In 938, a rich vein of silver was discovered at the Rammelsberg in Saxony. This mineral wealth helped fund Otto's activities throughout his reign; indeed, it would provide much of Europe's silver, copper, and lead for the next two hundred years.Otto soon showed his intention of breaking with the policy of his father, who had been content with a nominal superiority over the duchies; in 937 he punished Eberhard, duke of Franconia, for an alleged infringement of the royal authority; and in 938 deposed Eberhard, who had recently become duke of Bavaria. During this dispute, Eberhard of Franconia and Wichmann the Elder revolted against Otto and Thankmar joined them. Thankmar and Eberhard of Franconia captured Belecke on the Möhne. Wichmann the Elder was reconciled with Otto and the revolt in Saxony broke down. The fortress of Eresburg was besieged and occupied by imperial army and Thankmar was killed by Maginzo at the altar of the church of Saint Peter.Eberhard of Franconia was briefly imprisoned at Hildesheim, but was released and entered into a compact with Henry, Otto's younger brother.A fresh revolt broke out under the leadership of Henry, and Giselbert, duke of Lorraine. Otto gained a victory near Xanten, which was followed by the surrender of the fortresses held by his brother's adherents in Saxony, but the rebels, joined by Eberhard of Franconia and Archbishop Frederick of Mainz continued the struggle, and Giselbert of Lorraine transferred his allegiance to Louis IV, king of France. Otto's precarious position was saved by a victory near Andernach when Eberhard was killed, and Giselbert drowned in the subsequent flight. Henry took refuge with Louis of France, but was soon restored to favor and entrusted with the duchy of Lorraine, where, however, he was unable to restore order. Otto therefore crossed the Rhine and deprived his brother of authority. Later when Otto was at war against the Slavic tribes Henry conspired with Frederick, Archbishop of Mainz, to assassinate him during the celebration of Easter at Quedlinburg. But the plot was discovered and Henry fled, but was later pardoned by Otto.
To prevent further revolts, Otto arranged for all the important duchies in the German kingdom to be held by close family members. He kept the vacant duchy of Franconia as a fiefdom, while in 944 he bestowed the duchy of Lorraine upon Conrad the Red, nephew of Conrad I, who later married his daughter Liutgarde.With death of Duke Berthold in 947 his duchy of Bavaria passed to the king's own brother Henry. Meanwhile, he arranged for his son Liutdolf to marry Ida, the daughter of Duke Herman of Swabia, and to inherit that duchy when Herman died in 947. A similar arrangement led to Henry becoming duke of Bavaria in 949.During these years the tribes living between the Elbe and the Oder were made tributary, bishoprics were founded in this district, and in 950 the king himself marched against the Bohemians and reduced them to dependence. Strife between Otto and Louis IV of France had arisen when the French king sought to obtain authority over Lorraine and aided the German rebels in 939; but after the German king had undertaken an expedition into France, peace was made in 942. Afterwards, when Louis became a prisoner in the hands of his powerful vassal Hugh the Great, duke of France, Otto attacked the duke, who, like the king, was his brother-in-law, captured Reims, and negotiated a peace between the two princes; and in subsequent struggles between them his authority was several times invoked.
Meanwhile, Italy had fallen into political chaos. On the death (950), possibly by poisoning, of Lothair of Arles, the Italian throne was inherited by a woman, Adelaide of Italy, the respective daughter, daughter-in-law, and widow of the last three kings of Italy. A local noble, Berengar of Ivrea, declared himself king of Italy, abducted Adelaide, and tried to legitimize his reign by forcing Adelaide to marry his son Adalbert. However, Adelaide escaped to Canossa and requested German intervention. Luidolf and Henry independently invaded northern Italy to take advantage of the situation, but in 951 Otto frustrated his son's and his brother's ambitions by invading Italy himself. He received the homage of the Italian nobility, assumed the title "King of the Lombards" and in 952 forced Berengar and Adalbert to pay homage, allowing them to rule Italy as his vassals. Having been widowed since 946, he married Adelaide himself.When Adelaide bore a son, and a report gained currency that Otto intended to make this child his heir, Ludolf rose in revolt and was joined by Conrad of Lorraine and Frederick of Mainz. Otto fell into the power of the rebels at Mainz and was compelled to agree to demands made by them, which, however, he promptly revoked on his return to Saxony.While Otto was initially successful in reasserting his authority in Lorraine, he was captured while attacking Mainz, and by the next year, the rebellion had spread throughout the kingdom. However, Conrad and Liudolf erred by allying themselves with the Magyars. Extensive Magyar raids in southern Germany in 954 compelled the German nobles to reunite, and at the Diet of Auerstadt, Conrad and Luitdolf were stripped of their titles and Otto's authority reestablished. In 955, Otto cemented his authority by routing Magyar forces at the Battle of Lechfeld (10 August 955) and the Obodrites at the Battle of Recknitz (16 October 955).
