The Austria-Prussian War of 1866
The Gastein Convention was short-lived. Austria violated the agreement to settle any disputes directly with Prussia when it took its disputes about Holstein directly to the German Confederation. Prussia then threatened to invade Holstein. On 14 June 1866, Austria asked the German Confederation to join with their armies to punish the Prussians. Contrary to popular opinion and many sources, not all states of the Confederation jumped at the opportunity to fight Prussia. Prussia attacked Austria, as well as the warring states of the German Confederation and won the War of 1866 (also known as the Seven Weeks War). This conflict was to prove by far the most significant struggle for the establishment of a German Empire and far more important than the Franco-Prussian War that was yet to come.
There is confusion as to who was on which side, because many secondary sources say that most states sided with Austria. The conventional thought is that when the German Confederation asked for mobilization, everyone responded. This assumption is not true. Prussia’s allies were the King of Italy (who wanted Venetia), Mecklenburg-Schwerin, Mecklenburg-Strelitz, Oldenburg, Anhalt, Brunswick, Saxe-Altenburg, Saxe-Coburg and Gotha, Lauenburg, Lippe-Detmold, Schwarzburg-Sondershausen, Waldeck-Pyrmont, Bremen, Hamburg, and Lübeck.
Austria had fewer allies, but they were more powerful and included: the Kingdoms of Bavaria, Hanover, Saxony, and Württemberg, as well as Baden, Hesse-Darmstadt, Nassau, Hesse-Kassel, Saxe-Meiningen, Reuss Senior Line, Schaumburg-Lippe, and Frankfurt. Six other members of the German Confederation stayed neutral: Limburg, Liechtenstein, Luxembourg, Reuss Junior Line, Saxe-Weimar-Eisenach, and Schwarzburg-Rudolstadt.
Under the terms of the Treaty of Prague that ended the war on 23 August 1866 (and was mediated by Napoleon III), the Austrian Emperor recognized the dissolution of the German Confederation and consented to the new formation of German states in which the imperial state of Austria would have no part. Pope Pius IX greeted the news with the comment, “the world has collapsed.”
The war had lasted only seven weeks but at its conclusion, the balance of power shifted from Austria to Prussia, and the concept of Kleindeutschland began to come to fruition. No territorial claims were made of Austria in exchange for 30 million silver florins (about $405 million) worth of Austrian indemnity payments that allowed Bismarck to balance the Prussian budget. Bismarck also secured an agreement with Austria to allow Prussia to annex Schleswig, Holstein, the kingdom of Hanover, Hesse-Kassel, Nassau, and the free city of Frankfurt-am-Main, thus disregarding the rights of the existing imperial houses. These annexations created a physical bridge between the eastern and western parts of the Prussian kingdom. This was also important because the armies from the states that were absorbed became part of the Prussian army and politically many legislative votes went with this territory.
Those that had sided with Austria fared little better. Bavaria was given an indemnity of 23 million Florins ($303 million). Saxony had more to pay (10 million Talers) reducing that kingdom to almost a vassal. The Kingdom of Württemberg had to pay 8 million Guilders, Baden 6 million Guilders, Hesse-Darmstadt 3 million Guilders, and the principality of Reuß 100,000 Talers. Frankfurt-am-Main, which had been a free city, had its indemnity reduced from 25 million to 6 million Florins when the city voted itself out of existence and incorporated into Prussia.
Prior to unification, there were several different types of currency. Most currencies were linked to something called Vereinsthaler. This was a currency based on silver. When the exchange was made, the general rate was three gold marks to one Vereinsthaler. Southern Germany’s use of the Gulden was valued at 1.71 Marks.
These actions essentially sounded the death knell for Austria. Emboldened by Austria’s loss in 1866, the Hungarians made a play for semi-independence. Austria reached a compromise with Hungary known as the Ausgleichin 1867. Austria ceased to exist, and in its place, Austria-Hungary was born. Prussia had annexed and absorbed the armies of half of the German Confederation and entered into military convention with most of the states that had joined the North German Confederation. This introduced Prussian conscription into the North German Confederation and 800,000 more soldiers were pressed into Prussian service.