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The Ausgleich of 1867, a compromise between the Habsburg rulers of Austria and the Magyar nobles of Hungary, created the constitutional dual monarchy of Austria-Hungary. The empire grew and developed economically under the shared government by the Austro-German and Magyar (Hungarian) minorities, but the diverse nationalities of its subjects led to its disintegration during World War I.

In 1867 the Ausgleich (compromise) transformed the monarchy of the Habsburg ruling house of Europe, which had existed since 1526, into the dual state of Austria-Hungary. Count Friedrich Ferdinand von Beust (1809–1886), the Austrian foreign minister, and Count Gyula Andrassy (1823–1890), a prominent Hungarian nobleman, conducted the final negotiations of the compromise. The then-ruling Emperor of Austria, Franz Joseph (reigned 1848–1916), viewing his lands essentially in terms of maintaining dynastic power and prestige (Hausmacht), sought to avenge losses suffered during the Italian War of 1859 and the Austro-Prussian War of 1866, which had stripped the monarchy of its territories in Italy and undercut its position in Germany. A continuation of the struggle against Prussia, however, required Hungarian cooperation. Hungarian leaders, determined to control non-Magyar (the dominant people of Hungary) populations in their part of the monarchy, wanted to remain connected to a great European state under conditions that maximized Hungary’s autonomy within the larger whole.

The Nature of the Dual Monarchy

Extended consultations produced a compromise between the dominant Austro-Germans and the Magyars. The Ausgleich in effect created two distinct states, each organized as a constitutional dual monarchy. Franz Joseph and his successors would tie together the two independent and equal states by functioning as emperor of Austria and king of Hungary. The Habsburg ruler would appoint common ministers of finance, foreign affairs, and war as well as the ministries of the separate states, thereby preserving dynastic authority over the joint armed forces and the conduct of foreign policy. Delegates from the respective parliaments would meet on a rotating basis in Vienna and Budapest to settle matters of shared concern. The Ausgleich soon led to the creation of unified monetary and postal systems, a central bank, an integrated railroad network, and a customs union sheltered behind a single tariff.

Despite the ramshackle character of the dual monarchy, governmental structures functioned with surprising efficiency and allowed Austria-Hungary to retain its status as an important counterweight in the European power balance. However, in an age when nation-states had become the paramount form of political organization in the Western world and when the colonial possessions of the United States, Japan, and a small circle of European countries were becoming the dominant mode of imperial organization, Franz Joseph’s empire represented an anachronism as potentially unsettling to continental stability as it was itself endangered by internal tensions and conflicts. For reasons resembling the failure of the new U.S. republic to confront the question of slavery at the time of its founding, those leaders who negotiated the Ausgleich did nothing to resolve the nationalities problem facing the dual monarchy.

The Ausgleich used the River Leith to divide Franz Joseph’s possessions. The empire of Austria (Cisleithania) contained Germans located primarily along the Danube River and in the Alpine areas of the old hereditary lands (Erblande), Slovenes in the provinces to their south, Czechs in the Bohemian Crown lands, Poles, Ruthenians (Carpatho-Ukrainians), large concentrations of Jews in Galicia, and Romanians in Bukovena. Italians inhabited the south Tyrol and the Adriatic coast. In the other part of the dual monarchy, Magyars lived on the plains traversed by the Danube and Tisza rivers and in eastern Transylvania. Slovaks lived to their north, Croats and Serbs to their south. Bosnia-Herzegovina contained substantial numbers of Muslims. In addition to pockets of Germans scattered throughout the kingdom of Hungary, Romanians occupied much of Transylvania. Nowhere did ethnic patterns coincide with historic borders, and nowhere could boundary lines be drawn that did not divide peoples of common descent who spoke the same language and shared a cultural heritage. Both the Germans and the Magyars constituted less than one-half of the population in the areas of the dual monarchy where the Ausgleich had ensured their predominance. The Germans, like the Poles, Ruthenians, Romanians, Serbs, and Italians, were developing emotional ties with peoples of their own nationality inhabiting lands lying beyond the dual monarchy’s borders.

