The 1929 Economic Crisis or Great Depression, which
began with the collapse of 21 October 1929, was one of the most important
turning points in 20th century world history. All the industrialized countries were
affected by this crisis. Turkey does not affect the course of such an important
world events was impossible. When the new republic was established based on
Turkey’s door crisis, the country’s economy largely dependent on agriculture.
As mentioned above, Turkey’s export revenue was due largely to agricultural
products it sells to Europe. Tobacco, cotton, hazelnut, raisins and dried figs
were leading in exports. To give a general statistic, 80% of exports are based
on agriculture, and almost these exports were made to Europe. It was not long
before the wave of crisis in the US hit Europe.

Between the years
1933 and 1929 in Turkey felt the crisis, the government has tried to mitigate
the effects of the crisis by taking a series of measures.

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The greatest change
that the 1929 Crisis brought to the world economic system was Keynes’
“Mixed Economy Policy”, which envisaged government intervention in
the market. Izmir in Turkey this year began to pursue a more statist economic
policy deviating from the principles of liberal economic policy set by Congress
in Economics. In these years, as the private sector was inadequate about
capital accumulation, the state tried to speed up industrialization by
increasing the number of State Economic Enterprises.

 

Together with the economic crisis in Turkey, transforms the terms of trade with the fall in raw material prices of agricultural products-against Turkey. In the 1920s, the Turkish Lira was dependent on the sterling with the free exchange rate regime. The lack of a central bank to regulate money markets in Turkey, the state kept him from exercising the right to seigniorage on the market. Because of the 1929 crisis in the United States due to inadequate demand, large unemployment and price declines have occurred. These disadvantages are advanced as Europe entered under this category and adversely affect the economies of other countries also have a negative impact on Turkey’s economy. 

With the impact of the world economic crisis of 1929
and adverse climatic conditions, the agriculture sector’s decline also reduced
its growth rate. The growth rate, which was 6.9% in 1939, decreased by 4.9% in
1940. The inflation rate, which was 1.7% in 1939, rose to a high level of 25.4%
in 1940, and this increase lasted until 1944. (Terz?-Oltulular, 2004, s,22)

 

As a result, 1929 has constituted an important turning
point in the history of Turkey’s economy. Central Bank of the Republic of
Turkey establishing its own customs duties, and has laid the foundation of the
Turkish Lira by reforming financial independence and at the beginning of this
process has been mixed economy approach to Turkey, thanks to government has
played an important role in industrial production. This dominant role of the
state in production and on the markets continued until the 1980s.

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