ABSTRACT
For the Turks, the period 1918—1923 is the heroic epoch in their modern history — the years in which their national independence and morale were rescued from the threat of virtual extinction. Recovery from wartime dislocation seems the likely cause of the sharp increase in economic activity between 1923 and 1926. Economic policy formulation was left to those bureaucrats who had some experience of the subject. Such economic views as the government had rested on pragmatism and a conservative approach towards fiscal and monetary policy. Until recently, only scattered and tentative estimates of Turkey's national income during the 1920s were available. The persistence of the foreign trade deficit during the 1920s pointed to some serious structural defects in Turkey's foreign trading pattern. The heavy reliance of foreign trade on agricultural exports, for which demand was stagnant during the 1920s and declining during the 1930s, made it almost impossible to expand the economy without running a large balance of payments deficit.
