Introduction

In contrast to many other countries of nineteenth-century Europe, Germany was not a nation-state until the unification of 1871. In 1789, Germany consisted of more than three hundred territories that were formally subjected to the emperor in Vienna but were in practice independent. Under the pressure of Napoléon, Germany was mediatized, a policy that was continued by the Congress of Vienna. The central European political landscape that emerged in 1815 was dominated by the Habsburg Empire and Prussia, followed by a number of midsize states, which were, ranked by population, Bavaria, Hanover, Württemberg, Saxony, and Baden. What was later to become imperial Germany (excluding Alsace-Lorraine) consisted of altogether thirty-five states, Frankfurt am Main, and three Hanseatic cities. Figure 4.1 depicts Germany in the boundaries that emerged after the Congress of Vienna.

In terms of public finances, a formal and a material criterion each highlight the most important differences among these states. The first is whether the public finances were based on a constitution. Although the three southern German states adopted constitutions quite quickly after 1815, most northern German states were reluctant in this respect, with Prussia being the most prominent example. Whether a state was based on a constitution roughly coincided with a specific tax structure, which might serve as an alternative, material criterion. The tax systems of the southern states – Bavaria, Württemberg, and Baden – were primarily based on impersonal taxes on land, buildings, and business, as in France.