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Rh presented to Prussia a new project of the federal constitution, according to which a representation of the German nation at the federal diet was to be created by the establishment of an assembly of delegates chosen by the diets of the several states. Austria declared its readiness to accept this project, which gave to Austria and Prussia an equal number of delegates, if she should be allowed to enter the confederation with her entire territory. Prussia in a note of Dec. 20 declared it to be impracticable, and instead advocated the establishment of a federal state, on the plan which had been tried ten years before. This idea was promptly rejected by all the middle states in February, 1862, on the ground that it would involve the loss of their sovereignty. In August they united with Austria in submitting another plan of reform, according to which an assembly of delegates of the several German diets was to be convoked at Frankfort for the special purpose of deliberating on some reforms in the civil and commercial legislation of the German states. An assembly of liberal German deputies, held in September at Weimar, declared against this plan as wholly unsatisfactory, while on the other hand it was approved by the new national reform association (Reformverein), which in October was organized at Frankfort as the organ of those who unconditionally opposed the exclusion of Austria from Germany and the establishment of a Prussian leadership. In the federal diet, in January, 1863, it was defeated by a small majority. In the mean while the incessant conflicts between the Prussian liberals and their ultra-reactionary government had led, in September, to the entrance into the ministry of Otto von Bismarck, who soon after became its president and minister of foreign affairs. The uncompromising firmness with which he opposed the views of the Prussian diet on a reduction of the military budget filled even the Prussian friends of national unity with despair. Little was known of the ultimate plans of Bismarck with regard to German unity; but it was apparent that Prussia desired to be emancipated from the federal diet, and that her plans would henceforth be pushed with greater energy than at any previous time. The union movement was steadily gaining among the German people, and Austria made a bold bid for the continued headship in a reconstructed Germany. Francis Joseph invited the princes of all the German states, as well as the ruling burgomasters of the free cities, to a diet of princes (Fürstentag), to discuss the question of a new constitution. This assembly sat at Frankfort Aug. 17 to Sept. 1. The king of Prussia declined to attend it. The great majority of princes assented to the project of the emperor of Austria, according to which a directory of five princes (Austria, Prussia, Bavaria, and two others) was to be at the head of the nation, assisted by a federal council and a federal assembly of 300 members, which was to meet every third year.

Although Prussia was to have an equal number of deputies in the federal assembly, the presidency in the directory and federal council was to remain with Austria. The reform association declared for accepting the new constitution as a step in advance; while all the liberal parties of Germany decidedly rejected it. Soon a foreign complication turned the attention of all parties from the conflict of their schemes of reconstruction to a common defence of the German nationality. Frederick VII. of Denmark, in union with the predominant party of the country, had issued in March, 1863, a patent separating the duchy of Holstein from the common Danish monarchy, in order to unite Schleswig (which until then had been united with Holstein under one constitution) with Denmark proper. The federal diet summoned the Danish government to repeal the patent, as it encroached, upon the right of Holstein, and thus of Germany, and threatened, in case of refusal, a “federal execution.” On Nov. 15 Frederick VII. died, and was succeeded, according to the stipulation of the London conference of 1852, by Christian IX., who on Nov. 18 proclaimed the incorporation of Schleswig with Denmark. But as the federal diet had never recognized the London conference, the people of the duchies, as well as a number of the smaller German states, recognized Prince Frederick of Augustenburg as duke of Schleswig-Holstein. Public opinion throughout Germany strongly sympathized with this view, but Austria and Prussia decided to stand by the stipulations of 1851 and 1852, and insisted on carrying out the federal execution. The federal diet on Dec. 7, by 8 votes against 7, acceded to their demand and intrusted the execution to Hanover and Saxony. The German troops entered Holstein on Dec. 23, and the Danes withdrew without offering resistance. Prussia and Austria on Dec. 28 moved in the federal diet the occupation of Schleswig, in order to enforce the repeal of the law of Nov. 18. The motion was rejected, because the majority believed the question of succession would be prejudged by its adoption. In defiance of this resolution, Austria and Prussia declared that they would now act in the matter, not as members of the confederation, but as great powers of Europe, and at once (February, 1864) marched their troops into Schleswig. On Feb. 5 the Danes evacuated the strong Dannevirke, and withdrew behind the intrenchments of Düppel, which were stormed by the Prussians on April 18. A peace conference of representatives of the great powers, which met in London on April 25, remained without result. The Danes evacuated Jutland and confined themselves to the islands; but when the Prussians on June 29 occupied Alsen, they gave up all further resistance, and in the preliminary peace concluded in July ceded Schleswig, Holstein, and Lauenburg to Austria and Prussia. The cession, which was confirmed in the definitive peace of Vienna,