The accession of the city state of Hamburg to the German Customs Union, commonly known as , in 1888 (along with Bremen) was the culmination of a project for the economic and monetary union of Germany, stretching back to 1819. In that year Schwarzburg-Sondershausen joined Prussia’s internal customs union, the first other state to do so and the first of many to follow.Roghe p 14
When the German Customs Union was initially formed, in the 1830s and 1840s, the motives of the states in joining did not include any particular desire to unite with others to form a wider more powerful entity. The states which joined fought vigorously against any impairment of their full sovereignty. Hence each member had a veto and the union was not permanent, but had to be renewed after 12 years. Each member sought its own economic advantage. Accordingly, the accession of any of the Hanseatic cities of Hamburg, Bremen or Lübeck would have to be on condition that accession served the city's own advantage. A pre-condition of such advantage was that their territory touched directly with that of the Customs Union, which only happened for Hamburg after 1854, when Hanover joined. However Hamburg kept an open frontier with Holstein until 1867, when it was included in the Customs Union on being annexed to Prussia. But, after these accessions, other factors came into play as regards the question of Hamburg joining.Roghe pp. 14-16
Origins of Free Trade in Hamburg In 1189 the Holy Roman Emperor Frederick Barbarossa granted Hamburg the status of an Imperial Free City and tax-free access along the Lower Elbe into the North Sea, free of any tariffs and duties, etc.Verg p. 16 The rights were given orally for Hamburg's support of Frederick's participation in the crusades.Verg, p. 26 The written charter containing these rights, although dated 7 May 1189, actually originated in the 1360s, during a dispute between Hamburg and the Archbishop of Bremen over duties on the Elbe.Deutsche Welle website //www.dw.com/en/hamburg-celebrates-bogus-harbor-anniversary/a-4232908 retrieved April 2017
In the year 1038, the emperor Conrad II granted rights to the Archbishop of Bremen to establish a fair at Stade, a small town on the Elbe 25 miles downstream of Hamburg. This included the right to charge duties on commodities for sale at the fair or landed at Stade for that purpose. The Archbishops abused this privilege and, purporting to have a compulsory market at Stade, exacted a duty on all vessels passing by that town. However, the citizens of Hamburg were exempt by the 1189 grant of Frederick Barbarossa.Hutt, p.19
In 1648 the dominions of the Bremen archbishopric passed to Sweden, who continued this toll as an established customary right. As this was disputed, in 1691 a Convention to regulate the toll was agreed between Hamburg and Sweden. In 1725, the territory and the toll passed to the Electorate (later Kingdom) of Hanover, who enforced the collection with a ship at Brunshausen on the Elbe, at its confluence with the tributary river Schwinge.Hutt, pp.19-21
Despite the exemption for Hamburg's ships, this toll was a great inconvenience to commerce and in 1861 Hanover agreed by treaty to abolish the toll in exchange for compensation, one third provided by Hamburg, one third by Britain and one third by other countries affected.The other states paying compensation were: Austria, Belgium, Brazil, Denmark, Spain, France, Mecklenburg-Schwerin, Netherlands, Portugal, Prussia, Russia, Sweden and Norway, Lübeck, and Bremen. Thus was brought about toll free access for Hamburg's trade.UK Parliamentary Papers, Vol. 32, Session 5 February - 6 August 1861, printed by Harrison & Sons, London 1861; pp.559 – 574
Bremen’s Proposals for Customs Union Bremen had similar interests to Hamburg, but because of its more westerly position, it was affected by competition from the Dutch ports. These gained advantage from the trade treaty made in 1839 between the German Customs Union and Holland. To avoid this problem, the Senate of Bremen made two proposals in 1839 and 1842 to extend the Customs Union to the coast. They not only proposed the elimination of the differential duties in favour of Holland, but also the imposition of a protective duty on all goods imported by non-union ships, the establishment of joint consulates for the protection of economic interests abroad, which up to that time could only be very deficient due to the large number of different states, and a common trade flag of all the ships belonging to the union.
