Put the case of two isolated nations, each composed of a million of inhabitants. Grant that, _coteris paribus_, the one possesses double the quantity of everything,--corn, meat, iron, furniture, fuel, books, clothing, etc.,--which the other possesses. It will be granted that the one is twice as rich as the other. And yet there is no reason to affirm that a difference in _actual money prices_** exists in the two countries. Nominal prices may perhaps be higher in the richer country. It may be that in the United States everything is nominally dearer than in Poland, and that the population of the former country should, nevertheless, be better provided with all that they need; whence we infer that it is not the nominal price of products, but their comparative abundance, which constitutes wealth. When, then, we desire to pronounce an opinion on the comparative merits of restriction and free-trade, we should not inquire which of the two systems engenders dearness or cheapness, but which of the two brings abundance or scarcity. * Recently, M. Duchâtel, who had formerly advocated free trade, with a view to low prices, said to the Chamber: It would not be difficult for me to prove that protection leads to cheapness. **The expression, _prix absolus_ (absolute prices), which the author employs here and in chap. xi. of the First Series (ante), is not, I think, used by English economists, and from the context in both instances I take it to mean _actual money prices;_ or what Adam Smith terms _nominal prices_,-- Translator. For, observe this, that products being exchanged for each other, a relative scarcity of all, and a relative abundance of all, leave the nominal prices of commodities in general at the same point; but this cannot be affirmed of the relative condition of the inhabitants of the two countries. Let us dip a little deeper still into this subject. When we see an increase and a reduction of duties produce effects so different from what we had expected, depreciation often following taxation, and enhancement following free trade, it becomes the imperative duty of political economy to seek an explanation of phenomena so much opposed to received ideas; for it is needless to say that a science, if it is worthy of the name, is nothing else than a faithful statement and a sound explanation of facts. Now the phenomenon we are here examining is explained very satisfactorily by a circumstance of which we must never lose sight. Dearness is due to two causes, and not to one only. The same thing holds of cheapness. It is one of the least disputed points in political economy that price is determined by the relative state of supply and demand.