The Compromise of 1867, which created the Dual Monarchy, gave the Hungarian government more control of its domestic affairs than it had possessed at any time since the Battle of Mohacs. However, the new government faced severe economic problems and the growing restiveness of ethnic minorities. World War I led to the disintegration of Austria-Hungary, and in the aftermath of the war, a series of governments--including a communist regime--assumed power in Buda and Pest (in 1872 the cities of Buda and Pest united to become Budapest).
Constitutional and Legal Framework
Once again a Habsburg emperor became king of Hungary, but the compromise strictly limited his power over the country's internal affairs, and the Hungarian government assumed control over its domestic affairs. The Hungarian government consisted of a prime minister and cabinet appointed by the emperor but responsible to a bicameral parliament elected by a narrow franchise. Joint Austro-Hungarian affairs were managed through "common" ministries of foreign affairs, defense, and finance. The respective ministers were responsible to delegations representing separate Austrian and Hungarian parliaments. Although the "common" ministry of defense administered the imperial and royal armies, the emperor acted as their commander in chief, and German remained the language of command in the military as a whole. The compromise designated that commercial and monetary policy, tariffs, the railroad, and indirect taxation were "common" concerns to be negotiated every ten years. The compromise also returned Transylvania, Vojvodina, and the military frontier to Hungary's jurisdiction.
At Franz Joseph's insistence, Hungary and Croatia reached a similar compromise in 1868, giving the Croats a special status in Hungary. The agreement granted the Croats autonomy over their internal affairs. The Croatian ban would now be nominated by the Hungarian prime minister and appointed by the king. Areas of "common" concern to Hungarians and Croats included finance, currency matters, commercial policy, the post office, and the railroad. Croatian became the official language of Croatia's government, and Croatian representatives discussing "common" affairs before the Hungarian diet were permitted to speak Croatian.
The Nationalities Law enacted in 1868 defined Hungary as a single nation comprising different nationalities whose members enjoyed equal rights in all areas except language. Although non-Hungarian languages could be used in local government, churches, and schools, Hungarian became the official language of the central government and universities. Many Hungarians thought the act too generous, while minority-group leaders rejected it as inadequate. Slovaks in northern Hungary, Romanians in Transylvania, and Serbs in Vojvodina all wanted more autonomy, and unrest followed the act's passage. The government took no further action concerning nationalities, and discontent fermented.
Anti-Semitism appeared in Hungary early in the century as a result of fear of economic competition. In 1840 a partial emancipation of the Jews allowed them to live anywhere except certain depressed mining cities. The Jewish Emancipation Act of 1868 gave Jews equality before the law and effectively eliminated all bars to their participation in the economy; nevertheless, informal barriers kept Jews from careers in politics and public life.
Rise of the Liberal Party
Franz Joseph appointed Gyula Andrassy--a member of Deak's party--prime minister in 1867. His government strongly favored the Compromise of 1867 and followed a laissez-faire economic policy. Guilds were abolished, workers were permitted to bargain for wages, and the government attempted to improve education and construct roads and railroads. Between 1850 and 1875, Hungary's farms prospered: grain prices were high, and exports tripled. But Hungary's economy accumulated capital too slowly, and the government relied heavily on foreign credits. In addition, the national and local bureaucracies began to grow immediately after the compromise became effective. Soon the cost of the bureaucracy outpaced the country's tax revenues, and the national debt soared. After an economic downturn in the mid-1870s, Deak's party succumbed to charges of financial mismanagement and scandal.
As a result of these economic problems, Kalman Tisza's Liberal Party, created in 1875, gained power in 1875. Tisza assembled a bureaucratic political machine that maintained control through corruption and manipulation of a woefully unrepresentative electoral system. In addition, Tisza's government had to withstand both dissatisfied nationalities and Hungarians who thought Tisza too submissive to the Austrians. The Liberals argued that the Dual Monarchy improved Hungary's economic position and enhanced its influence in European politics.
Tisza's government raised taxes, balanced the budget within several years of coming to power, and completed large road, railroad, and waterway projects. Commerce and industry expanded quickly. After 1880 the government abandoned its laissez-faire economic policies and encouraged industry with loans, subsidies, government contracts, tax exemptions, and other measures. The number of Hungarians who earned their living in industry doubled to 24.2 percent of the population between 1890 and 1910, while the number dependent on agriculture dropped from 82 to 62 percent. However, the 1880s and 1890s were depression years for the peasantry. Rail and steamship transport gave North American farmers access to European markets, and Europe's grain prices fell by 50 percent. Large landowners fought the downturn by seeking trade protection and other political remedies; the lesser nobles, whose farms failed in great numbers, sought positions in the still-burgeoning bureaucracy. By contrast, the peasantry resorted to subsistence farming and worked as laborers to earn money.
