PSIR 426 The Foundation of the Turkish Republic

PSIR 426 The Foundation of the Turkish Republic W 1&2

The Downfall of the Ottoman Empire � The Ottoman Empire started experiencing serious economic and politico-military problems during the 18 th and 19 th century. � Politico-military problems: It started losing massive territories in the prolonged wars with the European powers ( England, France, Italy, Greece, Russia etc) leading to massive territorial losses that included Hungary, Greece, the northern coasts of the Black Sea, Crimea and other regions.

The Downfall of the Ottoman Empire � This, in turn, encouraged indigenous nationalist forces to rise up and put an end to Ottoman rule over their territories. By the 19 th century the Ottoman state faced serious challenge from every corner of the Empire: Serbia, Egypt, North Africa, Eastern Anatolia, and elsewhere. This contraction of the Empire exacerbated the crises in the Ottoman economy and polity and further contributed to its decline.

The Downfall of the Ottoman Empire � Economic Problems: Another reason that contributed to the decline of the Ottoman Empire was its economic relations with the Western Europe that consequently began to have adverse effects on local, small-scale Ottoman industry. The Empire’s trade relations with Europe began to intensify in the 1830 s. � At the end of 1830 s, the imports made from England France had doubled. This tendency had been entrenched with the signing of the Anglo-Turkish Commercial Convention of 1838 which abolished the state’s protective tariffs and monopolies and extended extra-territorial privileges to all foreign traders.

The Downfall of the Ottoman Empire � These developments marked the end of industrialization via the manufacturing sector in Ottoman Turkey. First the cotton, then silk industry faced a crisis. The Empire which lost its traditional industry also failed to establish a modern industry due to free trade policy. The Empire was instead relegated to raw materials production such as cotton, tobacco and raisins geared to the needs of the European-dominated world economy. � Thus, instead of using its agriculture as a base for internal industrial expansion, as to some extent been the case up to 19 th century, the Ottoman Empire, with its native industry destroyed, was transformed into an agrarian reserve of the expending European capitalist economies.

The Downfall of the Ottoman Empire � *Following the WWI which destroyed her, the Ottoman Empire signed the Armistice of Mudros on 31 October 1918. � The Entente Powers comprised a military alliance of France, Great Britain and Russia. With Britain's entry into the war, her colonies and dominions abroad variously offered military and financial assistance, and included Australia, Canada, India, New Zealand the Union of South Africa, Japan. Later joined Japan US and Italy. � Central Powers: another alliance of great powers: Austria-Hungary and Germany. By the close of the war the Central Powers had been extended to incorporate Bulgaria and Turkey.

The Downfall of the Ottoman Empire � Armistice of Mudros contained provisions such as the military occupation of the straits, control by the Entente of all railway and telegraph lines, demobilization and disarmament of the Ottoman troops, except for small contingents needed to keep law and order. � Soon, Turkey would be occupied by French, Italians, English and the Greeks according to article seven of the Armistice which stipulated that the Entente had the right to occupy the Ottoman Empire if it considered being under threat.

The Downfall of the Ottoman Empire � The sultan’s government signed the Treaty of Sevres on 10 August 1920. This treaty not only carved up Anatolia but the restrictions it placed on the new state made it into a virtual condominium of Britain, France and Italy.

The Downfall of the Ottoman Empire � In the meanwhile, a group of officers had started fleeing to Anatolia, where they would start to organise the War of Independence. � In April 1920, those members of the Ottoman national assembly who had escaped arrest by the allies in Istanbul had come together in Ankara and declared that national sovereignty was vested in them, the Grand National Assembly (GNA) of Turkey. Under the leadership of Mustafa Kemal, they determined to resist the dismemberment of any part of what now constitutes the Turkish Republic.

Social and Class Structure of Turkey in the late 19 th century � 1) Political power in the Empire rested in the throne of the central authority, the Padisah or Sultan, and his administrative deputy called the Sadrazam or Grand Vezir. Below this, and under the direct control of the Sultan, there existed the large and organized Ottoman Palace bureaucracy. It was this political structure that clashed- with nationalist forces led by the Kemalist petty bourgeoisie in 20 s.

