Damon Mcknight
The Austro-Hungarian monarchy collapsed in the autumn of 1918, with Croatia, Slovenia, Bosnia-Herzegovina, and Vojvodina declaring independence from Austria-Hungary and forming new states. The remaining Austrian half of the Empire proclaimed the German-Austrian Republic, which became the First Austrian Republic. The Hungarian half proclaimed the Hungarian Democratic Republic, which became the Kingdom of Hungary. The Treaty of Saint-Germain-en-Laye and the Treaty of Trianon regulated the new borders of Austria and Hungary, reducing them to small, landlocked states. The German Empire, which had supported Austria-Hungary during the war, was also defeated and faced political upheaval, with power shifting to left/liberal parties.
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What You'll Learn
The collapse of the Austro-Hungarian monarchy
The armistice between the Allies and Austria-Hungary was signed on November 3, 1918, and came into effect on November 4. Under its provisions, Austria-Hungary’s forces were required to evacuate all territory occupied since August 1914, as well as South Tirol, Tarvisio, the Isonzo Valley, Gorizia, Trieste, Istria, western Carniola, and Dalmatia. All German forces were to be expelled from Austria-Hungary within 15 days, and the Allies were to have free use of Austria-Hungary’s internal communications and most of its warships.
On November 11, Karl I, the last Habsburg ruler of Austria-Hungary, issued a proclamation recognizing the Austrian people's right to determine the form of the state and renounced the right to participate in Austrian affairs of state. He dismissed his government and released officials in the Austrian half of the empire from their oath of loyalty to him. Two days later, he issued a similar proclamation for Hungary. However, he did not abdicate, remaining available if the people of either state recalled him. Despite this, on November 12, the German-Austrian National Council proclaimed the Republic of German Austria. Hungary followed suit on November 16, proclaiming the Hungarian Democratic Republic.
The Treaty of Saint-Germain-en-Laye and the Treaty of Trianon regulated the new borders of Austria and Hungary, reducing them to small, landlocked states. The Republic of Austria lost roughly 60% of the old Austrian Empire's territory and had to drop its plans for union with Germany. The new Austrian state was united only by loyalty to the Habsburgs, and Vienna, its capital, was now an imperial capital without an empire. The collapse of the Austro-Hungarian monarchy led to the formation, re-establishment, or expansion of several states, including German Austria (which became the First Austrian Republic) and the First Hungarian Republic, which became the Hungarian Soviet Republic.
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The Treaty of Saint-Germain-en-Laye and Trianon
The Treaty of Saint-Germain-en-Laye and the Treaty of Trianon were signed after World War I to regulate the new borders of Austria and Hungary, respectively. Both treaties reduced the former Austro-Hungarian Empire to small, landlocked states. The Entente powers often ruled in favour of the newly emancipated independent nation-states, allowing them to claim territories with sizeable German- and Hungarian-speaking populations.
The Treaty of Saint-Germain-en-Laye
The Treaty of Saint-Germain-en-Laye was signed on 10 September 1919 by the victorious Allies of World War I and the Republic of German-Austria. The treaty contained 381 articles, divided into 14 parts, and was written in French, English, and Italian. It included the Covenant of the League of Nations, which the United States did not sign, instead establishing the US-Austrian Peace Treaty in 1921.
The treaty marked the official end of World War I for Austria and the majority of the states and kingdoms of the former Austro-Hungarian Empire. It established fixed boundaries for Austria, enforced by a boundary commission, and reduced Austrian territory to around 40% of its pre-war size. Austria lost roughly 60% of the old Austrian Empire's territory, including South Tyrol, the Trentino province, the Carinthian Canal Valley, the Austrian Littoral, and the Kingdom of Dalmatia, among others.
The treaty also prohibited Austria from compromising its independence, which meant it could not enter into a political or economic union with the Weimar Republic without the agreement of the council of the League of Nations. As a result, Austria had to change its name from German-Austria (Deutschösterreich) to Austria, a term many Austrians found harsh. Additionally, conscription was abolished, and the Austrian Army was limited to 30,000 volunteers.
