On 17 October 1918, the Hungarian Parliament voted in favour of terminating the union with Austria and declared the independence of the country. The most prominent opponent of continued union with Austria, Count Mihály Károlyi, seized power in the Aster Revolution on 31 October. Charles was all but forced to appoint Károlyi as his Hungarian prime minister. One of Károlyi's first acts was to cancel the compromise agreement, officially dissolving the Austro-Hungarian state. On 31 October Hungary ended the personal union with Austria, officially dissolving the Monarchy.
By the end of October, there was nothing left of the Habsburg realm but its majority-German Danubian and Alpine provinces, and Karl's authority was being challenged even there by the German-Austrian state council. Karl's last Austrian prime minister, Heinrich Lammasch, concluded that Karl was in an impossible situation, and persuaded Karl that the best course was to relinquish, at least temporarily, his right to exercise sovereign authority.
On 11 November, Karl issued a carefully worded proclamation in which he recognized the Austrian people's right to determine the form of the state. He also renounced the right to participate in Austrian affairs of state. He also dismissed Lammasch and his government from office and released the officials in the Austrian half of the empire from their oath of loyalty to him. Two days later, he issued a similar proclamation for Hungary. However, he did not abdicate, remaining available in the event the people of either state should recall him. For all intents and purposes, this was the end of Habsburg rule.
Karl's I proclamation
On the day after he announced his withdrawal from Austria's politics, the German-Austrian National Council proclaimed the Republic of German Austria. Károlyi followed suit on 16 November, proclaiming the Hungarian Democratic Republic.
There were two legal successor states of the former Austro–Hungarian monarchy:
· German Austria (which became the First Austrian Republic)
· Hungarian Democratic Republic (which after a few other short-lived intermediaries became the Kingdom of Hungary)
The Treaty of Saint-Germain-en-Laye (between the victors of World War I and Austria) and the Treaty of Trianon (between the victors and Hungary) regulated the new borders of Austria and Hungary, reducing them to small-sized and landlocked states. In regard to areas without a decisive national majority, the Entente powers ruled in mamy cases in favour of the newly-emancipated independent nation-states, enabling them to claim vast territories containing sizeable German- and Hungarian-speaking populations.
The decisions contained in the treaties had immense political and economic effects. The previously rapid economic growth of the imperial territories initially stalled because the new borders became major economic barriers. Many established industries and infrastructure elements were intended to satisfy the needs of an extensive realm. As a result, the emerging countries were often compelled to considerable sacrifices in order to transform their economies. A major political unease in the affected regions followed as a result of these economic difficulties, fueling in some cases extremist movements.