The Zollverein (Customs Union) was established in 1834 to facilitate
trade by reducing its costs. This was done by compelling most of the
members to choose between two monetary standards (the Thaler and the
Gulden) in 1838.
Much as the Bundesbank was to Europe in the second half of the
twentieth century, the Prussian central bank became the effective
Central Bank of the Federation from 1847 on. Prussia was by far the
dominant member of the union, as it comprised 70% of the population and
land mass of the future Germany.
The North German Thaler was fixed at 1.75 to the South German Gulden
and, in 1856 (when Austria became informally associated with the
Union), at 1.5 Austrian Florins. This last collaboration was to be a
short lived affair, Prussia and Austria having declared war on each
other in 1866.
Bismarck (Prussia) united Germany (Bavarian objections notwithstanding)
in 1871. He founded the Reichsbank in 1875 and charged it with issuing
the crisp new Reichsmark. Bismarck forced the Germans to accept the new
currency as the only legal tender throughout the first German Reich.
Germany's new single currency was in effect a monetary union. It
survived two World Wars, a devastating bout of inflation in 1923, and a
monetary meltdown after the Second World War.
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