Sources of Imperial Strength

Despite its lack of geographical cohesion and the centrifugal (tending away from centralization) forces of nationalism, Austria-Hungary managed to survive until military defeat in World War I finally precipitated its disintegration. The attachment that many of Franz Joseph’s subjects exuded for their emperor-king made him an indispensable source of stability. His long reign, venerable family heritage, steadfast demeanor, and unwavering commitment to his responsibilities elicited widespread devotion and support. Loyalty to this embodiment of the multinational Habsburg state remained strong in the armed forces, which imparted useful skills and broadening life experiences to soldiers and sailors of diverse backgrounds. Dedication to duty likewise remained high in the civil service, where bureaucrats played an increasingly influential role in society. The Roman Catholic Church, although diminishing in power, as well as the landed aristocracy throughout the empire, continued to pledge firm allegiance to the Habsburg dynasty.

Economic development provided another source of unity for Austria-Hungary. The growth of industry, notably the rising output of porcelain, textiles, and armaments in Bohemia, complemented the agricultural productivity of Hungary. The construction of railroads, expansion of banking, integration of regional markets—and therefore interdependence of various regions—all reinforced the dual monarchy’s economic interaction. On the other hand, the spread of industrialization intensified nationality problems, and growing numbers of impoverished peasants, driven by demographic pressures, streamed into the larger cities, accelerating the urbanization of society.

Vienna, whose inhabitants had numbered around 400,000 in 1848, mushroomed into a metropolis of 1.6 million by 1914. A once-predominantly German population became extraordinarily diverse ethnically, linguistically, socioeconomically, and culturally. As in other urban centers of the dual monarchy, such diversity probably contributed to its flourishing intellectual and artist life. Late nineteenth-century Vienna nurtured the work of Arnold Schoenberg and Gustav Mahler in music, Arthur Schnitzler and Hugo von Hofmannsthal in literature, Gustav Klimt and Egon Schiele in painting, as well as Sigmund Freud in psychiatry. Its university boasted world-renowned figures in fields ranging from history and philosophy to economics, medicine, and law. Despite its splendor, however, Vienna could not avoid the divisions and strife that came with its size and diversity. Here, as elsewhere in Franz Joseph’s domains, national consciousness and accompanying feelings of grievance became more acute whenever economic expectations, educational levels, and degrees of social sophistication rose significantly.

Developments in Austria

Pervasive nationality problems invariably complicated other political problems. Although the Austrian constitution guaranteed many basic rights, including the right of every national group to uphold its own language, religion, and culture, the right to vote operated through a class system designed to ensure the dominance of Germans in parliament. Immediately after 1867, a period of liberal ascendancy under Franz Joseph’s prime minister, Prince Carlos Auersperg (1814–1890) brought a series of reforms that broadened trial by jury, introduced free and compulsory elementary education, diminished the influence of the Catholic Church over education and its control over marriage and family law, established universal military service, reduced the severity of the penal code, outlawed discrimination against Jews, and accorded all Christian faiths legal equality.

The creation of the German Empire by Prince Otto von Bismarck after the Prussian defeat of France in 1871 dashed Franz Joseph’s aspirations to reassert Habsburg dominance in central Europe. Fears of losing Austria’s German-speaking lands to the newly united Germany brought to power a more conservative ministry under Count Karl Sigismund von Hohenwart (1824–1899). It attempted to appease the Slavic population by reorganizing the empire on a federal basis. Efforts to give the Czechs a status equal to that of the Magyars met with unyielding resistance from the two master nationalities, but the Hohenwart ministry did ensure the adherence of Galicia’s Poles by granting them administrative and cultural autonomy. Another liberal ministry led by Prince Adolf Auersperg (1821–1885) introduced the direct election of parliamentary representatives, which resulted in a Czech boycott because the reform favored urban and hence German voters.

Prolonged economic depression, political corruption, and liberal opposition to a foreign policy now directed by Andrassy compelled Franz Joseph to name Count Eduard Taaffe (1833–1895), a conservative Bohemian aristocrat, as his chief minister in 1879. Taaffee organized a political coalition of Slavs, clericals, and German conservatives known as “the iron ring.” He achieved stability by making concessions to his supporters without ever addressing their deepest discontents or resolving severe fiscal problems facing the Austrian government. Recurring political crises followed his resignation in 1893. The attempt to diminish opposition among aggrieved minorities with an election law that provided universal manhood suffrage failed to restore order to the parliamentary process.

