It may happen that in the United States everything is nominally dearer than in Poland, and that, nevertheless, the people there are less generally supplied with everything; by which it may be seen that the abundance of products, and not the absolute price, constitutes wealth.

In order, then, accurately to compare free trade and protection the inquiry should not be which of the two causes high prices or low prices, but which of the two produces abundance or scarcity.
For observe this: Products are exchanged, the one for the other, and a relative scarcity and a relative abundance leave the absolute price exactly at the same point, but not so the condition of men.
Let us look into the subject a little further.
Since the increase and the reduction of duties have been accompanied by results so different from what had been expected, a fall of prices frequently succeeding the increase of the tariff, and a rise sometimes following a reduction of duties, it has become necessary for political economy to attempt the explanation of a phenomenon which so overthrows received ideas; for, whatever may be said, science is simply a faithful exposition and a true explanation of facts.
This phenomenon may be easily explained by one circumstance which should never be lost sight of.
It is that there are _two causes_ for high prices, and not one merely.
The same is true of low prices.

One of the best established principles of political economy is that price is determined by the law of supply and demand.
The price is then affected by two conditions--the demand and the supply.
These conditions are necessarily subject to variation.

The relations of demand to supply may be exactly counterbalanced, or may be greatly disproportionate, and the variations of price are almost interminable.
Prices rise either on account of augmented demand or diminished supply.
They fall by reason of an augmentation of the supply or a diminution of the demand.
Consequently there are two kinds of _dearness_ and two kinds of _cheapness_.

There is a bad dearness, which results from a diminution of the supply; for this implies scarcity and privation.