ve_ cost. We may often by trading with foreigners obtain
their commodities at a smaller expense of labour and capital than they
cost to the foreigners themselves. The bargain is advantageous to the
foreigner because the commodity which he receives in exchange, though it
has cost us less, would probably have cost him more.

The value of a commodity brought from a distant place does not depend on
the cost of production in the place from whence it comes, but on the
cost of its acquisition in that place; which in the case of an imported
article means the cost of production of the thing which is exported to
pay for it. In other words, the values of foreign commodities depend on
the terms of international exchange, which, in turn, depend on supply
and demand.

It may be established that when two countries trade together in two
commodities the exchange value of these commodities relatively to each
other will adjust itself to the inclinations and circumstances of the
consumers on both sides in such manner that the quantities required by
each country of the article which it imports from its neighbour shall be
exactly sufficient to pay for one another, a law which holds of any
greater number of commodities. International values depend also on the
means of production available in each country for the supply of foreign
markets, but the practical result is little affected thereby.

_IV.--On the Influence of Government_

One of the most disputed questions in political science and in practical
statesmanship relates to the proper limits of the functions and agency
of governments. It may be agreed that they fall into two classes:
functions which are either inseparable from the idea of government or
are exercised habitually by all governments; and those respecting which
it has been considered questionable whether governments should exercise
them or not. The former may be termed the _necessary_, the latter the
_optional_, functions of government.

It may readily be shown that the admitted functions of government
embrace a much wider field than can easily be included within the
ring-fence of any restrictive definition, and that it is hardly possible
to find any ground of justification common to them all, except the
comprehensive one of general expediency; nor to limit the interference
of government by any universal rule, save the simple and vague one that
it should never be admitted but when the case of expediency is strong.

A mos