When Wilhelm I became king of Prussia in 1861, he appointed Otto von Bismarck chancellor a year later. Bismarck, a German noble, had previously served in Prussian parliament and a series of diplomatic posts. Germany, at the time, was a loose collection of states bound together only in terms of mutual defense. Under the leadership of Bismarck, the "Iron Chancellor," the 39 German states were unified into a cohesive entity with political and economic unity.

Wars of Unification

The unification of Germany didn't come about through any popular movement. Rather, Bismarck forced unification through a series of wars. In 1864, Prussia attacked Denmark to regain control of German-speaking territories. After victory, Bismarck began the Austro-Prussian war two years later. The conflict lasted only a few weeks and ended with Prussia on top. At this point, the Northern German Confederation had formed, but German states in the south were reluctant to join. Bismarck launched war against France in 1870 and seized the border territories. In 1871, Bismarck announced the creation of the German empire in the Hall of Mirrors at France's Versailles palace, declaring Wilhelm I emperor of a united Germany.

Solidifying German Power

Once unification had been accomplished, Bismarck continued his quest to make the German empire the most powerful in Europe. The new Germany was organized around Prussia, with all foreign policy decisions made by the king of Prussia and German kaiser in the Prussian capital of Berlin. Bismarck dominated the new empire's place on the world stage with full support from the aging kaiser. To that end, he formed an alliance with Austria-Hungary to counterbalance the alliance between France and Russia. Then, in 1885, he held a conference in Berlin to divide Africa among the European powers, coming away with German colonies on the continent.

Europe's First Welfare State

As a right-wing conservative, Bismarck was concerned about the rise of socialism in Europe. Although many of the progressive reforms he introduced caused him to be labeled a socialist himself, his motivation was to prevent more radical ideas from taking root. Bismarck created a comprehensive system to promote the well-being of workers and support the elderly and disabled. His retirement and disability systems, with mandatory participation and matching contributions from employees, employers and the government, would later be used as a model when the U.S. Social Security system was designed. The workers' compensation, national healthcare, disability benefits and old age pensions introduced by Bismarck were the first of their kind in Europe.

The End of an Era

Bismarck remained chancellor of Germany for 28 years. When Wilhelm I died in 1888, he was succeeded by his son Frederick III. The terminally ill Frederick only ruled a few months before his death. When his son Wilhelm II took the throne, he wanted to rule the empire personally and expressed resentment over Bismarck's power. Within two years, he'd forced Bismarck out of the government. From then on, Wilhelm II appointed chancellors who were civil servants he could control, rather than powerful statesmen, as Bismarck had been. Bismarck retired to his estate, predicting that Wilhelm II would be the ruin of the German empire.