Council of Economic Affairs

The Supreme Economic Council (SEC) is a key advisory body established on 25 June 1927 by Law No. 1170 with the aim of accelerating economic development in Türkiye and finding solutions to economic problems. Operating under the Prime Ministry, the Council consisted of representatives from the private sector and bureaucrats. Its primary duties were to provide opinions on economic laws and regulations, assess international economic developments, and propose strategies for the country’s economic growth. Particularly through the reports and recommendations it prepared after the 1929 Great Depression, Türkiye's it played a significant role in shaping state-led economic policies. The Supreme Economic Council was dissolved in 1935.

Establishment and Structure

The Supreme Economic Council (SEC) was established on 25 June 1927 by Law No. 1170 as one of the important steps taken by the young Republic of Türkiye toward achieving its economic development goals. The Council's Its creation was directly linked to the economic uncertainties and structural challenges facing Türkiye at the time. By the end of the 1920s, it became widely accepted that private enterprise alone could not achieve the desired level of industrialization, given the insufficient capital accumulation in the private sector and the looming impact of the 1929 World Crisis. This perception strengthened the view that the state needed to assume a more active role in the economy and highlighted the need for institutional structures capable of informing political decisions, providing necessary data, and even incorporating pressure groups into the decision-making process. The Supreme Economic Council was one of the institutions established precisely to meet this need.

According to its founding report, the Council’s fundamental objective was to remove obstacles to rapid economic development in the country. In this context, it was expected to assume a pioneering role in promoting economic growth and to facilitate consensus among different economic actors.

According to its founding law, the Supreme Economic Council consisted of twenty-four members. The selection process was designed to reflect the Council’s composite structure and representation of diverse sectors: half of the members were appointed by the Council of Ministers, while the other half were designated by Chambers of Commerce and Industry and other prominent professional organizations of the period. This structure brought together leading figures from the private sector—including industrialists, merchants, bankers, and economists—with representatives of the public bureaucracy, aiming to create a direct dialogue and cooperation platform between the state and the private sector. This composition enabled the inclusion of diverse perspectives and needs in the formulation of economic policies of the time. However, reflecting the socio-economic conditions of the era, no representatives of the working class were included in the Council.

The Council was established directly under the Prime Ministry and conducted its activities within this administrative framework. This structure ensured that the Council’s recommendations and reports were transmitted directly to the government's the highest level of government, enhancing its potential influence on policy decisions. Tasked with deliberating on issues determined by the government, the Council also functioned as a research and advisory body, making it a central actor in generating scientific and practical solutions to the economic challenges of the period. Like similar economic advisory bodies established in 19th-century Europe, the Supreme Economic Council played a significant role in Türkiye’s economic regulation and development processes.

Objectives and Responsibilities

The primary objective of the Supreme Economic Council was to remove obstacles to rapid economic development in Türkiye and to address the country’s economic and financial difficulties in order to ensure progress. The Council functioned as a research and advisory body, assuming a pioneering role in economic growth and facilitating consensus among different economic actors.

Its responsibilities, as stipulated in Article 4 of the law, were as follows:

• To provide opinions on laws and regulations relating to the economy.

• To inform the government of whether these laws and regulations were suited to the country’s needs, along with justifications.

• To report to the government on the effects of international economic trends on Türkiye.

• To deliberate on issues determined by the government and prepare reports on them.

Through these responsibilities, the Supreme Economic Council aimed to provide the government with scientifically and practically grounded advisory services in shaping national economic policies and to contribute to the development of economic strategies aligned with the conditions of the period.

Activities and Reports

From its establishment until its dissolution in 1935, the Supreme Economic Council operated as an active advisory and research body. As required by law, the Council convened twice a year for periods of fifteen days each. During these meetings, the country’s economic situation, the problems encountered, and proposed solutions were discussed in detail. In addition to addressing issues determined by the government, the Council regularly reported on global economic developments and their impact on Türkiye. The Council filled a significant gap in the economic life of the period by bringing together diverse economic actors’ views to produce comprehensive assessments. These activities formed the foundation of national economic policies taking shape during The first years of the Republic the period.

Among the Council’s activities, its reports were the most notable. These reports not only captured a snapshot of Türkiye’s economy at the time but also offered strategic insights and solutions for the future. Although the Council produced many published and unpublished reports, the 1931 report and two unpublished reports from 1932–1933 hold particular importance for understanding the economic conditions of the period and the work of the Supreme Economic Council.

The 1931 Report: Türkiye in the Face of the World Economic Crisis

The 1931 report prepared by the Supreme Economic Council was specifically drafted to identify the adverse effects of the 1929 World Economic Crisis on Türkiye’s economy and to formulate policies to counter them. The hardships brought by the First World War and the economic transformations of the post-war period triggered a major crisis in the United States, which quickly spread worldwide. In agrarian economies like Türkiye, the impact of this crisis was felt even more acutely. The report holds exceptional significance from the perspective of Atatürk-era national economic policies policy.

