In 1815, after the final defeat of Napoleon, the German princes and free cities established the German Confederation as a loose successor of the former Holy Roman Empire. The sovereignty remained with the individual German states. There were several attempts to create a modern nation state, most prominently in the Revolution of 1848. A major issue in the struggle was the rivalry between Austria, the traditional principal power in Germany, and the ascending Prussia. The Austro-Prussian War of 1866 demonstrated the military superiority of Prussia, led by its ingenious and energetic minister-president Otto von Bismarck.
After the war Prussia annexed most of its adversaries' territories north of the river Main, such as the Kingdom of Hanover, and with the other North German states it signed on 18 August the North German Confederation Treaty. The alliance had 15 members then, with 80 percent of the inhabitants living in Prussia. (A notable exclave of the North German Confederation was the Prussian territory of Hohenzollern in the south.) Hesse-Darmstadt was part of the new Confederation only with its northern part. A South German Confederation, as mentioned in the Peace of Prague, did not come into existence.
From the beginning the alliance was supposed to become a nation state with a federal constitution. On 15 December 1866, Bismarck presented a proposal to the representatives of the allied governments. Their complaints did not seriously alter the proposal. On 7 February 1867, the common proposal of the governments was ready. It was the intention not to impose the new constitution but to stipulate it together with a representation of the people. To this end a konstituierender North German parliament was elected on 12 February. This Norddeutscher Reichstag accepted the constitution, with relatively minor changes, on 16 April 1867. It became law on 1 July. Consequently, a new Reichstag was elected, the only one during the (following) existence of the North German Confederation. Bismarck became the first and only North German 'Bundeskanzler', the head of the executive.