INTL 410/ECIR 410

Dr. Caner BAKIR

1
 Boratav, K. 2007. Türkiye İktisat Tarihi 1908-2005,
Ankara: İmge Kitabevi, chs. 1-2-3.

 Pamuk, Ş. 2008. ‘‘Economic Change in Twentieth-

century Turkey: Is the Glass More Than Half Full?’’ in
Turkey in the Modern World, Reşat Kasaba (ed.),
Cambridge: Cambridge University Press.

2
1. Turkish economy during war years (1940-1945)
2. Integration with the world economy (1946-1953)
3. Stagnation and readjustment (1954-1961)
4. Review questions

3
• Turkey did not take active part in the WWII.
• The war conditions affected almost all segments of society.
• Yet the impact of the WWII was not distributed evenly and symmetrically.
• The losers were wide public segments. The active male population was called for military service. The production in agricultural
sector and industry declined. The development plans in the industrial sector were postponed.

Example: Wheat production declined almost 50 percent!

• It became extremely difficult to find even the basic daily consumption products, like sugar, bread and flour.

• During war years the industrial production declined 5.5 percent, agricultural production declined 7.1 percent, GNP
declined 6 percent annually.
• Main economic problems included scarcity arising from reduced production and imports, as well as increasing
inflation.
• Responses included wage and price controls , minimum export and maximum import price lists etc.;

4
• Yet, the war did not bring risks and poverty for all segments.
• Some parts of the economic interest groups made fortune due to their capacity to control “black economy”
(karaborsa in Turkish).
• Another group that significantly lost was the economic elites belonging to minorities;
• The government enacted a law imposing a high amount of tax, named Varlık Vergisi / wealth levy imposed on
fixed assets such as building and business owners (October 1942/abolished in 1944). Why?
• Varlık Vergisi targeted commercial bourgeoisie, who made fortune during War years. Yet, the implementation
was not just and reasonable.
• When it was abolished in 1944, 315 million lira was collected from about 114,000 entrepreneurs. About 1,400
people, who could not pay the tax levied upon them were sent to labor camp in Askale. The minorities were
adversely affected due to higher tariffs they faced.
• The revenue raised from Varlık Vergisi was composing the 3.5 percent of the national income or 38% of
government expenditures in 1943.
• In 1943-44, peasants and landowners faced Toprak Mahsulleri Vergisi /agricultural production tax (about 10% of
agricultural production taxed, TL167 million collected)

5
6
• The post-war era refers to a distinct period not only in economic but also in the political realm.

• In 1946, Turkey switched from single party regime dominated by CHP to that of multiparty

parliamentary system with the rise of Democrat Party.

• The regime transformation was not immune from the external dynamics because Turkey sided

with the US-lead capitalist economic and military system against the USSR-lead communist

block. The political transformation was mainly driven by external dynamics but supported by

domestic coalitions.

• Democrat Party entered into Turkish political system in 1946 and ruled the country between 1950

and 1960.

• From economic point of view, however, this decade should be divided into two sub-periods;

• Integration with the world economy (1946-1953)

• Stagnation and readjustment (1954-1960) 7

 On 21 July 1946, multiparty general election
was held.
 The electoral system was based on “open
ballots and secret vote count”. Hence the first
multiparty elections in Turkey were rendered
neither free, nor fair (Kalaycıoğlu, Turkish
Dynamics, pp. 74)
 4-minute scene from Demirkırat

8
 The elections of May 14, 1950 have been referred to as the “White
Revolution” in Turkish Politics (Kalaycıoğlu, Turkish Dynamics, pp. 75)
 The electoral system revised: Secret ballots and public vote count. Yet
majoritarian electoral formula led to skewed distribution of the seats in
favor of the front runner.
 DP scored landslide victory by obtaining 53 % of the votes

9
• Turkey was standing at a crossroad in terms of political economy choices in the immediate post-war
era.
• One sect of CHP, known as Kadrocular in Turkish, suggesting state-led economic development model. They were
against the foreign debt and swift liberalization.

• The other sect was pushing for economic liberalization and integration with the US-led international economic
system.

• The changing external dynamics and domestic power balance enabled the second sect to gain the
upper hand. Therefore, Turkey followed an intense liberalization and agriculture-cum-integration
into the world economy.
• In 1946, Turkish lira was devalued more than twofold vis-à-vis the US dollar.

• In 1951 and 1954 two laws were enacted to promote the foreign investments in Turkey.

• The import quotas were also abolished extensively.

• Turkey became a member of IMF, World Bank (1947), European Council (1949) and NATO (1952)

• Turkey supported the US in the Korean War and send troops to Korea.

