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.
History of Austria
The dynasty was now en route to become a world power. The concept of "pietas austriacae" (the divine duty to rule had originated with Rudolph I, but was reformulated by Frederick as AEIOU, "Alles Erdreich ist Österreich untertan" or "Austriae est imperare orbi universo" (Austria's destiny is to rule the world), which came to symbolise Austrian power. However, not all events proceeded smoothly for Frederick. The Austrian-Hungarian War (1477–1488) resulted in the Hungarian king, Matthias Corvinus setting himself up in Vienna in 1485 till his death in 1490. Hungary occupied the entire Eastern Austria. Frederick therefore found himself with an itinerant court, predominantly in the Upper Austrian capital of Linz.