 | Wolfert's roost |  |
“A TIME OF UNEXAMPLED PROSPERITY.”
In the course of a voyage from England, I once fell in with a
convoy of merchant ships, bound for the West Indies. The
weather was uncommonly bland; and the ships vied with each
other in spreading sail to catch a light, favoring breeze, until
their hulls were almost hidden beneath a cloud of canvas. The
breeze went down with the sun, and his last yellow rays shone
upon a thousand sails, idly flapping against the masts.
I exulted in the beauty of the scene, and augured a prosperous
voyage; but the veteran master of the ship shook his head,
and pronounced this halcyon calm a “weather-breeder.” And so
it proved. A storm burst forth in the night; the sea roared and
raged; and when the day broke, I beheld the late gallant convoy
scattered in every direction; some dismasted, others scudding
under bare poles, and many firing signals of distress.
I have since been occasionally reminded of this scene, by those
calm, sunny seasons in the commercial world, which are known
by the name of “times of unexampled prosperity.” They are
the sure weather-breeders of traffic. Every now and then the
world is visited by one of these delusive seasons, when “the credit
system,” as it is called, expands to full luxuriance: every
broad way to certain and sudden wealth lies plain and open; and
men are tempted to dash forward boldly, from the facility of borrowing.
Promissory notes, interchanged between scheming individuals,
are liberally discounted at the banks, which become so many mints
to coin words into cash; and as the supply of words is inexhaustible,
it may readily be supposed what a vast amount of promissory
capital is soon in circulation. Every one now talks in thousands;
nothing is heard but gigantic operations in trade; great
purchases and sales of real property, and immense sums made at
every transfer. All, to be sure, as yet exists in promise; but the
believer in promises calculates the aggregate as solid capital, and
falls back in amazement at the amount of public wealth, the “unexampled
state of public prosperity!”
Now is the time for speculative and dreaming or designing
men. They relate their dreams and projects to the ignorant and
credulous, dazzle them with golden visions, and set them maddening
after shadows. The example of one stimulates another;
speculation rises on speculation; bubble rises on bubble; every one
helps with his breath to swell the windy superstructure, and admires
and wonders at the magnitude of the inflation he has contributed
to produce.
Speculation is the romance of trade, and casts contempt upon
all its sober realities. It renders the stock-jobber a magician, and
the exchange a region of enchantment. It elevates the merchant
into a kind of knight-errant, or rather a commercial Quixote.
The slow but sure gains of snug percentage become despicable in
his eyes: no “operation” is thought worthy of attention, that does
that does not promise an immediate fortune. As he sits
musing over his ledger, with pen behind his ear, he is like La
Mancha's hero in his study, dreaming over his books of chivalry.
His dusty counting-house fades before his eyes, or changes into a
Spanish mine: he gropes after diamonds, or dives after pearls.
The subterranean garden of Aladdin is nothing to the realms of
wealth that break upon his imagination.
Could this delusion always last, the life of a merchant would
indeed be a golden dream; but it is as short as it is brilliant.
Let but a doubt enter, and the “season of unexampled prosperity”
is at end. The coinage of words is suddenly curtailed; the promissory
capital begins to vanish into smoke; a panic succeeds,
and the whole superstructure, built upon credit, and reared by
speculation, crumbles to the ground, leaving scarce a wreck behind:
“It is such stuff as dreams are made of.”
When a man of business, therefore, hears on every side rumors
of fortunes suddenly acquired; when he finds banks liberal, and
brokers busy; when he sees adventurers flush of paper capital,
and full of scheme and enterprise; when he perceives a greater
disposition to buy than to sell; when trade overflows its accustomed
channels, and deluges the country; when he hears of
new regions of commercial adventure; of distant marts and distant
mines, swallowing merchandise and disgorging gold; when
he finds joint stock companies of all kinds forming; railroads,
canals, and locomotive engines, springing up on every side;
when idlers suddenly become men of business, and dash into the
game of commerce as they would into the hazards of the faro table;
palaces conjured up by the magic of speculation; tradesmen flushed
with sudden success, and vying with each other in ostentatious
expense; in a word, when he hears the whole community joining
in the theme of “unexampled prosperity,” let him look upon the
whole as a “weather-breeder,” and prepare for the impending
storm.
The foregoing remarks are intended merely as a prelude to
a narrative I am about to lay before the public, of one of the
most memorable instances of the infatuation of gain, to be found
in the whole history of commerce. I allude to the famous Mississippi
bubble. It is a matter that has passed into a proverb,
and become a phrase in every one's mouth, yet of which not one
merchant in ten has probably a distinct idea. I have therefore
thought that an authentic account of it would be interesting and
salutary, at the present moment, when we are suffering under
the effects of a severe access of the credit system, and just recovering
from one of its ruinous delusions.
THE GREAT MISSISSIPPI BUBBLE.
Before entering into the story of this famous chimera, it is proper
to give a few particulars concerning the individual who engendered
it. John Law was born in Edinburgh, in 1671. His
father, William Law, was a rich goldsmith, and left his son an
estate of considerable value, called Lauriston, situated about four
as bankers, and his father's operations, under this character,
may have originally turned the thoughts of the youth to the
science of calculation, in which he became an adept; so that at an
early age he excelled in playing at all games of combination.
In 1694, he appeared in London, where a handsome person,
and an easy and insinuating address, gained him currency in the
first circles, and the nickname of “Beau Law.” The same personal
advantages gave him success in the world of gallantry, until
he became involved in a quarrel with Beau Wilson, his rival in
fashion, whom he killed in a duel, and then fled to France to avoid
prosecution.
He returned to Edinburgh in 1700, and remained there several
years; during which time he first broached his great credit system,
offering to supply the deficiency of coin by the establishment
of a bank, which, according to his views, might emit a paper currency
equivalent to the whole landed estate of the kingdom.
His scheme excited great astonishment in Edinburgh; but,
though the government was not sufficiently advanced in financial
knowledge to detect the fallacies upon which it was founded,
Scottish caution and suspicion served in place of wisdom, and the
project was rejected. Law met with no better success with the
English parliament; and the fatal affair of the death of Wilson
still hanging over him, for which he had never been able to procure
a pardon, he again went to France.
The financial affairs of France were at this time in a deplorable
condition. The wars, the pomp, and profusion, of Louis XIV.,
and his religious persecutions of whole classes of the most industrious
of his subjects, had exhausted his treasury, and overwhelmed
magnificence, and could not be induced to diminish his enormous
expenditure; and his minister of finance was driven to his wits'
end to devise all kinds of disastrous expedients to keep up the
royal state, and to extricate the nation from its embarrassments.
In this state of things, Law ventured to bring forward his financial
project. It was founded on the plan of the Bank of
England, which had already been in successful operation several
years. He met with immediate patronage, and a congenial spirit,
in the Duke of Orleans, who had married a natural daughter of
the king. The duke had been astonished at the facility with
which England had supported the burden of a public debt, created
by the wars of Anne and William, and which exceeded in
amount that under which France was groaning. The whole matter
was soon explained by Law to his satisfaction. The latter
maintained that England had stopped at the mere threshold of
an art capable of creating unlimited sources of national wealth.
