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The German Confederation replaced the Holy Roman Empire in Central Europe. After the Holy Roman Empire fell, Germany had fallen into over 300 different small kingdoms. In 1815, the Congress of Vienna decided that these weak kingdoms were not strong enough to keep France from trying to take them over, which it had already done once under Napoleon. So the Congress combined all those little countries into 39 larger countries, which were still very small compared to the powerful countries of Europe.
The problem was that the Congress did not want to make them too strong, or they'd start taking over other countries. So they put the 39 countries into a confederation which meant that they were all separate countries, but they agreed to help defend each other, and in some ways acted like one big country. But the Confederation was never strong enough to be able to attack another country.
The German Confederation lasted until 1866, when the members fought each other. The winners formed a new North German Confederation. In 1871 after winning the Franco-Prussian War, Otto von Bismarck, chancellor of Prussia, combined all the countries of Germany into the German Empire.