To create cheapness, the free-traders have occasionally succeeded in securing liberty, and, to their astonishment, an elevation of prices has been the consequence.
For example, in France, in order to favour agriculture, a duty of 22 per cent has been imposed on foreign wool, and it has turned out that French wool has been sold at a lower price after the measure than before it.
In England, to satisfy the consumer, they lowered, and ultimately removed, the duty on foreign wool; and it has come to pass that in that country the price of wool is higher than ever.
And these are not isolated facts; for the price of wool is governed by precisely the same laws which govern the price of everything else. The same result is produced in all analogous cases. Contrary to expectation, protection has, to some extent, brought about a fall, and competition, to some extent, a rise of prices.
When the confusion of ideas thence arising had reached its height, the protectionists began saying to their adversaries, "It is our system which brings about the cheapness of which you boast so much." To which the reply was, "It is liberty which has induced the dearness which you find so useful."*
At this rate, would it not be amusing to see cheapness become the watch-word of the Rue Hauteville, and dearness the watchword of the Rue Choiseul?
Evidently there is in all this a misconception, an illusion, which it is necessary to clear up; and this is what I shall now endeavour to do.
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.