Zollverein

[2] Austria was excluded from the Zollverein because of its highly protectionist trade policy, the unwillingness to split its customs territory into the separate Austrian, Hungarian and Galician-Lodomerian ones, as well as due to opposition of Prince von Metternich to the idea.

[4] The splintering of territory and states over generations meant that by the 1790s in the German-speaking Holy Roman Empire in Central Europe, there were approximately 1800 customs barriers.

When France defeated the Second Coalition, made up of Russian, Austrian and German forces, and annexed territories up to the Rhine, there was a general consolidation of the myriad of tiny states in Germany in the Mediatization of 1803.

This last piece of major legislation enacted by the Holy Roman Empire re-arranged the map of Central Europe, especially in the southwestern territories.

[6] The Zollverein created a larger market for German-made farm and handicraft products and promoted commercial unification under fiscally sound economic parameters.

By 1806, as Napoleon I sought to secure his hegemony in Europe, the Continental System offered a semblance of unified effort toward a widespread domestic market for European goods.

The combination of war and isolation from Britain's trading system destroyed markets for external raw materials and for manufactured goods, resulting in the near ruin of the Central European economy.

Especially hard hit were the trading economies of the Lowlands and Rhineland states, which had relied heavily upon imports of raw materials from throughout the world, and on the export of finished products.

[8] At the Congress of Vienna in 1814 and 1815, diplomats – principally those from the Great Powers – confirmed the remapping of Europe, and broadly, the rest of the world, into spheres of influence.

The German states retained autonomy; however, the old imperial institution of the Reichstag was converted to the form of a Confederation Diet, to meet in Frankfurt.

Isolated voices, such as Joseph Görres and Freiherr vom Stein, called for the abolition of domestic tolls and the creation of a German tariff on imports.

The "newer" Prussian provinces in the Rhineland and Westphalia, with their developing manufacturing sectors, contended with the heavily agricultural territories of "old" Prussia.

The dissimilarities in the two sides of Prussia confirmed regional perceptions for the need for their own political and administrative units, which became an important element of the customs debate.

On the one hand, adherents to the Malthusian model believed it was dangerous for Britain to rely on imported corn, because lower prices would reduce wages, and landlords and farmers would lose purchasing power.

Not only did the Corn Laws keep the price of grain in Britain high, they undermined the viability of Junker producers in east Prussia, and limited their access to external markets.

Having abolished its own internal tariffs in 1818, Prussia began inviting individual states to eliminate tariffs,[14] with the agreements setting the foundation for Zollverein cementing strong economic ties between the various Prussian and Hohenzollern territories, and ensuring economic contact between non-contiguous holdings of the Hohenzollern family, also the ruling family of Prussia.

Their spokesman, the economist Friedrich List, feared that the German people would end up as "drawers of water and hewers of wood for Britain".

[15] Similarly, Karl Friedrich Nebenius, later president of the Ducal Ministry in the Grand Duchy of Baden and the author of Baden's 1819 proposed customs initiative with the German Confederation, offered a widely publicized description about the difficulties of surmounting such protections: The 38 toll barriers in Germany cripple domestic traffic and bring more or less the same results: how if every limb of the human body were bound together, so that blood could not flow from one limb to the other?

In opposition to the Prussian activities, Hanover, Saxony, Hesse, and other states (Austria, France, Great Britain, and the Netherlands), developed their own economic agreements.

24 September: By the Treaty of Kassel, the Central German Commercial Union (CGCU) is formed by central and northern German states (Saxony, Hanover, Hesse-Kassel, Saxe-Weimar, Saxe-Altenburg, Saxe-Coburg, Nassau, Schwarzburg-Rudolstadt, Frankfurt, Saxe-Meiningen, Brunswick, Schwarzburg-Sondershausen, Reuss-Greiz, Reuss-Gera, Bremen, Oldenburg, and Hesse-Homburg).

[19] When eventually Hamburg acceded to the Customs Union in 1888 it negotiated the exemption of an area of 4 square miles at the centre of its port, which remained outside of the Zollverein.

They argue that nothing seems to indicate that industrial investments increased decisively during the period in Prussia, or that the customs union played a significant role in reducing the dominance of agriculture in the kingdom's economy.

[23] In 1840 the poet August Heinrich Hoffmann von Fallersleben published, in his Unpolitische Lieder, a song entitled Der deutsche Zollverein which ironically compares the economic advantages of a customs union to the political unity which the German Confederation had failed to achieve.