Social and Class Structure of Turkey in the late 19 th century � 2)The dominant economic interests during this period were made up of a group of big landowners (the ayans, derebeys, and ağas) in the countryside and comprador capitalists (a native steward or agent for a foreign business-) of mainly minority ethnic origin in major urban centres. � In 1913, the traditional landed gentry (the ayans and derebeys), constituted 5% of the farmer families and owned 65% of the arable land. As a result of their vast economic power in the countryside, the big landowners were able to monopolize local political power and, through links with the rural Islamic clergy, imposed their social and cultural domination over the peasantry. Exploitation of peasantry became the principal source for accumulating wealth.

Social and Class Structure of Turkey in the late 19 th century � 3) Largely involved in import-export trade and domestic marketing tied to European imports, the minority commercial interestscomprised of Greek and Armenian merchants and primarily concentrated in large urban centres such as Istanbul and Izmir- made up the basis of the Empire’s comprador bourgeoisie.

Social and Class Structure of Turkey in the late 19 th century � � � 4) The dependent structure of the Ottoman economy during the 19 th century, coupled with its tributary position in the Mediterranean economy encompassing the period since the early 16 th century, did not permit the development of large-scale local industry. Consequently, there never developed a full-blown class of industrialists that would resemble the classical European national industrial bourgeoisie. While a limited expansion did take place in small-scale manufacturing and processing industries, it was largely the minority comprador bourgeoisie that, in addition to its traditional place in commerce, extended into the ownership and control of these industries and prospered under the terms of the Empire’s dependent economy. The small numbers of ethnic Turkish firms however, had interests that were diametrically opposed to those of the imperialist and minority bourgeoisies. Although weak in numbers and economic strength, the political aspirations of Turkish industrialists coincided with and took expression in the leadership of the Nationalist forces as their economic position began to deteriorate with the further expansion into industry and trade of the metropolitan and minority bourgeoisies. It was this deterioration in the position of the Turkish national bourgeoisie that later drove its members on the side of the Nationalist leadership in the struggle against the victorious powers of the WWI.

Social and Class Structure of Turkey in the late 19 th century � � 6) Given the limited size and restricted nature of both national and foreign-owned local industry, the size of the working class was also small. Moreover, the ethnic composition of the working class was highly fragmented and did not allow for the development of working-class unity. This split within the working class reached its peak during the liberation struggles when non-Turkish workers identified with and joined the ranks of their own ethnic groups and fought against the forces of Turkish national liberation. Isolated as they were in Istanbul and Izmir- the main centres of industry which came under the control of foreign occupation forces during the liberation struggle- Turkish workers were cut off from Anatolia and could not contribute directly to or affect the outcome of the national liberation struggle. Thus several factors- mainly the numerical inferiority, ethnic heterogeneity, and geographical isolation of the Ottoman working class- held back the workers from direct participation in the National Front, which otherwise might well have influenced the direction and outcome of the liberation struggle.

Social and Class Structure of Turkey in the late 19 th century � � 7) In the Turkish countryside, the majority of the rural population consisted of small-holding peasants. Dispersed throughout the Anatolian interior and engaged in subsistence agriculture, the Turkish peasantry was under the direct control of big landowners who exercised economic, political, and cultural domination over them through links with the rural Islamic clergy. This disparity in wealth and economic position did not, however, lead to the radicalization of the small-holding peasantry; neither did it ensure its voluntary participation in the national liberation struggle. Although objectively occupying a revolutionary position in terms of its class interests, the Turkish peasantry, given the enormous economic and political power and socio-religious control exercised over them by the dominant eşraf, was unable to develop revolutionary class consciousness and transform the agrarian structure through united class action.

Social and Class Structure of Turkey in the late 19 th century � � 8) Finally, in addition to the small-holding peasantry, rural Turkey also contained a class of small merchants and local artisans, who, together with doctors, lawyers, teachers and locally based government officials, made up the core of the Anatolian petty bourgeoisie. (‘Petty bourgeoisie’ is defined here as those who own and/or control means of production, but employ no wage labourers. The self-employed (or small shopkeepers, artisans, and landed peasants) have traditionally been viewed as constituting the core of this class). The petty bourgeoisie is an intermediate class in that it is caught between the dominant ruling class(es) and the working class, with both of which it has certain shared characteristics. Like the big bourgeoisie and landlords, it owns or controls means of production, but, like the working class, it is directly engaged in the production process, hence it provides its own labour power. Thus, it is neither an exploiting class nor an exploited one. It was in this intermediate group that the Kemalist forces first found their crucial support in laying the basis of their national campaign among the masses of the Anatolian peasantry. Dominated and controlled by imperialism and the minority bourgeoisie in the urban centres and oppressed under the rule of the ayan, the derebey and the esraf in the countryside, the Ottoman petty bourgeoisie was highly fragmented, weak and lacked an organizational base to consolidate its power to serve its own class interests in national politics.

