1960s >> 1962 >> no-699-november-1962

Forerunner of Common Market

 The continental politicians, business men and lawyers who have spent years discussing, negotiating and drafting the Treaty of Rome and its accompanying agreements for the establishment of the European Economic Community must often have been reminded of a half century of work on the German Customs Union (Zollverein) that reached its culmination in 1871 in Bismark’s German Empire. What happened then in Germany may not, at first sight, appear to bear comparison with the formation of a European Common Market by six separate governments, but the earlier event was in fact an even more complicated business.
 At the beginning of the nineteenth century what was later to become a united Germany consisted of 289 separate states, each with its own government and frontiers, as well as 61 cities which were almost self-governing. These states were separated from each other by toll charges and tariffs, by different coinages, weights and measures and different legal systems, not to mention the frequently almost impassable roads.
In the conflict between the rulers of Prussia and Austria as to which was to dominate central Europe, the Customs  Union was to prove a powerful weapon in the hands of Prussia though at the outset its possibilities were so little realized that the Prussian government actually had Austrian approval. It started in 1819 as a Free Trade area for Prussia’s own scattered territories, behind a Customs barrier. As Prussia completely surrounded some of the smaller states and controlled the main trade routes into Central Germany, it was possible for the Prussian authorities to impose heavy transit charges on goods crossing Prussian territory and to put pressure on other states to induce them to join the Union.
 
 It was not until the eighteen thirties that the Union expanded among the more important of the other German states with the accession of Bavaria, Wurtenberg, Saxony, Baden and the city of Frankfurt. An attempt by Hanover (under the British Crown until 1837) to form a rival union of North German states was a failure and the question of admitting Austria produced some of the kind of difficulties that now arise for the British Government through its links with the Commonwealth countries. Austria at that time controlled Hungary, Lombardy and Venice as well as being influential in the policies of the other governments in what is now Italy. The issue was whether Austria should enter the Customs Union bringing Hungary and Italy along too, and whether the latter were to be excluded from what purported to be a Union of German Peoples. In the long run it was settled by military means with the crushing defeat of the Austrian Army in the “seven weeks war” at Sadowa in 1866. From then onwards Austria was no longer in a position to challenge or hinder the achievement of German unity under Prussian leadership.
 What the Customs Union gained for German capitalism was that after the eighteen thirties the major part of Germany formed an economic entity. Communications were improved, an identical system of weights, measures and currency introduced, and prices fell and became uniform. At first the trading and economic changes brought no corresponding political changes, and as the Encyclopaedia Britannica has it: “it was not until later that Bismark was able to utilize the Union for the furtherance of his schemes for National unity.”
 Among the internal industries that thrived behind the tariff protection of the Customs Union were German wine production, sugar beet growing and processing, and tobacco growing, with the corresponding decline of imports from abroad and loss of trade in what had been the ports of entry. There had been no question of Britain and France being allowed to join the German Customs Union, which was of course intended to operate as a protection for home industries against cheap imports from those two countries among others.
H. de B. Gibbins in his Economic and Industrial Progress of the Century had this to say about the British and French reactions to the Customs Union:

  One effect of it was seen at once in the imposition of severely protective duties on all foreign manufacturers, though the raw materials for home manufactures were wisely admitted free. The result was that England and France did not regard the Zollverein with much favour. . . .

 One of the tasks the Prussian ruling class had to carry out in Germany was to break down very strong local “patriotisms” of the’ multiplicity of German states, and replace them with an all-German patriotism.
 It took time, but long before the end of the nineteenth century, German patriotism could compete in stupidity and fervour with anything the other empires and republics could boast. Nowadays we hear supporters of the European Common Market who argue that getting into a group of countries, since it means giving up some of the independence of each country, is a step towards internationalism. The argument is fallacious because in a capitalist world the only difference between the isolated country and the group of countries is that the later is industrially and militarily more powerful—it does not diminish the international antagonisms. Association with the European Common Market is no more a step towards internationalism than is association with the British Commonwealth or membership of United Nations.
 It is to the point to recall that when the German Customs Union was absorbing economically the separate German states as a prelude to unifying them politically, there were people who fancied they could see that, too, as a step towards international brotherhood. Gustav Schmoller, the German professor of political science wrote his book, The Mercantile System round the theme that “ historical progress has consisted mainly in the establishment of ever larger and larger communities as the controllers of economic policy in place of small.” It was illustrated chiefly from Prussian history. Writing in 1884 when Europe was already conscious of growing European tensions over trade and colonies and the consequent threat of war, Schmoller was nevertheless able to deceive himself about the part played by the formation of the larger economic group he wrote about. He admitted that in the seventeenth and eighteenth centuries the conduct of the separate nations had been “characterised by a selfish national commercial policy of a harsh and rude kind,” and pointed to the way England had reached commercial supremacy by 1800 “by means of its tariff and naval wars, frequently with extraordinary violence,” but he could imagine that capitalism had later changed and that “the struggle . . .  had a tendency, with the progress of civilisation, to assume a higher character and to abandon its coarsest and most brutal weapons.”

  Schmoller thought he could see the capitalist jungle being tamed or civilised by the formation of leagues of states, by alliances for customs and trade questions, and by the growth of international law which was bringing into existence “ the moral and legal community of all civilised states.”

How wrong he was; but no more blind to the realities of capitalism than are most of those who now argue for and against the European Common Market.

Edgar Hardcastle

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