The duke was dazzled with his splended views and specious reasonings,
and thought he clearly comprehended his system. Demarets,
the Comptroller General of Finance, was not so easily deceived.
He pronounced the plan of Law more pernicious than
any of the disastrous expedients that the government had yet
been driven to. The old king also, Louis XIV., detested all innovations,
especially those which came from a rival nation: the
project of a bank, therefore, was utterly rejected.
Law remained for a while in Paris, leading a gay and affluent
existence, owing to his handsome person, easy manners, flexible
temper, and a faro-bank which he had set up. His agreeable career
was interrupted by a message from D'Argenson, Lieutenant
was “rather too skilful at the game which he had introduced!”
For several succeeding years, he shifted his residence from
state to state of Italy and Germany; offering his scheme of finance
to every court that he visited, but without success. The
Duke of Savoy, Victor Amadeas, afterward King of Sardinia,
was much struck with his project; but after considering it for a
time, replied; “I am not sufficiently powerful to ruin myself.”
The shifting, adventurous life of Law, and the equivocal
means by which he appeared to live, playing high, and always
with great success, threw a cloud of suspicion over him, wherever
he went, and caused him to be expelled by the magistracy
from the semi-commercial, semi-aristocratical cities of Venice and
Genoa.
The events of 1715, brought Law back again to Paris.
Louis XIV. was dead. Lous XV. was a mere child, and during
his minority the Duke of Orleans held the reins of government
as Regent. Law had at length found his man.
The Duke of Orleans has been differently represented by different
contemporaries. He appears to have had excellent natural
qualities, perverted by a bad education. He was of the middle
size, easy and graceful, with an agreeable countenance, and open,
affable demeanor. His mind was quick and sagacious, rather
than profound; and his quickness of intellect and excellence of
memory, supplied the lack of studious application. His wit was
prompt and pungent; he expressed himself with vivacity and precision;
his imagination was vivid, his temperament sanguine and
joyous; his courage daring. His mother, the Duchess of Orleans,
expressed his character in a jeu d'esprit. “The fairies,' said she,
talent on my son, he possesses them all. Unfortunately, we had
forgotten to invite an old fairy, who, arriving after all the others,
exclaimed, `He shall have all the talents, excepting that to
make good use of them.”
Under proper tuition, the duke might have risen to real
greatness; but in his early years, he was put under the tutelage
of the Abbé Dubois, one of the subtlest and basest spirits that
ever intrigued its way into eminent place and power. The Abbé
was of low origin and despicable exterior, totally destitute of
morals, and perfidious in the extreme; but with a supple, insinuating
address, and an accommodating spirit, tolerant of all kinds
of profligacy in others. Conscious of his own inherent baseness, he
sought to secure an influence over his pupil, by corrupting his
principles, and fostering his vices: he debased him, to keep himself
from being despised. Unfortunately he succeeded. To the
early precepts of this infamous pander have been attributed
those excesses that disgraced the manhood of the Regent, and
gave a licentious character to his whole course of government.
His love of pleasure, quickened and indulged by those who should
have restrained it, led him into all kinds of sensual indulgence.
He had been taught to think lightly of the most serious duties
and sacred ties, to turn virtue into a jest, and consider religion
mere hypocrisy. He was a gay misanthrope, that had a sovereign
but sportive contempt for mankind; believed that his most
devoted servant would be his enemy, if interest prompted; and
maintained that an honest man was he who had the art to conceal
that he was the contrary.
He surrounded himself with a set of dissolute men like himself,
held, during the latter hypocritical days of Louis XIV., now gave
way to every kind of debauchery. With these men the Regent
used to shut himself up, after the hours of business, and excluding
all graver persons and graver concerns, celebrate the most
drunken and disgusting orgies, where obscenity and blasphemy
formed the seasoning of conversation. For the profligate companions
of these revels he invented the appellation of his roués,
the literal meaning of which is, men broken on the wheel; intended,
no doubt, to express their broken-down characters and
dislocated fortunes; although a contemporary asserts that it
designated the punishment that most of them merited. Madame
de Labran, who was present at one of the Regent's suppers, was
disgusted by the conduct and conversation of the host and his
guests, and observed at table, that God, after he had created
man, took the refuse clay that was left, and made of it the souls
of lackeys and princes.
Such was the man that now ruled the destinies of France.
Law found him full of perplexities, from the disastrous state of
the finances. He had already tampered with the coinage, calling
in the coin of the nation, re-stamping it, and issuing it at a nominal
increase of one fifth; thus defrauding the nation out of twenty
per cent. of its capital. He was not likely, therefore, to be scrupulous
about any means likely to relieve him from financial difficulties:
he had even been led to listen to the cruel alternative
of a national bankruptcy.
Under these circumstances, Law confidently brought forward
his scheme of a bank, that was to pay off the national debt, increase
the revenue, and at the same time diminish the taxes.
his system to the Regent. The credit enjoyed by a banker or a
merchant, he observed, increases his capital tenfold; that is to
say, he who has a capital of one hundred thousand livres, may, if
he possess sufficient credit, extend his operations to a million,
and reap profits to that amount. In like manner, a state that
can collect into a bank all the current coin of the kingdom, would
be as powerful as if its capital were increased tenfold. The
specie must be drawn into the bank, not by way of loan, or by
taxations, but in the way of deposit. This might be effected in
different modes, either by inspiring confidence, or by exerting
authority. One mode, he observed, had already been in use.
Each time that a state makes a re-coinage, it becomes momentarily
the depository of all the money called in, belonging to the
subjects of that state. His bank was to effect the same purpose;
that is to say, to receive in deposit all the coin of the kingdom,
but to give in exchange its bills, which, being of an invariable
value, bearing an interest, and being payable on demand, would
not only supply the place of coin, but prove a better and more
profitable currency.
The Regent caught with avidity at the scheme. It suited his
bold, reckless spirit, and his grasping extravagance. Not that he
was altogether the dupe of Law's specious projects: still he was
apt, like many other men, unskilled in the arcana of finance, to
mistake the multiplication of money, for the multiplication of
wealth; not understanding that it was a mere agent or instrument
in the interchange of traffic, to represent the value of the
various productions of industry; and that an increased circulation
of coin or bank-bills, in the shape of currency, only adds a proportionably
enlisted the vanity of the Regent in his cause. He persuaded
him that he saw more clearly than others into sublime theories
of finance, which were quite above the ordinary apprehension. He
used to declare that, excepting the Regent and the Duke of Savoy,
no one had thoroughly comprehended his system.
It is certain that it met with strong opposition from the
Regent's ministers, the Duke de Noailles and the Chancellor
d'Anguesseau; and it was no less strenuously opposed by the
parliament of Paris. Law, however, had a potent though secret
coadjutor in the Abbé Dubois, now rising, during the regency,
into great political power, and who retained a baneful influence
over the mind of the Regent. This wily priest, as avaricious as
he was ambitious, drew large sums from Law as subsidies, and
aided him greatly in many of his most pernicious operations. He
aided him, in the present instance, to fortify the mind of the
Regent against all the remonstrances of his ministers and the
parliament.
