It was founded in 1871 when Wilhelm I, King of Prussia from the Hohenzollern dynasty was proclaimed the German Emperor in the Hall of Mirrors at the Palace of Versailles. Berlin became its capital with the Berlin Palace as the Emperor's official residence. Its constitution then entered into force, and Otto von Bismarck became the first Chancellor. As these events occurred, the Prussian-led North German Confederation and its southern German allies were still engaged in the Franco-Prussian War. The state was founded with the notable exclusion of Austria, and as such, represented the so-called Lesser German solution (Kleindeutsche Lösung).
The German Empire consisted of 26 constituent territories, most of them ruled by royal families. They included four kingdoms, six grand duchies, five duchies (six before 1876), seven principalities, three free Hanseatic cities, and one imperial territory. Although Prussia became one of several kingdoms in the new realm, it contained most of Germany's population and territory, thus remaining a powerhouse with the major say in imperial affairs. Its influence also helped define modern German culture.
After 1850, the states of Germany had rapidly become industrialized, with particular strengths in coal, iron (and later steel), chemicals, and railways. In 1871, Germany had a population of 41 million people; by 1913, this had increased to 68 million. A heavily rural collection of states in 1815, the now united Germany became predominantly urban. During its 47 years of existence, the German Empire was an industrial, technological, and scientific giant, gaining more Nobel Prizes in science than any other country. By 1900, Germany was the largest economy in Europe, surpassing the United Kingdom, as well as the second-largest in the world, behind only the United States.
Until 1879, Otto von Bismarck's tenure was marked by relative liberalism, but it became more conservative afterwards. Broad reforms and the Kulturkampf marked his period in the office. Late in Bismarck's chancellorship and in spite of his personal opposition, Germany became involved in colonialism. Claiming much of the leftover territory that was yet unclaimed in the Scramble for Africa, it managed to build the third-largest colonial empire after the British and the French ones. As a colonial state, it sometimes clashed with other European powers, especially the British Empire.
Germany became a great power, boasting a rapidly developing rail network, the world's strongest army, and a fast-growing industrial base. In less than a decade, its navy became second only to Britain's Royal Navy. After the removal of Chancellor Otto von Bismarck by Wilhelm II in 1890, the Empire embarked on a bellicose new course that ultimately contributed to the outbreak of World War I. In addition, Bismarck's successors were incapable of maintaining their predecessor's complex, shifting, and overlapping alliances which had kept Germany from being diplomatically isolated. This period was marked by various factors influencing the Emperor's decisions, which were often perceived as contradictory or unpredictable by the public. In 1879, the German Empire consolidated the Dual Alliance with Austria-Hungary, followed by the Triple Alliance with Italy in 1882. It also retained strong diplomatic ties to the Ottoman Empire. When the great crisis of 1914 arrived, Italy left the alliance and the Ottoman Empire formally joined.
In the First World War, German plans to capture Paris quickly in the autumn of 1914 failed. The war on the Western Front became a stalemate. The Allied naval blockade caused severe shortages of food. Germany was repeatedly forced to send troops to bolster Austria-Hungary and Turkey on other fronts. However, Germany had great success on the Eastern Front; it occupied large Eastern territories following the Treaty of Brest-Litovsk. German declaration of unrestricted submarine warfare in early 1917 was designed to strangle the British, but it failed because of the use of a trans-Atlantic convoy system. However, the declaration, along with the Zimmermann Telegram, did bring the United States into the war. Meanwhile, German civilians and soldiers had become war-weary and radicalised by the Russian Revolution.
The high command under Paul von Hindenburg and Erich Ludendorff increasingly controlled the country, as they gambled on one last offensive in spring 1918 before the Americans could arrive in force, using large numbers of troops, aeroplanes, and artillery withdrawn from the Eastern Front. This offensive failed, and by October, the German armies were in retreat, Austria-Hungary and the Ottoman Empire had collapsed, Bulgaria had surrendered, and the German people had lost faith in their political system. After at first attempting to retain control, causing massive uprisings, the Empire collapsed in the November 1918 Revolution with the abdications of the Emperor and all other ruling monarchs. This left a postwar federal republic that generated a devastated and unsatisfied populace, which later led to the rise of Hitler and Nazism.