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The settlement ultimately failed because it did not admit Calvinist to the terms of the treaty, and it was unable to define the religious status of the Episcopal states. Most importantly, it created a mutually hostile Protestant and a Catholic bloc in Central Europe. This hostility eventually led to the Thirty Years War, the most brutal conflict, according to some, in European history.

[[File: Lucas Cranach d.Ä. (Werkst.) - Porträt des Martin Luther (Lutherhaus Wittenberg).jpg|300px|thumb|left|Portrait of Martin Luther]]

The Holy Roman Empire was a fragmented collection of largely independent states of various sizes. The Holy Roman Emperor, a member of the House of Hapsburg, directly ruled some of the lands, but he was only a ‘nominal head of state in the rest of the Empire.’<ref> Hale, JR, <i>Reformation Europe</i> (Pelican, London, 1998), p 134</ref> The Hapsburg’s hereditary rulers of Austria, were elected Emperor by the major states in the Empire.

By the 1550s, Protestantism had been established too firmly within the Empire Central Europe to be ended by arms. Charles V wanted to secure his son's succession to Spain's throne and his nephew to the crown of the Holy Roman Emperor, and this required peace. He decided to ‘come to terms with the Protestants, which led ‘first to an armistice and then to the Treaty of Augsburg.’ <ref>Von Friedeburg, Robert. "Cuius Regio, Eius Religio: The Ambivalent Meanings of State Building in Protestant Germany, 1555–1655." <i>In Diversity and Dissent: Negotiating Religious Difference in Central Europe, 1500-1800</i>, edited by Louthan Howard, Cohen Gary B., and Szabo Franz A. J., 73-91. Berghahn Books, 2011 </ref>

The Peace of Augsburg, also called the Augsburg Settlement, was signed in September 1555 by Charles V, Holy Roman Emperor, and the Schmalkaldic League signed on 25 September 1555 at the imperial city Augsburg.<ref>Elliot, J.H. <i>Imperial Spain 1469–1716</i>. Penguin Books (New York: 2002), p. 208</ref> It officially ended the religious war. It attempted to establish a religious settlement in the sprawling German lands.<ref> Hale, p. 134</ref> The principle of <i>cuius regio, eius religio</i>, was the most important aspect of the treaty. This principle states that the ruler of the realm decided the faith of the people.<ref>Von Friedneburg, p 76</ref> This was to ensure the states' internal unity within the Holy Roman Empire. If a ruler was Catholic, he could determine that all those who lived in his realm had to be Catholics. Those who did not accept the situation could migrate to a jurisdiction that was Protestant.

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[[File: Karel Svoboda Defenestrace.jpg |300px|thumb|left|Defenestration of Prague 1618]]

The Peace of Augsburg created a temporary end to hostilities; it did not resolve the underlying religious tension in Germany and central Europe. There were continued tensions between Catholics and Protestants. Despite the agreement that those who did not share the religion of the prince or ruler should conform or leave the realm, in the treaty, many did not. This meant that there were rival groups of Catholics and Protestants living near each other in an uneasy peace. There are many instances of riots and violence between the two groups.

Furthermore, Calvinists, because they were recognized under the Peace of Augsburg, were in effect unable to secure any tolerance for their faith in the Empire. This was to play an important part in the breakdown of the Augsburg Settlement. Indeed, the collapse of the Augsburg settlement can be attributed to actions borne out of Calvinists' frustrations. The so-called ‘defenestration of Prague’ involved Calvinists attacking and throwing the Holy Roman Emperor's representatives out a window. This was to trigger the Thirty Years War that left most of central Europe a wasteland.<ref> Wilson, Peter, <i>The Thirty Years War: Europe's Tragedy</i>. London: Belknap Press, 2011), p. 67</ref>

In the Holy Roman Empire, there were very many ecclesiastical principalities. They ranged in size from a small town to large territories, often containing significant urban centers such as Cologne. The Treaty, after protracted negotiations, had to deal with the issue of ecclesiastics who converted to Lutheranism. The Catholic side was concerned that a bishop or another religious leader converted that his realm would become Lutheran. This had happened during the Reformation. The Head of the Teutonic Knights in Prussia, originally an order of warrior-monks, had converted to Protestantism, and as a result, all the Prussian territories had become Protestant. The Catholics demanded that any bishop or religious leader that had converted to Lutheranism should return his realm as by rights their lands belonged to the Catholic Church.

However, those bishops and others who had converted refused to return their lands and became the secular ruler of the former ecclesiastical principalities. This was a source of continuing tension between the Protestants and the Catholics. Many of the latter believed that the Protestant side had not respected or fully implemented Augsburg's treaty. This led to frequent clashes between both members of both confessions over the future of Episcopal principalities. For example, in the Cologne War (1583-1588), when the prince-archbishop became a Protestant, it led to a brutal sectarian war between Catholics and Lutherans. One of the Thirty Years War principal causes was the ‘lack of clarity over the status of these episcopal princedoms.’<ref> Wilson. p 67</ref>

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After Augsburg's Peace, Germany was composed of two separate confessions that did not trust each other and saw each other as heretics. They both sought to gain an advantage over the other and increase their territory at the other's expense. Augsburg's settlement did end a war, but it also copper-fastened the division of the Empire into a Catholic and a Protestant bloc. When the balance of power broke down in 1618, these two mutually hostile religions began a war that was unprecedented in its loss of life and destruction.<ref>Wilson, p. 656</ref>

The Peace of Augsburg was intended to give Germany a lasting peace that would prevent future religious wars. The settlement was successful because it did prevent a general religious war in Germany and Central Europe until 1618. However, Augsburg's settlement in 1555 was fundamentally unstable, and its eventual failure was almost guaranteed. Those who drafted the treaty failed to recognize that the growth of Calvinism would destabilize the agreement and increase sectarian tensions in the Empire. Because the terms of the treaty did not cover them, they often worked against it, which led to Bohemia's conflict that triggered the Thirty Years War.