During World War II, the Dual Monarchy of the Austro-Hungarian empire already had problems in maintaining political unity because of the rising nationalism within its immensely diverse empire which included German, Czech, Romanian, Serbian and many other lands. Before World War II and into World War II, Austria-Hungary produced an average of nearly 105 million quintals of wheat and rye annually between 1909 and 1913, sufficient to satisfy domestic demand in these categories, which averaged around 100 million quintals. The war, however, introduced a deficit between the supply of grain and the demands of the population. In 1914, this deficit totaled only around 9.8 million quintals. In 1915, it more than doubled to 20.6 million quintals, and in 1916 nearly doubled again to 37.1 million quintals. By 1917, it stood at 37.8 million quintals (1). As the Treaty of Saint-Germain demanded reparations and dismantled the Austro-Hungarian empire causing lost of natural resources and workforce, Austrian agricultural production fell 53 percent from pre-war levels and starvation was a persistent problem in Austria. With the supply of domestic grain failing to provide for close to 53 percent of the need, Austria-Hungary has lost its autarky and its ability to feed itself. As a result of this meltdown, inflation and unemployment hit Austria. In 1919, six crowns (Austria's currency) equaled one U.S. dollar. In January, 1921, it was 177 crowns to the dollar. In August, 1922, 83,000 crowns. In late 1922 Austria's federal government managed to stop the spiraling inflation with help from the League of Nations in the form of a loan and the League's insistence on austerity measures. Despite the help from the League of Nations, unemployment even rose to an estimated 25%.

Because of the spiraling economy, Austria experienced political instabilities and polarization as Austro-fascism and anti-semitist ideas became popular. In the late 1920s and early 1930s, paramilitary political organizations were engaged in strikes and violent conflicts. In February 1934external image 99362-004-91037D17.jpg, the political conflict called the February Uprising or the Austrian Civil War occurred when the Austrian government suspended the Parliament and began to suspend the civil liberties of the Social Democratic Party. As a result, members of the Social Democratic Party were imprisoned and the violence spread all over the major cities of Austria. In the end, there were 1000 casualties from both sides and the governing Austro-fascist party won and consolidated the power by eliminating the multi-party system. Though the government sought to preserve Austrian independence, in February 1938, under renewed threats of military intervention from Germany, Chancellor Kurt Schuschnigg was forced to accept Austrian National Socialists (Nazis) in his government. On March 12, Germany sent its military forces into Austria and annexed the country ("Anschluss"), an action that received enthusiastic support among most Austrians.

(1) http://findarticles.com/p/articles/mi_7063/is_3_34/ai_n28818895 Kurt Schuschnigg