South German Customs Union

Bavaria and Württemberg pushed for a protectionist union with high external tariffs, while Baden, Nassau, and Hesse-Darmstadt wanted a free trade agreement.

At the end of November 1820, the Badian civil servant and economist Karl Friedrich Nebenius presented a draft treaty to serve as a basis for negotiations.

Nebenius' draft proposed that the total income from tolls by divided between member states on the basis of their population and the length of their borders, which clearly favoured Baden.

The states on the Rhine were interested in free trade policies as a natural result of their geographic situation, while states that were not on key internal trade routes had an interest in high, protective tariffs, so that their local industries, which had supplied their local markets without problem up to this point, would not be threatened.

Added to this was the "Sponheim question", a conflict between Bavaria and Baden over territories that had been divided between them in the Palatinate, which strained the relationship between the two states.

As negotiations had become totally bogged down, the Hessian hosts of the meeting ended their participation on 3 July 1823, in favour of modernising their own customs system, since they no longer believed that an interstate agreement was likely to be agreed.

The negotiations finally failed when the small Thuringian states agreed the Treaty of Arnstadt amongst themselves in December 1822, seeking first to unify themselves, before engaging with larger projects.

Thus, new negotiations began in February 1825 in Stuttgart on a South German Customs Union between Baden, Bavaria, Hesse-Darmstadt, Nassau, and Württemberg.

After this, Bavaria and Württemberg signed the treaty founding the South German Customs Union on 18 January 1828.