Though, however, Austria by her diplomatic attitude had secured, without striking a blow, the settlement in her sense of the Eastern Question, she emerged from the contest without allies and without friends. The "Holy Alliance" of the three autocratic northern powers, recemented at Münchengrätz in 1833, which had gained for Austria the decisive intervention of the tsar in 1849, had been hopelessly shattered by her attitude during the Crimean War. Russia, justly offended, drew closer her ties with Prussia, where Bismarck was already hatching the plans which were to mature in 1866; and, if the attitude of Napoleon in the Polish question prevented any revival of the alliance of Tilsit, the goodwill of Russia was assured for France in the coming struggle with Austria in Italy. Already the isolation of Austria had been conspicuous in the congress of Paris, where Cavour, the Sardinian plenipotentiary, laid bare before assembled Europe the scandal of her rule in Italy. It was emphasized during the campaign of 1859, when Sardinia, in alliance with France, laid the foundations of united Italy. The threat of Prussian intervention, which determined the provisions of the armistice of Villafranca, was due, not to love of Austria, but to fear of the undue aggrandizement of France. The campaign of 1859, and the diplomatic events that led up to it, are dealt with elsewhere (see Italy, Italian Wars, Napoleon III., Cavour). The results to Austria were two-fold. Externally, she lost all her Italian possessions except Venice; internally, her failure led to the necessity of conciliating public opinion by constitutional concessions.
The proclamation on the 26th of February 1861 of the new constitution for the whole monarchy, elaborated by Anton von Schmerling, though far from satisfying the national aspirations of the races within the empire, at least gave Austria a temporary popularity in Germany; the liberalism of the Habsburg monarchy was favourably contrasted with the "reactionary" policy of Prussia, where Bismarck was defying the majority of the diet in his determination to build up the military power of Prussia. The meeting of the princes summoned to Frankfort by the emperor Francis Joseph, in 1863, revealed the ascendancy of Austria among the smaller states of the Confederation; but it revealed also the impossibility of any consolidation of the Confederation without the co-operation of Prussia, which stood outside. Bismarck had long since decided that the matter could only be settled by the exclusion of Austria altogether, and that the means to this end were not discussion, but "Blood and Iron." The issue was forced by the developments of the tangled Schleswig-Holstein Question (q.v.), which led to the definitive breach between the two great German powers, to the campaign of 1866, and the collapse of Austria on the field of Koniggratz (July 3. See Seven Weeks' War).
(W. A. P.; A. Hl.)
The war of 1866 began a new era in the history of the Austrian empire. By the treaty of Prague (August 23, 1866) the emperor surrendered the position in Germany which his ancestors had held for so many centuries; Austria and Tirol, Bohemia and Salzburg, ceased to be German, and eight million Germans were cut off from all political union with their fellow-countrymen. At the Establishment of the dual monarchy. same time the surrender of Venetia completed the work of 1859, and the last remnant of the old-established Habsburg domination in Italy ceased. The war was immediately followed by a reorganization of the government. The Magyar nation, as well as the Czechs, had refused to recognize the validity of the constitution of 1861 which had established a common parliament for the whole empire; they demanded that the independence of the kingdom of Hungary should be restored. Even before the war the necessity of coming to terms with the Hungarians had been recognized. In June 1865 the emperor Francis Joseph visited Pest and replaced the chancellors of Transylvania and Hungary, Counts Francis Zichy and Nadásdy, supporters of the February constitution, by Count Majláth, a leader of the old conservative magnates. This was at once followed by the resignation of Schmerling, who was succeeded by Count Richard Belcredi. On the 20th of September the Reichsrath was prorogued, which was equivalent to the suspension of the constitution; and in December the emperor opened the Hungarian diet in person, with a speech from the throne that recognized the validity of the laws of 1848. Before any definite arrangement as to their re-introduction could be made, however, the war broke out; and after the defeats on the field of battle the Hungarian diet was able to make its own terms. They recognized no union between their country and the other parts of the monarchy except that which was based on the Pragmatic Sanction.[[5]] All recent innovations, all attempts made during the last hundred years to absorb Hungary in a greater Austria, were revoked. An agreement was made by which the emperor was to be crowned at Pest and take the ancient oath to the Golden Bull; Hungary (including Transylvania and Croatia) was to have its own parliament and its own ministry; Magyar was to be the official language; the emperor was to rule as king; there was to be complete separation of the finances; not even a common nationality was recognized between the Hungarians and the other subjects of the emperor; a Hungarian was to be a foreigner in Vienna, an Austrian a foreigner in Budapest. A large party wished indeed that nothing should be left but a purely personal union similar to that between England and Hanover. Deák and the majority agreed, however, that there should be certain institutions common to Hungary and the rest of the monarchy; these were—(1) foreign affairs, including the diplomatic and consular service; (2) the army and navy; (3) the control of the expenses required for these branches of the public service.
Recognizing in a declaratory act the legal existence of these common institutions, they also determined the method by which they should be administered. In doing so they carried out with great exactitude the principle of dualism, establishing in form a complete parity between Hungary on one side and the other territories of the king on the other. They made it a condition Delegations.