Accordingly, on the 2d of May, 1716, letters patent were
granted to Law, to establish a bank of deposit, discount, and circulation,
under the firm of “Law and Company,” to continue for
twenty years. The capital was fixed at six millions of livres, divided
into shares of five hundred livres each, which were to be
sold for twenty-five per cent. of the regent's debased coin, and
seventy-five per cent. of the public securities, which were then at
a great reduction from their nominal value, and which then
amounted to nineteen hundred millions. The ostensible object
of the bank, as set forth in the patent, was to encourage the commerce
and manufactures of France. The louis-d'ors, and crowns
its bills to be payable in them on demand.
At the outset, while the bank was limited in its operations,
and while its paper really represented the specie in its vaults, it
seemed to realize all that had been promised from it. It rapidly
acquired public confidence, and an extended circulation, and produced
an activity in commerce, unknown under the baneful
government of Louis XIV. As the bills of the bank bore an
interest, and as it was stipulated they would be of invariable
value, and as hints had been artfully circulated that the coin
would experience successive diminution, every body hastened to
the bank to exchange gold and silver for paper. So great became
the throng of depositors, and so intense their eagerness, that
there was quite a press and struggle at the back door, and a
ludicrous panic was awakened, as if there was danger of their
not being admitted. An anecdote of the time relates, that one
of the clerks, with an ominous smile, called out to the struggling
multitude, “Have a little patience, my friends; we mean to take
all your money;” an assertion disastrously verified in the sequel.
Thus by the simple establishment of a bank, Law and the
Regent obtained pledges of confidence for the consummation of
farther and more complicated schemes, as yet hidden from the
public. In a little while the bank shares rose enormously, and the
amount of its notes in circulation exceeded one hundred and ten
millions of livres. A subtle stroke of policy had rendered it popular
with the aristocracy. Louis XIV. had several years previously
imposed an income tax of a tenth, giving his royal word that it
should cease in 1717. This tax had been exceedingly irksome to
the privileged orders; and, in the present disastrous times, they
operation of Law's scheme, however, the tax was abolished,
and now nothing was to be heard among the nobility and clergy
but praises of the Regent and the bank.
Hitherto all had gone well, and all might have continued to go
well, had not the paper system been farther expanded. But Law
had yet the grandest part of his scheme to develope. He had to
open his ideal world of speculation, his El Dorado of unbounded
wealth. The English had brought the vast imaginary commerce
of the South Seas in aid of their banking operations. Law
sought to bring, as an immense auxiliary of his bank, the whole
trade of the Mississippi. Under this name was included not
merely the river so called, but the vast region known as Louisiana,
extending from north latitude 29° up to Canada in north
latitude 40°. This country had been granted by Louis XIV. to
the Sieur Crozat, but he had been induced to resign his patent.
In conformity to the plea of Mr. Law, letters patent were granted
in August, 1717, for the creation of a commercial company, which
was to have the colonizing of this country, and the monopoly of
its trade and resources, and of the beaver or fur trade with
Canada. It was called the Western, but became better known
as the Mississippi Company. The capital was fixed at one hundred
millions of livres, divided into shares, bearing an interest of
four per cent., which were subscribed for in the public securities.
As the bank was to cooperate with the company, the Regent
ordered that its bills should be received the same as coin, in all
payments of the public revenue. Law was appointed chief
director of this company, which was an exact copy of the Earl of
Oxford's South Sea Company, set on foot in 1711, and which distracted
with the delusive picturings given in that memorable scheme
of the sources of rich trade to be opened in the South Sea
countries, Law held forth magnificent prospects of the fortunes
to be made in colonizing Louisiana, which was represented as a
veritable land of promise, capable of yielding every variety of the
most precious produce. Reports, too, were artfully circulated, with
great mystery, as if to the “chosen few,” of mines of gold and
silver recently discovered in Louisiana, and which would insure
instant wealth to the early purchasers. These confidential whispers
of course soon became public; and were confirmed by travellers
fresh from the Mississippi, and doubtless bribed, who had
seen the mines in question, and declared them superior in richness
to those of Mexico and Peru. Nay more, ocular proof was furnished
to public credulity, in ingots of gold, conveyed to the
mint, as if just brought from the mines of Louisiana.
Extraordinary measures were adopted to force a colonization.
An edict was issued to collect and transport settlers to the Mississippi.
The police lent its aid. The streets and prisons of
Paris, and of the provincial cities, were swept of mendicants and
vagabonds of all kinds, who were conveyed to Havre de Grace.
About six thousand were crowded into ships, where no precautions
had been taken for their health or accommodation. Instruments
of all kinds proper for the working of mines were ostentatiously
paraded in public, and put on board the vessels; and the whole
set sail for this fabled El Dorado, which was to prove the grave
of the greater part of its wretched colonists.
D'Anguesseau, the chancellor, a man of probity and integrity,
still lifted his voice against the paper system of Law, and his project
the evils they were calculated to produce; the private distress and
public degradation; the corruption of morals and manners; the
triumph of knaves and schemers; the ruin of fortunes, and downfall
of families. He was incited more and more to this opposition
by the Duke de Noailles, the Minister of Finance, who was jealous
of the growing ascendency of Law over the mind of the regent,
but was less honest than the chancellor in his opposition. The
Regent was excessively annoyed by the difficulties they conjured
up in the way of his darling schemes of finance, and the countenance
they gave to the opposition of parliament; which body, disgusted
more and more with the abuses of the regency, and the
system of Law, had gone so far as to carry its remonstrances to
the very foot of the throne.
He determined to relieve himself from these two ministers,
who, either through honesty or policy, interfered with all his
plans. Accordingly, on the 28th of January, 1718, he dismissed
the chancellor from office, and exiled him to his estate in the
country; and shortly afterward removed the Duke de Noailles
from the administration of the finance.
The opposition of parliament to the Regent and his measures
was carried on with increasing violence. That body aspired to an
equal authority with the Regent in the administration of affairs,
and pretended, by its decree, to suspend an edict of the regency
ordering a new coinage, and altering the value of the currency.
But its chief hostility was levelled against Law, a foreigner and
a heretic, and one who was considered by a majority of the members
in the light of a malefactor. In fact, so far was this hostility
carried, that secret measures were taken to investigate his malversations,
in parliament that, should the testimony collected justify their
suspicious, they would have him seized and brought before them;
would give him a brief trial, and if convicted, would hang him
in the court-yard of the palace, and throw open the gates after the
execution, that the public might behold his corpse!
Law received intimation of the danger hanging over him, and
was in terrible trepidation. He took refuge in the Palais Royal,
the residence of the Regent, and implored his protection. The
Regent himself was embarrassed by the sturdy opposition of parliament,
which contemplated nothing less than a decree reversing
most of his public measures, especially those of finance. His indecision
kept Law for a time in an agony of terror and suspense.
