EMERGENCE OF THE ECONOMY 1923 - 1950
When the Turkish Republic was declared in 1923, not only did the country have a backward social structure, it was also devastated by continuing wars. The winner of the War of Independence, the emerging nation was surrounded by an oposing and hostile international settings. As an open market of the Western Powers, the Ottoman Empire was exploited by them for long years.
The low per capital income, which was roughly $240-260 at 1975 prices in the early years of the Republic, reveals the poverty of the nation. Although we do not possess reliable figures for 1923, the rough estimates for 1927 suggestthat the share of agriculture in the GNP was around 37 per cent.
Agriculture reflected the primitive social and economic conditions of the country. Although agricultural land was partly owned by big landowners, the small peasant-farmers owneb a great proportion of arable land. Both big landowners and small farmers (peasants) were impoverished under a heavy tax burden; the high rents paid by some peasants depressed their position further. Neither group was in a position to modernize agriculture and accumulate capital.
Big and medium sized industry had not been set up in Turkey ;
so the import of industrial goods had to be paid for partly by the export of agricultıral products and partly by foreign borrowing.
Numerous causes prevented the accumulation of capital and industrialization in the country. Among them was the low level of per capita income, which did not allow for a reasonable level of saving. Another cause was the low level of per capita national income coupled with the disintegration of markets, thus impeding the rise of demand for industrial products to a reasonable level. the infrastructure of the country was insufficient for the setting up of a coordinated industrial structure and, as almost all industrial commodities were imported from western countries, the establishment of a national industry was against the interests of foreign countries as well as their representatives in business and in public administration in Turkey.
In addition to the adverse conditions mentioned above, cultural and social traditions did not encourage Turks to enter business and industry. Domestic and international trade was carried on mostly by non-Muslims. Small industry, which was mostly owned and managed by non-Muslims, was in a state of great confusion due to the continuing wars and the emigration of non-Muslims.
The financial resources and administrative capacity of the State were very limited.
According to the first census made in 1927, the population amounted to 13.6 million citizens, of which a great proportion were peasant-farmers, some 75 per cent of the whole population. The 1927 census showed the rate of illiteracy to be about 90per cent of the whole population; only some 4 per cent of all the female population could write and read. The total number of students at all levels was 350,000.
The Treaty of Lausanne, signed in 1924 between the new Turkish Republic and the Western Powers, brought to a close the hostilities between Greece and Turkey. ıt had several far-reaching economic consequences for Turkey, three of which were particularly important.
