The Zollverein continued to expand, by 1936 included 25 states with a population of 26 millions, but Austria refused to join the Zollverein, intent on remaining independent of other states in her industries and market. This led the Prussians to become dominate in economic terms in the Confederation. In 1848 Austria proposed to establish a union between Austria and the Zollverein, this was rejected. Prussia was now considered to be the state best equipped to direct the commercial fortunes with its rapidly developing economy.
With the failure to establish a united democratic empire in the resolutions of 1948-49 Prussia proposed to set up a united German Empire under Prussian leadership, while Austria would be excluded from the empire, but not from German Affairs. While Austria was distracted in Piedmont and Hungary, Prussia accounted the Erfurt Union the first step in the development of a united German Empire. The German princes powerless against the Prussian army accepted the Prussian plan, 28 states joining the Union.
The Austrians proposed the creation of ‘Middle Europe’, a union of all the German states with Austria at its head. As Austria began to reassert power within German affairs the Erfurt Union dispersed, due to the Prussian intimidation the states defected, looking to Austria for protection. On the 29th of November 1851, the Erfurt Union was terminated. And at a meeting in Dresden in 1851 the Austrian proposal for the Austrian-dominated ‘Middle Europe’ was rejected. For Prussia the dispersing of the Erfurt union was a profound humiliation while for Austria it portrayed the potential for revival. The failure of Prussia and Austria to co-operate determined that the only way for Prussia to re-establish her previous position would be to remove Austria from the states by force.
The removal of Austria from the states involved three wars. The first being the Polish revolt of 1863 which occurred in Russian Poland. This event provided the opportunity to gain Russian neutrality in the upcoming clash with Austria. Bismarck had to be certain that attacking Austria would not result in engaging Russia as well. Through his actions Bismarck was able to secure the friendship of Russia in the upcoming war.
In 1863 the King of Denmark, Frederick VII died without an heir. The Danish duchies of Schlewig-holstein were mainly German-speaking and became a focus for nationalists. Bismarck wanted the territories for Prussia, inviting Austria to joining them in achieving this goal. In 1864, Prussian and Austrian troops moved into Denmark soon defeating the forces. The distribution soon came into discontent and became a source of tension for both parties. This provided Bismarck with a pretext which to go to war upon.
To go to war with Austria, Bismarck had to be first sure that France would not interfere, he visited Napoleon II in 1865, convincing himself that if Venetia could be secured for Italy then there would be no threat from France. On the 1st of June 1866, Austria appealed to the Confederation to settle the issue of the Duchies. This broke the terms of the convention and in retaliation Prussia occupied Holstein. Austria than made a appeal to the Diet for assistance which was granted. Prussia reacted by dissolving the confederation and sent troops to occupy the states of Hesse, Saxony and Hanover. On the 3rd of July the major engagement occurred which resulted in Prussia being victorious. By the treaty of Prague Austria was forced to give Venetia to Italy, to agree to the annexation of Schleswig-Holstein by Prussia and to acknowledge the ending of the German Confederation. Forming a union of the northern states.
in 1870 the Franco-Prussian War broke out, with the south German states fighting alongside Prussia against France. The French quickly sustained a number of defeats, Paris falling in January 1871 and a primarily peace arranged, ratified by the Treaty of Frankfurt in May. Fourth months before the signing of the Frankfurt Treaty the German Empire was proclaimed at Versailles on the 18th of January 1871. The only chance of lasting security laying with Prussia the southern states gave up their independence and joined with the north to complete the process of German Unification.
In conclusion Germany was unified under Prussia and not under Austria due to the superiority of Prussia in reference to economy, army and strategy. a number of strengthening of the Prussian economy due to economic reforms and the Zollverein between 1815 and 1848, and the continued growth after this period with army and financial reforms. As well as the three wars against Denmark (1864), Austria (1866) and France (1870-71) resulted in Germany being unified under Prussia.