Rapid development of Tivat started in the second half of 19th century when the Austrian empire built a maritime arsenal for its fleet. Still the town shaped itself by developing small industry. In the beginning of 1918, in the Tivat Bay sailors revolted against the mighty Austrian empire. With great approval and support, people from this area followed their revolutionary actions. The period between two world wars was marked with syndicate activity in Račica, Krtoli and Arsenal. Between 1941 and 1943 the town was part of the Italian Governatorate of Dalmatia.