Austro-Italian ironclad arms race
Austria's defeat in the Seven Weeks War forced Austria to determine a new set of foreign and domestic policies for the future, as Austria's interests since the days of the Holy Roman Empire had primarily been found in Italy and Germany. The Empire thus reformed itself into the Austria-Hungarian Empire following the adoption of the Austro-Hungarian Compromise of 1867 (German: "Ausgleich"), which re-established the sovereignty of the Kingdom of Hungary and placed Hungarians within the Empire on an equal footing with Austrians. Under the "Ausgleich", Emperor Franz Joseph I would be crowned as King of Hungary, while a separate parliament at Pest with powers to enact laws for the lands of the Holy Crown of Hungary would be established.
Welf VII
His father inherited the family's estates in Swabia, including the prominent counties of Altdorf and Ravensburg, which he gave to Welf. Welf, however, spent much of his time managing the Italian possessions while his father stayed in Swabia. Both Welfs supported Frederick Barbarossa as king of Germany and the younger Welf (VII) accompanied him on his Italian campaigns, starting in 1154. In 1160, he was made duke of Spoleto by the emperor. Between 1164 and 1166, he participated in the famous feud between his father and Hugh of Tübingen, which the emperor himself resolved. He was a participant in the campaign of 1167, in which malaria devastated the army and forced the emperor back over the Alps. Welf was a victim of the malaria and died at Siena. He was buried in Steingaden Abbey in Bavaria, where his father was also later buried.