The country was governed by the Council of Lieutenancy of Hungary (the Gubernium) – located in Pressburg and later in Pest – and by the Hungarian Royal Court Chancellery in Vienna.
The Empire relied increasingly on a cosmopolitan bureaucracy—in which Czechs played an important role—backed by loyal elements, including a large part of the German, Hungarian, Polish and Croat aristocracy.
[13] After 1878, Bosnia and Herzegovina came under Austro-Hungarian military and civilian rule[14] until it was fully annexed in 1908, provoking the Bosnian crisis among the other powers.
[20] Relations during the half-century after 1867 between the two parts of the dual monarchy featured repeated disputes over shared external tariff arrangements and over the financial contribution of each government to the common treasury.
According to this statute Bosnia-Herzegovina formed a single administrative territory under the responsible direction and supervision of the Ministry of Finance of the Dual Monarchy in Vienna.
In this sense, Austria–Hungary remained under an autocratic government, as the Emperor-King appointed both Austrian and Hungarian prime ministers along with their respective cabinets.
Members of the House of Deputies were elected through a system of "curiae" which weighted representation in favor of the wealthy but was progressively reformed until universal male suffrage was introduced in 1906.
The first curia included the large landowners, the highest taxpayers, and people who had reached a certain standard of education without regard to the amount they paid in taxes.
With this curial system was combined the grouping of the mandates and of the electors according to the three dominant creeds (Catholic, Serbian Orthodox, Muslim).
[27] The Emperor of the dual monarchy in his right of Emperor of Austria and King of Bohemia, ruler of the Austrian part of the realm, officially named The Kingdoms and Lands Represented in the Parliament of the Realm (Die im Reichsrate vertretenen Königreiche und Länder), simplified in 1915 to just Austrian Lands (Österreichische Länder) appointed the Government of Austria.
In 1867 the Ministerium consisted of seven ministries (Agriculture, Religion and Education, Finance, Interior, Justice, Commerce and Public Works, Defence).
He was thus under the dual supervision of the monarch and the prime minister, appointed by the former at the advice of the latter and could be dismissed in the same manner or at the Emperor's own discretion.
Stateholders were appointed for the Kingdom of Bohemia, the Kingdom of Galicia and Lodomeria, the Archduchy of Austria down the River Enns, the Archduchy of Austria up the River Enns, the Duchy of Styria, the Margraviate of Moravia, the Princely Country of Tyrol (jointly administrated with the Province of Vorarlberg) and the joint Coastal Land.
This administrative "double track", as it was called, resulted largely from the origin of the State – for the most part through a voluntary union of countries that had a strong sense of their own individuality.
As early as 1904, premier Ernest von Koerber had declared that a complete change in the principles of administration would be essential if the machinery of State were to continue working.
Richard von Bienerth's last act as Austrian premier in May 1911 was the appointment of a commission nominated by the Emperor to draw up a scheme of administrative reform.
It was not until March 1918 that the Seidler Government decided upon a program of national autonomy as a basis for administrative reform, which was, however, never carried into effect.
Executive power in Transleithania was vested in a cabinet responsible to the National Assembly, consisting of ten ministers: From 1867 the administrative and political divisions of the lands belonging to the Hungarian crown were remodeled due to some restorations and other changes.
In 1868 Transylvania was definitely reunited to Hungary proper, and the town and district of Fiume maintained its status as a Corpus separatum ("separate body").
There were 26 of these urban municipalities in Hungary: Arad, Baja, Debreczen, Győr, Hódmezővásárhely, Kassa, Kecskemét, Kolozsvár, Komárom, Marosvásárhely, Nagyvárad, Pancsova, Pécs, Pozsony, Selmecz- és Bélabanya, Sopron, Szabadka, Szatmárnémeti, Szeged, Székesfehervár, Temesvár, Újvidék, Versecz, Zombor, and Budapest, the capital of the country.
[22] The administration of the country, together with the carrying out of the laws, devolved upon the Territorial Government in Sarajevo, which was subordinate and responsible to the Common Ministry of Finance.
[43] The traditional aristocracy and land-based gentry class gradually faced increasingly wealthy men of the cities, who achieved wealth through trade and industrialization.
The urban middle and upper class tended to seek their own power and supported progressive movements in the aftermath of revolutions in Europe.
Newly prosperous members of the bourgeoisie erected large homes and began to take prominent roles in urban life that rivaled the aristocracy's.
In the early period, they encouraged the government to seek foreign investment to build up infrastructure, such as railroads, in aid of industrialization, transportation and communications, and development.
The influence of liberals in Austria, most of them ethnic Germans, weakened under the leadership of Count Eduard von Taaffe, the Austrian prime minister from 1879 to 1893.
In Bohemia, for example, he authorized Czech as an official language of the bureaucracy and school system, thus breaking the German speakers' monopoly on holding office.
By playing nationalities off one another, the government ensured the monarchy's central role in holding together competing interest groups in an era of rapid change.
During the First World War, rising national sentiments and labour movements contributed to strikes, protests and civil unrest in the Empire.
The Catholics studied the Swiss Factory Act of 1877, which limited working hours for everyone and provided maternity benefits, and German laws that insured workers against industrial risks inherent in the workplace.