The difficulty of administering customs duties in the small and scattered areas of the different States of Germany led to the formation of the German customs union (Zollverein) in 1833. This union, which at first embraced a population of 25,000,000 and a territory of 80,600 square miles, grew in size and in permanence with the renewal, from time to time, of the treaties which bound together the States composing it, and with the entrance of new States, so that in 1854 it embraced 98,000 square miles and 35,000,000 inhabitants. It was the core of the present German Empire. At the beginning the moderate, mainly revenue, duties of Prussia were adopted. In the tariff of 1865 the rates were lowered and many removed. Duties on grain and on almost all raw materials were removed, and the duties on manufactured goods reduced. The free-trade tendency which accomplished this change lasted until long after the formation of the Empire, indeed, down to 1877.

The constitution of the Empire confers upon the Imperial legislature the exclusive power to regulate customs. It may levy taxes to any amount upon all articles exported or imported, for revenue purposes or for protection or for both. But the Imperial legislature cannot tax anything else. Further revenues, if needed, can be raised in the form of an apportioned requisition upon the commonwealths of the Empire. The growing need of the Empire for revenues was accompanied by a wave of protectionist sentiment, so that the increased duties were more and more protective in character. It is true, however, that the revenue features were increased at the same time.

Particularly interesting is the duty on grain, introduced in 1879, and raised several times since then. The rate is now 5 M. per 100 kilograms for wheat and rye, 4 M. for oats, 2.25 M. for barley. These duties are in some measure protective in ordinary seasons. It is frequently found that a part of the revenue which flows into the treasury from this source, especially in extraordinary years, is paid by others than the consumer.1 Generally, however, the consumers pay the home producers a goodly sum in the shape of higher prices. The operation of these grain duties has been materially modified in recent years by the conclusion of commercial treaties with some of the grain-producing countries. The main revenues from customs duties in the Empire come from coffee, tobacco, wine, and grain.