The disaster of Königgrätz and Austria's exclusion from Germany had a traumatic effect on Austrian German culture, and a crisis of identity for Austrian Germans that was to have a profound, ongoing impact for the rest of the Monarchy's career. One well known, pithy response was from Franz Grillparzer, Austria's bard, who wrote on a photograph in 1867: ‘I was born a German, am I one still?’ A more musical response occurred with the 15 February 1867 choral premiere of Johann Strauss the Younger's By the Beautiful Blue Danube waltz. Later, this became the informal Austrian national anthem, accompanied by an anodyne, Austria-praising text. The original text by Josef Weyl, however, was performed in Carnival and started with a challenge to its audience: ‘Viennese be happy! …. defy the times – O God the times! – of sadness’. The Blue Danube waltz began as a carnevalesque effort to escape, for the moment, the nadir in which Vienna and Austria found itself.

By the end of 1867, the situation had changed yet again, and a much more optimistic era opened, with liberal regimes in both halves of the new Dual Monarchy (which had effectively begun three days after the Blue Danube premiere on 18 February with the agreement between Franz Joseph and the Hungarian leadership). Liberalism, in the shape of a German government in Vienna and a Magyar government in Buda, appeared triumphant, and set fair for a long rule. This turned out, for Cisleithania at least, to be deceptive, but for over a decade liberalism had an immense impact on all aspects of life in the Monarchy.

The German-Magyar Liberal Condominium

Two constitutional states were established by the end of 1867. In Hungary, the April Laws of 1848 had already become the basis of a constitutional regime in the spring. In Cisleithania, the December Constitution was put into law by imperial sanction on 21 December. It was composed of five ‘Basic Laws’, one of which was the aforementioned Delegation Law that had codified the Austrian version of dualism.