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34: Government

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THE present constitution of the Austro-Hungarian monarchy is based on the Pragmatic Sanction of the emperor Charles VI., first promulgated on the 19th of April 1713) whereby the succession to the throne is settled in the dynasty of Habsburg-Lorraine, descending by right of primogeniture and lineal succession to male heirs, and, in case of their extinction, to the female line, and whereby the indissolubility and indivisibility of the monarchy are determined; is based, further, on the diploma of the emperor Francis Joseph I. of the 20th of October 1860, whereby the constitutional form of government is introduced; and, lastly, on the so-called Ausgleich or "Compromise," concluded on the 8th of February 1867, whereby the relations between Austria and Hungary were regulated.

The two separate states - Austria and Hungary - are completely independent of each other and each has its own parliament and has own government. The unity of the monarchy in expressed in the common head of the state, who bears the title Emperor of Austria and Apostolic King of Hungary, and in the common administration of a series of affairs, which affect both halves of the Dual Monarchy. These are: (1) foreign affairs, including diplomatic and consular representation abroad; (2) the army, including the navy, but excluding the annual voting of rends, and the special any of each state; (3) finance in so far as it concerns joint expenditure.

For the administration of these common affairs there are three joint ministries: the ministry of foreign affairs and of the imperial and royal house, the ministry of war, and the ministry of finance. It must be noted that the authority of the joint ministers is restricted to common affairs, and that they are not allowed to direct or exercise any influence on affairs of government affecting separately one of the halves of the monarchy. The minister of foreign affairs conduct the intentional relations of the Dual Monarchy, and can conclude international treaties. But commercial treaties, and such state treaties as impose burdens on the state, or parts of the state, or involve a change of territory, require the parliamentary assent of both states. The minister of war is the head for the administration of all military affairs, except those of the Austrian Landwehr and of the Hungarian Honvéds, which are committed to the ministries for national defence of the two respective states. But the supreme command of the army is vested in the monarch, who has the power to take all measures regarding the whole army. It follows, therefore, that the total armed power of the Dual Monarchy forms a whole under the supreme command of the sovereign. The minister of finance has charge of the finances of common affairs, prepares the joint budget, and administers the joint state debt. (Till 1909 the provinces of Bosnia and Herzegovina were also administered by the joint minister of finance, excepting matters exclusively dependent on the minister of war.) For the control of the common finances, there is appointed a joint supreme court of account, which audit the accounts of the joint ministries. Budget. - Side by side with the budget of each state of the Dual Monarchy, there is a common budget, which comprises the expenditure necessary for the common affairs, namely for the conduct of foreign affairs, for the army, and for the ministry of finance. The revenues of the joint budget consist of the revenues of the joint ministries, the net proceeds of the customs and the quota, or the proportional contributions of the two states. This quota is fixed for a period of years, and generally coincides with the duration of the customs and commercial treaty. Until 1897 Austria contributed 70 %, and Hungary 30 % of the joint expenditure, remaining after deduction of the common revenue. It was then decided that from 1897 to July 1907 the quota should be 66 46/49 for Austria, and 33 3/49 for Hungary. In 1907 Hungary's contribution was raised to 36.4 %. Of the total charges 2 % is first of all debited to Hungary on account of the incorporation with this state of the former military frontier.

The Budget estimates for the common administration were as follows in 1905:

Revenue -
Ministry of Foreign Affairs £21,167
Ministry of War 305,907
Ministry of Finance 4,870
Board of Control 18
The Customs 4,780,000
Proportional contributions 15,650,448
Total £20,762,410
Expenditure -
Ministry of Foreign Affairs £485,480
Ministry of War -
Army 12,679,160
Navy 2,306,100
Ministry of Finance 177,000
Board of Control 13,250
Extraordinary Military Expenditure 4,785,500
Extraordinary Military Expenditure in Bosnia 315,920
Total £20,762,410¹

¹ In 1912 the Budget estimates were £24,000,000.

