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 consisting of twenty-one states, was placed under the absolute and undivided leadership of Prussia, while South Germany, numbering four states, formed an unconnected cluster of semi-independent sovereignties. The two divisions were bound together, to some extent by treaties of alliance between Prussia and the three principal states of South Germany, Bavaria, Würtemberg, and Baden. By the treaty between Prussia and Bavaria, dated August 22, 1866, the two contracting powers mutually guaranteed the integrity of their respective territories, with all the military forces at their disposal, it being further stipulated that, in case of war, the King of Prussia was to have the supreme command of the Bavarian army. The treaties between Prussia and Würtemberg, and Prussia and Baden, dated August 26 and August 18, 1866, were similar to that with Bavaria, both providing a strict military alliance, and union of armies in time of war.

By the terms of the Charter of 1867, the legislative power of the North-German Confederation was vested in two representative bodies, the first delegated by the various governments, called the 'Bundesrath' or Federal Council, and the second, elected by the populations, styled the 'Reichstag' or Diet of the realm. To the Council each of the governments of the Confederation sent a deputy, with one or more votes, according to the extent and population of the state represented. The Diet, elected by universal suffrage at the rate of one member per 100,000 souls, for the term of three years, and meeting in annual session, was independent of the Council, but the members of the latter had the right to be present at the sittings 'in order to make known the views of their respective governments.' To the Diet belonged the right of initiative in federal legislation.

By treaties concluded at Versailles in November 1870 between the King of Prussia and the governments of Bavaria, Würtemberg, Baden, and Hesse, and which were ratified by the Diet of North Germany on the 10th of December, 1870, the four southern states were admitted into the North German Confederation, which transformed itself from a 'Staatenbund,' or league of states, into a 'Bundesstaat,' or united confederacy, under a common Emperor and a central Parliament. According to the constitution of Dec. 10, 1870, the jurisdiction of the Empire extends to the following subjects:—

1. The privilege of residing, exercising political rights, carrying on trade, and possessing real property in every part of Germany; as also all that relates to passports and the supervision of travellers, with the whole legislation on trade, commerce, emigration, and colonisation, inclusive of the provisions affecting insurance companies.

2. The tariff and the Federal excise and taxes.

3. Coinage, weights and measures, together with the fundamental provisions for the issue of paper money.

4. Banking.