ituated. Despite the campaign of obstruction
that overthrew the Banffy and led to the formation of the Szell cabinet in
1899, the hegemony of the Liberal party which, under various names, had
been the mainstay of dualism since 1867, appeared to be unshaken. But clear
signs of the decay of the dualist and of the growth of an extreme
nationalist Magyar spirit were already visible. The Army bills of 1889,
which involved an increase of the peace footing of the joint
Austro-Hungarian army, had been carried with difficulty, despite the
efforts of Koloman Tisza and of Count Julius Andrassy the Elder. Demands
tending towards the Magyarization of the joint army had been advanced and
had found such an echo in Magyar public opinion that Count Andrassy was
obliged solemnly to warn the country of the dangers of nationalist
Chauvinism and to remind it of its obligations under the Compact of 1867.
The struggle over the civil marriage and divorce laws that filled the
greater part of the nineties served and was perhaps intended by the Liberal
leaders to serve as a diversion in favour of the Liberal-dualist
standpoint; nevertheless, Nationalist feeling found strong expression
during the negotiations of Banffy and Szell with various Austrian premiers
for the renewal of the economic _Ausgleich_, or "Customs and Trade
Alliance." At the end of 1902 the Hungarian premier, Szell, concluded with
the Austrian premier, Koerber, a new customs and trade alliance [v.03
p.0023] comprising a joint Austro-Hungarian tariff as a basis for the
negotiation of new commercial treaties with Germany, Italy and other
states. This arrangement, which for the sake of brevity will henceforth be
referred to as the Szell-Koerber Compact, was destined to play an important
part in the history of the next few years, though it was never fully
ratified by either parliament and was ultimately discarded. Its conclusion
was prematurely greeted as the end of a period of economic strife between
the two halves of the monarchy and as a pledge of a decade of peaceful
development. Events were soon to demonstrate the baselessness of these
hopes.

[Sidenote: The Army question.]

In the autumn of 1902 the Austrian and the Hungarian governments, at the
instance of the crown and in agreement with the joint minister for war and
the Austrian and Hungarian ministers for national defence, laid before
their respective parliaments bills providing for an increase of 21,000 men
in the annual