Till the second decade of the 19th century each of German state levied customs and exercise duties as they pleased. Due to this trade and commerce of Germany remained weak. In 1819 Prussia settled customs pact with small state Schworjberg – Schwoshen and inaugurated custom union called Zollverein.By the end of 1834 all the German states except Austria became part of Zollverein.This resulted in economic unification in Germany and some extent subdued the local feeling and replaced it with wider and stronger element of German nationality. It proved to be an important step towards the political unification of German states. The economic policy of Zollverein sprouted from the concept of economic nationalism. The Prussian monarch Fredric William III stressed upon the expansion of railways because mutual exchange of things was expected to bring about unity in Germany. Austria failed to understand the importance of Zollverein in the beginning. The success of Zollverein and Austria’s estrangement from that customs union resulted in the abolition of political obstacles caused by the pressure of economic forces among the German states. The establishment of Zollverein paved the way for the political unification of Germany under the leadership of Prussia.