Kingdom of Prussia follows Kingdom of Hanover
The divided administration of Schleswig and Holstein then became the trigger for the Austro-Prussian War of 1866—also known as the Seven Weeks' War. Prussia, allied with the Kingdom of Italy and various northern German states, declared war on the Austrian Empire. The Austrian-led coalition was crushed, and Prussia annexed four of its smaller allies—the Kingdom of Hanover, the Electorate of Hesse, the Duchy of Nassau and the Free City of Frankfurt. Prussia also annexed Schleswig and Holstein, and also effectively annexed Saxe-Lauenburg by forcing it into a personal union with Prussia (which was turned into a full union in 1876). King William initially wanted to take territory from Austria itself, but Bismarck persuaded him to abandon the idea. While Bismarck wanted Austria to play no future role in German affairs, he foresaw that Austria could be a valuable future ally. With these gains in territory, the Prussian possessions in the Rhineland and Westphalia became geographically connected to the rest of the kingdom for the first time. Counting the de facto annexation of Saxe-Lauenburg, Prussia now stretched uninterrupted across the northern two-thirds of Germany. It would remain at this size until the overthrow of the monarchy in 1918.
Bismarck used this opportunity to end the budget dispute with parliament. He proposed a bill of indemnity granting him retroactive approval for governing without a legal budget. He guessed, correctly as it turned out, that this would lead to a split between his liberal adversaries. While some of them argued that there could be no compromise with the principle of constitutional government, most of the liberals decided to support the bill in hopes of winning more freedom in the future.
The German Confederation was dissolved as part of the war. In its place, Prussia cajoled the 21 states north of the Main into forming the North German Confederation in 1866. Prussia entered the Confederation as a whole (including the East Prussian cradle of its statehood, as well as its share of dismembered Poland consisting of Province of Posen and West Prussia), thus becoming the dominant state in this new entity, with four-fifths of its territory and population—more than the other members of the confederation combined. Its near-total control was cemented in a constitution written by Bismarck. Executive power was vested in a president—a hereditary office of the rulers of Prussia. He was assisted by a chancellor responsible only to the president. There was also a bicameral parliament. The lower house, or Reichstag (Diet), was elected by universal male suffrage. The upper house, or Bundesrat (Federal Council) was appointed by the state governments. The Bundesrat was, in practice, the stronger chamber. Prussia had 17 of 43 votes and could easily control proceedings through alliances with the other states. For all intents and purposes, Bismarck dominated the new grouping. He served as his own foreign minister for virtually his entire tenure as prime minister of Prussia, and in that capacity was able to instruct the Prussian delegates to the Bundesrat.
The southern German states (except Austria) were forced to accept military alliances with Prussia, and Prussia began steps to merge them with the North German Confederation. Bismarck's planned Kleindeutschland unification of Germany had come considerably closer to realisation.
The final act came with the Franco-Prussian War (1870–1871), where Bismarck maneuvered Emperor Napoleon III of France into declaring war on Prussia. Activating the German alliances put in place after the Austro-Prussian War, the German states, aside from Austria, came together and swiftly defeated France, even managing to take Napoleon prisoner (2 September 1870). Even before then, Bismarck was able to complete the work of unifying Germany under Prussian leadership. The patriotic fervour aroused by the war against France overwhelmed the remaining opponents of a unified Kleindeutschland nation, and on 18 January 1871 (the 170th anniversary of the coronation of the first Prussian king, Frederick I), the German Empire was proclaimed in the Hall of Mirrors at Versailles outside of Paris, while the French capital was still under siege. King William became the first emperor (Kaiser) of a unified Germany. However, the titles of Emperor of Germany and King of Prussia were to be borne by the same man until the end of the monarchy.
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