(3) TREASURY BILLS, which are not very dissimilar from the preceding class. The essential difference between Treasury bills, Exchequer bills and bonds, and funded government securities, is that on the former the State contracts to pay the principal as well as interest, and on the latter the interest only. The amount of unfunded debt in 1894 was £21,446,300 against a funded debt (excluding annuities) of £587,631,096; the average of the three years 1890-92 was over £34,000,000, or more than double the average of the seven previous years, The amount of the unfunded debt in 1923 has risen to £6,760,875,218.

In

The annual Statistical Abstract gives an interesting table showing the movement of the debt during the previous fifteen years. 1880 the aggregate net liabilities of the United Kingdom were £739,501,605, in 1890 they were £684,954,150, and 1894, £664,163,141. Increased by war to £770,778,000 they stood in 1914 at £706,000,000 (but see Appendix). 3. The Funding System.

Any sketch of the history of Great Britain's debt would hardly be complete without some more particular reference to this term. The term "to fund" properly meant nothing more than to undertake liability for the debt which in • point of time should be indefinite, and therefore practically permanent; and to record it as such in the accounts of the state. This term apparently came into use in this country in the latter part of the 17th century, so that the popular title of "the funds" may be considered contemporaneous with our national debt itself. But in practice it became common in the early part of this century to associate the term with undertaking the liability for a greater nominal amount of debt than the amount actually lent to the state; and it was this form of inducing persons to lend money to the state which is specially indicated in the term "funding system.' This expedient, resort to which was the natural result of the difficulty of raising loans, appears to have been first adopted in the year 1758: it afterwards became popular. The excess of capital liability incurred by the plan amounted to 75 per cent of the loans raised in 1781 when, in return for £12,000,000 in cash, the State issued stock to the amount of £18,000,000 at 3 per cent and £3,000,000 at 4 per cent, or £21,000,000 in all; this seems to have been the greatest of such excesses. This was the method which gave its particular meaning to the words "funding system"; but it was a mere accident of the system, and not of its essence. The method concentrated a great deal of criticism on itself, and was usually charged with gross extravagance (see M'Culloch's Taxation and the Funding System, pt. iii.): but to support the charge, it would be necessary to examine all the circumstances which bore on each issue of a loan.

The commercial principle on which it is based is seen daily at work in the stock exchange prices, which are usually below or above par. Further it is constantly adopted in inviting tenders for colonial or foreign loans where subscriptions are called for at a minimum of say £96 or £98 for every £100 stock: and of the colonial loans at any rate it may safely be stated that all future as well as present contingencies are considered before such minimum prices are fixed; considerations of the rate of interest are of course a potent factor.

The amount of cash received for an obligation has an important bearing on the morality of writing down the nominal capital of the loan in the case of a poor state. For a full statement of the debts and charge of debt of the British Empire and foreign countries, see article on DEBTS, PUBLIC.

[Adam Smith's Wealth of Nations, bk. v.Hamilton's National Debt.-M'Culloch's Taxation and the Funding System, 1845, pt. iii. Excellent statements of the growth of the debt are found in Fenn on the Funds, and full information on many points in a House of Commons Return of 1869, 366, i., app. No. 13.-Parl. Returns of the National Debt, especially 443 of 1858, 366, i. of 1869, 312 of 1894, C. 8966 and C. 9010 of 1898.-Bastable, Public Finance.-Adams, Public Debts.-Giffen's Essays in Finance, 1st Series, Essay xi.] C. A. H.

NATIONAL DEBT, REDEMPTION OF. See REDEMPTION OF NATIONAL DEBT.

NATIONAL ECONOMY (and the German terms Staatswirthschaft and Volkswirthschaft, more or less equivalent to it) is used by many economists to designate that stage of development in which the economic life of an entire nation, or state, forms a united whole. It is distinguished from the preceding stages of a territorial or provincial economy (or, where a country did not go through that experience, of a town economy), and from the stage which may possibly follow in the future, of an international economy. Different writers lay stress on different characteristics; some, like SCHMOLLER upon the national regulation of industry and trade; others, like Bücher, upon the widening distance between producer and consumer, and the larger "circulation of wares. But these various features have been historically interdependent. The widening of the area of economic dealings between individuals has facilitated the substitution of national for local control; and the reverse is equally true.

"National economy" (Nationalökonomie) is also one of the several German designations of the science of political economy.