Social and Class Structure of Turkey in the late 19 th century � Among the different strata of this class, it was the sections associated with the various bureaucratic organisations of the state, above all, junior army officers and nationalist intellectuals and journalists, who emerged as the top leadership of the Kemalist movement. � *While the big landowners and the clergy had collaborated with the Palace and imperialist occupation forces in their areas, the compradors in the cities were demanding the protection of big states such as France, England or Germany.

Social and Class Structure of Turkey in the late 19 th century *The Kemalist leadership hoped to find its mass base in the Anatolian peasantry. Yet, the peasants had a distrust of and passive resistance to the Nationalist forces and they refused to collaborate. Their deep-seated religious beliefs led them to view their interests more closely with those of landlords and Islamic clergy (din adamlari). � The two major classes of the day; Anatolian eşraf (landlord - clergy coalition) and the merchant capital in the cities had collaborated with the Palace and imperialist occupation forces and demanded the protection of big states such as France, England or Germany. Yet, the eşraf would soon change their position in response to attacks by the Greeks in the Aegean region and become actively involved in the Liberation Struggle. �

Social and Class Structure of Turkey in the late 19 th century *Consequently, it became clear that it was only through the intermediary of the landlords and the Islamic clergy that the peasantry would be involved in the national struggle. The alliance between the National Leadership and the eşraf was first affirmed at the Erzurum Congress on July 23, 1919, and continued with the creation of the GNA in 1920. It was only after the consolidation of this alliance in the GNA that the National Front began to receive the gradual support of the Turkish peasantry. � This alliance would have long-term consequences that would mark the Republican Turkey. Due to this alliance, the feudal structure that prevailed in the Eastern part of Turkey would remain intact, and although there have been various attempts, a land reform that would change the property relations could not be implemented. �

The foundation of the new Republic � � � The verdict of the battlefield was formalised by a peace treaty signed at Lausanne (Switzerland) in 23 July 1923. The Treaty of Lausanne (signed between the British Empire, France, Italy, Japan, Greece, Romania and the Serb-Croat-Slovene state on one part and Turkey, on the other part) replaced the Treaty of Sevres that partitioned the Ottoman Empire (1920). The treaty led to international recognition of the sovereignty of the new Republic of Turkey as the successor state of the defunct Ottoman Empire. Turkey recovered full sovereign rights over all its territory. No reparations were exacted. In return, Turkey renounced all claims on former Ottoman territories outside its new boundaries and undertook to guarantee the rights of its minorities. A separate agreement between Greece and Turkey provided for the compulsory exchange of minorities. .

The foundation of the new Republic � Even before the signing of Treaty of Lausanne, the victories on the battlefield swept the Kemalists into a position of unchallengeable national authority. In November 1922 the Sultanate was abolished and in October 1923, Turkey was formally declared a Republic. The new order was confirmed in the republican constitution, adopted by the Grand National Assembly on 20 April 1924.

Economic challenges faced by the new Republic � � The Republic faced a depressing legacy from the past. The Turkey of 1923 was an extremely underdeveloped country, saddled with inherited debts and the destructive effects of continuous wars between 1912 and 1922. The economy was predominantly based on the agriculture sector, yet this sector was underdeveloped due to a number of reasons. The availability of a large and cheap labour pool minimized the introduction of new production techniques. The expansion and improvement in agricultural production was hindered by the rural tax system (tithe) which had an overburdening effect on the small- holding peasantry and the landlords’ role as usurer that kept the peasants in perpetual debt-bondage.

