The social and economic background to politics in Steyr was highly unusual. The town was a working class, social democratic stronghold isolated within an agrarian, conservative region. Moreover, its economy was unstable automobile works, dominated by one single, highly the Steyr-Werke. This thesis is concerned with the ways in which this unusual background dominated and defined the nature and development of the local social democratic movement between 1927 and 1934. It argues that this background conditioned the emergence of a distinctive, insular social democratic ethos which encapsulated a moderate, reformist approach to politics based not on ideological considerations, but on practical local experience. Between 1927 and 1929, the Steyr-Werke undertook a massive expansion of production and employment which triggered a local economic boom. The boom in the local economy supported and promoted the social democratic ethos. Conversely, the sudden shutdown of automobile production late in 1929 plunged the local economy into depression and undermined the rationale of the social democratic ethos, which became anachronistic and inconsistent with the new local economic background. However, the unwieldiness of the Social Democratic Party structure and the rigidly bureaucratic mentality of the party leadership precluded effective response to the new local conditions. The inability to respond stimulated the development of an opposition faction within the movement which rejected the authority and policies of the established party leadership, and which mobilised in support of a radically different, quasi-communist political strategy.