Count von Beust negotiated the Ausgleich (Compromise) of 1867, which transformed the Austrian Empire into the “Dual Monarchy” of Austria-Hungary.

The dangers which Austria has to face are of a twofold nature. The first is presented by the tendency of her liberal-minded German population to gravitate towards that larger portion of the German-speaking people now represented by Prussia, Saxony, what was Hanover, Wurtemberg, and Bavaria. The second is the diversity of language and race in the empire. Of Austria’s large Slav population, the Poles have a natural craving for independence after having enjoyed and heroically fought for it for centuries, while the other nationalities are likely at a moment of dangerous crisis to develop pro-Russian tendencies. Everyone who has studied the German problem — which assumed an acute form in 1866, when I was Minister in Saxony — must feel that, setting aside the question of rivalry with France, which sooner or later will be decided at the point of the sword, it resolves itself simply into the question of political supremacy. The Germans, that is the majority of them, have been and are still anxious not to perpetuate the state of things typified by the German empire as constituted by Charles the Fifth. Bismarck’s object is, so far as I know it, to consolidate Germany under one head, probably that of King William as Emperor. Germany has changed immensely in sentiment and policy since I was at Frankfort as Saxon Minister to the German Bund. The condition of affairs which then existed can never recur; and the action of Prussia in the Schleswig-Holstein question was the first practical demonstration of the underlying principle of Bismarck’s policy, which means Germany for the Germans. . . .

The second danger… presents a far more difficult problem. So long as Austria was a purely despotic State, and the Emperor ruled over it as an absolute monarch — Emperor in Vienna, King in Hungary and Bohemia, Ducal Prince in the other provinces of his vast empire — the local councils had a merely nominal existence and the governors were there but to register the sovereign’s Imperial will and to enforce it by arms if the necessity should arise. The revolutionary wave of 1848 swept over his territories as it did over those of other potentates. Laws and decrees, which the ignorance and apathy of his people had tolerated, if not approved, in the days of Maria Theresa and the monarchs who succeeded her, raised for the first time among the masses of the population objections and antipathies which generated the firm resolve in their minds to sweep the whole system away. The German element, then as now, took the initiative, but the feeble constitutional measures which were the outcome of popular strife and much bloodshed dwindled down year by year until but a semblance of constitutionalism remained. The comfortable and good-natured Austrian … soon forgot what had happened and occupied himself more with his creature comforts and his dramatic performances than with the development of his constitutional liberties….The various nationalities of the empire preferred their servile condition to a state of things which on the very principle of Constitutional government would make all the component parts of the monarchy of like value and cause their representatives to meet in a common parliament on an equal footing. Now my object is to carry out a bloodless revolution…. , to show the various elements of this great empire that it is to the benefit of each of them to act in harmony with its neighbour and that no Constitution can permanently exist unless every portion of the State is represented by it.

But to this I have made one exception. Hungary is an ancient monarchy, more ancient even than Austria proper. The kingdom of St. Stephen [Hungary] has a pedigree of centuries and its constitutional principle was asserted in the earliest times. Its race and language are entirely different from those of the other peoples which constitute the monarchy. Its territorial area is larger than theirs. Its population, though less by six millions than that of the remainder of the empire, is much larger than that of any other nationality. Its people are powerful, brave, united-and, notwithstanding 1848, loyal…. The scheme which I have developed I have endeavoured to give Hungary not a new position with regard to the Austrian empire, but to secure her in the one which she has occupied. The Emperor of Austria is King of Hungary….The leading principles of my plan are not the creation of a new kingdom and a new Constitution, but the resuscitation of an old monarchy and an old Constitution. Not the separation of one part of the empire from the other, but the drawing together of the two component parts by the recognition of their joint positions, the maintenance of their mutual obligations…. It is no plan of separation that I have carried out. On the contrary, it is one of closer union, not by the creation of a new power, but by the recognition of an old one. This cannot be too often repeated, for I know that there are many people who maintain that I have divided the empire.