German States Join to Form Customs Union Summary

  • Last updated on November 10, 2022

The coming together of most of the German states in a customs union was an important first step in the unification of Germany.

Summary of Event

When the European great powers gathered in Vienna Congress of Vienna (1814-1815);and Germany[Germany] in 1814-1815 to redraw the map of Europe following their defeat of Napoleon I, one of their most important tasks was to decide what to do with Germany. Before the Napoleonic Wars, Germany had consisted of more than three hundred separate principalities, tied loosely together in the Holy Roman Empire, Holy Roman Empire Habsburg Dynasty which was presided over by the ruler of the Habsburg lands as Holy Roman Emperor. However, Napoleon had forced the last Holy Roman Emperor, Francis II Francis II (Holy Roman Emperor) , to give up the imperial crown, and Francis had become Francis I, emperor of Austria. There was no thought of reviving that medieval relic, the Holy Roman Empire. Holy Roman Empire Zollverein Germany;customs union Prussia;and German customs union[German customs union] [kw]German States Join to Form Customs Union (Jan. 1, 1834) [kw]States Join to Form Customs Union, German (Jan. 1, 1834) [kw]Join to Form Customs Union, German States (Jan. 1, 1834) [kw]Form Customs Union, German States Join to (Jan. 1, 1834) [kw]Customs Union, German States Join to Form (Jan. 1, 1834) [kw]Union, German States Join to Form Customs (Jan. 1, 1834) Zollverein Germany;customs union Prussia;and German customs union[German customs union] [g]Germany;Jan. 1, 1834: German States Join to Form Customs Union[1850] [c]Trade and commerce;Jan. 1, 1834: German States Join to Form Customs Union[1850] [c]Government and politics;Jan. 1, 1834: German States Join to Form Customs Union[1850] Motz, Friedrich von

The alternative solution devised by the powers was the creation of a German Confederation, embracing the two leading German powers, Austria and Prussia, and the more than three hundred German principalities that had either survived Napoleon by bowing to his will, or had played a part in the defeat of Napoleon. The multitude of tiny independent principalities that had existed before Napoleon had reconstructed Germany into satellites for his siblings were combined into thirty-eight different states. Perhaps the most important innovation introduced at the Congress of Vienna Congress of Vienna (1814-1815);and Germany[Germany] was the assignment to Prussia of a substantial block of territory in the west of Germany, along the Rhine River. However, the original Prussia remained intact and was separated from the new Prussia on the Rhine. The overriding motive for this arrangement was to make Prussia the defender of Germany against any future Napoleon. History was to validate this decision, but in ways the other powers had not anticipated.

The founding document of the Germanic Confederation made provision for economic cooperation among the members of the confederation in article 19, which authorized the members of the confederation to devise new arrangements over the levying of customs duties and particularly transit duties, to reduce the number of imposts by common consent. This provision proved meaningless, however, as common consent could never be secured.

Meanwhile, faced with the need for reviving government finance and developing a governmental system that incorporated the new Rhineland Rhineland territories of Prussia, Prussian finance minister Friedrich von Motz had determined that the best way to achieve this goal was to create a single tariff Tariffs;Prussian for all of Prussia, collected on the borders. This was not an easy task, because the territorial arrangements of the Congress of Vienna Congress of Vienna (1814-1815);and Germany[Germany] had given Prussia an extremely long frontier, deriving in part from bringing together the two halves of Prussia: the old, eastern half and the new western half in the Rhineland. This meant high expenses in policing this lengthy frontier. At the same time, there was an urgent need to reorganize government finances, and customs dues were the principal source of revenue. Under the plan introduced by Motz Motz, Friedrich von , all internal dues were abolished and duties were collected only on the frontier. In general the duties were moderate, established to discourage smuggling, encourage trade, and, at the same time, generate needed revenue.

Prussia Prussia;tariffs Tariffs;Prussian introduced a new tariff in 1818. Raw materials were generally admitted free of duty. Items for consumption within Prussia were charged moderate rates, varying between 10 and 30 percent. The lower figure applied to manufactured items; the higher duties fell on tropical products. One unusual feature of the tariff was that the duties were all specific, that is, so much per item or per unit of weight or volume. This contrasted with the customs tariffs of many other countries, whose duties were ad valorem, that is, specified percentages of the products’ values. The effect of the Prussian system was that when prices fell, as many did in the postwar years, duties rose in proportion to the value of imports, since they did not change with the products’ prices.