Finally, by assembling a board of justice, and bringing to his aid
the absolute authority of the king, he triumphed over parliament,
and relieved Law from his dread of being hanged.
The system now went on with flowing sail. The Western, or
Mississippi Company, being identified with the bank, rapidly increased
in power and privileges. One monopoly after another
was granted to it; the trade of the Indian Seas; the slave trade
with Senegal and Guinea; the farming of tobacco; the national
coinage, etc. Each new privilege was made a pretext for issuing
more bills, and caused an immense advance in the price of stock.
At length, on the 4th of December, 1718, the Regent gave the establishment
the imposing title of The Royal Bank, and proclaimed
that he had effected the purchase of all the shares, the proceeds
of which he had added to its capital. This measure seemed
to shock the public feeling more than any other connected with
the system, and roused the indignation of parliament. The French
noble, lofty, and magnificent, to the royal name and person, especially
during the stately and sumptuous reign of Louis XIV.,
that they could not at first tolerate the idea of royalty being in any
degree mingled with matters of traffic and finance, and the king
being in a manner a banker. It was one of the downward steps,
however, by which royalty lost its illusive splendor in France and
became gradually cheapened in the public mind.
Arbitrary measures now began to be taken to force the bills
of the bank into artificial currency. On the 27th of December, appeared
an order in council, forbidding, under severe penalties, the
payment of any sum above six hundred livres in gold or silver.
This decree rendered bank bills necessary in all transactions of
purchase and sale, and called for a new emission. The prohibition
was occasionally evaded or opposed; confiscations were the
consequence; informers were rewarded, and spies and traitors began
to spring up in all the domestic walks of life.
The worst effect of this illusive system was the mania for
gain, or rather for gambling in stocks, that now seized upon the
whole nation. Under the exciting effects of lying reports, and
the forcing effects of government decrees, the shares of the company
went on rising in value, until they reached thirteen hundred
per cent. Nothing was now spoken of but the price of shares,
and the immense fortunes suddenly made by lucky speculators.
Those whom Law had deluded used every means to delude others.
The most extravagant dreams were indulged, concerning the wealth
to flow in upon the company, from its colonies, its trade, and its
various monopolies. It is true, nothing as yet had been realized,
nor could in some time be realized, from these distant sources,
in the advance, and their conjectures are immediately converted
into facts. Lying reports now flew from mouth to mouth, of sure
avenues to fortune suddenly thrown open. The more extravagant
the fable, the more readily was it believed. To doubt, was
to awaken anger, or incur ridicule. In a time of public infatuation,
it requires no small exercise of courage to doubt a popular
fallacy.
Paris now became the centre of attraction for the adventurous
and the avaricious, who flocked to it not merely from the provinces,
but from neighboring countries. A stock exchange was established
in a house in the Rue Quincampoix, and became immediately
the gathering place of stock-jobbers. The exchange opened
at seven o'clock with the beat of drum and sound of bell, and
closed at night with the same signals. Guards were stationed at
each end of the street, to maintain order and exclude carriages
and horses. The whole street swarmed throughout the day like a
bee-hive. Bargains of all kinds were seized upon with avidity.
Shares of stock passed from hand to hand, mounting in value, one
knew not why. Fortunes were made in a moment as if by magic;
and every lucky bargain prompted those around to a more desperate
throw of the die. The fever went on, increasing in intensity
as the day declined; and when the drum beat, and the bell rang, at
night, to close the exchange, there were exclamations of impatience
and despair, as if the wheel of fortune had suddenly been stopped,
when about to make its luckiest evolution.
To ingulf all classes in this ruinous vortex, Law now split the
shares of fifty millions of stock each into one hundred shares;
thus, as in the splitting of lottery tickets, accommodating the venture
very dregs, and adventurers of the lowest order hurried to the
stock market. All honest, industrious pursuits, and modest
gains, were now despised. Wealth was to be obtained instantly,
without labor, and without stint. The upper classes were as base
in their venality as the lower. The highest and most powerful
nobles, abandoning all generous pursuits and lofty aims, engaged
in the vile scuffle for gain. They were even baser than the lower
classes; for some of them, who were members of the council of
the regency, abused their station and their influence, and promoted
measures by which shares arose while in their hands, and
they made immense profits.
The Duke de Bourbon, the Prince of Conti, the Dukes de la
Force and D'Antin, were among the foremost of these illustrious
stock-jobbers. They were nicknamed the Mississippi Lords, and
they smiled at the sneering title. In fact, the usual distinctions
of society had lost their consequence, under the reign of this new
passion. Rank, talent, military fame, no longer inspired deference.
All respect for others, all self-respect, were forgotten in
the mercenary struggle of the stock-market. Even prelates and
ecclesiastical corporations, forgetting their true objects of devotion,
mingled among the votaries of mammon. They were not
behind those who wielded the civil power in fabricating ordinances
suited to their avaricious purposes. Theological decisions forthwith
appeared, in which the anathema launched by the church
against usury, was conveniently construed as not extending to the
traffic in bank shares!
The Abbé Dubois entered into the mysteries of stock-jobbing
with all the zeal of an apostle, and enriched himself by the spoils
as considerations for his political influence. Faithless to his
country, in the course of his gambling speculations he transferred
to England a great amount of specie, which had been paid into
the royal treasury; thus contributing to the subsequent dearth
of the precious metals.
The female sex participated in this sordid frenzy. Princesses
of the blood, and ladies of the highest nobility, were among the
most rapacious of stock-jobbers. The Regent seemed to have the
riches of Crœsus at his command, and lavished money by hundreds
of thousands upon his female relatives and favorites, as well
as upon his roués, the dissolute companions of his debauches.
“My son,” writes the Regent's mother, in her correspondence,
“gave me shares to the amount of two millions, which I distributed
among my household. The king also took several millions
for his own household. All the royal family have had them; all
the children and grandchildren of France, and the princes of the
blood.”
Luxury and extravagance kept pace with this sudden inflation
of fancied wealth. The hereditary palaces of nobles were pulled
down, and rebuilt on a scale of augmented splendor. Entertainments
were given, of incredible cost and magnificence. Never
before had been such display in houses, furniture, equipages, and
amusements. This was particularly the case among persons of
the lower ranks, who had suddenly become possessed of millions.
Ludicrous anecdotes are related of some of these upstarts. One,
who had just launched a splendid carriage, when about to use it
for the first time, instead of getting in at the door, mounted,
through habitude, to his accustomed place behind. Some ladies
but whom nobody knew, alight from a very handsome carriage,
inquired who she was, of the footman. He replied, with a sneer:
“It is a lady who has recently tumbled from a garret into this
carriage.” Mr. Law's domestics were said to become in like manner
suddenly enriched by the crumbs that fell from his table.
His coachman, having made a fortune, retired from his service.
Mr. Law requested him to procure a coachman in his place. He
appeared the next day with two, whom he pronounced equally
good, and told Mr. Law: “Take which of them you choose, and
I will take the other!”
