Features of the Economy in the PreRepublican Period

1
Features of the Economy in the Pre-Republican
Period

• Internal Factors
• The end of land acquisition after 16th century
• Long wars
• War booty was not used for capital accumulation
• Government revenues mainly came from agriculture
• Heavy foreign borrowing

2
Features of the Economy in the Pre-Republican
Period

• Internal Factors
• Privileges to foreigners and minorities
• No independent monetary or fiscal policy
• Division of labor
• Agriculture Turks
• Industry and Trade Foreign capital and
  minorities

3
External Debts

• 1858 The Ottoman-Crimea War
• 1881 Düyun-u Umumiye (First established in 1877)
• 1929 First debt payment
• 1954 All debts were covered

4
Features of the Economy in the Pre-Republican
Period

• External Factors
• The rise of Mercantilism
• 1838 Trade Agreement with UK

5
Mercantilism

• 16th 18th centuries
• The material resources of society (the means)
  were to be used to promote the enrichment and
  well-being of the nation-state (the end)
• The period was characterized by the presence of
  great trading nations. Power building took the
  form of exploration, discovery and colonization.

6
Mercantilism

• Philipp Wilhelm von Hornicks nine principal
  rules
• Every inch of a countrys soil be utilized for
  agriculture, mining or manufacturing
• All raw materials found in a country be used in
  domestic manufacture, since finished goods have a
  higher value than raw materials
• A large, working population is encouraged

7
Mercantilism

• 4. All export of gold and silver be prohibited
  and all domestic money be kept in circulation
• 5. All imports of foreign goods be discouraged as
  much as possible
• 6. Where certain imports are indispensable they
  be obtained at first hand, in exchange for other
  domestic goods instead of gold and silver

8
Mercantilism

• 7. As much as possible, imports be confined to
  raw materials that can be finished at home
• 8. Opportunities be constantly sought for selling
  a countrys surplus manufactures to foreigners,
  so far as necessary, for gold and silver
• 9. No importation be allowed if such goods are
  sufficiently and suitably supplied at home

9
Adam Smith

• 1776 Inquiry into the Nature and Causes of the
  Wealth of Nations
• Invisible hand
• Division of labor

10
Agriculture

• Land belonged to the state
• Fief System Has, Zeamet, Timar
• 1858 Land Law (private ownership)
• 1863 Credit cooperatives for agriculture
• 1888 Establishment of Ziraat Bank
• Uneven distribution of land

11
Mining

• Production was done by foreigners
• French capital dominated the industry
• Production is mainly exported
• Mining Laws 1861, 1869, 1906
• Shares in production ()
• Year Turks Minorities Foreigners
• 1902 43 7 50
• 1911 20 5 75

12
Industry

• Small scale production units
• Production for domestic market
• Only consumption goods are produced
• Guild cooperation
• Customs
• Domestic 8
• UK 5

13
Industry

• 1913 The law for encouraging industry
• Industry was located in the west
• Istanbul 55
• Izmir 22
• Others 23
• Sectoral Distribution
• Food 70.3
• Textile 11.9
• Leather 8.3

14
Transportation

• Importance given to Railways
• Maritime lines Controlled by foreigners

15
Banking

• No banking system
• Galata Bankers (Minorities)
• 1856 Osmanli Bank
• 1888 Ziraat Bank

16
International Trade

• Policy To restrict exports and to encourage
  imports
• Trade deficits
• Main trading partner UK
• Exports Agricultural products (cotton, tobacco,
  hazelnut), mining products
• Imports Textile, clothing, food (sugar, flour)

17
International Trade

• Capitulations
• 1453 First capitulation to Genoese
• 1914 Abolished by Ottoman Empire
• 1920 Sevr Agreement (new capitulations)
• 1923 Lousanne Agreement (abolished)

18
National Income

• Growth Rate 2
• 1913
• Agriculture 47
• Industry 12
• Services 28
• Others 13

19
Education

• Literacy Rate 10
• Non-homogenous education system
• Minority schools
• Modern schools
• Religious schools