As a key element of his domestic policy, Otto sought to strengthen ecclesiastical authorities, chiefly bishops and abbots, at the expense of the secular nobility who threatened his own power. To control the forces that the Church represented, Otto made consistent use of three institutions. One was the royal investiture of bishops and abbots with the symbols of their offices, both spiritual, for Otto was the anointed King of the Germans, and temporal, in which Otto secured his bishops and abbots as his vassals through a commendation ceremony. "Under these conditions clerical election became a mere formality in the Ottonian empire, and the king filled up the ranks of the episcopate with his own relatives and with his loyal chancery clerks, who were also appointed to head the great monasteries" (Cantor, 1994 p. 213). The second institution was more securely established in Ottonian territories, that of the proprietary churches (Eigenkirchen; in English law the right of "advowson"). In German law, any structure built on land owned by a lord belonged to that lord, unless a charter had very specifically conveyed away those rights. Otto and his chancery aggressively reclaimed proprietary rights over many landed churches and abbeys. The third instrument of Ottonian power was the system of the advocatus (German Vogt). The advocatus was a secular manager of ecclesiastical estates, who was entitled to a certain share of the agricultural produce and other revenues and was responsible for safety and good order. Unlike countships, which quickly became hereditary, the Vogt performed the duties of a West Frankish bailli and held his position solely at the continued will of the emperor whom he served.Because Otto personally appointed the bishops and abbots, these reforms strengthened his central authority, and the upper ranks of the German church functioned in some respect as an arm of the imperial bureaucracy. Conflict over these powerful bishoprics between Otto's successors and the growing power of the Papacy during the Gregorian Reforms would eventually lead to the Investiture Conflict and the undoing of central authority in Germany in the 11th century.
In the early 960s, Italy was again in political turmoil, and when Berengar occupied the northern Papal States, Pope John XII asked Otto for assistance. Otto returned to Italy and on 2 February 962, the pope crowned him emperor. Ten days later, the pope and emperor ratified the Diploma Ottonianum, under which the emperor became the guarantor of the independence of the papal states. This was the first effective guarantee of such protection since the Carolingian Empire. After Otto left Rome and reconquered the Papal States from Berengar, however, John became fearful of the emperor's power and sent envoys to the Magyars and the Byzantine Empire to form a league against Otto. In November 963, Otto returned to Rome and convened a synod of bishops that deposed John and crowned Leo VIII, at that time a layman, as pope. When the emperor left Rome, however, civil war broke out in the city between supporters of the emperor and of John. John returned to power amidst great bloodshed and excommunicated those who had deposed him, forcing Otto to return to Rome a third time in July 964 to depose Pope Benedict V (John having died two months earlier). On this occasion, Otto extracted from the citizens of Rome a promise not to elect a pope without imperial approval.
His next move was against the Greeks and Saracens of southern Italy, but seeking to attain his objects by negotiation, sent Liudprand, bishop of Cremona, to the eastern emperor Nicephorus II Phocas to arrange for a marriage treaty between the two empires. Nicephorus refused to admit the validity of Otto's title, and the bishop was roughly repulsed; but the succeeding emperor, John I Tzimisces, was more reasonable, and Theophano, daughter of the emperor Romanus II, was married to the younger Otto in 972. The same year witnessed the restoration of peace in Italy and the return of the emperor to Germany, where he received the homage of the rulers of Poland, Bohemia and Denmark; but he died suddenly at Memleben on the 7th of May 973, he was buried next to his first wife Edith of Wessex in the Cathedral of Magdeburg.
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