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The Federal State of Austria (; known as the "Ständestaat") was a continuation of the First Austrian Republic between 1934 and 1938 when it was a one-party state led by the Conservatism, nationalist, Corporatism, Clerical fascism and Catholic Fatherland Front. The Ständestaat concept, derived from the notion of Stände ("estates" or "Corporatism"), was advocated by leading regime politicians such as Engelbert Dollfuss and Kurt Schuschnigg. The result was an Authoritarianism government based on a mix of Italian fascism and conservative Catholic Church influences.
It ended in March 1938 with the Anschluss, the Nazi Germany annexation of Austria. Austria would not become an independent country again until 1955, when the Austrian State Treaty ended the Allied occupation of Austria.
Dollfuss then banned Communist Party on 26 May 1933, the Social Democratic Republikanischer Schutzbund paramilitary organization on 30 May and Austrian Nazism on 19 June. On 20 May 1933 he had established the Fatherland's Front as a unity party of "an autonomous, Christian, German, corporative Federal State of Austria". On 12 February 1934 the government's attempts to enforce the ban of the Schutzbund at the Hotel Schiff in Linz sparked the Austrian Civil War. The revolt was suppressed with support by the Bundesheer and right-wing Heimwehr troops under Ernst Rüdiger Starhemberg, and ended with the ban of the Social Democratic Party and the trade unions.
The path to dictatorship was completed on 1 May 1934, when the Constitution of Austria was recast into a severely authoritarian and corporatist document by a rump National Council. Direct parliamentary elections were abolished. Instead, deputies were nominated by four non-elective, corporatist-styled councils – the State Council ( Staatsrat), Federal Culture Council ( Bundeskulturrat), Federal Economic Council ( Bundeswirtschaftsrat), and the States' Council ( Länderrat). In practice, however, all governing power was now in Dollfuss' hands.
Dollfuss continued to rule under what amounted to martial law until his assassination on 25 July 1934 during the Nazi July Putsch. Although the coup d'état initially had the encouragement of Hitler, it was quickly suppressed and Dollfuss's education minister, Kurt Schuschnigg, succeeded him. Hitler officially denied any involvement in the failed coup, but he continued to destabilise the Austrian state by secretly supporting Nazi sympathisers like Arthur Seyss-Inquart and Edmund Glaise-Horstenau. In turn Austria under Schuschnigg sought the backing of its southern neighbour, the fascist Italian dictator Benito Mussolini. Tables turned after the Second Italo-Abyssinian War of 1935–36, when Mussolini, internationally isolated, approached Hitler. Though Schuschnigg tried to improve relations with Nazi Germany by amnestying several Austrian Nazis and accepting them in the Fatherland's Front, he had no chance to prevail against the "Axis powers" of Berlin and Rome proclaimed by Mussolini on 1 November 1936.
One of the reasons for the failure of the putsch was Italian intervention: Mussolini assembled an army corps of four divisions on the Austrian border and threatened Hitler with a war with Italy in the event of a German invasion of Austria as originally planned, should the coup have been more successful. Support for the Nazi movement in Austria was surpassed only by that in Germany, allegedly amounting to 75% in some areas.
A key feature of the ständestaat was its implementation of austerity measures. The Federal State aimed to reduce unnecessary spending and foster a society that embraced a more straightforward way of living, aligning with his Catholic belief in living modestly for God and family. This approach was a response to the encroachment of consumerism in neighboring countries like Czechoslovakia, which threatened traditional values. The State saw it as a method to trim excess, combat superficial consumerism, and promote a devout and ascetic lifestyle in service of God. Despite having Ludwig von Mises as an economic advisor, there is no convincing evidence that his Laisse policy was implemented in Austria.
The Federal State pursued harsh deflationary policies to balance the currency. It also cut spending drastically, and high interest rates were the norm. The budget deficit was slashed from over 200 million shillings to less than 50 million. By 1936, only 50% of the unemployed were receiving unemployment benefits. These policies coincided with a catastrophic economic contraction. According to Angus Maddison's estimates, unemployment peaked at 26% in 1933, failing to fall under 20% until 1937. This can be contrasted with German unemployment, which peaked at 30% in 1932 and had fallen to less than 5% by 1937. Additionally, real GDP collapsed, not returning to pre-1929 levels until 1937.
Whether the Federal State could be considered genuinely fascist is debatable. Although it was authoritarian and used fascist-like symbols, it never achieved broad support among Austrians. Its most prominent policy was an embrace of Catholicism, and its economic and social policies bear only a passing resemblance to those of Fascist Italy and Nazi Germany and more of a resemblance to Portugal under Salazar.
After the British ambassador to Berlin, Nevile Henderson on 3 March 1938 had stated that the German claims to Austria were justified, Schuschnigg started a last attempt to retain Austrian autonomy by scheduling a nationwide referendum on 13 March. As part of his effort to ensure victory, he released the Social Democratic leaders from prison and gained their support in return for dismantling the one-party state and legalizing the socialist trade unions. Hitler reacted with the mobilization of Wehrmacht troops at the Austrian border and demanded the appointment of Seyss-Inquart as Austrian chancellor. On 11 March Austrian Nazis stormed the Federal Chancellery and forced Schuschnigg to resign. Seyss-Inquart was sworn in as his successor by Miklas and the next day Wehrmacht troops crossed the border meeting no resistance.
Hitler had originally intended to retain Austria as a puppet state headed by Seyss-Inquart. However, the enthusiastic support for Hitler led him to change his stance and support a full Anschluss between Austria and Nazi Germany. On 13 March Seyss-Inquart formally decreed the Anschluss, though President Miklas avoided signing the law by resigning immediately, only for Seyss-Inquart to take over as acting President and sign the Anschluss bill into law. Two days later in his speech on the Heldenplatz in Vienna, Hitler proclaimed the "accession of my homeland to the German Reich". A highly dubious referendum – organized and implemented by Josef Bürckel, the Nazi Gauleiter of the Pfalz and the Saarland, who was appointed by Hitler to be in charge of the election – was held on 10 April, ratifying the Anschluss with an implausible 99,73% of votes. Hundreds of thousands of "undesirable" Austrians – 18% of the population – were removed from the voter lists due to being Jewish or members of the Social Democratic party, which opposed the Nazis, and were therefore unable to vote.Weyr, Thomas (2005) The Setting of the Pearl: Vienna Under Hitler New York: Oxford University Press. pp.62-64 & 75
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