The Treaty of Trianon
The Treaty of Trianon was signed on 4 June 1920 between Hungary and the Allies, completing the disposition of the former Dual Monarchy. The treaty declared the dissolution of the Austro-Hungarian Empire and required Austria, along with the other Central Powers, to accept responsibility for starting the war. The new Republic of Austria recognised the independence of Hungary, Czechoslovakia, Poland, and the Kingdom of Serbs.
The Treaty of Trianon transformed Hungary into a small, landlocked state, with the Entente powers often ruling in favour of the newly independent nation-states, allowing them to claim territories with significant Hungarian-speaking populations.
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The rise of left-liberal political parties
The end of World War I saw the collapse of the Austro-Hungarian monarchy, which was comprised of the Austrian Empire and the Hungarian Kingdom. The empire's defeat and minor revolutions in Vienna and Budapest gave political power to the left/liberal political parties. The German-Austrian National Council proclaimed the Republic of German Austria, and Hungary proclaimed itself a democratic republic, severing ties with Austria. The Treaty of Saint-Germain-en-Laye and the Treaty of Trianon regulated the new borders of Austria and Hungary, reducing them to small, landlocked states.
In the aftermath of World War I, the German Democratic Party (DDP) represented the left-liberal strain in Germany, playing an important role during the Weimar Republic era. The DDP merged into the German State Party in 1930 and eventually dissolved itself after the Nazi seizure of power in 1933.
The history of liberal parties in Germany dates back to 1861 with the founding of the German Progress Party (DFP). From 1867 until the end of the Weimar Republic in 1933, the liberal-democratic camp was divided into national-liberal and left-liberal lines of tradition. The Free Democratic Party (FDP), founded in 1948, is a liberal party in Germany that has traditionally been located in the centre-right of the political spectrum, pushing for economic liberalism and the promotion of free markets and privatisation.
The Left is another left-leaning political party in Germany that supports further debt cancellations for developing countries and increases in development aid. The party strives for the democratisation of EU institutions and a stronger role for the United Nations in international politics. The Left has suffered setbacks and leadership crises in recent years, and its popularity has fluctuated, with losses in state elections in Berlin, Bremen, and Hesse.
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The end of Habsburg rule
The Austro-Hungarian monarchy collapsed in the autumn of 1918. The monarchy's collapse was due to specific social and political crises brought on by the experience of total war, rather than issues of national conflict. The Austro-Hungarian Army was ineffective due to incompetent leadership, and the military routinely suspended civil rights and treated different national groups with varying degrees of contempt. Leftist and pacifist political movements organized strikes in factories, and uprisings in the army had become commonplace. These leftist or left-liberal pro-Entente maverick parties opposed the monarchy as a form of government. Eventually, the German defeat and the minor revolutions in Vienna and Budapest gave political power to the left/liberal political parties.
On October 15, 1918, Croatia and Slovenia declared independence from Austria-Hungary and established the state of Slovenes, Croats and Serbs. Bosnia-Herzegovina and Vojvodina declared themselves for union with Serbia. On October 20, 1918, the Czech National Council proclaimed the independence of the Czech and Slovak state, comprising Bohemia, Moravia, Slovakia, and part of Galicia. In response, the Austrian Provisional National Assembly was formed on October 21 and proclaimed the German-Austrian Republic on November 12, comprising what was left of the Austrian half of the Empire. On October 25, Hungarian politicians formed their own assembly and proclaimed the Hungarian Republic on November 16, having lost Transylvania and other territories to Romania.
The armistice between the Allies and Austria-Hungary was signed on November 3, 1918, to become effective on November 4. Under its provisions, Austria-Hungary’s forces were required to evacuate all territory occupied since August 1914, as well as South Tirol, Tarvisio, the Isonzo Valley, Gorizia, Trieste, Istria, western Carniola, and Dalmatia. All German forces were to be expelled from Austria-Hungary within 15 days, and the Allies were to have free use of Austria-Hungary’s internal communications and to take possession of most of its warships.
