Following military defeat by France in 1806 and domestic reforms in the Napoleonic era, after 1815 Berlin became capital of a larger and more important Prussian state, stretching from eastern outposts by the Baltic to western provinces in the Rhineland. As trade and industry grew, Berlin began a further striking transformation: from being primarily a princely residence and garrison town to a rapidly expanding industrial city. A new sense of German nationalism began to develop, alongside the development of bourgeois culture and associated institutions and buildings, while early industrialisation also meant the growth of an impoverished working class. Political eruptions in France in 1848 sparked unrest across central Europe, including Berlin. Following defeat of the revolutionary and nationalist movements in 1848–49, authoritarianism backed by military might prevailed over liberalism in a new period of reactionary conservatism under Chancellor Bismarck. In 1871, Bismarck brought about the unification of ‘small Germany’, excluding Austria, by policies of ‘blood and iron’.