Kingdom of Yugoslavia - Economy

Economy

Three quarters of the Yugoslav workforce was engaged in agriculture. A few commercial farmers existed, but most were subsistence peasants. Those in the south were especially poor, living in a hilly, infertile region. No large estates existed except in the north, and all of those were owned by foreigners. Indeed, one of the first actions undertaken by the new Yugoslav state in 1919 was to break up the estates and dispose of foreign, and in particular Magyar landowners. Nearly 40% of the rural population was surplus (i.e., excess people not needed to maintain current production levels), and despite a warm climate, Yugoslavia was also relatively dry. Internal communications were poor, damage from World War I had been extensive, and with few exceptions agriculture was devoid of machinery or other modern farming technologies.

Manufacturing was limited to Belgrade and the other major population centers, and consisted mainly of small, comparatively primitive facilities that produced strictly for the domestic market. The commercial potential of Yugoslavia's Adriatic ports went to waste because the nation lacked the capital or technical knowledge to operate a shipping industry. On the other hand, the mining industry was well developed due to the nation's abundance of mineral resources, but since it was primarily owned and operated by foreigners, most production was exported. Yugoslavia on the whole was the third least industrialized nation in Eastern Europe after Bulgaria and Albania.

Yugoslavia was typical of Eastern European nations in that it borrowed large sums of money from the West during the 1920s. When the Great Depression began in 1930, the Western lenders called in their debts, which could not be paid back. Some of the money was lost to graft, although most was used by farmers to improve production and export potential. Agricultural exports were always an unstable prospect, and the Depression caused the market for them to collapse as nations everywhere erected trade barriers. Italy was a major trading partner of Yugoslavia in the initial years after World War I, but ties fell off after Benito Mussolini came to power. In the grim economic situation of the 1930s, Yugoslavia followed the lead of its neighbors in allowing itself to become a dependent of Nazi Germany.

The small middle class occupied the major population centers and almost everyone else were peasants engaged in subsistence agriculture. The largest ethnic group were Serbs followed by Croats, Slovenes, Macedonians, Bosnians, and Albanians. Religion followed the same pattern with half the population following Orthodox Christianity, 40 or so percent being Catholic, and the rest Islam. In such a polyglot nation, tensions were frequent, but especially between Serbs and Croats. Other quarrels were those between Serbs and Macedonians, as the Yugoslav government had as its official position that the latter were ethnic Serbs. Although there was no linguistic or ethnic justification for this claim, Yugoslavia still promoted it relentlessly.

Slovenes were closer to Croats in terms of religion and culture, but did not share their neighbors' violent dislike of Serbs. In particular, the Slovenes knew they were too small in numbers to form a nation of their own and there was no reason to suppose a Croat-dominated Yugoslavia would be any better or worse than a Serb-dominated one. For the most part, they went along with the general political flow and were not a significant source of problems.

The predominately Muslim Bosnians won some concessions from Belgrade, but always faced strong disliking from their neighbors, especially Serbs and were known to one and all as "Turks" regardless of their language. Albanians fared worse since they could not speak Serbian, but all Muslims were the subject of widespread prejudice in Yugoslavia.

Other lesser minorities included Greeks, Italians, Romanians and Magyars. Aside from the Romanians, the Yugoslav government awarded no special treatment to them in terms of respect for their language, culture, or political autonomy, not surprising given that all of their native countries had territorial disputes with Yugoslavia. A few Jews lived in the major cities; they were well-assimilated and there were no significant problems with anti-Semitism.

Although Yugoslavia had compulsory public schooling, it was inaccessible to most peasants. Official literacy figures for the population stood at 50%, but it varied widely throughout the country. Less than 10% of Slovenes were illiterate, but a staggering 80% of Macedonians and Bosnians could not read or write. Only 10% of elementary school students went on to high school, but for those that did, they had access to three universities in Belgrade, Ljubljana, and Zagreb.