Q. Should the word “nation” be capitalized?
A. If you are quoting from the Pledge of Allegiance (to the United States and its flag), then yes. As originally published, on September 8, 1892, in the Youth’s Companion, as part of a Columbus Day program for American schools, the pledge read as follows: “I pledge allegiance to my Flag and the Republic for which it stands: one Nation indivisible, with Liberty and Justice for all.”
The capital N was retained when the pledge was enacted by Congress into law in 1942, as were the capitals in “Flag” and “Republic”; “Liberty” and “Justice,” however, were demoted to “liberty” and “justice.” The current version retains the 1942 capitalization along with the words “under God” (added by congressional amendment in 1954).
All these capital letters evoke a religious and patriotic sensibility that was typical of a certain brand of eighteenth- and nineteenth-century American prose. They also echo a Germanic influence according to which all nouns are capitalized, a practice that can be seen in English as late as the 1749 publication of Henry Fielding’s The History of Tom Jones, a Foundling.
But unless you are quoting the Pledge of Allegiance or writing a historical novel—or otherwise deliberately invoking a bygone age—write “nation.”