The report’s content includes comprehensive analyses and recommendations on the key sectors of Türkiye’s economy at the time.

• Agriculture: The agricultural sector, which formed the backbone of Türkiye’s economy, received extensive attention in the report. It addressed the need to develop an agricultural credit system, expand irrigation infrastructure, and promote the use of modern farming machinery. The report emphasized the importance of educating farmers and expanding agricultural schools, even suggesting that successful farmers be sent to advanced countries for practical training. These recommendations aimed to increase agricultural productivity and accelerate the transition from traditional production methods to modern techniques.

• Animal Husbandry: The report highlighted the measures needed to develop the animal husbandry sector, whose importance was growing in the global economy. It focused on harnessing Türkiye’s rich potential in this field and improving productivity.

• Industry: A significant portion of the report was devoted to industry. It stressed the necessity of taking measures to establish a national industry. It identified obstacles hindering national industrial initiatives and offered recommendations for maximizing the efficiency of national capital in the industrial sector. This emphasis demonstrates the Supreme Economic Council’s substantial intellectual contribution to the formation of the state-led industrialization policies of the period. As private enterprise proved insufficient and national industrialization became a political imperative, the Council’s recommendations served as a guiding framework for government policy.

The 1931 report did not merely identify the negative effects of the crisis; it also reflected a determined effort to produce long-term solutions within the framework of national economic policy. This report fills an important gap in the study of economic history during the Republican era.

Two Unpublished Reports (1932–1933)

Two important reports prepared by the Supreme Economic Council in 1932 and 1933, but not published at the time, constitute valuable sources for the study of Türkiye’s recent economic history (iktisat7.pdf). These reports provide in-depth analyses focused on the specific economic conditions and challenges faced by the country during those years.

Report on Export Credit and Organization (1932)

The 1932 report titled “Export Credit and Organization” reflects Türkiye’s efforts to boost exports and improve its foreign trade balance during a period when the 1929 World Economic Crisis had severely affected international trade. The report examined the difficulties encountered in foreign trade and emphasized the need to establish credit systems and organizational structures to support exports. In this context, it conducted a detailed analysis of export promotion mechanisms in European countries such as Germany, France, Britain, Italy, Belgium, and the Netherlands, and explored models applicable to Türkiye.

The report’s recommendations included the establishment of a specialized export credit bank, increased state intervention in foreign trade, and the encouragement of foreign trade companies. These proposals reflect Türkiye’s efforts to overcome the constraints in its foreign trade and enhance its international competitiveness. Increasing exports was vital for generating foreign exchange and improving the balance of payments.

Report on Türkiye’s 1933 Balance of Payments (1933)

The 1933 report titled “Türkiye’s 1933 Balance of Payments” is a comprehensive document analyzing Türkiye’s external economic relations. It examined in detail Türkiye’s import and export figures for 1933, assessed the impact of invisible items—such as services, capital movements, tourism revenues, and worker remittances—and clarified the state of the current account balance.

The report presented detailed tables illustrating Türkiye’s external assets and liabilities, that is, the inflows and outflows of foreign currency. For instance, it provided balance of payments data for merchandise (imports and exports) and invisible items (freight, insurance, interest, tourism, banking expenses, worker earnings, consular and embassy expenditures, postal, telegraph, telephone charges, and remittances) between 1928 and 1933. It showed that by 1933, imports had declined significantly due to the global crisis, and exports had also fallen, but efforts were underway to improve the balance of payments. The report also compared Türkiye’s situation with that of other countries during the crisis, offering an international context. These detailed analyses provided decision-makers with critical data for shaping external economic policies.

The Council’s reports and similar documents did not remain confined to theoretical assessments; they also offered practical policy recommendations. These reports reflect a genuine effort to find realistic solutions to the economic problems of the period and demonstrate Türkiye’s determination to achieve economic independence and develop its national industry. The intensive activities of the Supreme Economic Council and its comprehensive reports are invaluable documents illuminating Türkiye’s early Republican economic history.