The following table gives in thousands sterling the joint budget for the years 1875-1905:

1875. 1885. 1895. 1900. 1905.
Ministry of Foreign Affairs
Ministry of War (Army and Navy)
Ministry of Finance
Supreme Court of Accounts
Total 9566.1 10,631.5 13,053.1 14,508.4 20,430.3
For the above Departments
Proportional Contributions
Total 9566.1 10,631.5 13,053.1 14,508.4 20,430.3

Debt. - Besides the debts of each state of the Dual Monarchy, there is a general debt which is borne jointly by Austria and Hungary. The following table gives in millions sterling the amount of the general debt for the years 1875-1905:

1875. 1885. 1895. 1900. 1905.
232.41 231.02 229.67 226.81 224.31

Delegations. - The constitutional right of voting money applicable to the common affairs and of its political control is exercised by the Delegations, which consist each of sixty members, chosen for one year, one-third of them by the Austrian Herrenhaus (Upper House) and the Hungarian Table of Magnates (Upper House), and two-thirds of them by the Austrian and the Hungarian Houses of Representatives. The delegations are annually summoned by the monarch alternately to Vienna and to Budapest. Each delegation has its separate sittings, both alike public. Their decisions are reciprocally communicated in writing, and, in case of non-agreement, their deliberations are renewed. Should three such interchanges be made without agreement, a common plenary sitting is held of an equal number of both delegations; and these collectively, without discussion, decide the question by common vote. The common decisions of both houses require for their validity the sanction of the monarch. Each delegation has the right to formulate resolutions independently and to call to account and arraign the common ministers. In the exercise of their office the members of both delegations are irresponsible, enjoying constitutional immunity.

The Austro-Hungarian Bank. - Common to the two states of the monarchy is the "Austro-Hungarian Bank," which possesses a legal exclusive right to the issue of bank- notes. It was founded in 1816, and had the title of the Austrian National Bank until 1878 when it received its actual name. In virtue of the new bank statute of the year 1899 the bank is a joint-stock company, with a stock of £8,780,000. The bank's notes of issue must be covered to the extent of two-fifths by legal specie (gold and current silver) in reserve the rest of the paper circulation, according to bank usage. The state, under certain conditions, takes a portion of the clear profits of the bank. The management of the bank and the supervision exercised over it by the state are established on a footing of equality, both states having each the same influence. The accounts of the bank at the end of 1900 were as follows: capital, £8,780,000; reserve fund, £428,250; note circulation, £62,251,000 cash, £50,754,000. In 1907 the reserve fund was £548,041; note circulation, £84,501,000; cash, £60,036,625. The charter of the bank, which expired in 1897, was renewed until the end of 1910. In the Hungarian ministerial crisis of 1909 the question of the renewal of the charter played a conspicuous part, the more extreme members of the Independence party demanding the establishment of separate banks for Austria and Hungary with, at most, common superintendence. After a long delay and strenuous opposition in the Hungarian parliament the charter of the bank, which expired on December 1, 1910, was renewed until December 31. 1917. The new charter differs from the old notably in regard to the obligatory redemption of bank-notes in gold. It does not compel the bank to redeem its notes in gold but throws on the governors the responsibility of deciding the moment when specie payment may be made obligatory without danger to the financial and commercial stability of the Monarchy, and defines the procedure by which the legislative sanction for the enforcement of specie payments is eventually to be obtained. It increases from £16,666,000 to £25,000,000 the non-funded bank-note circulation which the bank is entitled to issue without incurring the punitive 5 per cent tax, and like the old charter it authorizes the bank to reckon among its metallic reserve £2,500,000 of foreign gold bills, and other gold credits. The funded bank-note circulation remains fixed at two-and-a-half times the amount of the total metallic reserve. The most important proviso of the new charter is the obligation imposed upon the bank to maintain the gold bill policy, by which it has hitherto succeeded in regulating the rates of foreign exchanges in such a manner that, despite the existence of an optional gold standard, the Austro-Hungarian currency has been kept on a par with that of gold standard countries. Failure would entail immediate loss of the charter.


Austria proper is a parliamentary or constitutional (limited) monarchy, its monarch bearing the title of emperor. The succession to the throne is hereditary, in the order of primogeniture, in the male line of the house of Habsburg-Lothringen; and failing this, in the female line. The monarch must be a member of the Roman Catholic Church. The emperor of Austria is also king of Hungary, but except for having the same monarch and a few common affairs the two states are quite independent of one another. The emperor has the supreme command over the armed forces of the country, has the right to confer degrees of nobility, and has the prerogatives of pardon for criminals. He is the head of the executive power, and shares the legislative power with the Reichsrat, and justice is administered in his name. The constitution of Austria is based upon the following statutes: (1) the Pragmatic Sanction of the emperor Charles VI., first promulgated on the 19th of April 1713, which regulated the succession to the throne; (2) the Pragmatic Patent of the emperor Francis II. of the 1st of August 1804, by which he took the title of Emperor of Austria; (3) the Diploma of the emperor Francis Joseph I. of the 20th of October 1860, by which the constitutional form of government was introduced, (4) the Diploma of the emperor Francis Joseph I. of the 26th of February 1861, by which the provincial diets were created; (5) the six fundamental laws of the 21st of December 1867, which contain the exposition and guarantee of the civil and political rights of the citizen, the organization of justice, the organization and method of election for the Reichsrat, &c.

