Interwar period and World War II
After the war, inflation began to devalue the Krone, which was still Austria's currency. In the autumn of 1922, Austria was granted an international loan supervised by the League of Nations. The purpose of the loan was to avert bankruptcy, stabilise the currency, and improve Austria's general economic condition. The loan meant that Austria passed from an independent state to the control exercised by the League of Nations. In 1925, the Austrian schilling was introduced, replacing the Krone at a rate of 10,000:1. Later, it was nicknamed the "Alpine dollar" due to its stability. From 1925 to 1929 the economy enjoyed a short high before nearly crashing after Black Tuesday.
The First Austrian Republic lasted until 1933, when Chancellor Engelbert Dollfuss, using what he called "self-switch-off of Parliament", established an autocratic regime tending towards Italian fascism. The two big parties at this time, the Social Democrats and the Conservatives, had paramilitary armies; the Social Democrats' Republikanischer Schutzbund was now declared illegal, but was still operative as the 12–15 February 1934 Austrian Civil War broke out.
In February 1934, several members of the Schutzbund were executed, the Social Democratic party was outlawed, and many of its members were imprisoned or emigrated. On 1 May 1934, the Austrofascists imposed a new constitution ("Maiverfassung") which cemented Dollfuss's power, but on 25 July he was assassinated in an Austrian Nazi coup attempt.
His successor Kurt Schuschnigg acknowledged the fact that Austria was a "German state" and he also believed that Austrians were "better Germans" but he wished that Austria would remain independent. He announced a referendum on 9 March 1938, to be held on 13 March, concerning Austria's independence from Germany.
On 12 March 1938, Austrian Nazis took over the government, while German troops occupied the country, which prevented Schuschnigg's referendum from taking place. On 13 March 1938, the Anschluss (lit. 'joining' or 'connection') of Austria was officially declared. Two days later, Austrian-born Adolf Hitler announced what he called the "reunification" of his home country with the "rest of the German Reich" on Vienna's Heldenplatz. He established a referendum which confirmed the union with Germany in April 1938.
Parliamentary elections were held in Germany (including recently annexed Austria) on 10 April 1938. They were the final elections to the Reichstag during Nazi rule, and they took the form of a single-question referendum asking whether voters approved of a single Nazi-party list for the 813-member Reichstag, as well as the recent annexation of Austria (the Anschluss). Jews, Roma and Sinti were not allowed to vote. Turnout in the election was officially 99.5%, with 98.9% voting "yes". In the case of Austria, Adolf Hitler's native soil, 99.71% of an electorate of 4,484,475 officially went to the ballots, with a positive tally of 99.73 percent. Although most Austrians favoured the Anschluss, in certain parts of Austria, the German soldiers were not always welcomed with flowers and joy, especially in Vienna, which had Austria's largest Jewish population. Nevertheless, despite the propaganda and the manipulation and rigging which surrounded the ballot box result, there was massive genuine support for Hitler for fulfilling the Anschluss, since many Germans from both Austria and Germany saw it as completing the long overdue unification of all Germans into one state.
On 13 March 1938, Austria was annexed by the Third Reich and ceased to exist as an independent country (the Anschluss). The Aryanisation of the wealth of Jewish Austrians started immediately in mid-March, with a so-called "wild" (i.e. extra-legal) phase, but it was soon structured legally and bureaucratically so the assets which Jewish citizens possessed could be stripped from them. At that time, Adolf Eichmann, who grew up in Austria, was transferred to Vienna and ordered to persecute the Jews. During the November pogrom in 1938 ("Reichskristallnacht"), Jews and Jewish institutions such as synagogues were subjected to violent attacks in Vienna, Klagenfurt, Linz, Graz, Salzburg, Innsbruck and several cities in Lower Austria. Otto von Habsburg, a vehement opponent of the Nazis, the last Crown Prince of Austria-Hungary, an honorary citizen of hundreds of places in Austria and partly envisaged by Schuschnigg as a monarchical option, was in Belgium at the time. He spoke out against the Anschluss and was then wanted by the Nazi regime and his property would have been expropriated and he would have been shot immediately if he were caught. In 1938, the Nazis renamed Austria the "Ostmark", a name which it had until 1942, when it was renamed the "Alpine and Danubian Gaue" (Alpen-und Donau-Reichsgaue).
Though Austrians made up only 8% of the population of the Third Reich, some of the most prominent Nazis were native Austrians, including Adolf Hitler, Ernst Kaltenbrunner, Arthur Seyss-Inquart, Franz Stangl, Alois Brunner, Friedrich Rainer, and Odilo Globocnik, as were over 13% of the members of the SS and 40% of the staff at the Nazi extermination camps. In the Reichsgau, besides the main camp KZ-Mauthausen, there were numerous sub-camps in all provinces where Jews and other prisoners were killed, tortured and exploited. At this time, because the territory was outside the operational radius of Allied aircraft, the armaments industry was greatly expanded through the forced labour of concentration camp prisoners, this was especially the case with regard to the manufacture of fighter planes, tanks and missiles.
Most of the resistance groups were soon crushed by the Gestapo. While the plans of the group around Karl Burian to blow up the Gestapo's headquarters in Vienna were uncovered, the important group around the later executed priest Heinrich Maier managed to contact the Allies. This so-called Maier-Messner group was able to send the Allies information about armaments factories where V-1 flying bombs, V-2 rockets, Tiger tanks, and aircraft (Messerschmitt Bf 109, Messerschmitt Me 163 Komet, etc.) were manufactured, information which was important to the success of Operation Crossbow and Operation Hydra, both of which were preliminary missions before the launch of Operation Overlord. This resistance group, which was in contact with the American secret service (OSS), soon provided information about mass executions and concentration camps such as Auschwitz. The group's aim was to cause Nazi Germany to lose the war as quickly as possible and re-establish an independent Austria.
