Peace of Prague (1866) in the context of Wilhelm I, German Emperor

Franz Joseph I or Francis Joseph I (German: Franz Joseph Karl [fʁants ˈjoːzɛf ˈkaʁl]; Hungarian: Ferenc József Károly [ˈfɛrɛnt͡s ˈjoːʒɛf ˈkaːroj]; 18 August 1830 – 21 November 1916) was Emperor of Austria, King of Hungary, and the ruler of the other states of the Habsburg monarchy from 2 December 1848 until his death in 1916. In the early part of his reign, his realms and territories were referred to as the Austrian Empire, but in 1867 they were reconstituted as the dual monarchy of Austria-Hungary. From 1 May 1850 to 24 August 1866, he was also president of the German Confederation.

In December 1848, Franz Joseph's uncle Emperor Ferdinand I abdicated the throne at Olomouc, as part of Minister President Felix zu Schwarzenberg's plan to end the Hungarian Revolution of 1848. Franz Joseph then acceded to the throne. In 1854, he married his first cousin Duchess Elisabeth in Bavaria, with whom he had four children: Sophie, Gisela, Rudolf, and Marie Valerie. Largely considered to be a reactionary, Franz Joseph spent his early reign resisting constitutionalism in his domains. The Austrian Empire was forced to cede its influence over Tuscany and most of its claim to Lombardy–Venetia to the Kingdom of Sardinia, following the Second Italian War of Independence in 1859 and the Third Italian War of Independence in 1866. Although Franz Joseph ceded no territory to the Kingdom of Prussia after the Austrian defeat in the Austro-Prussian War, the Peace of Prague (23 August 1866) settled the German Question in favour of Prussia, which prevented the unification of Germany from occurring under the House of Habsburg.

The North German Confederation (German: Norddeutscher Bund) was initially a German military alliance established in August 1866 under the leadership of the Kingdom of Prussia, which was transformed in the subsequent year into a confederated state (a de facto federal state) that existed from July 1867 to December 1870. A milestone of the German Unification, it was the earliest continual legal predecessor of the modern German nation-state known today as the Federal Republic of Germany.

The Confederation came into existence following the Prussian victory in the Austro-Prussian War of 1866 over the lordship of two duchies (Schleswig-Holstein) resulting in the Peace of Prague, where Prussia pressured Austria and its allies into accepting the dissolution of the existing German Confederation (an association of German states under the leadership of the Austrian Empire), thus paving the way for the Lesser German version of German unification in the form of a federal state in Northern Germany. The construction of such a state became a reality in August 1866, following the North German Confederation Treaty, initially as a military alliance only, while its first federal constitution establishing a constitutional monarchy with the Prussian king holding as the head of state the Bundespräsidium was adopted on 1 July 1867. Laws could only be enabled with the consent of the Reichstag (a parliament based on universal male suffrage) and the Federal Council (Bundesrat, a representation of the states). During the initial three and a half years of the Confederation, a conservative-liberal cooperation undertook important steps to unify (Northern) Germany with regard to law and infrastructure. The designed political system and the political parties remained essentially the same also after 1870.