A war fought between Prussia, allied with Italy, and Austria, allied with Bavaria and other, smaller German states. War had become inevitable after Bismarck challenged Austria’s supremacy in the German Confederation. Hostilities finally broke out when Bismarck, having gained France’s neutrality and the support of Italy, proposed that the German Confederation should be abolished. Prussian troops forced the Austrians out of Schleswig‐Holstein, but the Austrians defeated the Italian army at Custozza. However, the Prussian army, better trained and equipped, crushed the main Austrian army at Sadowa. Seven weeks later the Austrians signed the Treaty of Prague, by which the German Confederation was dissolved. Austria ceded Venetia to Italy, while Prussia annexed the smaller states into the new North German Confederation. Austria, excluded from its territories in the south and from political influence to the north, turned towards the east, accepting the Hungarian Ausgleich and forming Austria‐Hungary.