The Prussian Customs Union and the Zollverein

The Prussian Customs Union
A brief introduction
By Ben Walters
So, what was this “ZOLLVEREIN”,
and what does it mean?
• ZOLLVEREIN is a German
word, and like many German
words it would be more than
one word in English.
• Zoll means “duty” or “customs”
• Verein means “union”
• So basically this word means a
customs union.
So, how did this customs union
come about?
• After 1815 the 39 German states manages
their own economies. There were almost
countless customs barriers and
international tariffs that heavily restricted
trade. Even inside a single state there
were a massive amounts of tolls.
• The variation in currency value within the
Confederation caused great trade
So what did they do?
• In 1818 many Rhineland manufactures
complained to the King of Prussia about this
gigantic burden on industry.
• They also complained about the competition
from unrestricted foreign imports and the lack of
duty being charged on them.
• As a result, the Prussian Tariff Reform Law
came created the PRUSSIAN CUSTOMS
• This new law completely got rid of the
complex web of internal customs duties
and replaced them with a tariff to be
charged at the Prussian state frontier.
• However, this was not exactly what the
Rhineland industrialists had quite wanted.
They hoped for a highly protective tariff
particularly against British goods.
• The tariff was low, nothing at all on raw
materials and only an average of 10% on
manufactured goods and 20% on luxury
goods; i.e. sugar or tea.
• Had the tariffs been any higher, then
smuggling would have been encouraged,
which was already a thorn in their sides.
• Prussia also could not raise the tariff as it
was not economically or politically strong
enough to compete with other countries in a
tariff war, as the other countries would only
raise the duty on Prussian goods in return.
• Subsequently Prussia did introduce custom
duties on raw materials, namely cotton yarn
and iron, to protect their home industry from
foreign competition.
• But, at the time it was working to extend
free trade within both Prussia and the rest
of the Confederation. By removing the
internal trade barriers, goods would move
around more freely and more importantly,
• Some of Prussia’s neighbours were
impressed by this new system and the
new economic success that they agreed to
join a customs union with Prussia, and
they even allowed Prussian custom
officers into their boundaries to implement
the new scheme.
• In 1828 the large Hesse-Darmstadt also
signed the customs agreement with
• By 1830 the customs unions were rapidly
growing. There were numerous unions. i.e.
the Bavaria and Württemberg, and the
famous Middle German Commercial Union
that included many massive states such
as Hanover and Saxony, as well as many
other smaller states.
• This system used the geographical
locations of the states to it’s advantage.
Prussia was well placed to control the
north-south trade routes through north
Germany. The Middle Union worked on
the existing roads from the North sea to
big German cities.
• They wanted to build roads around the
states of the Prussian Customs Union, but
the Prussian Finance Minister encourages
the building of roads joining Prussia
directly with Bavaria and Frankfurt. He
also extended Prussian trade along the
Rhine through a customs agreement with
the Dutch.
• In 1830 Hesse-Cassel, a small but very
important state in the Middle Union, fell
into financial difficulties and revolutionary
upheavals. The next year they joined the
Prussian Customs Union, to the horror of
the Middle Union.
• The Middle Union was already in trouble
and collapsed soon after!
• During this the Prussian Customs Union
just got stronger.
• In 1834, Bavaria and Wurttemberg joined
the Prussians.
• This massive Customs Union was renamed the ZOLLVEREIN!
• It grew rapidly and by 1844 only Hanover,
Oldenburg, Mecklenburg and Austria were
not members.
• This new ZOLLVEREIN promised all the
member states a common system of tariffs
and customs. Also all of the internal
customs barriers were to be abolished.
• Each state would appoint some officials to
the customs departments of other states,
and as long as they didn’t break the rules
of the ZOLLVEREIN they could negotiate
their own trade treaties.
• The implementation and organisation of
the ZOLLVEREIN was carried out by the
• It started out unifying both the currency
and the weights and measures system in
the member states of the ZOLLVEREIN.
• Then railways were extended to make a
quick and easy way to trade and also to
communicate between the members.
• Despite the typical German precision,
there were some difficulties.
• The ZOLLVEREIN administration did not
always work in a smooth and effective
way. This was partly to do with the fact
that any member state could veto a
and even then some decisions were not
upheld at all.
• The ZOLLVEREIN was generally
successful, especially from Prussia's point
of view.
• The member states worked together on
and Prussia achieved a position of
economic leadership within the
So, why did Prussia set it up in
the first place? Did they know
that this was going to happen?
• Prussian Finance Ministers realised that
by getting rid of internal customs duties,
first in Prussia, and then between Prussia
and the neighbouring states would
increase trade and bring affluence.
• It would also help to unite Prussia with the
distant Rhineland territories that Prussia
• By 1830, before the ZOLLVEREIN had
even been formed, the Prussian Finance
Minister had pointed out to the King that
free trade would not just bring prosperity
for Prussia and her associates, but would
also isolate the Austrians.
• The isolation would be economically
damaging and would weaken Austria’s
political influence within the Confederation.
• Some historians argue that the Prussians
were using the ZOLLVEREIN to solve the
German problem in a way that was
favourable for Prussia.
• By having lots of states finding financial
advantage under Prussian leadership,
then a similar political arrangement might
come out of it.
• The ZOLLVEREIN was a uniting force and
a focal point for nationalist sentiments.
• As a result Prussia, despite having
reactionary political sympathies, came to
be regarded as the natural leader of a
united Germany.
So if the ZOLLVEREIN was so
good, why did Austria stay out
of it?
• Austria refused to join in the beginning
because it disagreed with the policy of free
• Austria’s policy was protectionist. They
already had large markets for home
produced goods, and wanted high import
duties to protect those industries from
cheap foreign imports.
• By joining the ZOLLVEREIN, they would
have had to reduce their import duties to
the same level as the other states.
• They would have joined only if the
ZOLLVEREIN raised the levels of tariffs,
but Prussia would not even consider this
course of action.
• Prussia took the initiative and joined,
established a position of leadership, and
made sure that Austria were unable to
• Because of this, by 1848 although Austria
had political control of the federation,
Prussia had the economic leadership.
So, why do we care?
We care because...
• The ZOLLVEREIN helped unify the 39
German states and even put Prussia into a
position of power.
• It took some of Austria’s power and
influence away.
• People saw it as an idea of unity and were
able to draw on it’s successes and take
another step towards German