Nor were these novi homini treated with the distance and
disdain they would formerly have experienced from the haughty
aristocracy of France. The pride of the old noblesse had been
stifled by the stronger instinct of avarice. They rather sought
the intimacy and confidence of these lucky upstarts; and it has
been observed that a nobleman would gladly take his seat at the
table of the fortunate lackey of yesterday, in hopes of learning
from him the secret of growing rich!
Law now went about with a countenance radiant with success,
and apparently dispensing wealth on every side. “He is admirably
skilled in all that relates to finance,” writes the Duchess of
Orleans, the Regent's mother, “and has put the affairs of the
state in such good order, that all the king's debts have been
paid. He is so much run after, that he has no repose night or
day. A duchess even kissed his hand publicly. If a duchess can
do this, what will other ladies do!”
Wherever he went, his path, we are told, was beset by a sordid
throng, who waited to see him pass, and sought to obtain the
would bestow fortune. When at home, his house was absolutely
besieged by furious candidates for fortune. “They forced the
doors,” says the Duke de St. Simon; “they scaled his windows
from the garden; they made their way into his cabinet down the
chimney!”
The same venal court was paid by all classes to his family.
The highest ladies of the court vied with each other in meannesses,
to purchase the lucrative friendship of Mrs. Law and her
daughter. They waited upon them with as much assiduity and
adulation as if they had been princesses of the blood. The Regent
one day expressed a desire that some duchess should accompany
his daughter to Genoa. “My Lord,” said some one present,
“if you would have a choice from among the duchesses, you need
but send to Mrs. Law's; you will find them all assembled there.”
The wealth of Law rapidly increased with the expansion of
the bubble. In the course of a few months, he purchased fourteen
titled estates, paying for them in paper; and the public
hailed these sudden and vast acquisitions of landed property, as
so many proofs of the soundness of his system. In one instance,
he met with a shrewd bargainer, who had not the general faith in
his paper money. The President de Novion insisted on being
paid for an estate in hard coin. Law accordingly brought the
amount, four hundred thousand livres, in species, saying, with a
sarcastic smile, that he preferred paying in money, as its weight
rendered it a mere incumbrance. As it happened, the President
could give no clear title to the land, and the money had to be refunded.
He paid it back in paper, which Law dared not refuse,
lest he should depreciate it in the market!
The course of illusory credit went on triumphantly for eighteen
months. Law had nearly fulfilled one of his promises, for the
greater part of the public debt had been paid off; but how paid?
In bank shares, which had been trumped up several hundred per
cent. above their value, and which were to vanish like smoke in
the hands of the holders.
One of the most striking attributes of Law, was the imperturbable
assurance and self-possession with which he replied to
every objection, and found a solution for every problem. He had
the dexterity of a juggler in evading difficulties; and what was
peculiar, made figures themselves, which are the very elements of
exact demonstration, the means to dazzle and bewilder.
Toward the latter end of 1719, the Mississippi scheme had
reached its highest point of glory. Half a million of strangers
had crowded into Paris, in quest of fortune. The hotels and
lodging-houses were overflowing; lodgings were procured with
excessive difficulty; granaries were turned into bedrooms; provisions
had risen enormously in price; splendid houses were multiplying
on every side; the streets were crowded with carriages;
above a thousand new equipages had been launched.
On the eleventh of December, Law obtained another prohibitory
decree, for the purpose of sweeping all the remaining specie
in circulation into the bank. By this it was forbidden to make
any payments in silver above ten livres, or in gold above three
hundred.
The repeated decrees of this nature, the object of which was
to depreciate the value of gold, and increase the illusive credit of
paper, began to awaken doubts of a system which required such
bolstering. Capitalists gradually awoke from their bewilderment.
common cause against this continual expansion of a paper system.
The shares of the bank and of the company began to decline in
value. Wary men took the alarm, and began to realize, a word
now first brought into use, to express the conversion of ideal property
into something real.
The Prince of Conti, one of the most prominent and grasping
of the Mississippi lords, was the first to give a blow to the credit
of the bank. There was a mixture of ingratitude in his conduct,
that characterized the venal baseness of the times. He had received,
from time to time, enormous sums from Law, as the price
of his influence and patronage. His avarice had increased with
every acquisition, until Law was compelled to refuse one of his
exactions. In revenge, the prince immediately sent such an
amount of paper to the bank to be cashed, that it required four
waggons to bring away the silver, and he had the meanness to loll
out of the window of his hotel, and jest and exult, as it was trundled
into his port cochère.
This was the signal for other drains of like nature. The English
and Dutch merchants, who had purchased a great amount of
bank paper at low prices, cashed them at the bank, and carried the
money out of the country. Other strangers did the like, thus
draining the kingdom of its specie, and leaving paper in its place.
The Regent, perceiving these symptoms of decay in the system,
sought to restore it to public confidence, by conferring marks
of confidence upon its author. He accordingly resolved to make
Law Comptroller General of the Finances of France. There was
a material obstacle in the way. Law was a protestant, and the
Regent, unscrupulous as he was himself, did not dare publicly to
had fulminated against all heretics. Law soon let him know that
there would be no difficulty on that head. He was ready at any
moment to abjure his religion in the way of business. For decency's
sake, however, it was judged proper he should previously be
convinced and converted. A ghostly instructor was soon found,
ready to accomplish his conversion in the shortest possible time.
This was the Abbé Tencin, a profligate creature of the profligate
Dubois, and like him working his way to ecclesiastical promotion
and temporal wealth, by the basest means.
Under the instructions of the Abbé Tencin, Law soon mastered
the mysteries and dogmas of the Catholic doctrine; and, after a
brief course of ghostly training, declared himself thoroughly convinced
and converted. To avoid the sneers and jests of the
Parisian public, the ceremony of abjuration took place at Melun.
Law made a pious present of one hundred thousand livres to the
Church of St. Roque, and the Abbé Tencin was rewarded for his
edifying labors, by sundry shares and bank-bills, which he
shrewdly took care to convert into cash, having as little faith in
the system, as in the piety of his new convert. A more grave
and moral community might have been outraged by this scandalous
farce; but the Parisians laughed at it with their usual levity,
and contented themselves with making it the subject of a number
of songs and epigrams.
Law being now orthodox in his faith, took out letters of naturalization,
and having thus surmounted the intervening obstacles,
was elevated by the Regent to the post of Comptroller General.
So accustomed had the community become to all juggles and
transmutations in this hero of finance, that no one seemed shocked
now considered perfectly established in place and power, he became
more than ever the object of venal adoration. Men of rank
and dignity thronged his antechamber, waiting patiently their turn
for an audience; and titled dames demeaned themselves to take
the front seats of the carriages of his wife and daughter, as if they
had been riding with princesses of the blood royal. Law's head
grew giddy with his elevation, and he began to aspire after aristocratical
distinction. There was to be a court ball, at which
several of the young noblemen were to dance in a ballet with the
youthful king. Law requested that his son might be admitted
into the ballet, and the Regent consented. The young scions of
nobility, however, were indignant, and scouted the “intruding upstart.”