On November 11, Karl I, the last Habsburg ruler of Austria-Hungary, issued a proclamation recognizing the Austrian people's right to determine the form of the state. He renounced the right to participate in Austrian affairs of state and released officials in the Austrian half of the empire from their oath of loyalty to him. Two days later, he issued a similar proclamation for Hungary. While he did not abdicate, his refusal to do so was ultimately irrelevant. On November 12, the day after he announced his withdrawal from Austrian politics, the German-Austrian National Council proclaimed the Republic of German Austria. Hungary followed suit on November 16, proclaiming the Hungarian Democratic Republic.
The Treaty of Saint-Germain-en-Laye (between the victors of World War I and Austria) and the Treaty of Trianon (between the victors and Hungary) regulated the new borders of Austria and Hungary, reducing them to small, landlocked states. The Republic of Austria lost roughly 60% of the old Austrian Empire's territory. The new Austrian state was, at least initially, on shakier ground than Hungary. Unlike Hungary, Austria had never been a nation in any real sense. While the Austrian state had existed in one form or another for 700 years, it was united only by loyalty to the Habsburgs. Vienna, the lavish and oversized imperial capital, now lacked an empire to support it.
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The impact of currency reforms
The dissolution of the Austro-Hungarian Empire in 1918 brought about a series of currency reforms that had a significant impact on the economic landscape of the region. The reforms were necessitated by the lack of coordination in monetary policy and the absence of rules for sharing seigniorage. The successor states, including the Kingdom of Serbs, Croats and Slovenes, Czechoslovakia, Austria, Romania, and Hungary, each undertook currency reforms to establish control over their own identifiable domestic currencies.
One of the key challenges during this period was the lack of synchronisation in the implementation of reforms by the successor states. This allowed individuals to choose where to convert their crowns based on where their real value was greatest, resulting in substantial cross-border flows of notes. Hungary, which was the last to implement reforms, suffered particularly detrimental consequences. The Austrian and Hungarian currencies were eventually stabilised with the assistance of financial programs provided by the League of Nations.
The economic landscape of the successor states was characterised by a devalued and hyperinflating shared currency, a collapsed trade and payments system, and large external debts. The new borders also became major economic barriers, disrupting the previously rapid economic growth of the imperial territories. Austria, in particular, faced significant economic challenges, including unprecedented unemployment, substantial debt payments, scarce foreign exchange reserves, and a large civil service.
The Austro-Hungarian monetary union, which had operated for almost fifty years, experienced periods of monetary instability and fiscal indiscipline, particularly in its first phase from 1867 to the early 1890s. However, the second phase, commencing in 1892, introduced important monetary reforms, including the introduction of a gold coinage, the Austro-Hungarian crown, and a move towards the gold standard. The third phase, from 1896 onwards, brought about monetary stability and prudent fiscal management as the currency was pegged to the gold standard.
Overall, the currency reforms undertaken by the successor states of the Austro-Hungarian Empire had far-reaching consequences, shaping the economic trajectories of the newly formed nations and influencing their relationships with one another.
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Frequently asked questions
Germany faced a period of turmoil and instability. The country was a democracy and a republic for the first time, with a constitution and near-universal suffrage. The new government, the Weimar Republic, was inexperienced and had to deal with complicated economic problems, including reparations payments, hyperinflation, and the Great Depression. Germany also lost a significant amount of territory, contributing to their economic issues.
The Austro-Hungarian Empire collapsed. The empire was dissolved into several independent states, including German Austria (which became the First Austrian Republic) and the Hungarian (People's) Republic (which became the Kingdom of Hungary). The remaining territories fell into the composition of existing or newly formed states. The new borders of Austria and Hungary reduced them to small, landlocked states.
German citizens faced poor economic conditions, skyrocketing unemployment, political instability, and profound social change. Many struggled to understand their country's uncertain future and the reasons for their defeat. This created a sense of betrayal and humiliation, which contributed to the rise of Nazism and the future Second World War.
The dissolution of the Austro-Hungarian Empire resulted in significant economic changes. The previous economic union was not maintained, and the new borders became major economic barriers, stalling economic growth. The Austrian and Hungarian currencies experienced inflation, and various states undertook currency reforms.
Germany became a democracy and a republic, with democratically elected leaders replacing the monarchy. The Weimar Republic was the new democratic government, facing opposition from both right- and left-wing groups, including the Nazi Party. The country also experienced near-universal suffrage for the first time, with all German people gaining the right to vote.
