Great Depression

 Principles of the period were determined by two events: › İzmir Economic Congress (1923) › Lousanne Agreement (1923)

 Aim: To determine the problems and needs of the society in a collective manner  1135 Delegates  Principles of Economic Agreement: Economic Nationalism/Independence  To encourage private entrepreneurship

 Capitulations were abolished  Cabotage right  Foreign debts will be started to be paid in 1929  Current custom duties will be applied for 5 more years

 Balanced budget  Balance in international trade  Constant money supply

 The aim of fiscal policy: Balanced budget  Revenues: › Indirect taxes after abolishment of Aşar › Salt, tobacco, sugar taxes  Expenditures: › Infrastructure (railways) › Domestic/foreign debt payments

 Aim: To increase production  1925: Aşar was abolished  Private land ownership  1927: First population and agricultural census (82% percent of the labor force is employed in agriculture)

 No mechanization  Prices are volatile  The credit markets are unorganized › Ziraat Bank: 1888 › Agricultural Credit Cooperation: 1929  Technical schools, model farms

 1925: Sanayii ve Maadin Bank  1927: The Law for encouragement of industry  1929: Independent custom duties  Duty free imports for export oriented industries

 Agriculture: 43%  Textile: 24%  Mining and Machinery: 22%

 During the period: › Exports decreased › Imports increased › At the end of the period: trade surplus  The fall in export prices were sharper than the fall in import prices, so terms of trade deteriorated.

ExportsImportsBalance

 Volatile  Depends on agricultural production  Share of agriculture: 40-50%

 1921: The first constitution  1926: The Central Statistical Department  1928: Ministry of Economics  1929: Milli İktisat ve Tasarruf Cemiyeti (National Economy and Saving Association)

 Domestic Factors: › The fall in cereal output because of whether conditions. Turkey started to import cereals. › Rapid rise in import demand because of the new import duties that will be implemented in › The rise of import demand because of railway construction › Moratorium (First installment of the foreign debt)

 External factors: › The Great Depression: Incomes of our export markets fell

 Measures: › 1930: TCMB › 1930: The law regarding the protection of the T.L. › 1931: Import quotas › 1932: Clearing agreements

 The beginning of the Great Depression in the United States is associated with the stock market crash on October 29, 1929, known as Black Tuesday.  Picture from the Franklin D. Roosevelt Library, courtesy of the National Archives and Records Administration.

During this time (in US):  the prices of stock fell 40%  9,000 banks went out of business  86,000 businesses failed  The unemployment rate went from 9% all the way to 25%, about 15 million jobless people.

Although the depression was world wide, no other country except Germany reached so high a percentage of unemployed. The poor were hit the hardest. By 1932, Harlem had an unemployment rate of 50 percent and property owned or managed by blacks fell from 30 percent to 5 percent in Farmers in the Midwest were hit by economic downturns and the Dust Bowl.

 The Dust Bowl was a series of dust storms causing major ecological and agricultural damage to American and Canadian prairie lands in the 1930s, caused by decades of extensive farming without crop rotation among cotton, corn and grain farmers using techniques that promoted erosion coupled with severe drought.

 In the 1920s, in the U.S. the widespread use of purchases of businesses and factories on credit and the use of home mortgages and credit purchases of automobiles, furniture and even some stocks boosted spending but created consumer and commercial debt.  People and businesses who were deeply in debt, when demand for their product decreased, were in serious trouble. Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses began to fail as construction work and factory orders plunged.

 Banks which had financed a lot of this debt began to fail as debtors defaulted on debt and bank depositors became worried about their deposits and began massive withdrawals. Government guarantees and Federal Reserve banking regulations to prevent these types of panics were ineffective or not used.  Many economists have argued that the sharp decline in international trade after 1930 helped to worsen the depression, especially for countries significantly dependent on foreign trade.

Families on the road with all their possessions packed into their trucks, migrating and looking for work. (Circa 1935)

 Unemployed: Typical picture capturing the number of people who were unemployed and looking for a job. (Circa 1935)

 Breadlines: long line of people waiting to be fed- New York City: in the absence of substantial government relief programs during 1932, free food was distributed with private funds in some urban centers to large numbers of the unemployed. (Circa February 1932)