Although the reconstruction of the map of Germany by the great powers in Vienna Congress of Vienna (1814-1815);and Germany[Germany] in 1815 had eliminated many minute principalities, a significant number of small German states still existed. Between 1818 and 1834, eight of these small territories surrounded by Prussia agreed to join the Prussian customs system. Prussia took over the collection of duties and distributed revenues on the basis of population. The participation of these small states greatly simplified the collection of customs duties.

A major advance occurred in 1828, when Hesse-Darmstadt Hesse-Darmstadt[Hesse Darmstadt] agreed to join the Prussian customs system. Hesse-Darmstadt badly needed financial reform and particularly needed new revenue. By agreeing to join the customs system of Prussia, Hesse-Darmstadt was entitled to a portion of the total customs revenue of the Prussian system in the proportion of its population to Prussia’s western provinces, those in the Rhineland. The arrangement differed from that with the small enclaves in that Hesse-Darmstadt officials, rather than Prussian customs agents, collected duties on the borders of Hesse-Darmstadt with other states. This treaty was the first of a series concluded over the next five years that brought much of the rest of Germany into the Prussian customs system which, from January 1, 1834, was called the Zollverein, or customs union.

Meanwhile, the southern German states, notably Bavaria Bavaria and Württemberg, the two largest states after Austria, formed their own customs union in 1828. Revenues were to be distributed generally according to the proportion of population. In 1833, Bavaria and Württemberg Württemberg;and Prussia[Prussia] agreed to a formal merger with the Prussian customs system, effective January 1, 1834.

Meanwhile, Prussia had hit on a method to make joining the customs system more attractive to the smaller states. It agreed to build roads through these states, largely at Prussian expense. This offer unleashed a large increase in road building in Germany that helped enormously to strengthen commercial ties among the various states.

Significance

By 1833, almost all the smaller states of Germany had joined the Prussian customs system. The agreements by which the various states joined entitled them to representation at the conferences of the Zollverein in ways that generally reflected their relative sizes and economic importance. Although conferences were supposed to meet annually, they actually met at irregular intervals. During the three decades between 1834 and 1863, fifteen conferences were held. Unanimity for any changes in the tariff or other regulations of the Zollverein was required.

By 1834, most of Germany enjoyed a large measure of economic unity, a unity that was to make possible strong economic growth in the decades ahead. The only German state never to join was Austria, and its refusal to come to terms with the Zollverein was to have fateful political consequences in the twentieth century.

Further Reading
  • citation-type="booksimple"

    xlink:type="simple">Alter, Peter. The German Question and Europe: A History. London: Arnold, 2000. Survey of two centuries of history of German unification that considers Germany’s changing place in Europe.
  • citation-type="booksimple"

    xlink:type="simple">Clapham, J. H. The Economic Development of France and Germany, 1815-1914. Cambridge, England: Cambridge University Press, 1936. Although old, this work is still the most useful comprehensive treatment.
  • citation-type="booksimple"

    xlink:type="simple">Davis, John R. Britain and the German Zollverein, 1848-66. New York: St. Martin’s Press, 1997. Study of British-German relations that explores misunderstanding between the two great European powers.
  • citation-type="booksimple"

    xlink:type="simple">Henderson, W. O. The Industrial Revolution on the Continent. London: Frank Cass, 1961. Provides a brief treatment of the formation of the Zollverein.
  • citation-type="booksimple"

    xlink:type="simple">_______. The Zollverein. London: Frank Cass, 1959. First publishined in 1938, this is the most nearly definitive account of the Zollverein.
  • citation-type="booksimple"

    xlink:type="simple">Kitchen, Martin. The Political Economy of Germany, 1815-1914. London: Croom Helm, 1978. The first two chapters deal with the Zollverein.
  • citation-type="booksimple"

    xlink:type="simple">Nipperdey, Thomas. Germany from Napoleon to Bismarck. Princeton, N.J.: Princeton University Press, 1996. Contains a brief discussion of the formation of the Zollverein.

Organization of the German Confederation

Prussian Revolution of 1848

Swiss Confederation Is Formed

North German Confederation Is Formed

German States Unite Within German Empire

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