The Turkish Grand National Assembly (TBMM) summoned on 23rd April of 1920 in Ankara, and accepted the third law, which was about the constitution of the government that will be established on 2nd May of 1920. This government was composed of 11 ministers. It was also decided to establish a Ministry of Economy.

It was declared that the government would focus on financial and economical issues in its programme. However, between 1920-1922 Turkey was in Independence War and the main target of TBMM was to rescue the country from the occupations. The war conditions were interfering with the government’s plan about an industrial development. Moreover, the governmental cadre saw the political and economical independence as a principle after the victory.

When the Congress of Lausanne was paused, the Congress of Economy was assembled in Izmir between 17th February and 4th March of 1923, with 1135 delegates. In this congress, the economical problems of new Turkey were discussed. Also, it was explained that, Turkish Government would not accept the capitulations and the other privileges, which the Europeans were insisting in the Congress of Lausanne. During this critic period, the Congress of Economy was targeting to solve the economical problems, and to develop the ruined country by guiding the people, who were financially exhausted in the war. At the end of the Congress, the delegates had accepted the Misak-i Iktisadi (National Economy) with unanimity and had an oath to work for a modern and prosperous Turkey.

During the Congress;

--To establish new industrial branches to use the raw materials exist in the country and to support the private enterprises,

--To establish the banks, which will provide credits for the enterprises,

--Giving precedence to the daily consuming goods,

--To nationalise the important associations,

--To make laws to encourage the industry and to change the custom laws according to the needs of national industry,

--To transport the native goods both on the sea and on the land cheaper,

--To establishing the industrial banks,

--To develop the technical training, were decided.


After accomplishing the great victory, Mustafa Kemal Pasha had focused on the problems of the villagers and agriculture on 1st March of 1922 at the inauguration of TBMM. He said; “The real master of Turkey is the villager who is the real producer. Thus, the villager has the right for welfare, happiness and wealth more than anybody else”. Ataturk had put emphasis on the importance of agriculture in his speech at the Economical Congress of Izmir and he said that; “The arms using sword gets tired, but the arm using plough becomes stronger”.  

The most important problem of the villagers was the ashar tax, which means 1/10 of their income. The government had abolished this tax on the February of 1925.

With an another law, passed in 1925, the government distributed fields to the villagers with 20 years of credit. The Ziraat Bank (Bank of Agriculture) was established to provide credit with small interests to the farmers. Co-operatives were formatted, agricultural and Credit Co-operatives, Schools of Agriculture and Agriculture Institution were opened.

For the benefit of the villagers, seed amelioration stations and model farms were established. To introduce tractor cheap tools and machines were distributed. Ataturk established modern farms and he became a model for the farmers.

Instead of the Turkish Industry Credit Bank Sumerbank was established. The main aim of the Sumerbank’s was to provide credit for the private sector, as well as, to plan the industrial development. The Sumerbank became a model for the other banks that were established in the following years.

In 1935, to cultivate mineral wealth of the country, the Institute of Mine (MTA), for evaluating the electricity sources Institute of Electricity (EIE), and to organise these resources Etibank were established.

The First 5 Year Industrial Plan was composed of textile industry, hemp industry, iron-steal industry, semi-coke factory, porcelain and tile industries, sudkostik, chlorine, artificial silk, cellulose and paper factories, sugar industry, sponge and rose industries. The Plan was begun to be applied from 1934 and the foundations were completed in 5 years and activated. Also the modernisation of the military factories, which were not mentioned in the plan were realised. The period between the years 1933 and 1938 is the first and planned phase of the Turkish Industry. These developments created labour power in the technical fields and strongly effected the social life.


To operate and yield the resources of a country, and to improve the international trade is only possible with a systematic transportation. Transportation is essential for the political, social and cultural lives of a country and it plays an important role in the national unity. From beginning of the new state until the end of 1938, substructure was considered as an important element in the economical development and railways and highways were constructed.


The first step was to nationalise the railways, which were owned by foreign companies. The second step was to build new railways. To build railways through the country was a governmental policy and was applied successfully.

In 1927, the State Railways and Forts General Administration was established as a department in the Ministry of Transportation. Thus, the state started to operate the railways and the shipping lines. In 1929, the length of the railways was 5144 km and only 2766 km of them were belonged to the Turkish State and 2375 km were belonged to the foreign companies. The new Administration was constructing new railways and dealing with the nationalising of the existing railways. From the declaration of the Republic in 1923 to 1938 per a year 200 km of new railways were build and totally 3360 km railways were constructed with a very limited finance.


The length highways, inherited from the Ottoman Empire was 18.335 km., and 13.885 km of these highways needed an extend renovation. The construction of the highways was begun by the new state.

Shipping Lines

The shipping lines were developed rapidly. With the Lousanne Peace Treaty, the right for coastal trading was left to the Turks in the Turkish seas. Thus, the Turkish ships replaced the foreign ships. The Turkish Cabotage Law became in force on 1st July of 1926. Some institutions and associations were established as; Deniz Bank (Bank of Sea) (1938), State Directorate of Shipping Lines (1939) and the Denizcilik Bankasi (Bank of Shipping) (1952). These associations played important roles in the development of the sea transportation.


The State Airlines was started to its first regular flights between Ankara and Istanbul, in 1936. Later, Turkish Airlines replaced the State Airlines and rapidly developed by starting to international flights.


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