large
reserve of gold, and in the new charter which was (after long delay) passed
in 1899, a clause was introduced requiring the resumption of cash payments,
though this was not to come into operation immediately. Then from 1st
January 1900 the old reckoning by gulden was superseded, that by krone
being introduced in all government accounts, the new silver being made a
legal tender only for a limited amount. For the time until the 1st of July
1908, however, the old gulden were left in circulation, payments made in
them, at the rate of two kronen to one gulden, being legal up to any
amount.

This important reform has thereby been brought to a satisfactory
conclusion, and at a time when the political difficulties had reached a
most acute stage. It is indeed remarkable that notwithstanding the
complicated machinery of the dual monarchy, and the numerous obstacles
which have to be overcome before a reform affecting both countries can be
carried out, the financial, the commercial, and the foreign policy has been
conducted since 1870 with success. The credit of the state has risen, the
chronic deficit has disappeared, the currency has been put on a sound
basis, and part of the unfunded debt has been paid off. Universal military
service has been introduced, and all this has been done in the presence of
difficulties greater than existed in any other civilized country.

[Sidenote: The Ausgleich with Hungary.]

Each of the financial and economic reforms described above was, of course,
the subject of a separate law, but, so far as they are determined at the
general settlement which takes place between Austria and Hungary every ten
years, they are comprised under the expression "Ausgleich" (compact or
compromise), which includes especially the determination of the Quota, and
to this extent they are all dealt with together as part of a general
settlement and bargain. In this settlement a concession on commercial
policy would be set off against a gain on the financial agreement; _e.g._
in 1877 Austria gave Hungary a share in the management of the bank, while
the arrangement for paying the bonus on exported sugar was favourable to
Austria; on the other hand, since the increased duty on coffee and
petroleum would fall more heavily on Austria, the Austrians wished to
persuade the Hungarians to pay a larger quota of the common expenses, and
there was also a dispute whether Hungary was partly responsible for a debt
of 80 M. [v.03 p.002