Economic challenges faced by the new Republic The industrial sector was also extremely weak. There was an expansion of industrial activity during the war but recession followed defeat. The economy was uncoordinated and there was no sense of a national market. � The communications between the cereal producing regions of Anatolia and the consuming cities were so primitive that foreign grain was cheaper from grain from Anatolia. This created an odd situation which the cost of transporting wheat from central Anatolia to Istanbul was more expensive than the cost of transporting wheat from New York to Istanbul. Hence it seemed more rational to feed the population of Istanbul from Iowa than Ankara and Konya and let the Anatolian peasant engage in subsistence farming. �

Economic challenges faced by the new Republic � The founders of the Republic were also left to cope with the damaging effects on the economy of the almost continuous wars between 1912 and 1922. Although there had been relatively little industry to destroy, damage in the cities was severe, it was reckoned in 1921 that one-third of İstanbul had been burnt down during the war and the city of İzmir had been devastated by fire after the entry of the nationalist army in 1922. The railway system had also been damaged during the fighting.

Economic Policies of the New Kemalist State � � � Within these circumstances, the Kemalist policy makers tried to implement a policy to encourage private industry. In this period, the state’s role in the economy began to expand as it entered various branches of local industry to develop the infrastructure, establish banks, and regulate commerce. The state acquired full ownership in sugar, glass, leather, cotton yarn, textile industry, petroleum, explosives, paper, salt, cement industries, railways, major seaport facilities in İstanbul, İzmir, Trabzon and Mersin and a number of enterprises in mining and extractive industries.

Economic Policies of the New Kemalist State � � The state established several major industrial and commercial banks such as the İş Bankası (Business Bank), Sanayi ve Maadin Bankası (The Industrial and Mineral Bank) and Ziraat Bankası (The Agricultural Bank) and passed many special laws granting major concessions to private capital. İş Bankası thus became one of the very first statepromoted ‘private’ enterprises set up as a model for future capitalist development in Turkey. The Bank has been instrumental in encouraging the expansion of native industry and played a key role in the financing of many businesses, like the Alpullu Sugar Plant and the Paşabahce Glass and Bottle Factory.

Economic Policies of the New Kemalist State � The İzmir Economic Congress, which convened from February 17 to March 4, 1923, marks the beginning of the active role of the new Kemalist state in the formulation of economic policy- a policy which was to guide the post-independence economic development of Turkey along a capitalist path. � The Congress has become an economic forum where the representatives of the industrialists, the merchants, farmers and workers came together and discussed about the potential economic policy problems that the new regime might confront. The Congress also aimed to give a message to the Western European countries that a transition from Liberalism to Communism is out of question.

Economic Policies of the New Kemalist State � The Congress was carefully controlled and directed by the Turkish compradors (a native steward or agent for a foreign business) of Istanbul and the big landowners of Anatolia. The open collaboration of large landowners with other dominant classes represented there was instrumental in suppressing the interests of workers and peasants and in safeguarding their firm hold over land, blocking any attempts to open the question of land reform.

Economic Policies of the New Kemalist State � Decisions were taken on a number of issues in the Congress: monopolization would not be permitted, foreign capital -as long as it is respectful to national sovereignity- would not be objected, customs protection would be brought, farmers, industrialists and merchants would be provided credits and the workers rights would be recognised. The Congress ended with the determination to invigorate private entrepreurship by credits, education, transportation, infrastructure and technical services being provided by the government.

Economic Policies of the New Kemalist State � Hence state intervention in favour of local capitalists accelerated throughout the late 1920 s in line with the Kemalist leadership’s hope of building up the economic base of the nation through state encouragement of local accumulation by the local bourgeoisie.

Economic Policies of the New Kemalist State � In addition to the direct role played by various state banks and credit institutions in encouraging the expansion of national industry, many special laws were passed by the Grand National Assembly granting major concessions to private capital. Law for the Encouragement of Industry (Teşvik i Sanayi Kanunu) was passed in 1927. � The Law provided tax exemptions for new and expanding industrial firms. Enterprises benefiting from this law were to be granted up to ten hectares of land free by the government, were to be exempted from taxes on land immovable property and profits, as well as import duties on machinery and construction materials which were not produced in Turkey.