The Position of Hungary

In their part of the dual monarchy, Hungarian leaders proved unable and often unwilling to address the grievances of subject peoples. Magyar landowners dominated the political process and utilized their power to assimilate or subjugate the other nationalities through relentless efforts at Magyarization. Only Croatia possessed a degree of administrative autonomy that gave its peoples their own diet, courts, and schools. Kalman Tisza (1830–1902), head of the Liberal Party and prime minister from 1875 to 1890, sought to uphold the Ausgleich while enhancing Hungary’s position within the dual monarchy. A resurgent Independence Party under the direction of Frenc Kossuth (1841–1914) assumed control of the government in 1890 and complicated relations with Austria until 1910 by pressing for a virtually separate Hungary. Istvan Tisza (1861–1918), who served as prime minister from 1903 to 1905 and again from 1913 to 1917, revised the Hungarian agenda. Determined to uphold the Ausgleich, he still increased his country’s prerogatives and influence whenever possible.

Foreign Affairs

Unremitting internal difficulties encouraged the leaders of Austria-Hungary to pursue an expansionist foreign policy. For reasons of dynastic prestige, military security, and economic advantage, the imperial and royal army occupied the Turkish provinces of Bosnia and Herzegovina in 1878. This occupation counterbalanced the recent loss of territory in Italy and alleviated fears that an intensifying South Slav irredenta aimed at the inclusion of Croatia and Slovenia in an independent Slavic state, and the political aspirations of Serbia, which sought to become the center of this imagined state, might unsettle minorities living within the dual monarchy. But the occupation complicated relations with Serbia, Italy, and Russia, which itself had ambitions in the Balkans, and pushed Austria-Hungary into a defensive alliance with Germany the following year.

The dual monarchy aroused heightened resentments when it formally annexed Bosnia and Herzegovina in 1908. The annexation raised serious questions in every European capital concerning Austria- Hungary’s intensions in the international sphere and increased its dependence on Germany, which had provided crucial if reluctant support. The annexation weakened the Triple Alliance, consisting of Germany, Austria-Hungary, and Italy, by alienating Italy and reinforced Russia’s commitment to the Triple Entente, which by 1907 had diplomatically tied Russia to England and France. By provoking further Serbian agitation among the dual monarchy’s South Slavs, the annexation ensured further trouble in southeastern Europe. Two Balkan wars during 1912–1913 left Serbian territorial aspirations unfulfilled, an outcome for which Serbian nationalists held Austria-Hungary responsible. Then, on 28 June 1914, young Bosnian extremists with connections in the Serbian capital of Belgrade assassinated Crown Prince Franz Ferdinand and his wife in Sarajevo, the Bosnian capital.

Consequences of World War I

The Austro-Hungarian government, feeling threatened, declared war on Serbia on 28 July; Russia’s backing of Serbia and Germany’s support of Austria- Hungary, its only reliable ally, set off mobilizations that turned a Balkan crisis into a European war. During the opening campaigns Austria-Hungary’s army suffered nearly 50 percent casualties and lost many experienced officers. Yet loyalty to Franz Joseph and his multinational dual monarchy remained strong. Victories in Italy, Serbia, and Romania restored morale but could not prevent hardship within the civilian population, and thus left effective authority with soldiers and bureaucrats. Subsequent military setbacks, restrictions on individual rights, mounting shortages, and a dependence on Germany rekindled nationalist animosities and ambitions.

The last Habsburg emperor-king, Karl I (r. 1916– 1918), failed to make a separate peace with Allied leaders in France and England, who belatedly recognized the need to break up his empire after their victory. The collapse of offensives mounted by Germany and Austria-Hungary during spring and summer of 1918 paved the way for an abrupt disintegration of the dual monarchy. In October the leaders of various national groups used Allied recognition to declare the independence of Czechoslovakia, Yugoslavia, and an expanded Romania. Territorially reduced states of Austria and Hungary set up republican governments after Karl I resigned in mid-November. Galicia became part of a new Poland. The end of the monarchy ruled by the Habsburg dynasty for nearly four hundred years left small successor states facing long-standing nationality conflicts in a now deeply divided east-central Europe.

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