(EMPIRE and NATIONALISM in EUROPE, 1850-1900 – continued)
Hungarians had been refusing to participate in their own subjugation in the wake of the Austrian and Russian defeat of the Hungarians in 1849. And the subjugation of the Hungarians had been a financial liability for Austria. Then in 1866-67, with the defeat of Austria by Prussia, a weakened Austria was ready to compromise with the Hungarians – in other words, the Magyars.
In 1867, Franz Joseph and a Magyar delegation signed the "Ausgleich," or Compromise, which divided Austria's empire in two, creating Austria-Hungary. The Magyars were given power within Hungary to make rules regarding other ethnicities as they saw fit – ethnicities such as Croats, Serbs, Slovaks and Romanians. "You take care of your Slavs and we'll take care of ours," was the sentiment of those accepting the empire's division, with Austria having not only Germans but Czechs, the Poles of Galacia and most Slovenes. Austria and Hungary were now to have the same monarch – Franz Joseph – and Austria and Hungary were to have common ministries for finance, foreign affairs and war, the Magyars agreeing to leave defense and foreign policy to Franz Joseph's government and agreeing to pay their share of the empire's budget. Austria and Hungary had their own prime minister and parliament, and every ten years a tariff and trade agreement was to be negotiated, in addition to an agreement on the amount of money each was to contribute to the empire's treasury.
Within the empire, the Poles remained both anti-Russian and anti-German. Within the Austrian half of the empire the Czechs were largely in sympathy with their Russian fellow Slavs. And Germans in Austria identified more with Germans in general, and they were hostile toward Czechs who were challenging the dominant use of the German language in the courts, bureaucracy and schools.
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