There was some encouragement from Hamburg initially and Prussia was in favour. However, by 1845, when Prussia stated its position, the Senate of Hamburg expressed itself in a memorandum very vigorously against such ideas. It invoked the free-trade argument that every protective tariff is an unjust burden on the many to benefit the few. In this case, in favour to the union vessels, to which all the consumers of imported articles, as well as the exporting producers, would have to pay monopoly prices for sea transport. The Hamburg Senate did not wish to know anything about a common flag either: it was in the interests of the Hanseatic cities that they retain their own flags, and thus present themselves abroad as neutral trade republics, even if German states went to war with other countries. Likewise, joint consulates were unacceptable as it would be difficult for them to represent the multifarious interests of the participating states.Roghe pp. 17-18
Distance from the coast as a motive for joining the Customs Union
Although 1834 is the official date of the Customs Union's establishment, member states in fact joined at various times over several decades. This was because the benefits of becoming a member of the union increased, both as it grew in economic size and in its geographic spread.Keller, p.1
A state's accession to the Customs Union was related to the distance to the coast because that gave access to international markets. States more distant from the coast joined earlier. Not being a member of the Customs Union mattered more for the states of south Germany, since the external tariff of the Customs Union prevented customs-free access to the coast. Thus, by 1836, all states to the south of Prussia had joined the Customs Union (except Austria, which had its own coast). Keller, p.18
For the southern states the Alps effectively blocked off trade to ports in the south, leaving routes through the Customs Union as the only option.Keller, p.10 In contrast, Hanover formed its own customs union - the “Tax Union” or Steuerverein - in 1834 with Brunswick and with Oldenburg in 1836. The external tariffs on finished goods and overseas raw materials and were below the rates of the Zollverein. Brunswick joined the Zollverein Customs Union in 1842. Hanover finally joined in 1854. Hanover was compensated for this with a premium on its share of customs revenues (as normally calculated). Facing isolation, Oldenburg followed suit in 1854.Ploeckl, p.23 Holstein and Lauenburg were annexed by Prussia after the war in 1866, leading to an accession of their territories into the Customs Union, while Mecklenburg and the city states of Hamburg and Bremen, who engaged heavily in international trade, joined only in 1867 and 1888, respectively.Keller, p. 10
Risk of Dissolution of the Customs Union
Another factor for the Hanseatic states was the suspicion that the Customs Union might not endure, even for the 12 years (renewable) specified in the treaties. If their present trade relations with Scandinavia and Russia were to change after accession to the union because of customs duties, they were not likely to be resumed, should the Customs union be dissolved after a few years, and they returned to the free market. By that time the trade would probably be lost to English competition.
This changed with the establishment of the North German Federation in 1867. Instead of the old international treaties, a constitution bound the states together and solidified the union. Thus the fears of the Hanseatic cities had become groundless. But now it became clear that the other grounds alone were strong enough to keep them away from the Customs Union.Roghe, pp. 19-20
Joins North German Federation, 1867
Following the Second Schleswig War of 1864, Schleswig and Holstein became a Prusso-Austrian condominium, with Prussia occupying the former and Austria the latter, but on 8 June 1866, Prussian general Von Manteuffel crossed the river Eider into Holstein, which bordered Hamburg on the north. Having warned Austria he was exercising Prussia's condominate right to establish garrisons in some unoccupied points of Holstein, Austria decided to withdraw from Holstein without forcing a military conflict. However it requested the Federal Diet (Bundestag) of the German Confederation to mobilise militarily against Prussia.Malet, pp. 181-184 When the Diet was convoked (11 June), Austria moved that all Federal military contingents except Prussia's be mobilised. Prussia responded by laying before the Diet a scheme of reform of ten articles, the most salient being the exclusion of Austria from the Confederation and the election of a representative body in the remainder; Prussia moved its immediate adoption. The Diet voted on the Austrian proposal on 14 June, which was carried by nine votes to six.As described by Malet, the large states had one vote each, whilst the smaller states were in groups each with one vote. The free cities combined had one vote, the 17th voice or Curie The three Hanseatic cities, through their joint envoy Friedrich Krüger, voted against the Austrian proposal and made a declaration (formulated by Lübeck) that the events in Holstein did not justify Federal mobilisation, because the danger of immediate military collision had passed. Then on 16 June, Emil von Richthofen, the Prussian envoy to the Hanseatic states, presented to the Hamburg Senate and other German governments an "identical note" asking for an alliance on the basis of Prussia's reform proposal placed before the Diet and requesting that its troops be placed at the disposal Prussia. On 21 June, representatives of the Hanseatic cities met in Hamburg to discuss the measures demanded by Prussia. Richthofen also took part.Schönhoff, pp. 13-17
On 24 June, Richthofen met two prominent members of the House of Burgesses (Burgerschaft), Isaac Wolffson (former President of that chamber and member of the Right party) and Johannes Halben (leader of the Left party), to inform them of the intended rejection of the Prussian proposals by the Senate. He pointed out that Prussia would not accept a refusal without further action. He mentioned that Prussia would dissolve the Senate and take over the government. The Burgerschaft would remain undisturbed, as would the population, if they kept quiet. Otherwise, 10,000 Prussian troops would occupy the city. Wolffson and Halben reported this to Syndicus Carl Merck, who directed Hamburg's foreign affairs, who now sent Krüger, then in Hamburg, to Richthofen to obtain certainty about the Prussian threats.
Merck addressed the Senate on 25 June saying he regarded the policy of Lübeck, which was positive to the Prussian alliance and the threats of Richthofen as particularly serious considerations. He was afraid that, after the accession of all other north German states to the alliance, Hamburg would stand isolated and its independence threatened. Then on 26 June the Senate gave way.Schönhoff, p.19 Merck instructed the Hamburg envoy in London to seek understanding in Britain for the forced connection to Prussia and thereby to preserve the benefit of Hamburg's good relations with Britain. Then, exhausted, a nervous breakdown compelled him to hand over the business to Senator Kirchenpauer. Hamburg, Deutschland und die Welt, 2nd ed. 1952, by Percy Ernst Schramm, publ Hoffmann & Campe; p. 486