The Dual Monarchy before WWI
The Austro-Hungarian Empire was established in 1867 by the Ausgleich (Compromise) by Austria and Hungary. They both became self-governing states under a common monarch, the ruling Habsburg. Each had its own parliament for internal affairs, but foreign policy, war and finance were decided by common ministers.
In the summer of 1914, on June 28th the Archduke Franz Ferdinand was attending army maneuvers in Bosnia. He was accompanied by his wife and the governor of Bosnia and Hercegovina. After making his speech at the Town Hall in Cabrinovic both he and his wife were assassinated by Gavrilo Principe a member of the Slav "Black Hand Society". After several speculations and conflicts the Habsburg monarchy lost any hope solving the South Slav problem in a peaceful way. The rulers of the Monarchy placed the future of their states into the hands of the soldiers.
The army which was to fight had a multi-national character, reflected the national composition of the Empire. It was composed of the common army (usually they were recruited from all around the empire), the Austrian Landwehr, and the Hungarian Honved . The soldiers were dedicated and able men. For a young Pole or Czech the army offered a tempting career. Although it went through some strains as the other institutions of the Empire, the army remained an effective instrument until 1918.
Economic development in Hungary
In the period between 1867 and 1914 the rapid growth of industry, commerce and transport in relation to agriculture, lead on to a profound transformation of Hungary's socio-economic structure. The annual average growth rate was 2.8 per cent, so Hungary was able to close the gap with Austria and by 1914 it was responsible for 28.2 per cent of the Habsburg Empire's total industrial output. Hungary also had to accept an increase in its share of the Monarchy's common expenditure by 6.4 per cent to 36.4 per cent, while Austria's...