The Role of the State in the Agrarian Sector � Parallel to the process of development and expansion of native industry, a number of important steps were also taken by the state in this period to accelerate the process of capital accumulation in the countryside. Among these were the abolition of the Aşar (tithe tax) in 1925. and the distribution of land to landless peasants through laws passed in 1927 and 1929. � As a result, by 1934 a total of 17, 785, 787 acres of land had been distributed to those without land. However, all this land was state-owned public land, as the state was as yet reluctant to confront the powerful landlords by expropriating ‘their’ land.

The Role of the State in the Agrarian Sector � Although this process has contributed in the private proprietorship of the land becoming widespread, it has not led to big landownership. Small-scale and middle-scale production units are predominant in this era. Although it is possible to depict production for market in the regions having access to transportation and especially in industrial plants, subsistence farming is predominant in Turkey in 1920 s.

The Role of the State in the Agrarian Sector � Although a thorough transformation of the agrarian structure was not carried out during these initial years the state did attempt to increase production by establishing experimental stations, agricultural schools, and modern demonstration (state-owned) farms. � Improved seed was provided and instructors were sent to villages to show new ways of cultivation. Compulsory agricultural training was instituted for soldiers during their military service. � This was a ‘productionist’, rather than ‘redistributionist’ strategy.

The Role of the State in the Agrarian Sector � The landlords’ control over the mechanism of state aid to the agricultural sector did, nevertheless, expand the growth of output in some sectors of the rural economy. The production rate increased by 58 % in agriculture. � And while this growth was sufficient to divert the state’s attention to the other areas of the national economy, the increased revenues accruing to the landlords further strengthened their material position in relation to other propertied classes such that the possibility of a genuine agrarian reform was to become very remote after the 1920 s. In the meanwhile, the economic conditions of the peasants would further deteriorate by the sharp decrease in production prices as a result of the 1929 Depression.

The Obstacles to National Industrialisation Despite the extensive efforts of the state to aid the development of Turkish industry and agriculture during the 1920 s, capitalist development failed to achieve the results envisaged by the state. There were a number of obstacles to the industrialization of the country during this period. Four of them are worth to mention: � 1) the resistance of landlords in areas where their interests were threatened by industrial expansion; � 2) the failure of the expected transformation of Turkish compradors into industrial capitalists; � 3) the unfavourable terms of the Treaty of Lausanne � 4) the 1929 World Depression.

Internal reaction � Internal reaction, led by the landlord-clergy coalition, viewed the industrialization efforts of the state as part of the process of modernization which challenged their control over the countryside. � Resistance against these efforts succeeded in blocking the expansion of indigenous industry into the rural interior, leaving the control over vast sections of Anatolia exclusively in the hands of big landowners and the eşraf.

The failure of the expected transformation of Turkish compradors into industrial capitalists � 2 -The second major obstacle to the growth and expansion of local industry was the reluctance of the comprador bourgeoisie to expand into the industrial sector which the state consistently encouraged through credit, grants and numerous important concessions. � Rather than employ the loans, credits, supplies etc. provided by the state to expand production, most of them simply failed to take advantage of these concessions. The profits made by the big merchants were generally employed in usury and commerce, not industrial production.

Treaty of Lausanne 3 -The third major obstacle to the development of industry was Turkey’s adherence to the provisions of the Treaty of Lausanne for a period of five years (1924 -1929) during which the country continued to recognise the economic concessions granted to foreign firms by the Ottoman Empire prior to 1914. It was further agreed that Turkey would keep her customs duties to the level specified by the Ottoman customs tariff of September 1, 1916 which meant that the state was unable to formulate a customs policy until 1929. � *Another article of the Treaty of Lausanne necessitated the Turkish government paying a portion of the Ottoman State’s debts. Turkey was expected to pay the two third of the debt. The first installment of this payment which was 15 million golden liras led Turkey to a crisis in money and foreign exchange. �

Protectionist Statist Industrialization (19301945) � 1930 s Turkey faced its most serious crisis since the establishment of the Republic. It was a crisis which had both economic and political dimensions, and domestic as well as international roots. The 1929 Depression constituted the economic dimension of the crisis, which the government tried to overcome by resorting to statist-protectionist measures.

Politics of the New Republic � These were the years which the Republican People’s Party tried to define its ideological stance in terms of the ‘Six Arrows’ adopted at its 1931 Congress. The six arrows of the RPP are republicanism, nationalism, populism, etatism, secularism and revolutionism/reformism. The six arrows were later incorporated into the Turkish Constitution in 1937.