that there should be constitutional government in the rest of the monarchy as well as in Hungary, and a parliament in which all the other territories should be represented. From both the Hungarian and the Austrian parliament there was to be elected a Delegation, consisting of sixty members; to these Delegations the common ministers were to be responsible, and to them the estimates for the joint services were to be submitted. The annual meetings were to be held alternately in Vienna and in Pest. They were very careful that these Delegations should not overshadow the parliaments by which they were appointed. The Delegations were not to sit together; each was to meet separately; they were to communicate by writing, every document being accompanied by a translation in Magyar or German, as the case might be; only if after three times exchanging notes they failed to agree was there to be a common session; in that case there would be no discussion, and they were to vote in silence; a simple majority was sufficient. There were to be three ministers for common purposes—(1) for foreign affairs; (2) for war; (3) for finance; these ministers were responsible to the Delegations, but the Delegations were really given no legislative power. The minister of war controlled the common army, but even the laws determining the method by which the army was to be recruited had to be voted separately in each of the parliaments. The minister of finance had to lay before them the common budget, but they could not raise money or vote taxes; after they had passed the budget the money required had to be provided by the separate parliaments. Even the determination of the proportion which each half of the monarchy was to contribute was not left to the Delegations. It was to be fixed once every ten years by separate committees chosen for that purpose from the Austrian Reichsrath and the Hungarian parliament, the so-called Quota-Deputations. In addition to these "common affairs" the Hungarians, indeed, recognized that there were certain other matters which it was desirable should be managed on identical principles in the two halves of the monarchy—namely, customs and excise currency; the army and common railways. For these, however, no common institutions were created; they must be arranged by agreement; the ministers must confer and then introduce identical acts in the Hungarian and the Austrian parliaments.
The main principles of this agreement were decided during Financial settlement. the spring of 1867; but during this period the Austrians were not really consulted at all. The negotiations on behalf of the court of Vienna were entrusted to Beust, whom the emperor appointed chancellor of the empire and also minister-president of Austria. He had no previous experience of Austrian affairs, and was only anxious at once to bring about a settlement which would enable the empire to take a strong position in international politics. In the summer of 1867, however (the Austrian Reichsrath having met), the two parliaments each elected a deputation of fifteen members to arrange the financial settlement. The first matter was the debt, amounting to over 3000 million gulden, in addition to the floating debt, which had been contracted during recent years. The Hungarians laid down the principle that they were in no way responsible for debts contracted during a time when they had been deprived of their constitutional liberties; they consented, however, to pay each year 29½ million gulden towards the interest. The whole responsibility for the payment of the remainder of the interest, amounting annually to over a hundred million gulden, and the management of the debt, was left to the Austrians. The Hungarians wished that a considerable part of it should be repudiated. It was then agreed that the two states should form a Customs Union for the next ten years; the customs were to be paid to the common exchequer; all sums required in addition to this to meet the expenses were to be provided as to 30% by Hungary and as to 70% by Austria. After the financial question had been thus settled, the whole of these arrangements were then, on the 21st and the 24th of December 1867, enacted by the two parliaments, and the system of dualism was established.
The acts were accepted in Austria out of necessity; but no parties were really satisfied. The Germans, who accepted the principle of dualism, were indignant at the financial arrangements; for Hungary, while gaining more than an equal share of power, paid less than one-third of the common expenses. On the other hand, according to British ideas of taxable capacity, Hungary paid, and still pays, more than her share. The Germans, however, could at least hope that in the future the financial arrangements might be revised; the complaints of the Slav races were political, and within the constitution there was no means of remedy, for, while the settlement gave to the Hungarians all that they demanded, it deprived the Bohemians or Galicians of any hope that they would be able to obtain similar independence. Politically, the principle underlying the agreement was that the empire should be divided into two portions; in one of these the Magyars were to rule, in the other the Germans; in either section the Slav races—the Serbs and Croatians, the Czechs, Poles and Slovenes—were to be placed in a position of political inferiority.[[6]]
The logical consistency with which the principle of Dualism was carried out is shown in a change of title. By a letter to Beust of the 14th of November 1868 the emperor ordered that he should henceforward be styled, not as before "Emperor of Austria, King of Hungary, King of Bohemia, &c.," but "Emperor of Austria, King of Bohemia, &c., and Apostolic King of Hungary," thereby signifying the separation of the two districts over which he rules. His shorter style is "His Majesty the Emperor and King," and "His Imperial and Apostolic Royal Majesty"; the lands over which he rules are called "The Austrian-Hungarian Monarchy" or "The Austrian-Hungarian Realm." The new terminology, "Imperial and Royal" (Kaiserlich und Königlich), has since then been applied to all those branches of the public service which belong to the common ministries; this was first the case with the diplomatic service; not till 1889 was it applied to the army, which for some time kept up the old style of Kaiserlich-Königlich; in 1895 it was applied to the ministry of the imperial house, an office always held by the minister for foreign affairs. The minister for foreign affairs was at first called the Reichskanzler; but in 1871, when Andrássy succeeded Beust, this was given up in deference to Hungarian feeling, for it might be taken to imply that there was a single state of which he was minister. The old style Kaiserlich-Königlich, the "K.K." which has become so familiar through long use, is still retained in the Austrian half of the monarchy. There are, therefore, e.g., three ministries of finance: the Kaiserlich und Königlich for joint affairs; the Kaiserlich-Königlich for Austrian affairs; the Királyé for Hungary.
The settlement with Hungary consisted then of three parts:—(1) Common affairs. the political settlement, which was to be permanent and has since remained part of the fundamental constitution of the monarchy; (2) the periodical financial settlement, determining the partition of the common expenses as arranged by the Quota-Deputations and ratified by the parliaments; (3) the Customs Union and the agreement as to currency—a voluntary and terminable arrangement made between the two governments and parliaments. The history of the common affairs which fall under the management of the common ministries is, then, the history of the foreign policy of the empire and of the army. It is with this and this alone that the Delegations are occupied, and it is to this that we must now turn. The annual meetings call for little notice; they have generally been the occasion on which the foreign minister has explained and justified his policy; according to the English custom, red books, sometimes containing important despatches, have been laid before them; but the debates have caused less embarrassment to the government than is generally the case in parliamentary assemblies, and the army budget has generally been passed with few and unimportant alterations.