Hungary's population rose from 13 million to 20 million between 1850 and 1910. After 1867 Hungary's feudal society gave way to a more complex society that included the magnates, lesser nobles, middle class, working class, and peasantry. However, the magnates continued to wield great influence through several conservative parties because of their massive wealth and dominant position in the upper chamber of the diet. They fought modernization and sought both closer ties with Vienna and a restoration of Hungary's traditional social structure and institutions, arguing that agriculture should remain the mission of the nobility. They won protection from the market by reestablishment of a system of entail and also pushed for restriction of middle-class profiteering and restoration of corporal punishment. The Roman Catholic Church was a major ally of the magnates.
Some lesser-noble landowners survived the agrarian depression of the late nineteenth century and continued farming. Many others turned to the bureaucracy or to the professions.
In the mid-1800s, Hungary's middle class consisted of a small number of German and Jewish merchants and workshop owners who employed a few craftsmen. By the turn of the century, however, the middle class had grown in size and complexity and had become predominantly Jewish. In fact, Jews created the modern economy that supported Tisza's bureaucratic machine. In return, Tisza not only denounced anti-Semitism but also used his political machine to check the growth of an anti-Semitic party. In 1896 his successors passed legislation securing the Jews' final emancipation. By 1910 about 900,000 Jews made up approximately 5 percent of the population and about 23 percent of Budapest's citizenry. Jews accounted for 54 percent of commercial business owners, 85 percent of financial institution directors and owners, and 62 percent of all employees in commerce.
The rise of a working class came naturally with industrial development. By 1900 Hungary's mines and industries employed nearly 1.2 million people, representing 13 percent of the population. The government favored low wages to keep Hungarian products competitive on foreign markets and to prevent impoverished peasants from flocking to the city to find work. The government recognized the right to strike in 1884, but labor came under strong political pressure. In 1890 the Social Democratic Party was established and secretly formed alliances with the trade unions. The party soon enlisted one-third of Budapest's workers. By 1900 the party and union rolls listed more than 200,000 hard-core members, making it the largest secular organization the country had ever known. The diet passed laws to improve the lives of industrial workers, including providing medical and accident insurance, but it refused to extend them voting rights, arguing that broadening the franchise would give too many non-Hungarians the vote and threaten Hungarian domination. After the Compromise of 1867, the Hungarian government also launched an education reform in an effort to create a skilled, literate labor force. As a result, the literacy rate had climbed to 80 percent by 1910. Literacy raised the expectations of workers in agriculture and industry and made them ripe for participation in movements for political and social change.
The plight of the peasantry worsened drastically during the depression at the end of the nineteenth century. The rural population grew, and the size of the peasants' farm plots shrank as land was divided up by successive generations. By 1900 almost half of the country's landowners were scratching out a living from plots too small to meet basic needs, and many farm workers had no land at all. Many peasants chose to emigrate, and their departure rate reached approximately 50,000 annually in the 1870s and about 200,000 annually by 1907. The peasantry's share of the population dropped from 72.5 percent in 1890 to 68.4 percent in 1900. The countryside also was characterized by unrest, to which the government reacted by sending in troops, banning all farm-labor organizations, and passing other repressive legislation.
In the late nineteenth century, the Liberal Party passed laws that enhanced the government's power at the expense of the Roman Catholic Church. The parliament won the right to veto clerical appointments, and it reduced the church's nearly total domination of Hungary's education institutions. Additional laws eliminated the church's authority over a number of civil matters and, in the process, introduced civil marriage and divorce procedures.
The Liberal Party also worked with some success to create a unified, Magyarized state. Ignoring the Nationalities Law, they enacted laws that required the Hungarian language to be used in local government and increased the number of school subjects taught in that language. After 1890 the government succeeded in Magyarizing educated Slovaks, Germans, Croats, and Romanians and co-opting them into the bureaucracy, thus robbing the minority nationalities of an educated elite. Most minorities never learned to speak Hungarian, but the education system made them aware of their political rights, and their discontent with Magyarization mounted. Bureaucratic pressures and heightened fears of territorial claims against Hungary after the creation of new nation-states in the Balkans forced Tisza to outlaw "national agitation" and to use electoral legerdemain to deprive the minorities of representation. Nevertheless, in 1901 Romanian and Slovak national parties emerged undaunted by incidents of electoral violence and police repression.
SOURCE: Area Handbook of the US Library of Congress