Six Arrows of RPP � *Secularism and nationalism had been among the distinctive characteristics of Young Turk ideology at least since 1913. During the 1930 s both were carried to extremes, secularism being interpreted not only as a separation of state and religion, but as the removal of religion, from public life and the establishment of complete state control over remaining religious institutions. � An extreme form of nationalism, with the attendant creation of historical myths, was used as the prime instrument in building of a new national identity, and as such was intended to take the place of religion in many respects.

Six Arrows of RPP Republicanism had been a basic principle since 1923. It basically made an emphasis on Turkey being a Republic rather than a sultanate.

Six Arrows of RPP � Populism meant the notion, first emphasized during the First World War, of national solidarity and putting the interests of the whole nation before those of any group or class. � In a negative sense it entailed a denial of class interests (according to Kemalism, Turkey did not have classes in the European sense) and a prohibition of political activity based on class (and thus of all socialist or communist activity).

Six Arrows of RPP � The meaning of ‘Revolutionism/ Reformism’ was disputed in the party, the moderates interpreting it as reformism, the radicals as revolutionism. The radical interpretation became official in the 1930 s though the liberals continued to oppose this definition, maintaining that the state was committed to only reform.

Six Arrows of RPP � � Etatism (statism), on the other hand, was a new concept and aroused immediate controversy. The debate between the RPP and the opposition party created by the regime in 1930, the Liberal Republican Party, was almost exclusively about economic policy, with the opposition advocating liberalism and the RPP under İnönü demanding a greater role for the state in the economy. When ‘statism’ was officially adopted as the new economic policy and one of the pillars of Kemalist ideology, it was never clearly defined. It was certainly not a form of socialism: private ownership remained the basis of economic life. Rather, it meant that the state took over responsibility for creating and running industries for which the private sector could not accumulate the necessary capital.

Political Opposition � The first attempt of forming an opposition party had come in 1924 and the Progressive Republican Party (Terakkiperver Cumhuriyet Fırkası) was established. It was led by Kazım Karabekir. � On domestic policy, the party supported a liberal democracy, but was blamed by the government for being the vehicle of Islamists in attempting subvert the newly-established government. � After Mustafa Kemal blamed Karabekir of the Sheikh Said Rebellion and the assassination attempt made on himself, the party was closed on 5 June 1925 by the government.

Political Opposition � In 1929, opposition became visible again. � This time, it received some encouragement from Mustafa Kemal himself and a Liberal party under the former Prime Minister Fethi Okyar appeared in 1930 which was named as the Liberal Republican Party (Serbest Terakki Fırkası). � The party advocated a liberal economic policy and encouragement of foreign investment, as well as freedom of speech.

Political Opposition � Yet, the “opposition” Free Party- which was intended as a device to promote constructive criticism and to discourage laxness in the Republican People’s Party- met the same fate as Progressive Republican Party after only a few months when it threatened to get out of hand in 1930. � In October 1930, local elections were held and the Liberal Republican Party managed to win 30 of the 512 councils. Even though this was only a small minority of the seats, the governing party was surprised and alarmed.

Political Opposition � Then, in an assembly debate directly after the elections, Fethi accused the governing party of large-scale irregularities and electoral fraud. This in turn led to fierce attacks on the FRP, in which it and its leader were accused of high treason. � Mustafa Kemal now told Fethi privately that he could no longer remain impartial in this atmosphere. Consequently, Okyar wrote to the Minister of the Interior on 17 November 1930, announcing that he had decided to dissolve the Liberal Republican Party.

Social Reforms � 1930 s witnessed a number of important reforms that mainly aimed at the secularization of the social life and giving Turkey “a more European image”. � Examples: Change in dress codes, adoption of Latin alphabet, women’s being given the right to elect and be elected

Repressive Labour Policies � � Yet, this period was not only marked with important reforms in the social sphere but repressive labour policies as well. The government’s main instrument for the control of working conditions was a Labour Law passed in 1936. The law provided for a maximum 48 -hour week, government inspection of working conditions, and restrictions on the employment of women and children under sixteen. A serious defect of the law, however, was that its provisions were not applicable to establishments with less than ten workers: this excluded around threequarters of the industrial workforce, who were still employed in small workshops. Moreover, trades unions, strikes and lockouts were banned, and labour disputes were to be settled by compulsory arbitration.

