Why did the Bill of Indemnity divide Prussian liberals in 1866?

The Bill of Indemnity did not divide Prussian liberals because of its specific legal content alone, but rather because it forced them to confront the success of Otto von Bismarck’s policies, which had fundamentally challenged their core liberal principles.1

Following Prussia’s victory in the Seven Weeks’ War, Bismarck sought an act of indemnity to retroactively legalize the unconstitutional collection of taxes he had pursued since 1862 during his struggle with the parliament. This request created a deep rift among liberals:1

• The Progressives: Remained staunch opponents of Bismarck’s authoritarian methods and his disregard for parliamentary sovereignty.1
• The Moderates: Chose to break away from the Progressives to form the National Liberal Party. They prioritized the prospect of German unity and the hope that a unified state would be administered in a "liberal" spirit over their previous insistence on parliamentary control.1

Ultimately, the passage of the bill on September 3, 1866, marked a shift from a struggle for power to a compromise, as many liberals traded their constitutional demands for the promise of national unification.1