This paper analyzes the institutional failure of Turkish Tobacco Bank project existed between 1938 and 1961. Tobacco, the most important export crop of Turkey, was taken under state monopoly by special legislations in the 1930s. Contrary to the promises of the legislations for a heavily regulated and smoothly functioning market orchestrated by the Monopoly (TEKEL), Turkish tobacco market was an arena of “eternal anarchy and chaos,” as described by many primary historical sources. The “chaotic” atmosphere was fed by struggling social, political and economical policies of market actors – tobacco producers, merchants, experts and the Monopoly - around several conflicts such as prices, grading, warehousing conditions and credit system. As a radical and absolute solution to the unending problems of tobacco market, an institutional reform package was proposed by tobacco experts in the war years. According to the original package, producers would have been organized under cooperatives, sales executed in exchange markets, and both the cooperatives and exchange markets established by the main regulatory institution, Turkish Tobacco Bank. Despite major revisions in the reform package during the post-war years, the idea to establish a “regulatory institution” – apart from the Monopoly - gained support among Turkish governing elites. Between 1946 and 1957, a compulsory withholding was cut directly from tobacco producers to raise the necessary startup capital for the projected institution. The foundational law of the institution was enacted in 1950, and the targeted capital was raised by 1957, however the tobacco bank could never be established. In this paper, I examine this interesting, informative and challenging history of the institutional failure of Turkish Tobacco Bank depending on the primary historical sources such as State Archives, tobacco journals, local newspapers and personal archives of the Monopoly experts. Revealing a direct and hidden taxation practice in tobacco market, the examination also provokes to question the prevailing arguments of modern Turkish historiography about the lack of taxation in the agricultural sector during the Republican era. I discuss the challenging historiographic insights hinted by the not-well known story of Turkish Tobacco Bank, and show that the direct and hidden taxation practice had a decisive impact on the discourses, demands and policies of different market actors.