The discussion which had been broken off so suddenly at Nikolsburg was continued at Berlin; during the interval the matter had been further discussed in Paris, and it had been determined firmly to demand compensation. Benedetti had warned the Government that Bismarck would not surrender any German territory; it was no good even asking for this, unless the demand was supported by urgent and threatening language. The result of the considerations was that he was instructed categorically to require the surrender to France of the Palatinate and Mayence. Benedetti undertook the task with some reluctance; in order to avoid being present at the explosion of anger which he might expect, he addressed the demand to Bismarck on August 5th, by letter. Two days he waited for an answer, but received none; on the evening of the 7th, he himself called on the Count, and a long discussion took place. Bismarck adopted a tone of indignation: "The whole affair makes us doubt Napoleon and threatens to destroy our confidence." The pith of it was contained in the last words: "Do you ask this from us under threat of war?" said Bismarck. "Yes," said Benedetti. "Then it will be war." Benedetti asked to have an interview with the King; it was granted, and he received the same answer. This was the result he had anticipated, and the next evening he returned to Paris to consider with the Government what was to be done. Bismarck meanwhile had taken care that some information as to these secret negotiations should become known; with characteristic cleverness he caused it to be published in a French paper, Le Siècle, that France had asked for the Rhine country and been refused. Of course, the German Press took up the matter; with patriotic fervour they supported the King and Minister. Napoleon found himself confronted by the danger of a union of all Germany in opposition to French usurpation, and his own diplomatic defeat had become known in a most inconvenient form; he at once travelled to Paris, consulted Benedetti, returned to his former policy, and asked that the demand of August 5th might be forgotten; it was withdrawn, and things were to be as if it had never been made.

Were they, however, still to give up all hope of some increase of French territory? The demand for German soil had been refused; it was not at all clear that Bismarck would not support the acquisition of at least part of Belgium. In conversation with Benedetti, on August 7th, he had said: "Perhaps we will find other means of satisfying you." Goltz was still very sympathetic; he regarded the French desire as quite legitimate in principle. It was determined, therefore, now to act on these hints and suggestions which had been repeated so often during the last twelve months; Benedetti was instructed to return with a draft treaty; the French demands were put in three forms; first of all he was to ask for the Saar Valley, Landau, Luxemburg, and Belgium; if this was too much, he was to be content with Belgium and Luxemburg, and if it seemed desirable he should offer that Antwerp be made a free city; by this perhaps the extreme hostility of England would be averted. With this demand, on August 20th, he again appeared before Bismarck. Of course, the Minister, as soon as Saarbrück and Landau were mentioned, drew himself up to his full height, adopted an angry air, and reminded Benedetti of his repeated declaration that they were not going to give up a single German village. Benedetti, therefore, in accordance with his instructions, withdrew this clause. The rest of the treaty he and Bismarck discussed together carefully; they took it line by line and clause by clause, Bismarck dealing with the matter in a serious and practical manner. After this had been finished a revised draft was written out by Benedetti, Bismarck dictating to him the alterations which had been made. This revised draft consisted of five articles: (1) The Emperor recognised the recent acquisitions of Prussia; (2) the King of Prussia should bind himself to assist France in acquiring Luxemburg from the King of Holland by purchase or exchange; (3) the Emperor bound himself not to oppose a union of the North German Federation with the South German States and the establishment of a common Parliament; (4) if the Emperor at any time wished to acquire Belgium, the King of Prussia was to support him and give him military assistance against the interference of any other Power; (5) a general treaty of alliance.

It will be seen that this treaty consists of two parts. The first refers to what has already taken place,—the Emperor of the French in return for past assistance is to have Luxemburg; this part would naturally come into operation immediately. The next two clauses referred to the future; the union of all Germany would in the natural course of events not be long delayed; this would seriously alter the balance of power and weaken France. Napoleon would naturally in the future use all his efforts to prevent it, as he had done during this year, and by an alliance with Austria he would probably be able to do so. He would, however, withdraw his opposition if he was allowed to gain a similar increase of territory for France. After all, the acquisition of at least part of Belgium by France might be justified by the same arguments by which the dethronement of the King of Hanover was defended. Many of the Belgians were French; there was no natural division between Belgium and France; probably the people would offer no opposition.

