The situation in the Kingdom of Hungary, including its subordinate Kingdom of Croatia—Slavonia, was by contrast considerably less fluid. Here the political elite, the Hungarian gentry, remained firmly in charge throughout the Dualist period and worked towards a Hungarian nation-state with some success, even though ethnic Hungarians or Magyars were a minority of the population. Romanians, Serbs, Slovaks and Ruthenes had genuine cause for complaint; yet to the end of his reign Francis Joseph remained loath to alter the basic terms of the Ausgleich.
The initial premises of the new constitutional era in Hungary, however, as represented by the 'Deakist' government of Count Gyula Andrassy (1867—71), were impeccably liberal. Deakists like Andrassy were ardent nationalists who insisted on the integrity of historic Hungary, but they also believed in constitutionalism, the rule of law and civic equality. Accordingly there was no problem in recognising the historic rights of Croatia by a sub-Compromise, the Nagodba, in 1868. By this Croatia retained its own government and Sabor (assembly) in Zagreb and the right to send delegates to the Hungarian Diet, although the Hungarian government exerted a crucial control in that it appointed the Ban or governor of the kingdom. The brightest achievement of the Andrassy government was the Nationalities Law of 1868, which for the time was an enlightened attempt to ensure the rights of Hungary's minorities. While declaring that 'all citizens of Hungary constitute a single nation', whose official language could only be Hungarian, the Law nevertheless gave local authorities the right to decide their language of business and individual citizens the right to justice in their own tongue at communal and district level, as well as education in their mother tongue up to secondary level.8 What the Nationalities Law did not recognise was any corporate identity of non-Magyar nationalities. The Deakists feared applying federalism to a multinational state like Hungary, and the stress on the political unity of the state meant that nationality rights were conditional on this, and hence liable to capricious interpretation by later Hungarian governments.
For this is what soon happened. Implementation of the Nationalities Law was already impeded by the fact that, because of the narrow suffrage, the county assemblies responsible for ensuring this remained gentry-dominated; a restriction of the suffrage pushed through in 1874 ensured that this remained the case. In the meantime the Deakists were losing ground to the new Liberal Party under Kalman Tisza, who came to power in 1875 and represented an increasingly nationalist variant of Hungarian politician, more nationalist indeed than liberal.
Tisza ruled through a combination of blatant electoral corruption and policies designed to reinforce the Magyar character of the state. The mainstay of his ministry (1875—90) was the policy of 'Magyarisation', the forcible conversion of the nationalities to the Magyar language and culture by means of systematic legislation and discrimination, which was continued by subsequent governments. Magyarisation involved the closure of non-Magyar cultural institutions and especially schools, making Magyar the language of instruction in state-run primary schools, and close regulation of secondary schools. The aim, according to a contemporary Hungarian observer, was to make the education system 'like a big engine, which takes in at one end hundreds of Slovak youths who come out at the other end as Magyars'.9 Non-Magyar newspapers were harassed by fines and censorship, and the language of public transport and communications, of public notices and even inscriptions on tombstones was made Hungarian. Electoral intimidation and gerrymandering ensured that representation of minorities remained tiny: after the last pre-war elections, ethnic Hungarians held 405 out of 413 seats in the Diet.
Magyarisation had some limited success, especially among ethnic Germans and Jews, many of whom in the Dualist period did their best to assimilate. Certainly the remarkable economic and cultural flowering of the late nineteenth century owed much to the genuine tolerance extended to this Magyarised Jewish community. On the other nationalities, however, Magyarisation undoubtedly had a profoundly alienating effect, yet its proponents equally clearly saw it as essentially progressive, designed to enhance 'national' cohesion through cultural assimilation.
Economic modernisation intensified in Hungary under Dualism, with great development in the period 1867—72 and an additional influx of Austrian capital after the Vienna stock market crash of 1873. After 1890 there was a renewed spurt of growth when a combination of the internal market offered to Hungarian agriculture by its inclusion in the Monarchy, the accumulation of capital, and the initial springboard provided by the country's extractive and food-processing industries led to yet further industrialisation and a sizeable factory proletariat, at least in the Budapest area.10
Despite this growth, the period after 1890 saw the rise of a new generation of Hungarian nationalists convinced of Hungary's oppressed status and determined to win greater autonomy or even independence. The main focus of nationalist grievance was the common imperial and royal army and the German language of command used even in Hungarian units. Control of the armed forces, however, was one of the areas considered by Francis Joseph as his exclusive prerogative. The result was the bruising constitutional crisis of 1903—6, when the emperor-king's rejection of nationalist demands for a more explicitly Hungarian army led to the fall of the last Liberal government under Istvan Tisza (Kalman's son) and the shock election in 1905 of a coalition led by the Independence Party. Francis Joseph defused this crisis by threatening to introduce universal manhood suffrage, as in Austria. The coalition government managed to avoid implementing this, which would have destroyed Magyar supremacy, but at the price of abandoning its demands regarding the army.
A pro-Vienna but still fiercely hegemonist National Party of Work, founded by Tisza, gained power in 1910 and showed no more inclination towards real democratisation than any of its predecessors. The nationalities' position remained completely subordinate, with the attendant danger, in the case of the Romanians and Serbs, of the spread of irredentist leanings towards neighbouring Romania and Serbia.
In Croatia, Hungarian governments maintained close control for most of this period through their appointment of the Ban, the narrowness of the electorate and the exercise of wholesale electoral corruption. A Croatian National Party, formed in the 1860s, strove unavailingly for greater genuine autonomy, while a more extreme nationalist faction, the Party of Right, voiced increasing intolerance, not just of Hungarian domination but also of Croatia's Serb minority. The governorship of Count Karoly Khuen-Hedervary (1883—1903) was distinguished by its deliberate policy of divide and rule, by making concessions to the Serbs which inflamed Croatian nationalist opinion. For a brief period in the new century, a Croatian—Serb coalition was formed, reflecting a new-found enthusiasm for a common 'Yugoslav' or South Slav identity, and in 1906—7 this alliance actually managed to form a government. This coincided, however, with rising tension between the Monarchy and Serbia, and in an atmosphere of heightened suspicion of South Slavs in both Budapest and Vienna over Bosnia, the Croatian—Serb government was forced from office and a number of prominent South Slavs were tried for treason in 1908—9. As a consequence Croatia was seething with disaffection by 1914.