Austro-Italian ironclad arms race
Austria's defeat in the Seven Weeks War forced Austria to determine a new set of foreign and domestic policies for the future, as Austria's interests since the days of the Holy Roman Empire had primarily been found in Italy and Germany. The Empire thus reformed itself into the Austria-Hungarian Empire following the adoption of the Austro-Hungarian Compromise of 1867 (German: "Ausgleich"), which re-established the sovereignty of the Kingdom of Hungary and placed Hungarians within the Empire on an equal footing with Austrians. Under the "Ausgleich", Emperor Franz Joseph I would be crowned as King of Hungary, while a separate parliament at Pest with powers to enact laws for the lands of the Holy Crown of Hungary would be established.
Austro-Italian ironclad arms race
Tegetthoff's successor to the office of "Marinekommandant" was his old political rival, Friedrich von Pöck. While he commanded the ship-of-the-line "Kaiser" in the Second Schleswig War, Pöck had been given shore assignments throughout the Seven Weeks War, denying him the same sort of fame and public admiration that Tegetthoff had enjoyed after the Battle of Lissa. Almost immediately after taking office, Pöck faced chronic budgetary problems, owing in large part due to obstructionism from Hungarians and liberal Germans within the Austro-Hungarian government, the former viewing naval matters as an Austrian concern, and the latter opposed to naval expansion in light of the continued deterioration of the Regia Marina following the Battle of Lissa. Additionally, since he was not involved in Tegetthoff's victory at the Battle of Lissa, he lacked the personal prestige to command the respect of the government, which Tegetthoff had successfully used to secure the construction of four ironclads in the four years since the Seven Weeks War. As a result, Pöck had great difficulty securing the funding for new ironclad warships during his tenure.