Austria. After the financial question had been
thus settled, the whole of these arrangements were then, on the 21st and
the 24th of December 1867, enacted by the two parliaments, and the system
of dualism was established.

The acts were accepted in Austria out of necessity; but no parties were
really satisfied. The Germans, who accepted the principle of dualism, were
indignant at the financial arrangements; for Hungary, while gaining more
than an equal share of power, paid less than one-third of the common
expenses. On the other hand, according to British ideas of taxable
capacity, Hungary paid, and still pays, more than her share. The Germans,
however, could at least hope that in the future the financial arrangements
might be revised; the complaints of the Slav races were political, and
within the constitution there was no means of remedy, for, while the
settlement gave to the Hungarians all that they demanded, it deprived the
Bohemians or Galicians of any hope that they would be able to obtain
similar independence. Politically, the principle underlying the agreement
was that the empire should be divided into two portions; in one of these
the Magyars were to rule, in the other the Germans; in either section the
Slav races--the Serbs and Croatians, the Czechs, Poles and Slovenes--were
to be placed in a position of political inferiority.[6]

The logical consistency with which the principle of Dualism was carried out
is shown in a change of title. By a letter to Beust of the 14th of November
1868 the emperor ordered that he should henceforward be styled, not as
before "Emperor of Austria, King of Hungary, King of Bohemia, &c.," but
"Emperor of Austria, King of Bohemia, &c., and Apostolic King of Hungary,"
thereby signifying the separation of the two districts over which he rules.
His shorter style is "His Majesty the Emperor and King," and "His Imperial
and Apostolic Royal Majesty"; the lands over which he rules are called "The
Austrian-Hungarian Monarchy" or "The Austrian-Hungarian Realm." The new
terminology, "Imperial and Royal" (_Kaiserlich und Koeniglich_), has since
then been applied to all those branches of the public service which belong
to the common ministries; this was first the case with the diplomatic
service; not till 1889 was it applied to the army, which for some time kept
up the old style of _Kaiserlich-Koeniglich_; in 1895 it was applied to the
ministry of the imperial house, an office always held by the