Economic policies of the 1930 s � In terms of the economic policies pursued these were the years which, the Turkish state took an even more direct role in the national economy to counteract the impact of the 1929 Depression. � The consolidation of the state’s role in the national industrialization process in the early 1930 s occurred after Turkey had gained control over its customs and established a protectionist customs policy designed to encourage domestic production.

Economic policies of the 1930 s � While immediate measures were taken to protect the Turkish economy in the early 1930 s, the long-term objective of the Kemalist leadership was to establish and manage state-owned enterprises that would form the basis of the nation’s industrial economy.

Economic policies of the 1930 s � In line with the state’s plans for importsubstituting industrialization, a series of tariff laws were passed and put into effect in the early 1930 s in order to reduce the volume of imports and, with the increased export of agricultural goods, to reduce or eliminate the annual trade deficits.

Economic policies of the 1930 s � As a result of these policies, the proportion of industry within GNP raised from 10% in 1924 to 16. 5% in 1938. At the end of this era, Turkey started producing the “three whites”; flour, sugar and textile and the “three blacks”; coal, iron and fuel oil which led to savings in foreign currency.

Economic policies of the 1930 s � In the latter part of the decade significant changes began to take place in the structure of Turkish imports. There was a decline in the level of the consumption goods imported whereas the level of capital goods started to increase. Consequently, Turkey had a trade surplus each year (with the exception of 1938) until the mid 1940 s. � This surplus helped increase the country’s foreign exchange earnings and with it the balance of payments improved considerably.

Economic Policies of the New Kemalist State � � The state putting a major stress on the rapid development of indigenous industry throughout the 1930 s led to a relative neglect of the agriculture. Consequently, the industrialization drive of this period significantly limited the development of Turkish agriculture, relative to industrial expansion. The agricultural sector, given the resistance throughout Anatolia of powerful landlords and eşraf, never became successfully incorporated into the Five Year Plans and remained on the periphery of the industrialization process. (yet the agricultural sector did make a substantial contribution to the national economy through increased production which was achieved through a limited degree of modernization of the productive forces).

Economic policies of the 1930 s � In this period, it is not possible to observe any legal arrangements related to land ownership. � In other words, the state’s moderate accomplishments in agriculture during this period were not achieved through the break-up of predominantly feudal relations in the countryside and the latter’s transformation into capitalist agriculture. What agricultural progress was made was in spite of the continuing overwhelming power and dominance of the landlord class.

Class structure � The class structure of Turkey had remained intact at the end of the decade. In this sense, there still was no industrial bourgeoisie worthy of the name, and the social relations in the countryside were left untouched. � The growing working class was brought under control through repressive legislation. The traditionally dominant classes; i. e the large landed interests and merchant capital, after being initially hit by the depression, had been reinstated through statism.

The Impact of the WWII: The Decline of Statist Industrialist � In policies (1939 -45) the course of World War II, İnönü succeeded in preserving his country’s neutrality, but was faced with the constant risk that either Germany or Russia might invade. After 1943, moreover, he came under strong pressures from the allies to join the war by opening a second front against Germany in South-east Europe.

The Impact of the WWII: The Decline of Statist Industrialist � In policies (1939 -45) the event, Turkey severed economic relations with Germany in August 1944 and formally declared war on Germany and Japan in 22 February 1945, but only to establish her status as a founder member of the United Nations. She thus emerged from the war without having fired a shot.

The Impact of the WWII: The Decline of Statist Industrialist policies (1939 -45) � � The eruption of the WWII in 1939 represents the decline of the statist policies in Turkey. Due to the war economy, the Second Five Year Industrial Development Plan could not be executed and the economic investments came to a halt. One million men had to join the army which led to a labour shortage in production units and about 50% decline in the wheat production. This era is marked by the continuous decline of the agricultural and industrial production (with the exception of 1942). The most crucial problem that marked the war years was the existence of the profiteers that benefited from the goods that went on to the black market. The producers and big merchants have made enormous gains in this way.

