Under Frederick II 'the Great' (1740-86), Prussia was advanced from a German state of medium importance to one of the foremost powers in Europe, due almost entirely to Frederick's campaigning and the excellence of the Prussian army which became a model for many military theorists. Despite Prussian successes in the Seven Years War, however, the army had declined somewhat in effectiveness, believing, perhaps, that as 'Old Fritz's' methods had been successful, modernization was unnecessary. The first signs were evident in Frederick's last campaign, the War of the Bavarian Succession against Austria (1778) in which comparatively little action occured; and after Frederick's death in 1786 a strong and vigorous monarch was required to re-assert Prussia's position in Germany, a position its size and Frederick's legacy demanded, but such a guiding hand was not forthcoming.
Frederick II was succeeded by his nephew, Frederick William II, in 1786. Lacking the energy and determination of his uncle, he neither pursued the previous vigorous external policy, nor made any attempt to meet the internal discontent by liberal reforms, so that the system of government remained that of absolutism, but perhaps lacking in the 'enlightenment' of Frederick the Great. Frederick William II tended to follow Austria's lead in forreign affairs, in direct contrast to his uncle, hence the Austro-Prussian alliance against Revolutionary France. The Prussian army had been engaged in a somewhat fruitless but expensive campaign in Holland in 1787, and was not especially distinguished against the French; and in 1795, suspicious of the motives of Austria and Russia, Prussia made a seperate peace (of Basel) which virtually split Germany into two camps. The greatest shame was the willingness with which Prussia abandoned German territories along the Rhine, yet was eager to expand eastwards, and though the partitions of Poland virtually doubled the state's area, the eastern provinces added little to her power.The following years of Prussian neutrality cost her prestige, and weakened the army and the previous attitudes of economy and good order.
Frederick William III (1770-1840) succeeded his father as king in 1797, and though he tried to remedy the worst aspects of his father's regime by lifting some of the more repressive laws, he lacked the decisiveness required. Not until the formation of the Confederation of the Rhine did Frederick William III decide to act against the growing menace from France, and only then after the urgings of his queen, Louise of Mecklenberg-Sterlitz, whose determination and hatred of the French led her to be regarded in some quarters as 'the only man in Prussia'. The crushing defeats of Jena and Auerstadt demonstrated the decline of the Prussian army and national resolve; Frederick William III lost half his kingdom by the 'Peace of Tilsit', including all the acquisitions from the 2nd and 3rd partitions of Poland and all land west of the Elbe. Yet, this debacle also resulted in the regeneration of Prussia, for the humiliation resulted in a rebirth of patriotism and moral regeneration, led by the Tugenbund or 'League of Virtue'.