Why did Bismarck argue for lenient peace terms toward Austria in 1866?

Following the decisive Prussian victory at the Battle of Königgrätz in 1866, Otto von Bismarck advocated for a swift and lenient peace with Austria for two primary strategic reasons:123

• Maintaining Continental Stability: Bismarck believed that preserving a strong Austria was essential for the long-term maintenance of the balance of power on the European continent.13
• Preventing Foreign Intervention: He feared that if the war were prolonged, other powers—specifically Napoleon III of France—might intervene in German affairs to exploit the conflict.13

By securing the Peace of Nikolsburg and the subsequent Treaty of Prague, Bismarck avoided humiliating Austria, which was permitted to retain its possessions with the exception of Venetia. This moderation allowed him to conclude the conflict quickly, effectively ending the long-standing contest for hegemony between Berlin and Vienna while positioning Prussia to lead the new North German Confederation.123