Another obstacle in the way of unification of Germany was posed by the problem of Schleswig and Holstein, the two duchies south of Zutland. While Holstein had entirely German population and was a member of the Confederation, Scheleswig had partly Danish population. As both Denmark and Germany wanted to capture these two duchies a conflict between the two became inevitable. In January 1848 the King of Denmark made a bid to incorporate the duchies in Denmark but Holstein revolved and made an appeal to Prussia and the confederation for help.

A war ensued as a result of which Danes were driven out of the duchies. However, England and Russia were opposed to invasion of Denmark and forced the Prussians to withdraw to Schleswig. By the Treaty of London, concluded in 1852, it was decided that both the duchies should remain under Denmark but they were not to be merged into it.

However, in 1863 the new King of Denmark (Christian IX) established intimate relations with Holstein and made a bid to annex Schleswig. As this was contrary to the terms of the Treaty of London it met with resistance from the patriots, leaders and rulers of the duchies. Taking full advantage of the situation Bismarck assumed leadership of Germany.

As the Emperor of Austria was heading the German Confederation Bismarck thought it desirable to have a treaty with Austria. The two (Austria and Prussia) then asked the King of Denmark to dissolve the new constitution as it violated the Treaty of London. On the latter’s refusal Prussia and Austria declared war against him in 1864.

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After his defeat the King of Denmark was forced to sign the Treaty of Vienna as a result of which Schleswig and Holstein came under the sway of Prussia and Austria. However, Bismarck knew it fully well that Austria would not agree to the surrender of these duchies to Prussia and as he himself was not willing to agree to the handing over of these duchies to the Duke of Augustenburg, a conflict with Austria seemed inevitable.

But as Bismarck was not as yet prepared for a war against Austria he reached an agreement with Austria whereby they duchy of Holstein was to go to Austria while the duchy of Schleswig was to go to Prussia. As a result of this settlement the hold of the Duke of Augustenburg over the duchies was ended for ever and road was left open for Prussia to conspire against Austria in the duchy of Holstein. Thus he prepared the ground for a war with Austria.