LIECHTENSTEIN by Wilfried Marxer 1. Introduction 1.1 Historical Overview The Principality of Liechtenstein (Fürstentum Liechtenstein) today cov- ers an area of around 100 square miles. It was originally made up of two territories, the Schellenberg dominion (Herrschaft Schellenberg) and the Vaduz shire (Grafschaft Vaduz). The territories only owed fealty to the Holy Roman Empire of the German Nation (reichsunmittelbare Ge- biete). Different dynasties of counts ruled the territories from the 12th until the end of the 17th century. In 1699 the royal house of Liechtens- tein acquired the right to rule over Schellenberg, followed by Vaduz in 1712. In 1719, Emperor Charles VI raised the two territories’ status to principality. In 1806, owing to Napoleon’s influence, Liechtenstein be- came a member of the Rheinbund resulting in the state’s sovereignty. In 1815, Liechtenstein joined the German Confederation (Deutscher Bund) and set up a tariff union with the Austrian Empire in 1852. The country survived the two World Wars without entering into military conflict. However, the downfall of the Austrian Empire did not have a signifi- cant effect on Liechtenstein. During the course of World War I, demo- cratic movements emerged, questioning the legitimacy of the royal rule, which had remained uninterrupted to this point. This resulted in the groundbreaking constitution of 1921, which is still in power today. In the constitution the people were declared sovereign alongside the prince for the first time. Economic and foreign policies, coupled with the bila- teral treaty on tariffs and currency with Switzerland, further emphasized the country’s new alignments. At this time the legislative foundation for Liechtenstein’s later success as a financial center was also established. Until World War II, however, Liechtenstein remained a rather poor agricultural country whose textile industry experienced modest indu- strialization in the second half of the 19th century. It was not until the end of World War II that Liechtenstein experienced a sustained econom-