The Impact of the WWII: The Decline of Statist Industrialist policies (1939 -45) � Yet these years were not only marked by profiteering but effective state intervention that aimed to tackle these unjust gains as well. Soil Produce Tax (Toprak Mahsülleri Vergisi), Capital Tax (Varlık Vergisi) and Law for Peasants to Acquire Land (Çiftçiyi Topraklandırma Kanunu) can be given as examples to these initiatives on the part of the CHP government. Although, it should be added, they could not be implemented due to the opposition of dominant forces within the society.

RPP’s interventions in the economic field � Soil Produce Tax which was passed in 1944 mainly targeted the agricultural profits which tended to rise in the war years. 10% of the gross production would be collected. This tax has been abolished in 1946.

RPP’s interventions in the economic field � The Capital Tax has been passed in November 1942. In theory, it had the laudable aim of soaking up part of the windfall profits gained by speculators in the inflationary wartime conditions, and was to be applied on a non-repetitive basis to wealthy farmers, businessmen, property owners and corporations. � In practice, assessments were made according to supposed wealth and ability to pay by local committees who were likely to use the most arbitrary criteria. It was to be collected only once and there was no way to object it. Those who could not pay it would be forced to go to labour camps in Aşkale, in Eastern Anatolia.

RPP’s interventions in the economic field � The 70% of those obliged to pay the Capital Tax was from Istanbul, mostly from the minority groups. This led to the Muslim. Turkish businessmen appropriating a part of the wealth of the minorities. Around 1400 people who could not pay the required amount were forced to go to the camps in Aşkale.

RPP’s interventions in the economic field � The Capital Tax was withdrawn in March 1944, under the influence of criticism from Britain and the United States, but by then irreparable damage to the confidence of the minorities in the Turkish state had been done. � Hence the Muslim and Non- Muslim families who was forced to pay this tax started to organise against the Republican People’s Party which eventually led to its being replaced by the newly established Democrat Party.

RPP’s interventions in the economic field � Besides the Capital Tax and Soil Produce Tax which targeted war profits, another development which troubled the powerful landlords was the Land Reform Bill which was introduced by the Republican People’s Party in 1945. In the January of that year the government submitted the Çiftçiyi Topraklandırma ve Çiftçi Ocakları Kurma Kanunu (Law for Peasants to Acquire Land the Formation of Peasant Cooperatives) to Parliament. � Debate on the bill lasted five months and by the time it was finally passed and became law, it had been substantially weakened and had lost its revolutionary character.

RPP’s interventions in the economic field � Nevertheless, even its final form, the bill retained some progressive aspects, and continued to pose a threat to the big landlords. The basic aims of the law, as stated in the opening paragraph of the final draft:

RPP’s interventions in the economic field � was to provide land means for peasants with none or too little. The method was to grant land to such peasants, together with twenty-year, interestfree loans for development , and other material help. � The land was to come from unused state lands, municipal and other publicly owned land, reclaimed land, land of unknown ownership, and land expropriated from private individuals. � For the last-named category, all landed property in excess of 500 dönüm (123. 5 acres) would be nationalized. Compensation would be paid on a sliding scale, the greater area held, the lower the rate. It would be paid in instalments, over twenty years.

RPP’s interventions in the economic field � This last provision (related to the expropriation of all landed property in excess of 500 donum) posed great threat to the landlords. The passage of the law, even in its severely distorted form, raised the struggle between the landlords (with their allies, the rural and urban commercial interests and local Islamic clergy) and the Kemalist Bureucracy to its highest level since the early 1920 s.

RPP’s interventions in the economic field � The confrontation between the two contending groups ended in favour of the landlords who further weakened the Land Reform Bill. Thus, at the close of the 1940 s, the nationalization limit was raised from 500 to 5000 dönüms. The distribution began in 1947 with state lands and pious foundations, and by 1950 only a few thousand dönüms had been distributed.

RPP’s interventions in the economic field � As a result, in this process, the CHP not only antagonized wealthy groups due to the laws issued during war time but it also antagonized workers through practices such as labour obligation and the restriction of the wages. � In short, at the end of 1945, CHP had lost the legitimacy it enjoyed due to the economic and political progress of the first fifteen years of the Republic. At the end of the war, there was an expectation of change on the part of all the classes in Turkey.