The executive power is vested in the council of ministers, at whose head is the minister- president. There are eight ministries, namely, the ministry of the interior, of national defence, of worship and instruction, of finance, of commerce, of agriculture, of justice, and of railways. There are, further, two ministries, without portfolio, for Galicia and Bohemia. The civil administration in the different provinces is carried out by governors or stadtholders (Statthalter), to whom are subordinate the heads of the 347 districts in which Austria was divided in 1900, and of the 33 towns with special statute, i.e., of the towns which have also the management of the civil administration. Local self-government of the provinces, districts and communities is also granted, and is exercised by various elective bodies. Thus the autonomous provincial administration is discharged by the provincial committees elected by the local diets; and the affairs of the communities are discharged by an elected communal council.

The legislative power for all the kingdoms and lands which constitute Austria is vested in the Reichsrat. It consists of two Houses: an Upper House (the Herrenhaus), and a Lower House (the Abgeordnetenhaus). The Upper House is composed of (1) princes of the imperial house, who are of age (14 in 1907); (2) of the members of the large landed nobility, to which the emperor had conferred this right, and which is hereditary in their family (78 in 1907); (3) of 9 archbishops and 8 prince-bishops; (4) of life members nominated by the emperor for distinguished services (170 in 1907). The Lower House has undergone considerable changes since its creation in 1861, by the various modifications of the electoral laws passed in 1867, 1873, 1892, 1896 and 1907. The general spirit of those modifications was to broaden the electoral basis, and to extend the franchise to a larger number of citizens. The law of the 26th of January 1907 granted universal franchise to Austrian male citizens over twenty-four years of age, who have resided for a year in the place of election. The Lower House consists of 516 members, elected for a period of six years. The members receive payment for their services, as well as an indemnity for travelling expenses. A bill to become law must pass through both Houses, and must receive the sanction of the emperor. The emperor is bound to summon the Reichsrat annually.

According to the imperial Diploma of the 26th February 1861, local diets have been created for the legislation of matters of local interest. These provincial parliaments are 17 in number, and their membership varies from 22 members, which compose the diet of Görz and Gradisca, to the 242 members which constitute that of Bohemia. They assemble annually and are composed of members elected for a period of six years, and of members ex-officio, namely, the archbishops and bishops of the respective provinces, and the rector of the local university.

Finance. - The growth of the Austrian budget is shown by the following figures:

1885. 1895. 1900. 1905.
Expenditure . . . . . . . . £44,121,600 £55,396,916 £66,003,494 £74,013,000
Revenue . . . . . . . . . . 43,714,666 57,446,091 66,020,475 74,079,000

The chief sources of revenue are direct taxes, indirect taxes, customs duties, post and telegraph and post-office savings banks receipts, railway receipts, and profits or royalties on forests, domains and mining. The direct taxes are divided into two groups, real and personal; the former include the land tax and house-rent tax, and the latter the personal income tax, tax on salaries, tax on commercial and industrial establishments, tax on all business with properly audited accounts (like the limited liability companies), and tax on investments. The principal indirect taxes are the tobacco monopoly, stamps and fees excise duties on sugar, alcohol and beer, the salt monopoly, excise duty on mineral oil, and excise duty on meat and cattle for slaughtering.

The national debt of Austria is divided into two groups, a general national debt, incurred jointly by the two halves of the Austro-Hungarian monarchy for common affairs, and is therefore jointly borne by both parts, and a separate debt owed only by Austria alone. The following table shows the growth of the Austrian debt in millions sterling:

1885. 1890. 1895. 1900. 1905.
45 88.23 119.60 140.68 167.91

At the close of 1903 the debt of Austria was £156,724,000, an increase since 1900 of £16,044,000. This large increase is due to the great expenditure on public works, as rail- ways, navigable canals, harbour works, &c., started by the Austrian government since 1900.


Hungary is a constitutional monarchy, its monarch bearing the title of king. The succession to the throne is hereditary in the order of primogeniture in the male line of the house of Habsburg-Lorraine; and failing this, in the female line. The king must be a member of the Roman Catholic Church. The king of Hungary is also emperor of Austria, but beyond this personal union, and certain matters regulated by both governments jointly, the two states are independent of each other, having each its own constitution, legislature and administration. The king is the head of the executive, the supreme commander of the armed forces of the nation, and shares the legislative power with the parliament.

