NATCHEZ 



NATIONAL DEBT 



403 



cotton and sugar ( nearly 200,000 annually }. Pop. 

 10,000. 



Xsitohez, capital of Adams county, Mississippi, 

 is on the east bank of the Mississippi River, 214 

 miles by rail and about 280 by water NN\V. of 

 New Orleans. It is built mainly on a high bluff, 

 looking out far over the cypress swamps of 

 Louisiana ; the part of the city along the bank, 

 where the heavy shipping business (mainly in 

 sotton ) is transacted, is known as Natchez-under- 

 the-Hill. The public buildings include a Roman 

 Catholic cathedral and a United States marine 

 hospital. Natchez, which was settled by the 

 French in 1716, derives its name from a former tribe 

 of Indians (see MOUND BUILDERS). Pop. ( 1870) 

 9057; (1880)7058; (1900)12,210. 



National Convention (1792-95). See 

 FRANCE, Vol. IV. p. 780 ; GIRONDISTS, JACOBINS, 

 ROBESPIERRE. 



National Covenant. See COVENANT. 



Xational Debt. National or public debts 

 although of early origin were relatively of small 

 importance before the development of the modern 

 system of banking and credit, and it is only during 

 the present century that they have become almost 

 universal on a considerable scale (see Gilbart on 

 Hunting, sect. i. ). So long as it was necessary 

 either to give pledges such as crown jewels or to 

 assign specified revenues, it was not possible that 

 public di-lits could attain any great magnitude. 

 As soon, however, as governments were able to 

 borrow simply on credit, national debts in the 

 modern sense of the term grew rapidly. In less 

 than a century after the foundation of the Hank of 

 England ( 1694), when for the first time in English 

 history the item ' Interest and Management of the 

 Public Debt ' appears in the national accounts, 

 Adam Smith felt compelled to enter a protest 

 against ' the progress of the enormous debts which 

 at present (1776) oppress, and will in the long-run 

 probably ruin, all tne great nations of Europe.' At 

 that time the public debts of the civilised world 

 were, however, only about one-tenth of their 

 present aggregate amount, which exceeds five 

 thousand million pounds sterling, exclusive of 

 local obligations. Although the English national 

 debt received ita greatest augmentation during the 

 great Napoleonic wars, the general indebtedness of 

 civilised nations has increased most rapidly since 

 1848. In fact since that year it has been calcu- 

 lated that there has been an annual average 

 deficit in the public accounts of the world ot over 

 100,000,000. In 1862 there were quoted on the 

 London Stock Exchange foreign public stocks to 

 the amount of nearly 700,000,000, whilst ten years 

 later these quotations had increased to nearly 

 2,500,000,000. At the present time there are 

 more than one hundred and fifty public securities 

 dealt in the London market (see Adams on Public 

 Debts, part i. chap. i.). Seeing then that national 

 debts are now practically universal in the civilised 

 world, and that the amounts and conditions under 

 which they are held are constantly changing, a 

 purely historical or statistical account is plainly 

 out of the question in the limits of the present 

 article. It will only be possible to indicate the 

 most general characteristics and principles involved, 

 and also some of the leading points of controversy. 

 As regards origin, undoubtedly the most important 

 cause of public indebtedness is, and always has 

 been, war-expenditure. Thus the Napoleonic ware 

 increased the English debt by over 600,000,000, 

 the United States civil war cost the victors 

 4.50,000,000, and the Franco German war added 

 390,000,000 to the total of national indebtedness. 



In recent years, however, governments have 

 added largely to their indebtedness by borrowing 



for various public purposes of an industrial or 

 social character. In France especially, in spite of 

 great changes of government, expenditure of this 

 kind has gone on increasing at an alarming rate ; 

 the amount of taxation per head of population has 

 increased by seventy per cent., and tins is largely 

 due to the growth of administrative functions on 

 the part of the state. In the British colonies also 

 the rapid increase of public indebtedness must be 

 ascril>ed principally to the same cause. The pro- 

 gress of civilisation necessarily imposes, as Adam 

 Smith, Mill, and other economists have pointed 

 out, new industrial functions upon governments, 

 and it is ini|>ossible that these can in all cases l>e 

 fulfilled in a directly remunerative manner. But, 

 apart from this natural growth, in recent years a 

 quasi-socialistic tendency has become pronounced, 

 which has involved a large increase in public ex- 

 penditure. The full importance, however, of this 

 element can only be seen when account is taken 

 of local taxation and indebtedness, which would 

 require a separate investigation. It must also be 

 olwerved that money spent on debts incurred for 

 public purposes may in some cases e.g. railways, 

 docks, &c., be directly profitable, and in others 

 e.g. education, be indirectly remunerative. 



Die nature of public debts ditt'ers in some respects 

 from that of private obligations. It is held\ for 

 example, that the government of a sovereign state 

 has the discretionary power of enforcing the claims 

 of its subjects for payment of the national (as con- 

 trasted with domestic ) obligations of another state. 

 The interests of bondholders may in consequence 

 give rise to diplomatic intervention and thus lead 

 to political disturbances, as has been shown recently 

 by the action of England. and France in Egypt 

 and Tunis res]>ectively. The growth of national 

 indebtedness has, however, hitherto been generally 

 accompanied by an increased sense of responsibility 

 founded on the importance of public credit, and 

 fundamental revolutions in government have not 

 generally given rise to repudiation, although the 

 new government might strongly disapprove of the 

 objects for which the debt was incurred, or the 

 methods by which the money was raised compare, 

 for example, the history of France during the 

 present century and the recent revolution in Brazil. 

 On several occasions, however, specious arguments 

 for partial repudiation have been urged and met 

 with some popular countenance. 



It has been maintained that if a debt has been 

 incurred in a depreciated currency that is to say, 

 if the government has only received the capital 

 sum borrowed in this form it is only equitably 

 liound to pay back the principal wjth an allowance 

 for its depreciation. This position was taken up 

 by some writers as regards the English debt in- 

 curred during the period of the bank restriction, 

 when liank of England notes were inconvertible 

 and depreciated, and more recently the same reason- 

 ing was advanced in the United States after the 

 civil war. The obvious answer, however, is that 

 a government would receive so much less capital if 

 the lenders were not assured against uncertain 

 depreciation. The amount actually received for a 

 nominal capital sum will clearly vary, according to 

 the standard in which the payment is to be ulti- 

 mately met (see Mill's Political Economy, bk. iii. 

 chap. xiii. ). In the same way it has sometimes 

 been maintained that if a government has bor- 

 rowed at a discount, and its stock has afterwards 

 risen to par, the fundholders have no equitable 

 right to this rise in value caused by the growth of 

 credit and national prosperity. But again the reply 

 is that the chance of their rise in the future was 

 taken into account by those who made the original 

 advances, and that they would have required so 

 much more interest if they were to be entitled 



