil Oil, and Ford.604
Deserving credit for this process, the American advisors, diplomats, academics, and
mission chiefs indeed played crucial roles in Turkish economic policies, initiatives,
and thoughts in the 1950s. They often had business backgrounds and their
evaluations of Turkey’s needs and challenges since the late 1940s had helped bring
604 Buğra, 87.
228
American businesses to the Turkish market and American economic thought to the
Turkish decision-makers. Thornburg’s country study had urged Turkey to liberalize
the economy and attract foreign investment for development. The reports by Dorr
and Barker suggested the same. These actors identified priority areas for investment
and guided American firms into these unknown lands while funding them through
the Marshall Plan. Their mediating roles among Turkish decision-makers, business
circles, and American MNCs proved invaluable in the years to come. Having
experience in the oil industry, McGhee played a particularly crucial part in the
enactment of the petroleum law of 1954 and Socony’s expansion in Turkey. A
similar comment can be made regarding Randall’s position in the eyes of the Turkish
decision-makers and business class. His first visit to Turkey in the summer of 1953
paved the way for an improved foreign investment bill in 1954. His second trip to
Turkey in 1956 and further meetings with Turkish leaders in the U.S. in the late
1960s helped him maintain a strong influence. Dewey had begun by working as a
lobbyist to attract American investors to the Turkish market; later, he reshaped his
mission to entail finding aid and credit to solve Turkey’s economic problems. Bates
primarily focused on philanthropic work with the training of future managers of
Turkey by teaching at the first American-type business school established in
İstanbul. Such an integrated economic approach kept American businesses and their
products in Turkey,605 as my father confirmed from his memories of the 1960s. To
conclude with his words, indeed, “these Americans” were everywhere in Turkey.
605 Richard D. Robinson, Cases in International Business (New York: Rinehart and Winston, 1962),
65.
229
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APPENDICES
Appendix I: Turkey’s Import and Export Rates in the Late 1940s and 1950s
243
Appendix II: Economic Cooperation Agreement Between the United States of
America and the Republic of Turkey
244
245
246
247
248
249
250
251
252
253
254
255
256
Appendix III: “Yabancı Sermayeyi Teşvik Kanunu” (“Law for the Encouragement of
Foreign Investment”) Enacted on January 18, 1954
257
258
259
Appendix IV: Effective Foreign/Total Tax Rates for Locally Incorporated
Subsidiaries of U.S. Corporations
260
Appendix V: Countries With Which ICA Investment Guaranty Agreements Were in
Force, December 31, 1958
261
Appendix VI: List of Foreign Investors by 1958
262
263
264
Appendix VII: List of U.S. Companies Operating in Turkey by 1958
265
Appendix VIII: Member Firms
266
267
Appendix IX: An Advertisement Published in the Wall Street Journal about
Minneapolis-Moline’s Operations in Turkey
268
Appendix X: List of Guests who Attended the Meeting with Menderes in His Trip to
the U.S.
269
Appendix XI: List of American MNCs Investing in Turkey Between 1950 and 1960
COMPANIES YEAR PLANNED INVESTMENT AMOUNT ($ or TL) RELEVANT LAW CODE SUCCESSOR
International Drilling and Water Co Inc. 1952 $100,000 5821
Sokoni-Vakum Petrol Anonim Ortaklığı 1952 15,000,000 TL ($5,319,148) 6326 ExxonMobil
B.F. Goodrich Otomobil Lastik Fabrikası 1954 $1,405,000 5821 Michelin
Abbott Laboratuvarı İstanbul Şubesi 1954 $500,000 5821 Abbott Laboratories
İskenderun İç Dış Kolektif Şirketi - Moritz Schwarz 1954 $65,000 6224
Central America Trading Co. Firması 1954 $250,000 6224
Haywood Publishing Company 1954 $100,000 6224
Parsons Whittemore - Kağıt Fabrikası 1954 $25,000 6224
American Turkish Factory Enterprises Inc. - Akümülatör
Fabrikası
1954 $226,385 + $60,000 (1956) + $100,000 (1958) 6224
Fertilizer Cooperation of America - Erol Beker 1954 $850,000 5821/6224
The General Tire and Rubber Co. 1954 5,000,000 TL ($1,773,049) 6224 Continental
William Drazin - Jorj D. Papajorjiyudur (Pen Factory) 1954 $21,000 6224
Ralph M. Parsons Company - İstanbul Tabii Gaz Limited
Şirketi
1954 $85,714 6224
Murat Dilber ve Edip Saban - Parutek Trading Agency 1954 $1,250,000 6224
British-American and Eastern Co. Inc. İle David B. Carmel -
Natan S. Eskenazi
1954 $1,200,000 6224
Libka Ticaret Türk Anonim Şirketi - Reynolds Pen Company 1955 $49,000 6224
Chas Pfizer Co. Inc. -Orta Şark Ticaret T.A. Şirketi 1955 810,000 TL ($287,234) + $70,000 (1959) 6224 Pfizer
James V. Christie - Panayot Nova 1955 $40,000 6224
Minneapolis-Moline 1955 $2,142,857 6224 Türk Traktör
Türkiye Garanti Bankası Anonim Şirketi - John T. Beatty 1955 $80,000 6224
The American Express Company Inc. 1955 $10,000 + $25,000 6224
ASA.S.Cook.Co. Division Peerless Precision Products Co.
