It was about at this time that the greatest statesman of modern Germany, Bismarck, began to become all powerful. It was he who recognized more clearly than anyone else the need of eliminating Austria from German affairs, and then finding some cause which would appeal strongly and equally to all the other German states. The difficulties connected with the division of Schleswig-Holstein offered to him an opportune cause for a quarrel with Austria, and when he felt in 1866 that the Prussian army had been sufficiently re-formed and built up to overpower not only Austria, but any of the other German states which might possibly join with her, he went to war. Prussia had succeeded in forming an alliance with the newly united Italy on the basis of the latter's desire to regain the north Italian territory which was then in the possession of Austria. On the other hand the latter had drawn to its side the kingdoms of Hanover and Saxony, as well as all the south German states. The war was one of the shortest in the history of mankind, considering the size of the countries involved and the odds at stake. In less than two months, after only one important battle--at Sadowa--had been fought on July 3, and lost by the Austrians, peace was concluded at Prague. As a result of the arrangements made then, Austria was eliminated from German affairs and withdrew all its claims for Schleswig-Holstein, and Prussia was free to form a confederation of the north German states with itself as a leader, while the south German states were permitted to form a federation of their own. Austria furthermore lost Venetia to Italy. Of the Austrian allies, the south German states were let off easy with a money indemnity, but Hanover, Nassau, and Hesse-Cassel lost their independence and became part and parcel of the Prussian kingdom. This addition to its territory made Prussia even more predominant in Germany than it had been in the past and Bismarck immediately proceeded to take the first step in the unification of Germany. This took the form of the North German Confederation and so well did he build at that time that the new government which he conceived then has ever since remained the government of united Germany. In its way it was unique. It was a mixture of monarchism and federation. Each of the federated states retained a large amount of control over its internal affairs, but yielded to Prussia control of its armies, foreign relations, railways, and posts and telegraphs. The King of Prussia became the president of this federation and as such its chief executive. The legislative powers were intrusted to two bodies, the Bundesrat and the Reichstag, the former representing the various states, the latter their people. The members of the Bundesrat were appointed by the rulers of the states which they represented, whereas the members of the Reichstag were elected by universal manhood suffrage.