The economy of Austria-Hungary changed slowly during the existence of the Dual Monarchy, 1867-1918. The capitalist way of production spread throughout the Empire during its 50-year existence replacing medieval institutions. In 1873, the old capital Buda and Óbuda (Ancient Buda) merged with the third city, Pest, thus creating the new metropolis of Budapest. The dynamic Pest grew into Hungary's administrative, political, economic, trade and cultural hub. Many of the state institutions and the modern administrative system of Hungary were established during this period. It was a large, heavily rural country with wealth and income levels a bit below the European average. Growth rates were similar to Europe as a whole. After 1895. migration became a major factor, with most headed to the United States. Background The Habsburg realms included 23 million inhabitants in 1800, growing to 36 million by 1870, third in population size behind Russia and Germany. Nationally the per capita rate of industrial growth averaged about 3% between 1818 and 1870. However there were strong regional differences. That was relatively little international trade. In the Alpine and Bohemian regions, proto-industrialization at begun by 1750, and became the center of the first phases of the industrial revolution after 1800. The textile industry was the main factor, utilizing mechanization, steam engines, and the factory system. Much of machinery was purchased from the British. In the Bohemian regions, machine spinning started later and only became a major factor by 1840. Bohemia's resources were successfully exploited, growing 10% a year. The iron industry had developed in the Alpine regions after 1750, with smaller centers in Bohemia and Moravia. The key factors included the replacement of charcoal by coal, introduction steam engine, and the rolling regard. The first steam engine appeared in 1816 but the abundance of water power slowed its dissemination. Hungary was heavily rural with little industry before 1870. The first machine building factories appeared in the 1840s. Economic trends 1870-1913 Technological change accelerated industrialization and urbanization. The GNP per capita grew roughly 1.76% per year from 1870–1913. That level of growth compared very favorably to that of other European nations such as Britain (1%), France (1.06%), and Germany (1.51%). However, in a comparison with Germany and Britain: the Austro-Hungarian economy as a whole still lagged considerably, as sustained modernization had begun much later. By 1913, the population of Austria-Hungary was 48 million, compared to 171 million in Russia, 67 million