10
 a group of co-
ed, public, boarding, normal schools that
were operational between 1940 and 1954
in Turkey. They were the cornerstones of
the rural development project. Village
Institutes are established to train
teachers for each village and send them
back to form new village schools.
 Because they were accused of Marxist
indoctrination, the Democrat party
government closed them and
transformed them into regular teacher-
training schools in 1955.

11
• The first half of Adnan Menderes governments
characterized by robust economic growth
(about 10 percent per annum).
• The main winners of this era are big agricultural
producers (agricultural growth was 13.2 per
annum).
• The domestic industrial elite was dissatisfied
because the share of industry declined from 15.2
percent to less than 13.5 percent in this period.
• Democrat Party government invested in
agricultural expansion and exportation rather
than industrial production.

12
• Dynamics of growth in this period was mainly foreign credits and aids (remember
Marshall Plan)
Question: Was it really an economic necessity for Turkey to receive Marshall aid? What is the
underlying political economy logic of Marshall Plan? Who benefitted and who lost during this
process?

• The commercial bourgeoisie also gained significantly in this era. According to one
calculation Turkish foreign trade deficit increased to 500 million dollars between
1946 and 1953.
• In general, however, almost all segments of society improved their living conditions
due to the economic expansion in the first half of Democrat Party era.

13
14
• The dynamics of economic expansion during first half of Democrat Party era
were mainly driven by burgeoning imports, foreign debt, expansion of
agricultural lands, and reutilization of existing capacity stock.
• The increasing trade deficit, the lack of external financing, and product shortages
constituted the main economic problems of the 1954-1960 period.
Question: Discuss the role of changing dynamics of US-Turkey relations on the change in
Turkey’s economic performance (Hint: Refer to Marshall aid and decreasing external credits)

• Accordingly, the ruling elite, shifted to a more state-oriented mixed economy

model and reintroduced import quotas at certain products.
• Despite all protectionist measures, Turkish lira was devalued more than twofold
in 1958.

15
 Istanbul Pogrom was a pogrom directed primarily
at Istanbul’s Greek minority on 6–7 September
1955. The events were triggered by the false news
that the Turkish consulate inThessaloniki, north
Greece—the house where Mustafa Kemal Atatürk
had been born in 1881—had been bombed the day
before.
 many of the Greek shops on Istanbul’s main
shopping street, İstiklal Avenue were ransacked.
The material damage was considerable, with
damage to 5317 properties, almost all Greek-
owned.

16
17
• There are four main characteristics of Turkish economy during Menderes era.

1. Agriculture-cum-liberalization dominated the economic agenda. Democrat Party

concentrated on the agricultural sector as an efficient way of integration to global economy

because it was thought that Turkey’s “comparative advantage” lies there.

2. Industrialization was not the primary aim. The projects about developing railway industry

promoted during 1930-1939, for example, totally abandoned. Land transportation was

promoted (Why?)

3. The distributional dynamics, in general, worked in favor of large segments of society mainly

because of the economic growth and populist policies pursued by Democrat Party

governments.

4. The 1950s also witnessed large scale urbanization. Masses migrated to cities as a result of

which the seeds of unplanned urbanization were planted.

18
19
 The anti-democratic measures of the DP government paved the way to
the break-down.
 In 1953, Ulus Newspaper, and real property of Republican People’s Party
are seized and transferred to the treasury with a new law.
 In 1954, the government promulgated the law on the press that restricts
freedom of the media – The right to proof is not granted to the journalists
who are accused of insulting a politican. (“ispat hakkı”)
 In 1954, Kırsehir was transformed into a district because it did not vote for
the DP
 In 1954, a law was promulgated to make it possible to fire civil servants
easily (Memur Tasfiye Yasası)
 In 1958, “Vatan Cephesi” was founded. On April 1960, a commission of
inquiry was founded to investigate and “judge” the members of
Republican People’s Party for coup. The commission consisted of 15
members and they immediately forbid any publication of any political
activity in the country.
20
 5-minute scene from Demirkırat for May 27, coup
 In the aftermath of the coup, leading figures of the DP were
judged, some of them were sentenced to prison, but Adnan
Menderes, Fatin Rüştü Zorlu, and Hasan Polatkan were
sentenced to death.
 The trials (Yassıada) were claimed to be unfair. The “baby
trial” and “dog trail” epitomize this dimension.

21
22
1. What are the reasons and consequences of Varlık Vergisi charged in
1942?
2. Discuss the post-war developments in Turkish economy with particular
reference to the changing political economy dynamics in the world
politics after the WWII.
3. Why Democrat Party pursued an agriculture-led integration into the
world economy (Hint: Please, keep “comparative advantage” argument
in mind)?
4. Discuss the distributional consequences of liberalization policies
followed by Democrat Party government in the aftermath of Second
World War.
23