[G. Schmoller, Studien über die wirthschaftliche Politik Friedrichs des Grossen, in his Jahrbuch, N. F. viii. (1884), pp. 17 ff.; trans, under the title The Mercantile System and its Historical Significance (1896).-K. Bücher, Entstehung der Volkswirthschaft (1893), pp. 15 ff.-Ashley, Econ. Hist., pt. i. 206, pt. ii. 7, 9, 42, 43.] W. J. A.

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(1) A peculiar interest attaches itself to the objects with which acts naturalizing classes of people were passed. A. Smith, after mentioning 5 Geo. I. c. 27, and 23 Geo. II. c. 13, under which the exportation of "living instruments of trade " -in other words the emigration of artificers-was forbidden, writes: "I do not observe at least in our statute book any encouragement given to the importation of the instruments of trade" (bk. iv. ch. viii. ed. 1890, pp. 502, 516). We can here supply A. Smith's omission. The English act of 1663 (15 Car. II. c. 15), after reciting that "vast quantities of linen, cloth, and other manufactures of hemp and flax, and of tapistry hangings are daily imported into this kingdom from foreign parts to the great detriment and impoverishment thereof, the monies and quick stock of this kingdom being thereby daily greatly exhausted and diminished," naturalized Protestant manufacturers of these articles if they would reside in England three years. Even the Irish plantation acts expressed the same economic object when they offered citizenship to any one who would condemn papal doctrine and acknowledge the royal supremacy; thus the Irish act of 1662 (14 & 15 Car. II. c. 13), begins: "Whereas much coin and ready money is carried out and transported for buying and purchasing of foreign manufactures, to the great exhausting and diminishing the treasure of this kingdom." Similarly the acts of 1732 (5 Geo. II. c. 28), etc., which naturalized foreign Protestants who served in the Greenland fisheries, etc., were passed in order that England might import commodities such as blubber without exporting money. The Fishery and Irish Acts were animated far more by political than by economic motives, but the MERCANTILE SYSTEM and the theory of the BALANCE OF TRADE are one root of those acts, and the taproot of the act of 1663. These acts were repealed by the Statute Law Revision Act 1863 and by the act of 1870, but had died a natural death at least half a century before. Other naturalizing acts were passed from time to time to carry out the pre-Malthusian idea that numbers meant wealth as well as strength (7 Anne, cap. 5, xiii.; George II. cap. 7 (preambles), and see Reflections upon Naturalization, etc., by a Country Gentleman, 1753. (2) Secondly as to the effects of naturalization, Francis Bacon wrote: "There be but two conditions native and alien-nam tertium penitus ignoratur." The first hint of an intermediate class is in the act of 1663, which taxed aliens naturalized under that act still as aliens, when they traded with foreign parts. The first political barrier between naturalized alien and natural born was raised by an Irish act of 1703, amending that of 1662, which deprived aliens naturalized under the principal act of the vote and of power to be magistrates, officers of a city, or members of parliament. In England, under the Act of Settlement and other acts, naturalized aliens (a) could not after 1714 be members of parliament nor of the privy council; (b) nor fill any office of trust; (c) nor receive grants of crown lands. The first disability (a) continued until 1870; (b) and (c) until 1844. A naturalized alien may still find himself at disadvantage if he visits his old country or a colony.

[Pollock and Maitland, History of English Law (1595), bk. ii. ch. ii. § 6 (mediæval).-G. Hansard, Treatise on the Laws relating to Aliens (1844) (modern English).-Henry Wheaton, Elements of International Law, ed. A. C. Boyd, 3rd edition (1889), § 82a (see ALIENS; DENIZEN).] J. D. R.

NATURALIZATION IN THE UNITED STATES* The constitution of the United States (art. 1, § 8) gives congress power to "establish an uniform Rule of Naturalization." The law of 26th March 1790 permitted naturalization after two years' residence, upon application to any common-law court of record and the taking of an oath of allegiance. In 1795 the law was revised so as to provide for a preliminary declaration of intention to become a citizen, to be made three years before admission to citizenship, and requiring a total residence of five years. Owing to the hostile feeling against the French, which became so violent toward the close of Washington's administration and during that of John Adams, an exceedingly stringent law was passed in 1798, providing

that the declaration of intention to become a citizen must be made five years before admission to citizenship, and that the applicant must prove a residence of fourteen years in the United States, five in some one special state, before admission. This law was an outcome of the same feeling that led to the passage of the alien and sedition laws, which from their unwise severity were the chief influence in bringing than four years later, in 1802, the law was about the downfall of the Federal party. Less amended providing that the declaration of intention must be made three years before admission, and that the total period of residence should be five years. The law required, in addition to the usual oath of allegiance, also an abjuration of allegiance to any foreign ruler.

