The Austro-Hungarian Empire was created in 1867, transforming the old Austrian Empire into a dual monarchy.
Franz Joseph I of Austria had ruled a multi-ethnic empire since 1848, but his government faced growing nationalist movements, especially in Hungary. The Hungarians had attempted to gain independence during the revolutions of 1848–49, but their uprising was crushed with Russian assistance.
Austria’s position weakened further after military defeats. The empire lost to the Kingdom of Sardinia and France in 1859, costing it much of its influence in Italy, and then suffered a major defeat by the Kingdom of Prussia in the Seven Weeks’ War of 1866. These setbacks convinced Franz Joseph that he needed to reconcile with the Hungarian nobility to preserve the empire.
In 1867, the emperor and Hungarian leaders reached the Austro-Hungarian Compromise. The agreement created the Dual Monarchy of Austria-Hungary. Both halves had their own parliaments and governments but shared a single monarch, a common foreign policy, and joint ministries for war and finance.
The new arrangement stabilized the empire for several decades and allowed it to continue as one of Europe’s great powers. However, many other nationalitiess and ethnicities within the empire, including Czechs, Slovaks, Croats, Romanians, and Serbs, did not receive the same autonomy as the Hungarians, creating tensions that persisted until the empire’s collapse at the end of the First World War.
The double headed imperial eagle represents that the Hapsburgs saw themselves as successors to the Roman Imperium. The eagle being a symbol of Rome, and the double heads showing the animal facing figuratively both west (back towards Rome) and east.
The Hungarian piece depicts the Crown of Saint Stephen, being carried by angels. The crown was supposedly a gift to a prior king of Hungary from the Byzantine emperor around the year 1000, and is currently sitting in the Hungarian Parliament.