Their more worldly parents, fearful of displeasing the
modern Midas, reprimanded them in vain. The striplings had not
yet imbibed the passion for gain, and still held to their high blood.
The son of the banker received slights and annoyances on all
sides, and the public applauded them for their spirit. A fit of
illness came opportunely to relieve the youth from an honor which
would have cost him a world of vexations and affronts.
In February, 1720, shortly after Law's instalment in office, a
decree came out, uniting the bank to the India Company, by
which last name the whole establishment was now known. The
decree stated, that as the bank was royal, the king was bound to
make good the value of its bills; that he committed to the company
the government of the bank for fifty years, and sold to it
fifty millions of stock belonging to him, for nine hundred millions;
a simple advance of eighteen hundred per cent. The decree farther
declared, in the king's name, that he would never draw on
by his receivers general.
The bank, it was said, had by this time issued notes to the
amount of one thousand millions; being more paper than all the
banks of Europe were able to circulate. To aid its credit, the
receivers of the revenue were directed to take bank-notes of the
sub-receivers. All payments, also, of one hundred livres and upward,
were ordered to be made in bank-notes. These compulsory
measures for a short time gave a false credit to the bank,
which proceeded to discount merchants' notes, to lend money on
jewels, plate, and other valuables, as well as on mortgages.
Still farther to force on the system, an edict next appeared,
forbidding any individual, or any corporate body, civil or religious,
to hold in possession more than five hundred livres in current
coin; that is to say, about seven louis-d'ors; the value of the
louis-d'or in paper being, at the time, seventy-two livres. All
the gold and silver they might have, above this pittance, was to
be brought to the royal bank, and exchanged either for shares
or bills.
As confiscation was the penalty of disobedience to this decree,
and informers were assured a share of the forfeitures, a bounty
was in a manner held out to domestic spies and traitors; and
the most odious scrutiny was awakened into the pecuniary affairs
of families and individuals. The very confidence between friends
and relatives was impaired, and all the domestic ties and virtues
of society were threatened, until a general sentiment of indignation
broke forth, that compelled the Regent to rescind the odious
decree. Lord Stairs, the British ambassador, speaking of the
system of espionage encouraged by this edict, observed that it
he had thus established the inquisition, after having already
proved transubstantiation, by changing specie into paper.
Equal abuses had taken place under the colonizing project.
In his thousand expedients to amass capital, Law had sold parcels
of land in Mississippi, at the rate of three thousand livres
for a league square. Many capitalists had purchased estates
large enough to constitute almost a principality; the only evil
was, Law had sold a property which he could not deliver. The
agents of police, who aided in recruiting the ranks of the colonists,
had been guilty of scandalous impositions. Under pretence of
taking up mendicants and vagabonds, they had scoured the streets
at night, seizing upon honest mechanics, or their sons, and hurrying
them to their crimping-houses, for the sole purpose of extorting
money from them as a ransom. The populace was roused
to indignation by these abuses. The officers of police were mobbed
in the exercise of their odious functions, and several of them
were killed, which put an end to this flagrant abuse of power.
In March, a most extraordinary decree of the council fixed
the price of shares of the India Company at nine thousand livres
each. All ecclesiastical communities and hospitals were now prohibited
from investing money at interest, in any thing but India
stock. With all these props and stays, the system continued to
totter. How could it be otherwise, under a despotic government,
that could alter the value of property at every moment? The
very compulsory measures that were adopted to establish the
credit of the bank, hastened its fall; plainly showing there was
a want of solid security. Law caused pamphlets to be published,
setting forth, in eloquent language, the vast profits that must accrue
doing it any harm. On the very back of these assertions, came
forth an edict of the king, dated the 22d of May, wherein, under
pretence of having reduced the value of his coin, it was declared
necessary to reduce the value of his bank-notes one half, and of
the India shares from nine thousand to five thousand livres!
This decree came like a clap of thunder upon shareholders.
They found one half of the pretended value of the paper in their
hands annihilated in an instant: and what certainty had they
with respect to the other half? The rich considered themselves
ruined; those in humbler circumstances looked forward to abject
beggary.
The parliament seized the occasion to stand forth as the protector
of the public, and refused to register the decree. It
gained the credit of compelling the Regent to retrace his step,
though it is more probable he yielded to the universal burst of
public astonishment and reprobation. On the 27th of May, the
edict was revoked, and bank-bills were restored to their previous
value. But the fatal blow had been struck; the delusion was at
an end. Government itself had lost all public confidence, equally
with the bank it had engendered, and which its own arbitrary
acts had brought into discredit. “All Paris,” says the Regent's
mother, in her letters, “has been mourning at the cursed decree
which Law has persuaded my son to make. I have received anonymous
letters, stating that I have nothing to fear on my own account,
but that my son shall be pursued with fire and sword.”
The Regent now endeavored to avert the odium of his ruinous
schemes from himself. He affected to have suddenly lost
confidence in Law, and on the 29th of May, discharged him from
of sixteen men in his house. He even refused to see him, when,
on the following day, he applied at the portal of the Palais Royal
for admission: but having played off this farce before the public,
he admitted him secretly the same night, by a private door, and
continued as before to co-operate with him in his financial
schemes.
On the first of June, the Regent issued a decree, permitting
persons to have as much money as they pleased in their possession.
Few, however, were in a state to benefit by this permission.
There was a run upon the bank, but a royal ordinance
immediately suspended payment, until farther orders. To relieve
the public mind, a city stock was created, of twenty-five millions,
bearing an interest of two and a half per cent., for which bank-notes
were taken in exchange. The bank-notes thus withdrawn
from circulation, were publicly burnt before the Hotel de Ville.
The public, however, had lost confidence in every thing and every
body, and suspected fraud and collusion in those who pretended
to burn the bills.
A general confusion now took place in the financial world.
Families who had lived in opulence, found themselves suddenly
reduced to indigence. Schemers who had been revelling in the
delusion of princely fortunes, found their estates vanishing into
thin air. Those who had any property remaining, sought to secure
it against reverses. Cautious persons found there was no
safety for property in a country where the coin was continually
shifting in value, and where a despotism was exercised over public
securities, and even over the private purses of individuals. They
began to send their effects into other countries; when lo! on the
effects, under penalty of forfeiting twice their value; and forbade
them, under like penalty, from investing their money in foreign
stocks. This was soon followed by an another decree, forbidding
any one to retain precious stones in his possession, or to sell them
to foreigners: all must be deposited in the bank, in exchange
for depreciating paper!
Execrations were now poured out, on all sides, against Law,
and menaces of vengeance. What a contrast, in a short time, to
the venal incense once offered up to him! “This person,” writes
the Regent's mother, “who was formerly worshipped as a god,
is now not sure of his life. It is astonishing how greatly
terrified he is. He is as a dead man; he is pale as a sheet, and
it is said he can never get over it. My son is not dismayed,
though he is threatened on all sides, and is very much amused
with Law's terrors.”
