In the aftermath of 1848, the German states were locked in a political stalemate. Austria and Russia blocked Prussian king Frederick William IV’s attempt in 1850 to unify Germany. After that, tension grew between Austria and Prussia as they struggled to dominate the German Confederation (see "Prussia, the German Confederation, and the Frankfurt National Parliament" in Chapter 21).

Economic differences exacerbated this rivalry. Austria had not been included in the German Customs Union, or Zollverein (TZOLE-fur-ayne), when it was founded in 1834 to stimulate trade and increase state revenues. By the end of 1853, Austria was the only state in the German Confederation outside the union.

Prussia had emerged from the upheavals of 1848 with a weak parliament, which was in the hands of the wealthy liberal middle class by 1859. These middle-class representatives wanted to establish — once and for all — that the parliament, not the king, held ultimate political power. Convinced that great political change and war were quite possible, Prussia’s tough-minded William I (r. 1861–1888) and his top military advisers at the same time pushed to raise taxes and increase the defense budget in order to double the size of the army. The Prussian parliament rejected the military budget in 1862, and the liberals triumphed completely in new elections. King William then appointed Count Otto von Bismarck as Prussian prime minister and encouraged him to defy the parliament.