What is nationalization in business

nationalization

Nationalization, transfer of private companies into a public economy, according to the economic demands of socialism. From 1918 a serious concern of the Austrian Social Democrats, who did not want complete socialization as in the Soviet Union, but wanted all branches of production with key positions in the economy to be taken over under the control of the state. After the end of World War I, there was a state commission for socialization in parliament, chaired by O. Bauer, then by W. Ellenbogen, but its activities fizzled out after the National Council elections in 1920 because the Christian Socials now represented the strongest faction. After the Second World War, nationalization took place, in agreement with the bourgeois party, in order to be able to take over the companies and factories confiscated by the Allies after the decision of the Potsdam Conference of August 1, 1945 (which only applies to the areas of 3 western allies, but not that of the Soviet Union).

Nationalization took place in Austria through the 1st (Federal Law Gazette number 168, July 26, 1946) and the 2nd Nationalization Law (Federal Law Gazette number 81, March 26, 1947). From the 1st Nationalization Act, the 3 largest Austrian stock banks (Creditanstalt-Bankverein, Länderbank and Österreichisches Credit-Institut), as well as numerous large companies in the fields of mining (coal, iron ore, copper, lead and others), iron and steel industry, non-ferrous Metal industry, machine, plant and shipbuilding as well as chemical and petroleum industries affected. With the 2nd Nationalization Act, a large part of the electricity works became the property of the federal states, large power plants were subordinated to special companies with a majority of the federal government (Österreichische Elektrizitätswirtschaft AG, Verbundgesellschaft). In Austria, nationalization was only associated with the takeover of the share rights by the public sector, whereby the legal structure of the companies was retained and the previous owners received compensation, unless the takeover of former German property provided for expropriation without compensation. Only afterwards could the nationalization become effective for the USIA operations, which were under Soviet administration from 1946-55. Nationalized industry was of central economic importance in Austria for decades, until its deficit development in the 1970s and 1980s made extensive privatization necessary.