NAPOLEON (COIN). The twenty-franc piece of France, issued during the reign of Napoleon I., bears that ruler's name. It is a gold coin of the millesimal fineness of 900, weighing 99.56 grains; its value in sterling is 15s. 10 d. (see FRANC).

F. E. A.

NASSE, ERWIN (1829-1890), a distinguished economist, was born at Bonn, and studied there and at Göttingen. He was appointed professor at Basel in 1856, and within the same year at Rostock; in 1860 he became professor at Bonn. He took an active part in political affairs, and sat as a member of the Prussian house of representatives from 1869 to 1879. His most important publications were: Bemerkungen über das preussische Steuersystem, 1861;—Die preussische Bank, 1866;-Ueber die mittelalterliche Feldgemeinschaft und die Einhegungen des 16. Jahrhunderts in England, 1869 (translated into English by Col. H. A. Ouvry, and published by the Cobden Club in 1871, 2nd ed., 1872); Geld und Münzwesen in Schönberg's Handbuch (2nd ed., 1886); and Das Sinken der Warenpreise während der letzten fünfzehn Jahre, 1888. From 1874 till his death Professor Nasse was president of the Verein für Sozialpolitik, of which he had been one of the founders. He was associated with Ad. Wagner in the new edition of RAU's Lehrbuch, but his collaboration seems to have been, for the most part, merely nominal. He supplied to the Verein für Sozialpolitik, in vol. iii., "Die Personalbesteuerung,' and in vol. xxvii., "Agrarische Zustände in Frankreich und England." He wrote largely on currency, banking, state-credit, prices, and taxation, contributing many articles on these subjects to economic and other journals. His memoir on the well-known work of "W. Stafford" is of special interest (Zeitschr. d. Staatsw., vol. xix.) (see W. S.). His writings are marked by cautious exactness and moderation. In his general views he was one of those somewhat loosely described as SOCIALISTS OF THE CHAIR (q.v.). He warmly eulogises the Verein für Sozialpolitik, which was created by that group of economists, as having been the product of the

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moral conscience of almost all Germany, and as having profoundly modified in a right direction the tendencies of public opinion. He insists on the insufficiency of a free field to individual interests, and the necessity of the application of moral ideas to the national economy through the action of the state (Lippert in Handwörterbuch der Staatswissenschaften).

J. K. I.

In addition to his eminence as a general economist, Nasse is of particular importance in the history of economic thought for three reasons. His special studies in money, credit, and banking institutions, etc., have won for him a very high place as a monetary critic. In two other respects he must be regarded as a forerunner of movements which have now become very important. He was one of the early and professorial socialists, and did much to modify the mechanical and harsh direction which economic theory had assumed. In addition his studies in the THREE-FIELD SYSTEM in England, though its conditions have been subject to much correction, drew attention to a valuable side of economic study. His remarks in this connection display considerable acumen, and though his methods and erudition have been severely criticised, he deserves great credit for seeing at an early stage the necessity of treating many problems from a historical rather than an abstract standpoint.

E. C. K. G.

NATION. This word is used in a loose sense to signify any considerable aggregate of human beings, living together in one country, or under one rule. They are generally assumed, with more or less accuracy, to be of one race; but if other bonds are sufficiently powerful to have the same uniting effect as those of blood, the community so held together is regarded as a nation, though its people may spring from various stocks. Thus, we call the Swiss a nation, as well as the French, the Germans, and the Italians. Yet in Switzerland there

man, or Italian language, as the case may be. The inhabitants of Switzerland are of different races, and use different tongues; but the political ties between them are so strong that they are constantly referred to as a nation. On the other hand, we often find that in common discourse governmental bonds are neglected where the term we are considering is used. No one calls the people of the Austrian empire a nation, though they all owe political allegiance to the occupant of the throne of the Hapsburgs. The usual phraseology describes Austria as a state made up of a number of nations or parts of nations-Germans, Magyars, Slavs, Poles, etc. Between the two ideas, that of bloodunity and that of administrative unity, ordinary speech hovers. The same person who has just

