The German National Liberal Party was formed in 1866 to support Bismarck`s policy of German unification. The birth of the party under these circumstances has led most historians to see it as the "capitulation" of German liberalism to Bismarckian power politics. The purpose of this article is to examine the contention that the liberals capitulated. Nineteenth-century liberalism in Germany had much in common with its western European counterparts. But-because of the special political and socioeconomie situation in the Germanies-it also had unique aspects. If one seeks in the German liberal an unbending hostility to the monarchist state, absolute claims for the sovereignity of the people, and justfication for revolution, one will be disappointed. Instead, German liberalism was more moderated. It was a movement to change the state of princely absolutism, of clerical and noble privilege, and of social and economic restriction, into the Rechtsstaat. Separation of powers-a mixed constitution with domination by neither the parliament nor king-was the liberal goal. When they declared they would support Bismarck`s natiol1al policy they also said they would continue to strive for internal liberal reforms, this twofold policy-both national and liberal-remained the basis of their actions. Bad the National Liberal party not existed, or had it not contained the inf1uential element, the liberal would have accomplished much less, in the formative years of the German Empire.