Austro-Italian ironclad arms race
Seizing upon the decline of the Regia Marina in the years immediately after the Battle of Lissa, Tegetthoff worked to continue the efforts of Archduke Ferdinand Max of expanding the ironclad fleet of the now Austro-Hungarian Navy. Tegetthoff found political allies in the Austro-Hungarian Minister of War Carl von Franck and retired Admiral Bernhard von Wüllerstorf-Urbair. Wüllerstorf's and Franck's primary arguments in favor of continuing with the ironclad program Austria had engaged in prior to the Seven Weeks War lay largely along economic grounds. The two believed that constructing new ironclad warships would rejuvenate Austria-Hungary's economy following the defeat at the hands of Prussia and Italy, and that such a fleet would help to open up new commercial opportunities in the Levant and the Middle East. These proposals would be shelved however while Austria continued to reel from the military defeats inflicted by Prussia, and several cabinet reshufflings by Emperor Franz Joseph I resulted in a government more interested in pursuing revenge against Prussia than constructing new ironclads, which would be of little use in a hypothetical second war with Prussia.
Otto von Bismarck
The war lasted seven weeks; Germans called it a "Blitzkrieg" ("lightning war"), a term also used in 1939. Austria had a seemingly powerful army that was allied with most of the north German and all of the south German states. Nevertheless, Prussia won the decisive Battle of Königgrätz. The King and his generals wanted to push onward, conquer Bohemia and march to Vienna, but Bismarck, worried that Prussian military luck might change or that France might intervene on Austria's side, enlisted the help of the Crown Prince, who had opposed the war but had commanded one of the Prussian armies at Königgrätz, to dissuade his father after stormy meetings. Bismarck insisted on a "soft peace" with no annexations and no victory parades, so as to be able to quickly restore friendly relations with Austria.