mentioned Germans as one of the nations of the Austrian empire, will go on to maintain that the realisation of German unity under the Hohenzollerns in 1871 gave the German nation a leading position in Europe. In the first case he will be thinking of race only; and in the second, of race plus political allegiance. In fact, there is no generally received definition of a nation. Common descent, common language, common history, common religion, common interests, common ideas, hopes, and aspirations,--all these enter more or less vaguely into the current conception, but any one of them may be wanting, or two or three of them may be absent together, and yet the community which lacks them may be called a nation. Its people must, however, possess what Renan rightly regards as essential to nationhood, a common heritage of memories and feelings, and a present desire to continue their common life. A curious reversal of ordinary practice is furnished, at least as far as formal and official terminology goes, by the United States of America. Its people cherish in a remarkable degree the characteristics enumerated above, but their written constitution nowhere applies the term nation to them; and a few years ago, a proposal to introduce into the liturgy the versicle "O Lord, bless our nation,' defeated in the convention of the American Protestant Episcopal Church (see Bryce, American Commonwealth, ch. ii.). But it must be added, that in common speech and writing the Americans constantly call themselves a nation. If it be necessary to assign a technical meaning to a term so loosely used in ordinary discourse, we may perhaps conveniently define a nation as a community whose members are bound together by ties of blood, speech, feeling, and interest, such as do not subsist between them and the rest of the world, and who are also under a common government. This leaves us the term nationality, for aggregates of human beings who feel the ties referred to, but do not form one political whole (see NATIONALITY), and enables us to distinguish a state from a nation or a

was

nationality, by laying stress upon the mere fact of political authority without reference to the conditions under which it is exercised (see INTERNATIONAL TRADE).

[Bagehot, Physics and Politics, chs. iii. iv.Maine, Early Law and Custom, ch. vii. and Early History of Institutions, chs. iii. iv. xii. xiii.Austin, Province of Jurisprudence Determined, Lect. vi.-Bluntschli, Allgemeine Staatslehre (Stutt

gart, 1875), bk. ii. chs. i.-v.—Renan, Qu'est ce qu'une Nation (1882).] NATIONAL BANKS (U.S.). See BANKS.

NATIONAL DEBT.*

T. J. L.

1. Introduction, p. 2; 2. National Debt of United Kingdom, p. 3; 3. The Funding System, p. 4.

1. Introduction.

The economic evolution of the system of borrowing by the state proceeds along the same lines as the development of commercial credit in the community. The system of accumulating treasure against unforeseen emergencies was adopted by the ancient world, and is not unknown at the present time. Forced loans were the favourite expedient of medieval monarchs. Anticipation, or pretended anticipation of taxes was the next step. As industry and independence increased, the despotic methods of the middle ages became intolerable. The growth of private credit suggested the use of public credit; the growth of public debt naturally followed. Holland, as the logical result of its advanced commercial development, was the first nation to contract public debt systematically. England and France followed more slowly. States whose commercial history, if not their existence, is more modern, have found a facility of incurring national debt ready made, so to speak, for their adoption. Consequently this method of acquiring ready money without trouble has been grossly abused, especially by the South and Central American Republics, which obtained large loans without the possibility of paying them, and for purposes utterly wasteful and corrupt.

The general questions of the gradual rise of public borrowing, its effects on industry and thrift, the policy of borrowing in national emergencies rather than increasing taxation, are explained in the article on DEBTS, PUBLIC; a very good statement of them will also be found in M'Culloch's Taxation and the Funding System (1st ed., 1845).

(a) It is sometimes suggested that a national debt should be permanent. But it is essential to pay it off as soon as possible. The old theories as to the benefit of having a large debt for purposes of investors are not yet exploded in commercial circles, but no economist could be found to support them. On this head see the essay, referred to below, in which Sir R. GIFFEN showed the propriety of making a serious effort to reduce the national debt of Great

Britain. With increasing population and wealth in any given country, the burthen of a debt previously incurred becomes proportionately less, and its repayment would therefore become easier. It is, however, matter of history that but few countries which have once incurred a debt have made the necessary effort to repay it. The reduction of the debt of the United States is the most striking instance of the recognition of this public duty: but in this case rapid development made the task specially easy. The high credit of many of the British colonies is partly due to the fact that from an early period in the currency of a loan provision is being made for its ultimate repayment. This point will be treated of under SINKING FUND.

