On 18 January 1871 Germany became a nation for the first time in history after a nationalistic war against France masterminded by the “Iron Chancellor” Otto von Bismarck. The ceremony took place in the palace of Versailles outside Paris rather than in Berlin – and this overt symbol of militarism and conquest would foreshadow the first half of the next century as the new nation became a major power in Europe. The unification of Germany began many years earlier, during the Napoleonic Wars. At the Battle of Leipzig in 1813, which is also called the Battle of Nations, many of the German states joined with Russia, Sweden, and Austria to defeat Napoleon's army. In the subsequent Peace of Vienna in 1815, which ended the Napoleonic Wars, Austria remained the most powerful of the German states, in terms of political power. Prussia emerged as Austria's political and diplomatic rival.

There were many problems in unifying the German states. Not all politicians were in favor of unification. Some feared that unification would give Austria and Prussia too much power among the many states. There were also problems in deciding who would collect taxes, and how much tax would be paid.