Bismarck had to remember that he could not complete the union of Germany without considering Napoleon; there were only two ways of doing the work, (1) by war with France, (2) by an alliance. Need we be surprised that he at least considered whether the latter would not be the safer, the cheaper, and the more humane? Was it not better to complete the work by the sacrifice of Belgian independence rather than by the loss of 300,000 lives?

Benedetti sent the revised draft to Paris; it was submitted to the Emperor, accepted in principle, and returned with some small alterations and suggestions. Benedetti sent in the revision to Bismarck and said he would be ready at any time to meet the Minister and finish the negotiations. He himself left Berlin for Carlsbad and there awaited the summons. It never came. Week after week went by, Bismarck retired to his Pomeranian estate; he did not return to Berlin till December and he never renewed the negotiations. The revised draft in Benedetti's handwriting was in his hands; four years later, when war had been declared against France, he published it in order to destroy whatever sympathy for Napoleon there might be in England.

Bismarck did not continue the negotiations, for he had found a better way. Till August 23d his relations to Austria were still doubtful; he always had to fear that there was some secret understanding between France and Austria, that a coalition of the two States had been completed, and that Prussia might suddenly find herself attacked on both sides. He had, therefore, not wished to offend France. Moreover his relations to Russia were not quite satisfactory. The Czar took a very serious view of the annexations in North Germany: "I do not like it," he said; "I do not like this dethronement of dynasties." It was necessary to send General Manteuffel on a special mission to St. Petersburg; the Czar did not alter his opinion, but Bismarck found it possible at least to quiet him. We do not know all that passed, but he seems to have used a threat and a promise. If the Czar attempted to interfere in Germany, Bismarck hinted, as he had already done, that he might have to put himself at the head of the Revolution, and proclaim the Constitution of 1849; then what would happen to the monarchical principles? He even suggested that a Revolution which began in Germany might spread to Poland. The Czar explained that he was discontented with many clauses in the Treaty of Paris. There was an understanding, if there was no formal compact, that Prussia would lend her support, when the time came for the Czar to declare that he was no longer willing to observe this treaty.

By the end of August Bismarck had therefore removed the chief dangers which threatened him. Russia was quieted, France was expectant, Austria was pacified. He had, however, done more than this: he had already laid the foundation for the union of the whole of Germany which Napoleon thought he had prevented.

The four southern States had joined in the war against Prussia. In a brilliant and interesting campaign a small Prussian army had defeated the Federal forces and occupied the whole of South Germany. The conquest of Germany by Prussia was complete. These States had applied at Nikolsburg to be allowed to join in the negotiations. The request was refused, and Bismarck at this time treated them with a deliberate and obtrusive brutality. Baron von der Pfortden, the Bavarian Minister, had himself travelled to Nikolsburg to ask for peace. He was greeted by Bismarck with the words: "What are you doing here? You have no safe-conduct. I should be justified in treating you as a prisoner of war." He had to return without achieving anything. Frankfort had been occupied by the Prussian army; the citizens were required to pay a war indemnity of a million pounds; Manteuffel, who was in command, threatened to plunder the town, and the full force of Prussian displeasure was felt by the city where Bismarck had passed so many years. It was arranged with Austria and France that the southern States should participate in the suspension of hostilities; that they should preserve their independence and should be allowed to enter into any kind of Federal alliance with one another. The result of this would have been that South Germany would be a weak, disunited confederation, which would be under the control partly of France and partly of Austria. This would have meant the perpetuation in its worst form of French influence over South Germany. When this clause was agreed on, the terms of peace between these States and Prussia had not yet been arranged. The King of Prussia wished that they should surrender to him some parts of their territory. Bismarck, however, opposed this. He was guided by the same principles which had influenced him all along. Some States should be entirely absorbed in Prussia, the others treated so leniently that the events of this year should leave no feeling of hostility. If Bavaria had to surrender Bayreuth and Anspach, he knew that the Bavarians would naturally take part in the first coalition against Prussia. With much trouble he persuaded the King to adopt this point of view. The wisdom of it was soon shewn. At the beginning of August he still maintained a very imperious attitude, and talked to the Bavarians of large annexations. Pfortden in despair had cried, "Do not drive us too far; we shall have to go for help to France." Then was Bismarck's turn. He told the Bavarian Minister of Napoleon's suggestion, shewed him that it was Prussia alone who had prevented Napoleon from annexing a large part of Bavaria, and then appealed to him through his German patriotism: Would not Bavaria join Prussia in an alliance? Pfortden was much moved, the Count and the Baron embraced one another, and by the end of August Bismarck had arranged with all the four southern States a secret offensive and defensive alliance. By this they bound themselves to support Prussia if she was attacked. Prussia guaranteed to them their territory; in case of war they would put their army under the command of the King of Prussia. He was now sure, therefore, of an alliance of all Germany against France. He no longer required French assistance. The unity of Germany, when it was made, would be achieved by the unaided forces of the united German States. The draft treaty with Napoleon might now be put aside.

