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 most important consideration in viewing the economical effects arising from performance of necessary government functions is the means adopted by government to raise the revenue which is the condition of their existence. The qualities desirable in a system of taxation have been embodied by Adam Smith in four maxims or principles, which may be said to have become classical: (1) The subjects of every state ought to contribute to the support of the government as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state. (2) The tax which each individual has to pay ought to be certain, and not arbitrary. A great degree of inequality is not nearly so great an evil as a small degree of uncertainty. (3) Every tax ought to be levied at the time or in the manner in which it is most likely to be convenient for the contributor to pay it. Taxes upon such consumable goods as are articles of luxury are all finally paid by the consumer, and generally in a manner that is very convenient to him. (4) Every tax ought to be so contrived as to take out and keep out of the pockets of the people as little as possible over and above what it brings into the public treasury.