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Austria-Hungary was a loose federation (1867 - 1918) in which the kingdom of Hungary enjoyed self-government and proportional representation in joint affairs (principally foreign relations and defence) with the western and northern lands of the Austrian Empire under the Emperors (who were also Kings of Hungary) of the Habsburg dynasty.

The non-Hungarian part is often referred to as Cisleithania because most of its territory lay west (or to "this" side, from an Austrian perspective) of the Leithe river (though Galicia to the north-east was also a part), but in official Austrian parlance its constituent provinces were known collectively as "the lands represented in the Reichsrat (German for Imperial council, Cisleithania's parliament)".

The Ausgleich (German, "compromise") of February 1867 which inaugurated the Empire's dualist structure in place of the former unitary Austrian Empire (1804-1867) was a result of the latter's declining strength and loss of power in Italy (war of 1859) and Germany (Austro-Prussian War, 1866) and continued Hungarian dissatisfaction with rule from Vienna following Austria's suppression (with Russian support) of the Hungarian revolution of 1848-1849.

In particular, Hungarian leaders demanded and received the Emperor's coronation as King of Hungary as a reaffirmation of Hungary's historic privileges, and the establishment of a separate parliament at Budapest with the powers to enact laws for the historic lands of the Hungarian crown, though on a basis which would preserve the political dominance of ethnic Hungarians (more specifically of the country's large nobility and educated elite) and the exclusion from effective power of the country's large Romanian and Slav minorities.

Relations over the next half-century between the two halves of the Empire (in fact the Cisleithan part contained about 57% of the combined realm's population and a rather larger share of its economic resources) were punctuated by repeated disputes over shared external tariff arrangements and the financial contribution of each government to the common treasury. Under the terms of the Ausgleich, these matters were determined by an agreement which was to be renegotiated every ten years, which created political turmoil each time the agreement was up for renewal. The disputes between the halves of the empire culminated in the mid-1900s in a prolonged constitutional crisis triggered by disagreement over the language of command in Hungarian army units, and deepened by the advent to power in Budapest (April 1906) of a Hungarian nationalist coalition. The common arrangements were renewed provisionally (October 1907, November 1917) on an "as is" basis.

The dominant ethnic group in each part of the Empire constituted a minority in the area which it controlled: Germans numbered only some 36% of Cisleithania's population, and Magyars slightly under a half of Hungary's. Czechs (the majority in the Austrian crownlands of Bohemia, Moravia and Austrian Silesia), Poles and Ukrainians (in Galicia) and Slovenians (in Carniola, Carinthia, southern Styria (mostly today's Slovenia) and Istria) each sought a greater say in Cisleithan affairs, while Hungary's Romanians, some Slovenians in Panonia, Croats[?], Slovaks[?] and Serbs challenged Magyar dominance, the Romanians of Transylvania and Serbs of the western Banat[?] (today's Vojvodina) looking also to union with their fellows in the newly-founded kingdoms of Romania and Serbia.

Though Hungary's leaders were on the whole less willing than their German Austrian counterparts to share power with their subject minorities, they granted a large measure of autonomy to the kingdom of Croatia in 1868, parallelling to some extent their own accommodation within the Empire the previous year.

The Imperial (Austrian) and Royal (Hungarian) governments differed also to some extent in their attitude toward the Empire's common foreign policy, leaders in Budapest fearing particularly annexations of territory which would add to the kingdom's non-Hungarian populations, though the Empire's alliance with Germany against Russia from October 1879 (see Dual Alliance, 1879 commanded general acceptance, the latter power being seen as the principal external military threat to both parts.

The territory of Bosnia and Herzegovina, occupied by Austro-Hungarian forces since August 1878 under the Treaty of Berlin was annexed in October 1908 as a common holding under the control of the finance ministry rather than being attached to either government, an anomalous situation which led some in Vienna to contemplate its combination with Croatia in a third component of the Empire combining its southern Slav regions under the domination of Croat leaders who might be more sympathetic to Vienna than Budapest.

The outbreak of World War I in July-August 1914, triggered by the assassination by Bosnian Serb militants in the Bosnian capital Sarajevo of Franz Ferdinand, Archduke of Austria, heir to his childless uncle the Emperor Franz Josef, brought the Empire into conflict with Russia and her allies France and the United Kingdom as well as Serbia and (from May 1915) Italy. Though Austro-Hungarian troops initially defended the routes into Hungary and repulsed Italian advances in Gorizia[?], even advancing into enemy territory following German-led victories in Galicia (May 1915) and at Caporetto (October 1917), the strain of war, enemy blockade and increasing anti-war agitation among socialists and national minorities intent on taking power led to the Empire's disintegration in October-December 1918.

While first the Czechs (October 28) and then the Hungarians proclaimed their independence, Transylvania's majority joined Romania (taking with them a large Hungarian minority) and the southern Slav lands united with Serbia as the State of the Serbs, Croats and Slovenians (later Yugoslavia). Both Austria and Hungary became republics, exiling the Habsburg family in perpetuity. A pro-monarchist revival in Hungary after the communist revolution and Romanian intervention of 1919 led to the country's formal reversion to a kingdom (March 1920), but with the throne vacant. Attempts by the last Emperor, Charles I, to regain power in Budapest (March, October 1921) ended in his deportation to Madeira, where he died the following year.

Historical views of Austria-Hungary have varied throughout the 20th century:
Historians in the early part of the century tended to view the Habsburg polity as despotic and obsolete. Subsequent experience of the region's inter-war "balkanization" and more recent nationality conflicts, coupled with wider efforts at European federalism, have resulted in a more favorable assessment of Austria-Hungary. One controversy among historians remains whether the Empire's collapse was the inevitable result of a decades-long decline or whether it would have survived in some form in the absence of military defeat in World War I.

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