Contest Between Prussia and Austria.—Already a difference of policy had begun to show itself. Prussia was believed to have the intention of annexing the duchies; while Austria began to favor the claims of Prince Frederick of Augustemburg. In the meantime, both nations were making ready for the struggle; and Italy, looking upon the quarrel as a precious opportunity to strike a blow for the liberation of Venetia, had secretly entered into an alliance with Prussia.
On July 3, 1866, was fought the decisive battle of Sadowa, in which the Austrians were routed. Not till the victorious Prussians had pushed forward towards Vienna was a truce obtained through the agency of the Emperor of the French, the Peace of Prague (August 20). Italy, though more than half-inclined to stand out for the cession by Austria of the Trentino, as well as Venetia, reluctantly agreed to the armistice (August 12).
A brief campaign sufficed for the defeat of the minor states of Germany that had joined Austria, viz.: Bavaria, Württemberg, Baden and Hesse-Darmstadt; and, after peace had at last been arranged, some of them were forced to submit to a certain loss of territory.
Independence of Austria and Union of Germany.—The war completed the dissolution of the Confederation, and secured the reconstruction of Germany on an entirely new basis. Austria was excluded from Germany, and a new confederation, the North German, was formed of the states north of the Main, under the headship of the king of Prussia. Schleswig-Holstein, Hanover, Hesse-Cassel, Nassau, and Frankfort were incorporated with that kingdom. Efforts to secure a further consolidation were opposed by the South German states, but the final solution of the question was at length brought about by France, whose demands resulted in the War of 1870. (See under [France].)
In this war Germany acquired Alsace and a part of Lorraine, and south Germany now [509] waived any further opposition to a consolidation of all the German states under the leadership of Prussia.
Restoration of the German Empire.—On December 3 the king of Bavaria invited the king of Prussia to restore the dignity of German emperor. Most of the other states gave their assent and the North German Reichstag on December 10 adopted a motion for the establishment of the German empire under the king of Prussia. On January 18, 1871, the restoration of the imperial dignity was solemnly proclaimed by William I. at Versailles.
Subsequently the empire was largely organized under the vigorous administration of Prince Bismarck. The parliament of the new empire soon met at Berlin, and adopted the new constitution. The main result of his foreign policy was a cordial alliance with Austro-Hungary; an alliance, in 1872, between the emperors of Germany, Austria and Russia, in which, subsequently, Italy took the place of Russia, forming what is known in European politics as the Triple Alliance.
In domestic affairs many difficulties were encountered. With the birth of the new Empire commenced the long struggle of Prince Bismarck with the Papacy. The Jesuits were expelled in 1872, and in 1873 the famous “Falk Laws” imposed secular restrictions on all ecclesiastical appointments. The strict enforcement of these laws led to intense discontent and ill-feeling among Catholics. The contest ended with the grant of many concessions and the confession by Prince Bismarck in 1887 that his policy was practically changed. The democratic movement known as Socialism, aiming at the regulation and organization by the State of labor and production, grew rapidly in strength and importance, and inaugurated an era of “labor policy” by legislation compelling employers to institute a system of insurance in favor of their work-people, since followed by the adoption of an important state-aided scheme of insurance against death and old age.
In 1888 Emperor William I. died, and the premature death, after a reign of three months, of the beloved Crown Prince, who succeeded him as Frederick III., disappointed the hopes of those who had anticipated a Liberal policy on the part of the Crown.
Accession of William II.—His son and successor, William II., took a strong view of his functions as emperor and king. His reign was immediately characterized by the further development of the labor policy inaugurated by Prince Bismarck. The emperor was not, however, generally in accord with the views of the great Chancellor, whose resignation was accepted in 1891.