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 Hornick’s nine principal rules: 1. Every inch of a country’s soil be utilized for agriculture, mining or manufacturing 2. All raw materials found in a country be used in domestic manufacture, since finished goods have a higher value than raw materials 3. 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 country’s 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, Tımar  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 (%): YearTurksMinoritiesForeigners 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 İstanbul: 55% İzmir: 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: Osmanlı 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