Historical Context and Impact

The establishment and activities of the Supreme Economic Council (SEC) cannot be understood apart from the broader economic and political context of the early years of the Republic of Türkiye. The Council was not merely a response to specific economic challenges of its time; it also represented a continuation of the efforts toward economic independence and development that had been ongoing since the late Ottoman period. Ottoman Empire

Economic Liberation Efforts Before the Republic

Since the 16th century, the Ottoman Empire had become increasingly integrated with European economies, a process that gradually dismantled its previously closed economic structure. International agreements such as 1838 Commercial Treaty and the influx of foreign capital increased economic dependency, fueling demands for economic independence. The emergence of the “National Economy” concept alongside 1908 Revolution marked a significant awakening among Ottoman intellectuals and statesmen, advocating for the protection of domestic capital, the development of a national bourgeoisie, and the attainment of economic autonomy. During this period, various institutional initiatives were undertaken to address economic problems and formulate a national economic policy. With the proclamation of the Republic, these national economic aspirations continued with more concrete steps. The Supreme Economic Council, as a natural extension of this historical process, was part of the state’s efforts to strengthen its institutional capacity to achieve national development goals.

Economic Conditions Influencing Its Establishment

The establishment of the Supreme Economic Council in 1927 was closely tied to the unique economic conditions of the early Republican period. Emerging from the destructive impacts of the First World War and the War of Independence, Türkiye faced significant structural economic challenges. The national economy was largely agrarian, and industrial development was still in its infancy. Capital accumulation in the private sector was extremely insufficient, and it appeared impossible for private enterprise alone to achieve the desired industrialization. Moreover, the early signs of the Great Depression, which would erupt globally in 1929, were already being felt, and its potential negative effects on agrarian and trade-dependent economies like Türkiye were widely anticipated.

During this period, economic policy debates intensified. The government clearly recognized that a purely market-driven economy could not sustain a national economic policy. This realization strengthened the conviction that state intervention in the economy was inevitable. The issue of accelerating industrialization ceased to be merely an economic necessity and became a political imperative. Consequently, there was a growing need for institutional structures capable of formulating political decisions, providing necessary information, and even incorporating various pressure groups—such as private sector representatives—into the decision-making process. The Supreme Economic Council emerged precisely as a product of these institutionalization efforts.

Comparison with European Models

When examined, the structure and function of the Supreme Economic Council reveal parallels with similar economic advisory bodies established in 19th-century Europe. These European institutions generally aimed at economic regulation and development and formed part of modern states’ efforts to manage increasingly complex economies. The SEC in Türkiye similarly sought to identify areas requiring economic regulation and improvement. This indicates that the Supreme Economic Council was influenced by international trends and reflected Türkiye’s efforts to adopt modern state governance practices. However, features such as the method of selecting its members and its direct subordination to the Prime Ministry demonstrate that it was shaped according to Türkiye’s specific conditions.

Role in State-Led Economic Policies

The Supreme Economic Council played a central role in the formation and development of state-led economic policies in Türkiye. The insufficiency of private capital accumulation and the desire to achieve national development goals necessitated the state’s transformation into a more active economic actor. The Council provided a crucial advisory platform during this transition.

The Council’s structure of twenty-four members comprised half bureaucrats appointed by the government and half private sector representatives from Chambers of Commerce and Industry and professional organizations. This composite structure created an effective channel for transmitting the demands and expectations of the private sector directly to the government’s decision-making mechanisms. As the 1929 World Economic Crisis deepened, the reports prepared by the Council presented a framework advocating for more comprehensive state intervention in the economy. For instance, the 1931 report detailed the necessary measures to establish a national industry and maximize the efficiency of national capital. Such recommendations provided the theoretical foundation for the government’s decisions to make direct investments in industry and other sectors in line with the “statism” principle.

The 1932 and 1933 reports on export credit and the balance of payments further supported the state-led tendency to develop foreign trade under state control and maintain economic equilibrium. The Council’s reports and overall activities serve as concrete evidence of the prevailing economic thought trends of the period and perceptions regarding the state’s role in the economy. The Council functioned like a “brain trust,” generating solutions to economic problems and proposing their implementation by the state. Thus, the Supreme Economic Council made a significant institutional and intellectual contribution to the development of Türkiye’s own unique model of statism.

The Council also served as a center for collecting and analyzing economic data. For example, the detailed balance of payments data presented in the 1933 report reflect the government’s capacity for economic analysis and its efforts in data collection. These data assisted the government in making more informed and strategic economic decisions.

However, the influence of the Supreme Economic Council extended beyond its reports; it also contributed to economic debates of the period and the public’s economic awareness. The broad public discussion of various economic issues, the clash of different viewpoints, and the search for consensus enriched the country’s intellectual economic life.

Dissolution

The activities of the Supreme Economic Council ended approximately eight years after its establishment, in 1935. The Council was abolished by Article 25 of the 1935 Budget Law. This dissolution marked the end of an important economic advisory body established in the early years of the Republic. Although existing sources do not clearly specify the reasons for its abolition, this decision can be linked to changes in the economic and political conditions of the period. From the mid-1930s onward, as Türkiye’s state-led economic policies became more clearly defined and implemented, the relevance and functionality of such an advisory body may have been reassessed.