(b) What is to be considered a heavy debt? The usual test is to compare the debt per head of population in various countries. This is done exhaustively in the article on DEBT, PUBLIC, STATEMENT OF. But it would probably be safer always to compare the proportion of the debt and debt-charge to the annual revenue. Even this fails, for a wealthy people can raise a given annual revenue with much less effort than a poor people. The real burthen of debt is a subject for close local inquiry.

The term "national debt," has been confined in practice to denoting debt owing from a state as an international unit to its own subjects or to foreigners. But debts incurred by municipalities and other local bodies are equally burthens on the industry of the nation; and there are few civilised nations which have not contracted some such. In the case of the United Kingdom such debts amounted in 1921 to about £658,000,000, or not much less than the national debt proper as it stood in the year immediately preceding the Great War; yet only 8 per cent of the amount it now reaches.

2. National Debt of United Kingdom. Probably the last of the forced loans under the privy seal was obtained by James I. in 1604. After the Restoration the favourite method of raising loans was by the issue of tallies in anticipation of revenue. When William III. became king the only recognised debt was £84,888: 6: 9, borrowed on tallies in anticipation of duties on French linens. The increase of debt during his reign, which is amply capable of justification, led to "tallies of fictitious loans," and the issue of annuities for lives and terms of years, as well as to the creation of the permanent form of funded debt which gradually superseded all other methods. The low state of public credit at this time is illustrated by an unsuccessful attempt in 1692 to borrow one million on annuities for ninetynine years at 10 per cent for eight years, and 7 per cent for the remainder of the term. William's government, however, took the first

3

steps to establish public credit: the "banker's debt," raised and repudiated by Charles II. (see EXCHEQUER, CLOSING OF), was finally made part of the national liabilities in 1699: the Bank of England debt, which had its origin in this period, brought ulterior benefits with it. The following figures account for the greater part of our national debt. Incurred during William III.'s reign (1688-1702) Anne's reign, war of Spanish succession, etc. (1702-13) American War (1775-86) French War (1793-1815)

£15,730,439

37,750,667 121,267,993 603,842,171

During the whole period the obligation of repayment was more or less borne in mind; but the net result of the operations in this direction was not very effective (see SINKING FUND).

The national debt of the United Kingdom, as it has stood during the last century or so, is composed of funded and unfunded debt.

(a) The funded debt comprises the debts on account of Bank of England and Bank of Ireland stock, and the South Sea and old East India companies, each of which has an interesting history. Prior to the Great War it reached its highest point in 1817, when it stood at £796,200,191 (the unfunded debt making up the total national debt of £848,282,477): it fairly steadily decreased except during the Crimean war, and stood in 1914 at £616,270,000, including the TERMINABLE ANNUITIES. Several schemes of recent years have been directed towards the reduction of capital or interest: the chief of these are the conversion of certain portions of the debt into terminable annuities and Viscount GOSCHEN'S conversion schemes of 1888-89, which chiefly affected the annual charge of debt. The national debt commissioners, first constituted under an act of 1786 (26 Geo. III. c. 31), the members ex officio being the Speaker of the Commons, the Chancellor of the Exchequer, the Master of the Rolls, the Paymaster-General, the Governor and Deputy-Governor of the Bank of England, have under them a permanent department, which is charged with the management of annuities and the purchase and cancellation of portions of the debt.

(b) The unfunded debt till recently consisted of issues of loans for short periods made in order to supply the wants of the state in anticipation of the incoming of the ordinary revenue. It is often referred to as "FLOATING DEBT." It was, prior to the extraordinary efforts for the War, created in three forms: (1) EXCHEQUER BONDS, which have currency for a fixed term of years, not now usually exceeding three, but were first issued in 1853 with a currency of forty years. (2) EXCHEQUER BILLS, which run for a few weeks or months as a minimum, and are thereafter liable to be called in at any time.