The Zollverein: A German Customs Union

 

The Zollverein of 1834 , a German customs union, was a result of Prussia’s negotiations with other German states in order to create a unified customs area between the territories of independent German states. Zollverein shaped the economy of Germany in 19th century, allowing such changes as reducing of the number of currencies being used and enabling German states’ economies to flourish during the Industralization Era.

Prussian efforts leading to the formation of the Zollverein date as back as 1818, when Prussia abolished internal tariffs between its own regions. After the Congress of Vienna in 1815, Prussia gained territories in Ruhr region, which was economically a highly developed area. Prussia’s old territories to the east were a lot more underdeveloped and agriculture-based regions. In order to create a balance between its regions, Prussia abolished internal tariffs.

In the following decade, some of the neighbouring states of Prussia joined the Zollverein. In 1828, Prussia and Duchy of Hesse agreed to form a customs union together. Seeing the effectiveness of Zollverein, other German states started initiatives to establish their own customs unions. To the south, Bavaria and Württemberg formed the Bavaria-Württemberg Customs Union and in Central Germany, independent German states formed the Central German Union. And in the following years, these customs unions made agreements between each other to expand free trade. Finally, in 1833, the unions mentioned above agreed to be merged under one unified customs union and in 1834, Zollverein was officially formed. Ideas of economist Friedrich List shaped the policy of national economies of German states as they boosted free trade within the union and strived to limit imports from outside the union.

German states that chose to stay outside of customs unions earlier, were encouraged to join the Zollverein with the promise of economic growth and infrastructure investments. With the Dresden Coinage Convention of 1838, the number of currencies used in Germany were reduced from over thirty to only two. Zollverein proved pretty successful for all members of the union, the economy of all members flourished greatly through free trade and this helped Germany to adapt quickly and profitably into the Industrialization Era. Expansion of road and railway systems were boosted by the Zollverein, which provided faster and secure transportation of raw materials and more fruitful production in newly developing factories. German states with rather strong economies that remained out of Zollverein at the beginning, such as Hanover, Luxembourg, Brunswick, Oldenburg and Frankfurt, joined the union one by one after seeing the positive effects of it. All German states, except for Austria, were welcome in the union.

So as to connect German market to the Scandinavia, the Zollverein made commercial agreements with Sweden-Norway in 1865. Zollverein also had some trade agreements with Austria but with the start of Austria-Prussian War of 1866, these agreements were terminated. War of 1866 tore Zollverein apart from inside as Germany was split between allies of Prussia and allies of Austria. As the war resulted in favour of Prussia, several changes were made within Zollverein. Prussian dominance over Germany were established with the foundation of North German Confederation. Zollverein had provided Prussia with the economic strength to eliminate Austria in the race to gain dominance over Germany and to stand against a potential threat of French expansion. Prussian statesmen used these advantages masterfully for decades and managed to eliminate both Austria and France and finally, officially unified Germany in 1871.

Zollverein maintained its existence even after the unification of Germany with new states joining such as newly obtained Alsace-Lorraine and city states Hamburg and Bremen. Influence of Zollverein allowed Germany to compete with British Empire in terms of industrial capacity. With rapid industrial growth, German grew to be one of the most economically developed countries in the world. Zollverein remained in existence until the dissolution of the Empire in 1919.

 

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