Manufacturers of Machinery - Şükrü Kerimzade
1955 $111,020 6224
Türkiye Garanti Bankası AŞ - Universal Match Cooperation -
Mr. Frank J. Prince
1955 $75,000 6224
David Hyde Ekwall 1955 $45,000 6224
270
Remington Rand Inc. 1955 $300,000 6224 Koçsistem
Tatko Türk Anonim Şirketi ve Goodyear Tire and Rubber 1955 Unknown 6224
Başarı İnşaat Limited Şirketi ve X-Ray Engineering Company 1955 $7,500 6224
Centflor Manufacturing Co. - Şakir-Mehmet Eti Kardeşler
Kolektif Şirketi
1955 $30,000 6224
Federal Motor Truck Company 1955 8,000,000 TL ($2,836,879) 6224
Newmont Mining Corporation 1955 $300,000 + $50,000 6224 Koza Altın
Willys Motors Inc - Verdi Limited Şirketi 1955 $500,000 6224
Paksoy Kardeşler ve Roger F. Dunn ve Frnak D. St. Hilaire 1956 1,120,000 TL ($194,782) 6224
The American Tobacco Company of the Orient Inc. 1956 $1,000,000 6224
Republic Chemical Corporation - Akiş Pamuk İplik Dokuma ve
Yağ Sanayii İşletmeleri T.A.O.
1956 $3,497,557 6224
William Blair Company Bankası - Dr. Cudi Birtek ve Naşit Fesçi 1956 $10,000,000 6224
Huxley-Westfried Corporation ve Fleischman Burd Co. Inc -
Sadık Tuna
1956 $50,000 + $50,000 6224
American Turkish Construction and Development Company
Inc.
1956 $300,000 6224
Westinghouse Air Brake Türk Anonim Şirketi 1956 $497,318 6224
E. R. Squibb Sons İlaçlar Anonim Şirketi ve Olin Mathieson
Chemical Corporation
1956 1,492,500 TL ($259,478) + 497,500 TL ($86,521) (1957) 5583/6224 Bristol-Myers Squibb
General Elektrik Türk Anonim Ortaklığı ve International
General Electric Co.
1956 $321,428 + $110,000 (1957) 6224 General Electric
British-American and Eastern Co. Inc. - Tamek 1957 600,000 TL ($104,347) 6224 TAMEK and Pepsi Co.
Koç Ticaret TAŞ ve W. A. Sheaffer Pen Company 1957 Unknown 6224
Philco-Amcor Co. 1957 $200,000 6224
Private Enterprise Inc. 1958 $6,200 6224
Motorlu Vasıtalar Bonmarşesi Türk Anonim Şirketi ve Century
Tire and Rubber Co. Inc.
1958 $100,000 6224
Gökyiğit Cam Eşya Fabrikası, Ahmet ve Ali Ramazanoğullar
Bakır Levha Kolektif Şirketi ve Dürüst İş Türk Ticaret -
General Glass Equipment Co.
1959 $1,479,370 6224
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