These negotiations mark indeed a most important change in Bismarck's own attitude. Hitherto he had thought and acted as a Prussian; he had deliberately refused on all occasions to support or adopt the German programme. He had done this because he did not wish Germany to be made strong until the ascendancy of Prussia was secured. The battle of Königgrätz had done that; North Germany was now Prussian; the time had come when he could begin to think and act as a German, for the power of Prussia was founded on a rock of bronze.

This change was not the only one which dates from the great victory. The constitutional conflict had still to be settled. The Parliament had been dissolved just before the war; the new elections had taken place on the 3d of July, after the news of the first victory was known. The result was shewn in a great gain of seats to the Government and to the Moderate Liberal party. The great question, however, was, How would Bismarck use his victory over the House? for a victory it was. It was the cannon of Königgrätz which decided the Parliamentary conflict. The House had refused the money to reorganise the army, and it was this reorganised army which had achieved so unexampled a triumph. Would the Government now press their victory and use the enthusiasm of the moment permanently to cripple the Constitution? This is what the Conservative party, what Roon and the army wished to do. It was not Bismarck's intention. He required the support of the patriotic Liberals for the work he had to do; he proposed, therefore, that the Government should come before the House and ask for an indemnity. They did not confess that they had acted wrongly, they did not express regret, but they recognised that in spending the money without a vote of the House there had been an offence against the Constitution; this could now only be made good if a Bill was brought in approving of what had happened. He carried his opinion, not without difficulty; the Bill of indemnity was introduced and passed. He immediately had his reward. The Liberal party, which had hitherto opposed him, broke into two portions. The extreme Radicals and Progressives still continued their opposition; the majority of the party formed themselves into a new organisation, to which they gave the name of National Liberals. They pledged themselves to support the National and German policy of the Government, while they undertook, so far as they were able, to maintain and strengthen the constitutional rights of Parliament. By this Bismarck had a Parliamentary majority, and he more and more depended upon them rather than his old friends, the Conservatives. He required their support because henceforward he would have to deal not with one Parliament, but two. The North German Confederation was to have its Parliament elected by universal suffrage. Bismarck foresaw that the principles he had upheld in the past could not be applied in the same form to the whole of the Confederation. The Prussian Conservative party was purely Prussian, it was Particularist; had he continued to depend upon it, then all the members sent to the new Reichstag, not only from Saxony, but also from the annexed States, would have been thrown into opposition; the Liberal party had always been not Prussian but German; now that he had to govern so large a portion of Germany, that which had in the past been the great cause of difference would be the strongest bond of union. The National Liberal party was alone able to join him in the work of creating enthusiasm for the new institutions and new loyalty. How often had he in the old days complained of the Liberals that they thought not as Prussians, that they were ashamed of Prussia, that they were not really loyal to Prussia. Now he knew that just for this reason they would be most loyal to the North German Confederation.