About the middle of July, the last grand attempt was made
by Law and the Regent, to keep up the system, and provide for
the immense emission of paper. A decree was fabricated, giving
the India Company the entire monopoly of commerce, on condition
that it would, in the course of a year, reimburse six hundred
millions of livres of its bills, at the rate of fifty millions per
month.
On the 17th, this decree was sent to parliament to be registered.
It at once raised a storm of opposition in that assembly;
and a vehement discussion took place. While that was going on,
a disastrous scene was passing out of doors.
The calamitous effects of the system had reached the humblest
concerns of human life. Provisions had risen to an enormous
had not wherewithal to buy bread. It had been found absolutely
indispensable to relax a little from the suspension of specie payments,
and to allow small sums to be scantily exchanged for paper.
The doors of the bank and the neighboring street were immediately
thronged with a famishing multitude, seeking cash for bank-notes
of ten livres. So great was the press and struggle, that
several persons were stifled and crushed to death. The mob carried
three of the bodies to the court-yard of the Palais Royal.
Some cried for the Regent to come forth, and behold the effect
of his system; others demanded the death of Law, the impostor,
who had brought this misery and ruin upon the nation.
The moment was critical: the popular fury was rising to a
tempest, when Le Blanc, the Secretary of State, stepped forth.
He had previously sent for the military, and now only sought to
gain time. Singling out six or seven stout fellows, who seemed
to be the ringleaders of the mob; “My good fellows,” said he,
calmly, “carry away these bodies, and place them in some church,
and then come back quickly to me for your pay.” They immediately
obeyed; a kind of funeral procession was formed; the
arrival of troops dispersed those who lingered behind; and Paris
was probably saved from an insurrection.
About ten o'clock in the morning, all being quiet, Law ventured
to go in his carriage to the Palais Royal. He was saluted
with cries and curses, as he passed along the streets; and he
reached the Palais Royal in a terrible fright. The Regent
amused himself with his fears, but retained him with him, and
sent off his carriage, which was assailed by the mob, pelted with
stones, and the glasses shivered. The news of this outrage was
of the decree for the commercial monopoly. The first president,
who had been absent for a short time, re-entered, and communicated
the tidings in a whimsical couplet:
Le carrosse de Law est reduite en carrelle!”
“Gentlemen, Gentlemen! good news!
The carriage of Law is shivered to atoms!”
The members sprang up with joy; “And Law!” exclaimed
they, “has he been torn to pieces?” The president was ignorant
of the result of the tumult; whereupon the debate was cut
short, the decree rejected, and the house adjourned; the members
hurrying to learn the particulars. Such was the levity with which
public affairs were treated, at that dissolute and disastrous period.
On the following day, there was an ordinance from the king,
prohibiting all popular assemblages; and troops were stationed at
various points, and in all public places. The regiment of guards
was ordered to hold itself in readiness; and the musketeers to
be at their hotels, with their horses ready saddled. A number of
small offices were opened, where people might cash small notes,
though with great delay and difficulty. An edict was also issued,
declaring that whoever should refuse to take bank-notes in the
course of trade, should forfeit double the amount!
The continued and vehement opposition of parliament to the
whole delusive system of finance, had been a constant source of
annoyance to the Regent; but this obstinate rejection of his last
grand expedient of a commercial monopoly, was not to be tolerated.
He determined to punish that intractable body. The Abbé
parliament altogether, being, as they observed, so far from useful,
that it was a constant impediment to the march of public affairs.
The Regent was half inclined to listen to their advice; but upon
calmer consideration, and the advice of friends, he adopted a more
moderate course. On the 20th of July, early in the morning, all
the doors of the parliament-house were taken possession of by the
troops. Others were sent to surround the house of the first president,
and others to the houses of the various members; who were
all at first in great alarm, until an order from the king was put
into their hands, to render themselves at Pontoise, in the course
of two days, to which place the parliament was thus suddenly and
arbitrarily transferred.
This despotic act, says Voltaire, would at any other time have
caused an insurrection; but one half of the Parisians were occupied
by their ruin, and the other half by their fancied riches, which
were soon to vanish. The president and members of parliament
acquiesced in the mandate without a murmur; they even went as
if on a party of pleasure, and made every preparation to lead a
joyous life in their exile. The musketeers, who held possession
of the vacated parliament-house, a gay corps of fashionable young
fellows, amused themselves with making songs and pasquinades, at
the expense of the exiled legislators; and at length, to pass away
time, formed themselves into a mock parliament; elected their
presidents, kings, ministers, and advocates; took their seats in
due form; arraigned a cat at their bar, in place of the Sieur Law,
and after giving it a “fair trial,” condemned it to be hanged. In
this manner, public affairs and public institutions were lightly
turned to jest.
As to the exiled parliament, it lived gaily and luxuriously at
Pontoise, at the public expense; for the Regent had furnished
funds, as usual, with a lavish hand. The first president had the
mansion of the Duke de Bouillon put at his disposal, all ready
furnished, with a vast and delightful garden on the borders of a
river. There he kept open house to all the members of parliament.
Several tables were spread every day, all furnished luxuriously
and splendidly; the most exquisite wines and liquors,
the choicest fruits and refreshments of all kinds, abounded. A
number of small chariots for one and two horses were always at
hand, for such ladies and old gentlemen as wished to take an airing
after dinner, and card and billiard tables for such as chose
to amuse themselves in that way until supper. The sister and
the daughter of the first president did the honors of his house,
and he himself presided there with an air of great case, hospitality,
and magnificence. It became a party of pleasure to drive
from Paris to Pontoise, which was six leagues distant, and partake
of the amusements and festivities of the place. Business was
openly slighted; nothing was thought of but amusement. The
Regent and his government were laughed at, and made the subjects
of continual pleasantries; while the enormous expenses incurred
by this idle and lavish course of life, more than doubled
the liberal sums provided. This was the way in which the parliament
resented their exile.
During all this time, the system was getting more and more
involved. The stock exchange had some time previously been removed
to the Place Vendome; but the tumult and noise becoming
intolerable to the residents of that polite quarter, and especially
to the chancellor, whose hotel was there, the Prince and
the extensive garden of their Hotel de Soissons as a rallying-place
for the worshippers of mammon. The offer was accepted.
A number of barracks were immediately erected in the
garden, as offices for the stock-brokers, and an order was obtained
from the Regent, under pretext of police regulations, that no
bargain should be valid, unless concluded in these barracks.
The rent of them immediately mounted to a hundred livres a
month for each, and the whole yielded these noble proprietors
an ignoble revenue of half a million of livres.
The mania for gain, however, was now at an end. A universal
panic succeeded. “Sauve qui peut!” was the watchword.
