In 1859 he became ambassador to Russia, and in 1862 he was posted to France.
That same year a bitter dispute between the Prussian government and Parliament over the size of the army reached an impasse. In 1861 Parliament had granted the government additional funds for reforms, but in 1862 it refused to do so without a reduction of compulsory military service from three to two years. King William I would not yield for fear that the draftees would be insufficiently imbued with conservative values; for that very reason, the liberal-dominated Parliament insisted on this concession.
In order to break the stalemate, Bismarck was named minister-president. He proceeded to collect the additional taxes on the basis of the 1861 budget, arguing that because the constitution did not provide for the case of an impasse he would have to apply the preceding year's budget. To justify the increase of the army, he warned that “the great questions of the day [meaning German unification] will not be settled by speeches and majority decisions . but by blood and iron”.
Public opinion began shifting to his side in 1864, when he used the expanded Prussian army, in alliance with Austria, to wrest the provinces of Schleswig and Holstein from Denmark. Two years later he escalated a Prusso-Austrian quarrel over these spoils into a war against Austria and other German states, the so called Seven Weeks' War. After their defeat in a whirlwind campaign, he incorporated Schleswig-Holstein, Hanover, and some other territories into Prussia. He also united all north and central German states into the North German Confederation under Prussian leadership. Faced with these achievements, the Prussian Parliament gave way and retroactively sanctioned his financial improvisations of the preceding four years.
In 1870 Bismarck trapped France into a war with the German states. His hope was that on the strength of the ensuing national enthusiasm he could bring the reluctant south German states into a united Germany.