For ten years (1849-1859) this endured--Clericalism rampant, financial ruin, stagnation everywhere. Then Nationality burst its bonds once more. The war with Napoleon III. ended in Austria's loss of Lombardy and the creation of the Italian kingdom. Faced by the bankruptcy of the whole political and financial system, Francis Joseph launched into a period of constitutional experiment. Following the line of least resistance, as throughout his long reign, he inclined now to federalism, now to centralism, and he was still experimenting when the war of 1866 broke out. For Austria this war was decisive, for its results were her final expulsion both from Germany and from Italy, and the creation of that fatal Dual System which has distorted her whole subsequent development.
Under the Ausgleich or Compromise of 1867 the Dual Monarchy is composed of two equal and separate States, the Empire of Austria and the Kingdom of Hungary, each possessing a distinct parliament and cabinet of its own, but both sharing between them the three Joint Ministries of Foreign Affairs, War, and Finance. The chiefs of these three offices are equally responsible to both Delegations, which are committees of the two Parliaments, sitting alternately in Vienna and Budapest, but acting quite independently of each other.
This system really secured the political power in Austria and Hungary to two races--the Germans and the Magyars, and they, as the strongest in each country, bought off the two next strongest, the Poles and the Croats, by the grant of autonomy to Galicia and Croatia. The remaining eight were not considered at all. At first this ingenious device seemed to offer fair prospects of success. But ere long--for reasons which would lead us too far--the German hegemony broke down in Austria, and the whole balance was disturbed. It gradually became clear that the system was only workable when one scale was high in the air. The history of the past forty-seven years is the history of the gradual decay of the Dual System. Austria has progressed in many ways; her institutions have steadily grown freer, her political sense has developed, universal suffrage has been introduced, racial inequalities have been reduced though not abolished, industry, art, and general culture have advanced steadily. But she has been continually hampered by Hungary, where racial monopoly has grown worse and worse. The Magyar Chauvinists attempted the impossible--the assimilation by seven million people of twelve million others. Yet in spite of every imaginable trick--a corrupt and oppressive administration, gross manipulation of the franchise, press persecution, the suppression of schools and ruthless restriction of every form of culture--the non-Magyar races are stronger to-day than in 1867. And the result of the struggle has been in Hungary a decay of political standards, a corruption of public life, such as fills even the greatest optimists with despair.