Every one was anxious to exchange falling paper for something
of intrinsic and permanent value. Since money was not to be
had, jewels, precious stones, plate, porcelain, trinkets of gold and
silver, all commanded any price, in paper. Land was bought at
fifty years' purchase, and he esteemed himself happy, who could
get it even at this price. Monopolies now became the rage
among the noble holders of paper. The Duke de la Force bought
up nearly all the tallow, grease, and soap; others the coffee and
spices; others hay and oats. Foreign exchanges were almost impracticable.
The debts of Dutch and English merchants were paid
in this fictitious money, all the coin of the realm having disappeared.
All the relations of debtor and creditor were confounded.
With one thousand crowns one might pay a debt of eighteen
thousand livres.
The Regent's mother, who once exulted in the affluence of
bank paper, now wrote in a very different tone: “I have often
wished,” said she, in her letters, “that these bank-notes were in
trouble than relief. Nobody in France has a penny. * * * My
son was once popular, but since the arrival of this cursed Law,
he is hated more and more. Not a week passes, without my receiving
letters filled with frightful threats, and speaking of him
as a tyrant. I have just received one, threatening him with poison.
When I showed it to him, he did nothing but laugh.”
In the mean time, Law was dismayed by the increasing
troubles, and terrified at the tempest he had raised. He was
not a man of real courage; and fearing for his personal safety,
from popular tumult, or the despair of ruined individuals, he
again took refuge in the palace of the Regent. The latter, as
usual, amused himself with his terrors, and turned every new disaster
into a jest; but he, too, began to think of his own security.
In pursuing the schemes of Law, he had no doubt calculated
to carry through his term of government with ease and splendor;
and to enrich himself, his connections, and his favorites; and had
hoped that the catastrophe of the system would not take place until
after the expiration of the regency.
He now saw his mistake; that it was impossible much longer
to prevent an explosion; and he determined at once to get Law
out of the way, and then to charge him with the whole tissue of
delusions of this paper alchemy. He accordingly took occasion
of the recall of parliament in December, 1720, to suggest to Law
the policy of his avoiding an encounter with that hostile and exasperated
body. Law needed no urging to the measure. His
only desire was to escape from Paris and its tempestuous populace.
Two days before the return of parliament, he took his sudden
and secret departure. He travelled in a chaise bearing the
servants, in the duke's livery. His first place of refuge was an
estate of the Regent's, about six leagues from Paris, from whence
he pushed forward to Bruxelles.
As soon as Law was fairly out of the way, the Duke of Orleans
summoned a council of the regency, and informed them that they
were assembled to deliberate on the state of the finances, and the
affairs of the India Company. Accordingly La Houssaye, Comptroller-General,
rendered a perfectly clear statement, by which it
appeared that there were bank-bills in circulation to the amount
of two milliards, seven hundred millions of livres, without any
evidence that this enormous sum had been emitted in virtue of
any ordinance from the general assembly of the India Company,
which alone had the right to authorize such emissions.
The council was astonished at this disclosure, and looked to the
Regent for explanation. Pushed to the extreme, the Regent
avowed that Law had emitted bills to the amount of twelve
hundred millions beyond what had been fixed by ordinances, and
in contradiction to express prohibitions; that the thing being done,
he, the Regent, had legalized or rather covered the transaction,
by decrees ordering such emissions, which decrees he had antedated.
A stormy scene ensued between the Regent and the Duke de
Bourbon, little to the credit of either, both having been deeply
implicated in the cabalistic operations of the system. In fact,
the several members of the council had been among the most venal
“beneficiaries” of the scheme, and had interests at stake which
they were anxious to secure. From all the circumstances of the
case, I am inclined to think that others were more to blame than
bank, had it been confined to its original limits, and left to the
control of its own internal regulations, might have gone on prosperously,
and been of great benefit to the nation. It was an institution
fitted for a free country; but unfortunately, it was subject
to the control of a despotic government, that could, at its
pleasure, alter the value of the specie within its vaults, and compel
the most extravagant expansions of its paper circulation.
The vital principle of a bank is security in the regularity of its
operations, and the immediate convertibility of its paper into
coin; and what confidence could be reposed in an institution, or
its paper promises, when the sovereign could at any moment
centuple those promises in the market, and seize upon all the
money in the bank? The compulsory measures used, likewise,
to force bank-notes into currency, against the judgment of the
public, was fatal to the system; for credit must be free and uncontrolled
as the common air. The Regent was the evil spirit of
the system, that forced Law on to an expansion of his paper currency
far beyond what he had ever dreamed of. He it was that
in a manner compelled the unlucky projector to devise all kinds
of collateral companies and monopolies, by which to raise funds
to meet the constantly and enormously increasing emissions of
shares and notes. Law was but like a poor conjuror in the hands
of a potent spirit that he has evoked, and that obliges him to go
on, desperately and ruinously, with his conjurations. He only
thought at the outset to raise the wind, but the Regent compelled
him to raise the whirlwind.
The investigation of the affairs of the company by the council,
resulted in nothing beneficial to the public. The princes and nobles
escaped unpunished, and retained the greater part of
their spoils. Many of the “suddenly rich,” who had risen from
obscurity to a giddy height of imaginary prosperity, and had indulged
in all kinds of vulgar and ridiculous excesses, awoke as
out of a dream, in their original poverty, now made more galling
and humiliating by their transient elevation.
The weight of the evil, however, fell on more valuable classes
of society; honest tradesmen and artisans, who had been seduced
away from the slow accumulations of industry, to the specious
chances of speculation. Thousands of meritorious families, also,
once opulent, had been reduced to indigence, by a too great confidence
in government. There was a general derangement in the finances,
that long exerted a baneful influence over the national prosperity;
but the most disastrous effects of the system were upon
the morals and manners of the nation. The faith of engagements,
the sanctity of promises in affairs of business, were at an
end. Every expedient to grasp present profit, or to evade present
difficulty, was tolerated. While such deplorable laxity of principle
was generated in the busy classes, the chivalry of France had
soiled their pennons; and honor and glory, so long the idols of
the Gallic nobility, had been tumbled to the earth, and trampled
in the dirt of the stock-market.
As to Law, the originator of the system, he appears eventually
to have profited but little by his schemes. “He was a
quack,” says Voltaire, “to whom the state was given to be cured,
but who poisoned it with his drugs, and who poisoned himself.”
The effects which he left behind in France, were sold at a low
price, and the proceeds dissipated. His landed estates were confiscated.
himself, his wife, and daughter, with decency. The chief relic
of his immense fortune was a great diamond, which he was often
obliged to pawn. He was in England in 1721, and was presented
to George the First. He returned, shortly afterward, to the
continent; shifting about from place to place, and died in Venice,
in 1729. His wife and daughter, accustomed to live with the prodigality
of princesses, could not conform to their altered fortunes,
but dissipated the scanty means left to them, and sank into abject
poverty. “I saw his wife,” says Voltaire, “at Bruxelles, as
much humiliated as she had been haughty and triumphant at
Paris.” An elder brother of Law remained in France, and was protected
by the Duchess of Bourbon. His descendants acquitted
themselves honorably, in various public employments; and one of
them was the Marquis Lauriston, sometime Lieutenant General
and Peer of France.
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