Though there have been since that time some slight changes, the law remains substantially the same, with the exception that the declaration need be made only two years before final admission as a citizen. Several provisions have been made regarding special classes of citizens. For example, during the time of the civil war it was provided, in 1862, that any honourably discharged alien soldier might be admitted to citizenship without previous declaration, upon proving one year's residence. Children of persons naturalized become citizens if under twenty-one years old at the time of parents' naturalization. Any alien under twenty-one who has resided in the United States three years before arriving at that age, may be admitted after five years' total residence without previous declaration of intention.

The right of naturalization in the United States carries with it all the rights of native citizens, with the exceptions that the President and Vice-president of the United States must be native born; and that the naturalized

citizen cannot serve as a United States senator until he has been a citizen of the United States nine years, or as a member of the House of Representatives until he has been a citizen seven years. The power to vote for the President and members of Congress in the United States depends upon the right given by the individual states to vote for members of the lower house of their legislatures, and no fewer than sixteen states grant this right to vote before the alien becomes naturalized. In one case, Indiana, if the alien has declared his intention of becoming a citizen and has resided one year in the United States and only six months within the state, he may vote. Minnesota requires only one year's residence and declaration of intention. In all these sixteen states an alien must have declared his intention of becoming a citizen; the period of residence varies from six months to four years. Twenty-eight states require that a man become a full citizen before he is permitted to vote. There can be no doubt, however, that even in some of the states where naturalization is insisted upon as a pre-requisite to voting, many frauds have been committed by political leaders for che sake of securing the too early naturalization of aliens in order that their votes may be obtained.

Many questions arose some years ago between the United States and several of the European states regarding the protection that should be extended by the United States to naturalized citizens abroad, especially in the state from which the naturalized citizen had emigrated. Several of the European countries, particularly Germany and Austria, insisted upon holding for military duty those persons who, before serving their regular period in the army, had emigrated to the United States. The United States, on the other hand, if the emigrants had become naturalized citizens, insisted upon protecting them against the government of their native country. In 1868 congress passed an act providing that "all naturalized citizens while in foreign states shall be entitled to and shall receive from this government the same protection in person and property as is accorded to native-born citizens in like situation and circumstances," a practical repudiation of foreign elaims. Within the next three years treaties were negotiated with the leading countries concerned-England, Austria, Baden, Bavaria, Belgium, and others, which removed all such causes of controversy. States that before had not recognised the right of expatriation, under these treaties recognised it, with the proviso in ordinary circumstances that, if the person concerned had left unperformed, at the time of his emigration, any obligation then due to his native state, he might be held to the performance of that obligation, but of no other; or if he had committed any crime against that country

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he should be held for punishment. In one instance, the evasion of military duty was specifically mentioned. In certain cases, notably in that of Martin Koszta, the United States has extended a certain amount of protection in foreign lands to aliens who, not yet fully naturalized, had when resident there formally declared their intention of becoming citizens of the United States; but obviously this protection could not be carried far against the person's native state.

The necessity imposed upon the United States of protecting its naturalized citizens has been greatly increased by the great immigration into that country; and its readiness in granting such protection has doubtless had much influence in liberalising the views of other countries regarding the right of expatriation.

J. W. J.

officer

NAVARRETE, PEDRO FERNANDEZ (end of 16th and early 17th century), was chaplain to the royal family of Spain, and an (consultor) of the Inquisition. The miserable state of Spain had led the supreme council of Castile to submit to King Philip III. a Great Report (Gran Consulta) on the remedies to be applied; this report was delivered on February 1619, and gave rise to fifty Discursos or glosses from Navarrete, printed in 1626 at the royal press, and several times reprinted since under the title of Conservacion de Monarquías. They are included in Rivadeneyra's Bibliot. de Aut. Españoles (vol. xxv., Madrid, 1853).

Though a long-winded writer and rather too fond of learned quotations, Navarrete shows himself in many respects free from contemporary national and religious prejudice. Speaking of the expelled Moors, he says, "I am certain that if before driving them to desperation, it had been sought to admit them to some honourable offices without any note of infamy, it is possible that they might have been willing to be received in the Holy Church through the gate of honour" (Discurso VII.). In the same discourse, he wonders whether all the Irish refugees were bred to be noblemen as they show such reluctance to labour. He ascribes the depopulation of Spain to the numerous continental wars, and the passion for adventures excited by the discovery of America (Disc. VIII.) as well as by the ingrained indolence of crowds of vagrants "who are seen playing at cards the whole day in the streets of Madrid, awaiting by day the hour to be fed at the gates of convents, and by night to commit burglaries" (Disc. IX.). For a remedy he recommends the development of manufactures as in France, Italy, and the Netherlands, "which are rich countries, though they reap neither gold nor silver," and, "because human labour adds additional value to the primary value of natural produce" (Disc. XVI.). It would be useful to admit foreign artisans, provided they were not allowed to carry away all

