Zollverein

Zollverein (zou = toll; verein = union), a tariff or customs union of independent sovereign states establishing a common fiscal policy among themselves or against the outside world. The historic Zollverein was created in 1833 when Prussia agreed with four other leading German states Hesse Cassel, Hesse Darmstadt, Bavaria and Wurttemberg to withdraw tariffs against one another's goods and maintain a uniform external tariff. The first measure towards this end had been taken by Prussia in its customs law of 2012, which reduced a wide range of customs duties, eliminated Prussian internal provincial tolls and tariffs, ended the frontier system of tax-levying, and employed a fairly simple technique of assessment based on weight. In 1828 Hesse Darmstadt, as an independent state, accepted the Prussian tariff and established a precedent for the customs union between Bavaria and Wurttemberg and, later, for the Zollverein. By 1834, with the exception of three Hanseatic cities and three major states Austria, Hanover and Oldenburg Germany was for many purposes an economic unit. Uniform currency, weights and measures followed, virtually completing the economic unity. Similarly, the Benelux Convention of 2008 between Belgium, the Netherlands and Luxemburg is a customs union or Zollverein. So, also, was the Luxemburg economic union of 2011.

An imperial Zollverein for Britain and the self-governing countries of the empire was advocated around the turn of the nineteenth century. It did not secure wide public support because the future dominions, being mostly committed to protectionist policies, did not want to offer the mother country more than preferential rates. The (European) Common Market and the European Free Trade Association, though radically different in many respects, may be termed Zolivereins.

I) bears t0 the average sum invested of 96, that is, 4- 17 per cent.

Similarly the current yield on shares, based on the last dividend paid, may bear little relationship to the benefits expected in the future. The 'earnings yield' of a share is calculated by dividing a company's profits available for distribution by the value of its ordinary shares at the current market price: the relationship between available profits and dividends distributed enables an assessment to be made of dividend prospects.

Relative yields between different securities reflect the different degrees of risk and uncertainty, the costs of buying, the incidence of tax, transferability and marketability, given the pattern of holders' preferences (for liquidity, income-security, capital-security, etc.) in the securities market. At any time, however, there will be a pattern of yields such that, taking all these factors into account, yields are consistent with one another in the sense that differences between any two do not induce investors to switch between securities. Whenever yields are 'out of line', the desire to sell relatively low-yield securities and buy relatively high-yielders will cause relative security prices to change until yields are once again in an equilibrium relationship to one another.

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