Belligerents:

Prussia and some of the smaller North German States and Italy.
Austria and the other German States.

Cause:

From 1848 onwards in all the projects for a united Germany there was keen rivalry between Prussia and Austria. Each resisted the domination of the other in any new Empire, and the South German states were inclined to side with Austria against Prussian supremacy. This state of affairs prevented any final scheme from being agreed to. At the same time there were serious differences between Austria and Italy, who was Prussia’s ally. Bismarck made up his mind that Austria must be expelled by force of arms from the German Federation. He was an ardent supporter of the House of Hohenzollern.

Occasion:

Austria supported Schleswig Holstein in their struggle for independence against Prussia after the conclusion of the Danish War. An attempted congress of neutrals failed. Austria called on the Diet of Frankfort to take the affairs of Schleswig Holstein into its own hands, and demanded and obtained the mobilization of the whole Federal armies. Prussia declared that this action made an end of the Federal Union, and submitted a new plan for the organization of Germany, which was refused. Diplomatic relations were broken off June 12, 1866.

Course of the War:

Hanover and Hesse Cassel were conquered by Prussia, the Austrians were defeated at KÖniggrÄtz, July 3, 1866, and the Prussians pushed forward in sight of Vienna. The Austrians defeated the Italians on land at Custozza, and by sea at Lissa.

Political Result:

Napoleon III offered mediation, which was accepted. The Treaty of Prague, August 23, 1866. Prussia annexed Hanover, Nassau, Hesse Cassel, and Frankfort: Germany north of the Main together with Saxony was included in a Federation under Prussia: the Southern states were left independent. Prussian sovereignty over Schleswig Holstein was recognized. Austria withdrew completely from German affairs.

Remarks:

Napoleon III had attempted, by dividing Germany in two, to put an obstacle in the way of German unity. His clumsy diplomacy was greatly disapproved of in France. By preventing a final settlement he made the recurrence of war inevitable.