The constitution of Hungary is in many respects strikingly analogous to that of Great Britain, more especially in the fact that it is based on no written document but on immemorial prescription, confirmed or modified by a series of enactments, of which the earliest and most famous was the Golden Bull of Andrew III. (1222), the Magna Carta of Hungary. The ancient constitution, often suspended and modified, based upon this charter, was reformed under the influence of Western Liberalism in 1848, the supremacy of the Magyar race, however, being secured by a somewhat narrow franchise. Suspended after the collapse of the Hungarian revolt in 1849 for some eighteen years, the constitution was restored in 1867 under the terms of the Con promise (Ausgleich) with Austria, which established the actual organization of the country (see History, below).

The legislative power is vested in the parliament (Országgyûlés), which consists of two houses: an upper house or the House of Magnates (Fõrendiház), and a lower house or House of Representatives (Képviselõház). The House of Magnates is composed as follows: princes of the royal house who have attained their majority (16 in 1904); hereditary peers who pay at least £250 a year land tax (237 in 1904); high dignitaries of the Roman Catholic and Eastern Orthodox churches (42 in 1904); representatives of the Protestant confessions (13 in 1904); life peers appointed by the crown, not exceeding 50 in number, and life peers elected by the house itself (73 altogether in 1904); members ex officio consisting of state dignitaries and high judges (19 in 1904); and three delegates of Croatia-Slavonia. The House of Representatives consists of members elected, under the Electoral Law of 1874, by a complicated franchise based upon property, taxation, profession or official position, and ancestral privileges.¹ The house consists of 453 members, of which 413 are deputies elected in Hungary and 43 delegates of Croatia-Slavonia sent by the parliament of that province The members are elected for five years and receive payment for their services. The parliament is summoned annually by the king at Budapest. The official language is Magyar, but the delegates of Croatia-Slavonia may use their own language. The Hungarian parliament has power to legislate on all matters concerning Hungary, but for Croatia- Slavonia only on matters which concern these provinces in common with Hungary. The executive power is vested in a responsible cabinet, consisting of ten ministers, namely, the president of the council, the minister of the interior, of national defence, of education and public worship, of finance, of agriculture, of industry and commerce, of justice, the minister for Croatia-Slavonia, and the minister ad latus or near the king's person. As regards local government, the country is divided into municipalities or counties, which possess a certain amount of self-government. Hungary proper is divided into sixty-three rural, and - including Fiume - twenty-six urban municipalities (see section on Administrative Divisions). These urban municipalities are towns which for their local government are independent of the counties in which they are situated, and have, therefore, a larger amount of municipal autonomy than the communes or the other towns. The administration of the municipalities is carried on by an official appointed by the king, aided by a representative body. The representative body is composed half of elected members, and half of citizens who pay the highest taxes. Since 1876 each municipality has a council of twenty members to exercise control over its administration.

Administrative Divisions. - Since 1867 the administrative and political divisions of the lands belonging to the Hungarian crown have been in great measure remodelled. In 1868 Transylvania was definitely reunited to Hungary proper, and the town and district of Fiume declared autonomous. In 1873 part of the "Military Frontier" was united with Hungary proper and part with Croatia-Slavonia. Hungary proper, according to ancient usage, was generally divided into four great divisions or circles, and Transylvania up to 1876 was regarded as the fifth. In 1876 a general system of counties was introduced. According to this division Hungary proper is divided into seven circles, of which Transylvania forms one.

The whole country is divided into the following counties:

(a) The circle on the left bank of the Danube contains eleven counties: (1) Árva,
(2) Bars, (3) Esztergom, (4) Hont, (5) Liptó, (6) Nógrád, (7) Nyitra, (8) Pozsony (Pressburg), (9) Trencsén, (10) Túrócz and (11) Zólyom.
(b) The circle on the right bank of the Danube contains eleven counties: Baranya,
Fejér, Gyõr, Komárom, Moson, Somogy, Sopron, Tolna, Vas, Veszprém and Zala.
(c) The circle between the Danube and Theiss contains five counties:
Bács-Bodrog, Csongrád, Heves, Jász-Nagykun-Szolnok and Pest-Pilis-Solt-Kiskun.
(d) The circle on the right bank of the Theiss contains eight counties:
Abaúj-Torna, Bereg, Borsod, Gömör, Kis-Hont, Sáros, Szepes, Ung, Zemplén.
(e) The circle on the left bank of the Theiss contains eight counties: Békés, Bihar,
Hajdú, Máramaros, Szabolcs, Szatmár, Szilágy and Ugocsa.
(f) The circle between the Theiss and the Maros contains five counties: Arad,
Csanád, Krassó-Szörény, Temes and Torontál.
(g) Transylvania contains fifteen counties: Alsó-Fehér, Besztercze-Naszód,
Brassó, Csík, Fogaras, Háromszék, Hunyad, Kis-Küküllõ, Kolozs, Maros-Torda, Nagy-Küküllõ, Szeben, Szolnok-Doboka, Torda-Aranyos and Udvarhely.

