Up to 1867 the Hapsburg Monarchy was, outwardly at least, a Teutonic state. But in 1866, having been decisively beaten by Prussia at Sadova, it found itself facing a new destiny. Expelled from the Germanic Bund of which it had been a leading member, the championship wrested from it by victorious Hohenzollerns, rent by internal discord, its statesmen concurred in the opinion that reconstruction of some kind was inevitable. But what course of action should be pursued? Should the government again have recourse to the shop-worn policy of rigid centralization and Germanization which had been tried by Austrian Premiers time and time again and invariably found wanting?
That Hungary should be given back her autonomy was conceded beforehand. Weakened by war, its military prestige shattered, its finances at a low ebb, the government was in no condition to resist the Magyars, who had assumed a threatening attitude. But what about the Bohemians, who also clamored for recognition? Bohemia, Hungary, and Austria, it will be remembered, had formed a union in 1526-1527 on terms of equality. And then how should the larger Slavic questions be settled? Numerically the Slavs were the strongest element in the monarchy. If allowed to elect representatives to one central parliament, these discontented Bohemians, Poles, Slovaks, and Croatians might one day, uniting politically, control the country. Tacitly Vienna and Budapest agreed that, whatever the terms of the settlement with Hungary, the disaster of Slavic majority must be averted.
"The Slavs must be pressed to the wall" (Man wird die Slaven an die Wand drücken), declared a statesman who participated actively in the plan of reconstruction. "You," addressing the Magyars, "will take care of your hosts [meaning the Slavs] and we shall take care of ours."
In the parliament the cause of the Slavic federalists was lost beforehand; a German-made constitution and German-made electoral law rendered futile every opposition. Besides, the government would brook no interference with its plan of reconstruction as outlined by Count Beust.[12] This plan contemplated a dual government, one in Vienna, the other in Budapest, and three parliaments, one to sit in Vienna for the Austrian half, one to meet in Budapest for the Hungarian half, and a third one to be called the "Delegations" and to convene alternately at both capitals to deliberate on matters common to the empire as a whole, such as foreign relations, the army, navy, finances, and so forth. In other words, Beust's plan provided for two seats of centralization instead of one. From a German state that it had been before 1867 Austria became a German-Magyar state--an organization without precedent or analogy.