The Austro-Hungarian Dual Monarchy was created through the Compromise of 1867. The Habsburg Monarchy now had two capitals, Vienna and Budapest. The two halves of the empire were united by their common army and foreign policy. The strongest linking factor was the monarch, who personified the unity of the empire.
In all other state matters Hungary was now completely autonomous. There were two separate governments and two parliaments: the Reichsrat in Vienna for the countries in the Austrian half of the empire (Cisleithania) and a separate parliament in Budapest in an impressive new building on the banks of the Danube for the Hungarian half (Transleithania). The development of these two halves of the empire diverged increasingly.