As World War II drew to a close, Albania's provisional government, run by the Albanian Communist Party, predecessor of the APL and a communist-dominated front organization, wasted little time taking full control of the economy. In December 1944, shortly after coming to power, the regime adopted new laws providing for strict state regulation of all industrial and commercial companies as well as foreign and domestic commercial relations. A "war-profits tax" and laws allowing the seizure of property belonging to anyone labeled an "enemy of the people" weakened the country's minuscule middle class. In early 1945, the Albanian authorities confiscated Italian- and German-owned assets, revoked all foreign economic concessions, nationalized all public utilities and means of transportation, and created a network of government-sponsored consumer cooperatives. Heedless of Albania's needs and comparative advantages, the party leaders followed Stalinism's dictates and pushed the development of heavy industry over agriculture and light industry.
The regime wooed the peasantry by curbing the power of the large landowners and granting concessions to peasants and sharecroppers. In January 1945, the new leaders canceled outstanding agricultural debts, slashed land-use charges by 75 percent, nationalized water resources, and offered peasants an opportunity to purchase irrigation water from the state at nominal fees. The Agrarian Reform Law of August 1945 destroyed what remained of the economic might of central and southern Albania's large landowners, replacing their sprawling estates with about 70,000 small farms. In effect, the government nationalized all forests and pasture lands and expropriated without compensation land belonging to individuals who had nonfarm sources of income. The land law allowed farmers to keep up to forty hectares if they earned their income exclusively from farming and worked the land with machinery. The landholdings of religious institutions and farmers without machinery were limited to twenty hectares. Landless peasants and people who owned less than five hectares of property received up to five hectares per family and additional hectarage for married sons who were household members. In some cases, the law required the new landowners to make nominal compensation to the former owners.
Another agricultural reform law enacted in 1946 limited rural property holdings to five hectares of arable land. In April of that year, military tribunals began giving prison sentences to peasants caught hoarding grain. The state also nationalized farm tools and draft animals, banned land sales and transfers, and required peasants to obtain government permission to slaughter animals. In June the authorities ordered peasants to deliver relatively high quotas of grain crops to state procurement centers at low, officially set prices. Using carrot-and-stick techniques, the government attempted to persuade peasants to join collective farms. Despite the fact that collective-farm members paid lower taxes and had smaller production quotas, the campaign succeeded in convincing only 2,428 peasant families to join collective farms by 1948. The government admitted that the campaign had failed. Poor yields, purges, and coercion characterized the agricultural sector for the next three years, and grain shortages became a chronic problem.
By early 1947, the government had in place much of the institutional framework required for a Stalinist economic system, nationalizing industries and seizing control of foreign trade and most domestic commerce. A currency reform delivered another blow to the embattled middle class. In April 1947, the Economic Planning Commission drew up the country's first economic plan, a nine-month set of selected production targets for the mining, manufacturing, and agricultural sectors denominated in terms of physical output rather than money. Albanian enterprises also began introducing the Soviet accounting system, and party zealots and teachers set about indoctrinating the population with the economic catechism of Marxism-Leninism.
Data as of April 1992