Another principle of Free Trade was that if it was thought advisable to put a tariff on to anything coming into the country which could be produced in the country, then you would have to put what was called “_an equivalent excise_” on the thing produced at home. For instance, in order to get revenue, one might put a tax of a 1d. on the pound on sugar coming from Germany, but, according to the doctrine of Free Trade, you must put a similar excise (that is, a home tax of 1d. on the pound) upon any sugar produced in England. If you did not do that you would be benefiting the sugar manufacturer in England at the expense of all other Englishmen, which would be unjust and also make England less wealthy because it would be inducing Englishmen to make sugar by offering them a reward and so take them away from some production for which they were better fitted. This idea, that Free Trade must necessarily be of advantage to everybody, and that it was only stupidity or private avarice which supported Protection, was very strong in England, and, in the form you have just read, it seems beyond contradiction. But if you will look closely at Formula No. 3 written in the last division on page 59 you will see that there is a fallacy hidden in this universal Free Trade theory. It is perfectly true that free exchange over any area tends to make the wealth of all that area greater, and if the area include the whole world, then free exchange all over the whole world, that is, complete Free Trade, would make the world as a whole richer. _But it does not follow that_ EACH PART _of the area thus made richer is itself enriched_. That is the important point which the Free Trade people missed, and it is this which supports, in some cases, the argument for Protection. If we allow free exchange everywhere throughout England, England as a whole will, of course, be the richer for it; but it is quite possible that Essex will be the poorer. If we allow Free Trade throughout all Europe, Europe will be the richer for it; but it is quite possible that some particular part of Europe, Italy or Spain, may be made poorer by the general process, and as they don’t want to be poorer they will by Protection and tariffs cut themselves off from the area of free exchange. =There are conditions where an interference with free exchange over the boundaries of a particular area make that area richer: when those conditions exist, there is what is called an Economic Reason for Protection.=