¹ The franchise is "probably the most illiberal in Europe." Servants, in the widest sense of the word, apprenticed workmen and agricultural labourers are carefully excluded, The result is that the working classes are wholly unrepresented in the parliament, only 6 % of them, and 13 % of the small trading class, possessing the franchise, which is only enjoyed by 6 % of the entire population.

Fiume town and district forms a separate division.

Croatia-Slavonia is divided into eight counties:
Belovár-Kõrös, Lika-Krbava, Modrus- Fiume, Pozsega, Szerém, Varasd, Verõcze and Zágráb.

Besides these sixty-three rural counties for Hungary, and eight for Croatia-Slavonia Hungary has twenty-six urban counties or towns with municipal rights. These are: Arad, Baja, Debreczen, Gyõr, Hódmezõ-Vásárhely, Kassa, Kecskemét, Kolozsvár, Komárom Maros-Vásárhely, Nagyvárad, Pancsova, Pécs, Pozsony, Selmeczbánya, Bélabánya, Sopron Szabadka, Szatmár-Németi, Szeged, Székesfehérvár, Temesvár, Újvidék, Versecz, Zombor, the town of Fiume, and Budapest, the capital of the country.

In Croatia-Slavonia there are four urban counties or towns with municipal rights namely: Eszék, Varasd, Zágráb and Zimony.

Justice. - The judicial power is independent of the administrative power. The judicial authorities in Hungary are: (1) the district courts with single judges (458 in 1905) (2) the county courts with collegiate judgeships (76 in number); to these are attached 15 jury courts for press offences. These are courts of first instance. (3) Royal Tables (12 in number), which are courts of second instance, established at Budapest, Debreczen, Gyõr Kassa, Kolozsvár, Maros-Vásárhely, Nagyvárad, Pécs, Pressburg, Szeged. Temesvár and Zágráb. (4) The Royal Supreme Court at Budapest, and the Supreme Court of Justice or Table of Septemvirs, at Zágráb, which are the highest judicial authorities. There are also a special commercial court at Budapest, a naval court at Fiume, and special army courts.

Finance. - After the revolution of 1848-1849 the Hungarian budget was amalgamated with the Austrian, and it was only after the Compromise of 1867 that Hungary received a separate budget. The development of the Hungarian kingdom can be better appreciated by a comparison of the estimates for the year 1849 prepared by the Hungarian minister of finance, which shows a revenue of £1,335,000 and an expenditure of £5,166,000 (including £3,500,000 for warlike purposes), with the budget of 1905, which shows a revenue of £51,583,000, and an expenditure of about the same sum. Owing to the amount spent on railways, the Fiume harbour works and other causes, the Hungarian budgets after 1867 showed big annual deficits, until in 1888 great reforms were introduced and the finances of the country were established on a more solid basis. During the years 1891-1895 the annual revenue was £42,100,000 an d the expenditure £39,000,000; in 1900 the revenue and expenditure balanced themselves at £45,400,000. The following figures in later years are typical:

Revenue. Expenditure.
1904 £49,611,200 £49,592,400
1908 57,896,845 57,894,923

The ordinary revenue of the state is derived from direct and indirect taxation, monopolies, stamp dues, &c. In 1904 direct taxes amounted to £9,048,000, and the chief heads of direct taxes yielded as follows: ground tax, £2,317,000; trade tax, £1,879,000; income tax, £1,400,000; house tax, £1,000,000. Indirect taxes amounted in 1904 to £7,363,000 and the chief heads of indirect taxation yielded as follows: taxes on alcoholic drinks £4,375,000; sugar tax, £1,292,000; petroleum tax, £418,000; meat tax, £375,000. The principal monopolies yielded as follows: salt monopoly, £1,210,000; tobacco monopoly £2,850,000; lottery monopoly, £105,000. Other revenues yielded as follows: stamp taxes and dues, £3,632,000; state railways, £3,545,000; post and telegraphs, £710,000; state landed property and forests, £250,000.

The national debt of Hungary alone, excluding the debt incurred jointly by both members of the Austro-Hungarian monarchy, was £192,175,000 at the end of 1903. The following table shows the growth of the total debt, due chiefly to expenditure on public works, in millions sterling:

1880. 1890. 1900. 1905.
£83.6 £171.9 £192.8 £198.02

Map of Hungary in the XVIII. Century

Map of Hungary in the late XIX. Century

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