#1328 1834 · Kingdom of Prussia (Zollverein) · Trade policy / statecraft
Prussia paid neighbors to join its tariff union, making holdouts costlier than joining
the problem
Dozens of German states taxed goods at every border, strangling trade, and Prussia wanted unity without war
background
The German-speaking lands after 1815 were a patchwork of dozens of independent states, each levying its own customs duties at its own borders, so a wagon of goods crossing from one end of Germany to the other might clear tariffs a dozen times. Prussia wanted the economic and eventually political leadership of a unified Germany, but a military campaign to force smaller states into line risked coalitions against it, foreign intervention, and years of instability it could not afford after the Napoleonic Wars.
Simply lowering Prussia's own tariffs wouldn't unify anyone else's, and asking neighboring states to surrender their independent customs revenue for the vague promise of future prosperity gave small states every reason to refuse and stay outside, collecting their own duties as before.
what everyone would do
Military unification was the obvious route to a single German market, and it was exactly what had failed for centuries and risked uniting other European powers against Prussia the moment it tried.
what they saw
Prussia saw it didn't need to conquer the German states, only make joining pay more than staying out. Sharing tariff revenue by population turned each new member into a magnet pulling in the next.
the move
Starting with a tariff law in 1818, Prussia abolished its internal customs and built a single external tariff wall, then invited neighboring states in one at a time, sharing the pooled customs revenue out by population rather than by origin and paying for roads into new member states — so each new member made staying outside more expensive for the states still holding out.
why it works
Population-based revenue sharing meant a small state joining the union got a cut of trade flowing through the whole bloc, not just its own tiny market — an immediate, tangible gain no promise of future prosperity could match. And every state that joined widened the tariff wall around the holdouts, shrinking their independent market and raising the relative cost of staying out, so the coalition's own growth did Prussia's recruiting for it.
the payoff
By 1834 most German states outside Austria had joined the Zollverein, unifying Germany's market decades before its politics.
where it breaks
It requires the initiator to have a large enough home market to make the shared pot worth joining in the first place, and a credible commitment not to dominate or shortchange smaller partners once they're inside — states that suspect the revenue split will later be rigged against them have every reason to stay out rather than trade sovereignty for a promise.
what came after
The tariff union proved that Germany could be economically integrated without a shot fired, and the shared market and administrative habits it built became the foundation Bismarck used to unify Germany politically under Prussian leadership in 1871.
references
- [1]German Customs UnionEBSCO Research Starters, 2024ebsco.com