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 gulden to the bank. Each measure had, therefore, to be considered not only on its own merits, but in relation to the general balance of advantage, and an amendment in one might bring about the rejection of all. The whole series of acts had to be carried in two parliaments, each open to the influence of national jealousy and race hatred in its most extreme form, so that the negotiations have been conducted under serious difficulties, and the periodical settlement has always been a time of great anxiety. The first settlement occupied two full years, from 1876, when the negotiations began, to June 1878, when at last all the bills were carried successfully through the two parliaments; and it was necessary to prolong the previous arrangements (which expired at the end of 1877) till the middle of 1878. First the two ministries had to agree on the drafts of all the bills; then the bills had to be laid before the two parliaments. Each parliament elected a committee to consider them, and the two committees carried on long negotiations by notes supplemented by verbal discussions. Then followed the debates in the two parliaments; there was a ministerial crisis in Austria, because the House refused to accept the tax on coffee and petroleum which was recommended by the ministers; and finally a great council of all the ministers, with the emperor presiding, determined the compromise that was at last accepted. In 1887 things went better; there was some difficulty about the tariff, especially about the tax on petroleum, but Count Taaffe had a stronger position than the Austrian ministers of 1877. Ten years later, on the third renewal, the difficulties were still greater. They sprang from a double cause. First the Austrians were determined to get a more favourable division of the common expenses; that of 1867 still continued, although Hungary had grown relatively in wealth. Moreover, a proposed alteration in the taxes on sugar would be of considerable advantage to Hungary; the Austrians, therefore, demanded that henceforth the proportion should be not 68·6&#x202f;:&#x202f;31·4 but 58&#x202f;:&#x202f;42. On this there was a deadlock; all through 1897 and 1898 the Quota-Deputations failed to come to an agreement. This, however, was not the worst. Parliamentary government in Austria had broken down; the opposition had recourse to obstruction, and no business could be done. Their object was to drive out the Badeni government, and for that reason the obstruction was chiefly directed against the renewal of the Ausgleich; for, as this was the first necessity of state, no government could remain in office which failed to carry it through. The extreme parties of the Germans and the anti-Semites were also, for racial reasons, opposed to the whole system. When, therefore, the government at the end of 1897 introduced the necessary measures for prolonging the existing arrangements provisionally till the differences with Hungary had been settled, scenes of great disorder ensued, and at the end of the year the financial arrangements had not been prolonged, and neither the bank charter nor the Customs Union had been renewed. The government, therefore (Badeni having resigned), had to proclaim the necessary measures by imperial warrant. Next year it was even worse, for there was obstruction in Hungary as well as in Austria; the Quota-Deputations again came to no agreement, and the proposals for the renewal of the Bank charter, the reform of the currency, the renewal of the Customs Union, and the new taxes on beer and brandy, which were laid before parliament both at Vienna and Pest, were not carried in either country; this time, therefore, the existing arrangements had to be prolonged provisionally by imperial and royal warrant both in Austria and Hungary. During 1899 parliamentary peace was restored in Hungary by the resignation of Bánffy; in Austria, however, though there was again a change of ministry the only result was that the Czechs imitated the example of the Germans and resorted to obstruction so that still no business could be done. The Austrian ministry, therefore, came to an agreement with the Hungarians that the terms of the new Ausgleich should be finally proclaimed in Austria by imperial warrant; the Hungarians only giving their assent to this in return for considerable financial concessions.

Since the years 1866–1871 no period of Austro-Hungarian development has been so important as the years 1903–1907. The defeat of the old Austria by Prussia at Sadowa in 1866, the establishment of the Dual Monarchy in 1867 and the foundation of the new German empire in 1871, formed the starting-point of Austro-Hungarian history properly so called; but the Austro-Hungarian crisis of 1903–1906—a crisis temporarily settled but not definitively solved,—and the introduction of universal suffrage in Austria, discredited the original interpretation of the dual system and raised the question whether it represented the permanent form of the Austro-Hungarian polity.

At the close of the 19th century both states of the Dual Monarchy were visited by political crises of some severity. Parliamentary life in Austria was paralysed by the feud between Germans and Czechs that resulted directly from the Badeni language ordinances of 1897 and indirectly from the development of Slav influence, particularly that of Czechs and Poles during the Taaffe era (1879–1893). Government in Austria was carried on by cabinets of officials with the help of the emergency clause (paragraph 14) of the constitution. Ministers, nominally responsible to parliament, were in practice responsible only to the emperor. Thus during the closing years of last and the opening years of the present century, political life in Austria was at a low ebb and the constitution was observed in the letter rather than in spirit.

Hungary was apparently better situated. Despite the campaign of obstruction that overthrew the Bánffy and led to the formation of the Széll cabinet in 1899, the hegemony of the Liberal party which, under various names, had been the mainstay of dualism since 1867, appeared to be unshaken. But clear signs of the decay of the dualist and of the growth of an extreme nationalist Magyar spirit were already visible. The Army bills of 1889, which involved an increase of the peace footing of the joint Austro-Hungarian army, had been carried with difficulty, despite the efforts of Koloman Tisza and of Count Julius Andrássy the Elder. Demands tending towards the Magyarization of the joint army had been advanced and had found such an echo in Magyar public opinion that Count Andrássy was obliged solemnly to warn the country of the dangers of nationalist Chauvinism and to remind it of its obligations under the Compact of 1867. The struggle over the civil marriage and divorce laws that filled the greater part of the nineties served and was perhaps intended by the Liberal leaders to serve as a diversion in favour of the Liberal-dualist standpoint; nevertheless, Nationalist feeling found strong expression during the negotiations of Bánffy and Széll with various Austrian premiers for the renewal of the economic Ausgleich, or “Customs and Trade Alliance.” At the end of 1902 the Hungarian premier, Széll, concluded with the Austrian premier, Körber, a new customs and trade alliance