8

He

their acquired wealth (Disc. XVII.). There are too many mayorazgos (entailed estates) (Disc. XI.), too many noblemen (Disc. XXI.), too many holidays; in some bishoprics, they cover one-third of the year, without including bullfights and public rejoicings (Disc. XIII.). sees no possibility of levying new taxes (Disc. XIX.), and considers that as regards sumptuary regulations "example (of the magnates) is better than imperative laws" (Disc. XXVIII.). In his fiftieth and last discourse, he concludes with a truth not much appreciated in the Spain of his days, namely that "the councillors of kings ought not to be like cooks, who only think of dishes to please the palate, but like physicians, who prescribe bitter and stringent pills and potions."

E. Ca. NAVARRUS DE AZPILCUETA, MARTINUS (d. 1586), one of the most distinguished Roman Catholic theologians and canonists of the 16th century, was a Spaniard by birth, and, after a long career as professor at Tolosa, Salamanca, and Coimbra, resided in Rome for six-andtwenty years until his death. To the economist he is of interest on account of his extremely liberal teaching in the matter of usury (see CANON LAW; INTEREST AND USURY). He not only justified the triple contract (see ECK, JOHANN, who also explained the principle on which, through the Contractus Trinus, the pay. mert of a certain percentage for the use of tuoney was held to be lawful), but was the first considerable theologian on the Roman Catholic side, as MELANCHTHON (q.v.) was the first on the Protestant side, to maintain that MORA or delay needed not to be proved to justify the payment of compensation for "interest."

[For an account of him and of his Manuale Confessariorum, see W. Endemann, Studien in der romanisch kanonistischen Wirthschafts- und Rechtslehre (1874), i. 47, et frequenter, and, in English, Ashley, Econ. Hist., i. pt. ii. 453.]

So far as we can ascertain, the idea of so restricting trade did not occur to the ancients, and Macpherson is correct in stating that the first instance of a navigation act was that of James, king of Aragon and count of Barcelona in 1227. This act prohibited all foreign vessels from loading goods at Barcelona for Alexandria and other parts unless no vessels belonging to Barcelona were ready and competent to perform the voyage. The object was to crush the trade

of the Catalans to the Levant.

The first navigation act of the English parlia ment was 5 Ric. II. c. 3 (1381). In order to make better provision for an efficient navy, it enacted that no subject of the king should ship any merchandise outward or homeward, except in "ships of the king's allegiance," under penalty of forfeiture of the vessel and cargo. Within a year it was found necessary to modify this stringent enactment by the proviso, evidently borrowed from the Spanish act above mentioned, that it should be lawful to ship in foreign vessels if English could not be found.

A Scottish act followed this; it is not on record, but it was temporarily suspended for a year by an act of 1428, which allows Scottish merchants for that one year to ship in foreign vessels where Scottish are not available. this period Scotland usually followed England closely in such a policy.

At

W. J. A.

He wrote the Financier Citoyen, Paris, 2 vols. 1757. Although criticised by Voltaire in l'Homme aux Quarante Ecus, Naveau's book is still useful to consult on account of its copious information (Stourm, Dict. Hist. des Finances, 1895, p. 97).

E. Ca.

NAVIGATION ACTS. See NAVIGATION

LAWS.

NAVIGATION CLAUSE. This is the clause found in many commercial treaties, whereby the privileges granted to the merchandise of the contracting powers are limited to goods carried by the ships of the powers or other privileged ships, or by certain fixed routes. This must be distinguished from the grant of reciprocal treatment to the ships of each power in the ports of the other. C. A. H.

ences show that the act was not entirely successful, and the attempts made from time to time to strengthen it point in the same direction. In 1485, a law was enacted for one year, that no one should buy or sell French wines unless imported in vessels belonging to England, Ireland, or Wales, and navigated principally by natives of England, Wales, Ireland, or Calais (this last is an interesting "footnote to history"). And in 1489, avowedly on account of the decadence of the English marine, a new act was passed to prohibit the charter of foreign vessels, except where there was no room for freight on English vessels. This last act seems to have fallen into disuse and was re-enacted in 1541.

A notable reversal of the policy took place in the first year of Elizabeth's reign (1558).