Some of these states were very small, so the union was a pact of mutual defense that was to guarantee the external and internal peace, and the independence of each of the members. It was a loose confederation, with few other interests than keeping others out.

Policy issues and matters of diplomacy were debated in a central Diet held under the presidency of Austria, at that time, the largest and most powerful member. Before any decision could be taken a two-thirds majority was required and most delegates had to vote as ordered by their respective governments.

As an organ of political action, therefore the Diet thus was impotent and largely ineffective. The Austrian statesman Metternich, intitially backed by Prussia, was a dominant figure, and led the union until 1848, the year of revolutions, which swept Germany (and other places) and led to the creation of the Frankfurt Parliament. This did not last, however, and the Diet took up its role again in 1850.

Pulling a lot of strings, a treaty. agreed upon at Olomouc, the Austrians temporarily became the leaders again, but now Bismarck began his famous plotting. He got his way and after the Austro-Prussian War of 1866, he dissolved of the union and established the North German Confederation instead, this time under Prussian leadership.

The North German Confederation, established under the orders of Bismarck in 1867, was an alliance of 22 German states, all of them located north of the Main River. It was dominated by Prussia, and basically consisted of those states that had supported Prussia in the Austro-Prussian War (1866).

The Southern German states, that had supported Austria, Bavaria, Baden, W¸rttemberg, and the grand duchy of Hesse, were excluded from the new confederation, but were allowed membership in the Zollverein, the trading confederation.

The constitution of the new confederation was laid out by Otto von Bismarck, and provided for a federal council, the Bundesrat, made up of deputies from the states, and a lower house the Reichstag, whose members were elected by direct vote.

Natually, Prussia was the predominant influence in both councils. All executive power was reserved for the king of Prussia, who had, as one of his powers the right to appoint the federal chancellor. By a strange co-incidence this turned out to be Otto von Bismarck!

Each of the smaller states retained their own independence and their own government, but most of the foreign policy and all the military forces were controlled by the federal government, and Bismarck. In 1871 the German Empire took over from the confederation.