"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,
everybody trusts everybody; a bad debt is a thing unheard of; the 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 madding 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 not double or treble the investment. No
business is worth following 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; when he beholds the streets glittering with new equipages,
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.
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 miles from Edinburgh. Goldsmiths, in those days, acted
occasionally 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 the 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 the nation with debt.
The old monarch clung to his selfish 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 splendid 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-General of Police, ordering him to quit
Paris, alleging that he was "_rather too skillful 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 Amadeus, 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.
Louis 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, "were invited to be
present at his birth, and each one conferring a 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 a 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 Abbe Dubois, one of
the subtlest and basest spirits that ever intrigued its way into eminent
place and power. The abbe 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; who, let
loose from the restraint under which they had been 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, restamping
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. The following is stated as the theory by
which he recommended 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 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 recoinage, it becomes momentarily the depositary 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
increased and fictitious value to such productions. Law 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 Abbe 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 & 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 of the bank were always to retain the same standard of
value, and 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, everybody 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 bank
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 further 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 had dreaded an
augmentation of it. In consequence of the successful 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 further expanded. But Law had yet the grandest
part of his scheme to develop. 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 co-operate 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 all England with the frenzy of
speculation. In like manner 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
travelers 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 of colonization,
and was eloquent and prophetic in picturing 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 finances.
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 leveled 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,
and to collect evidence against him; and it was resolved in parliament
that, should the testimony collected justify their suspicions, they would
have him seized and brought before them; would give him a brief trial, and,
if convicted, would hang him in the courtyard 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 nation had been so accustomed to attach an idea
of everything 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, even if productive; but the imaginations of
speculators are ever in the advance, and their conjectures are immediately
converted into facts. Lying reports now flew from mouth to month, 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 center 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 engulf 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 to the humblest
purse. Society was thus stirred up to its 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 gam. 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 rose 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. Bank, 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 Abbe Dubois entered into the mysteries of stockjobbing with all the
zeal of an apostle, and enriched himself by the spoils of the credulous;
and he continually drew large sums from Law, 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 Croesus 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 of quality, seeing a well-dressed woman covered with
diamonds, 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 his 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 favor of a word, a nod, or
smile, as if a mere glance from him 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 specie, saying, with a sarcastic smile, that he
preferred paying in money as its weight rendered it a mere encumbrance. 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 payment 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. Sound and able financiers
consulted together, and agreed to make 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 wagons 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 portecochère.
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 his way. Law was a Protestant, and
the regent, unscrupulous as he was himself, did not dare publicly to
outrage the severe edicts which Louis XIV., in his bigot days, 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 Abbe 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 Abbe 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 Abbe 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 now being 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 or astonished at his sudden elevation. On the contrary,
being 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 installment 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 further declared,
in the king's name, that he would never draw on the bank until the value of
his drafts had first been lodged in it 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 banknotes. 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 further 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 unpaired, 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 embassador, speaking of the system of
espionage encouraged by this edict, observed that it was impossible to
doubt that Law was a thorough Catholic, since 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 pretense 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 anything 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 to holders of the stock, and the
impossibility of the king's ever 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 pretense 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 bin from his employ as comptroller-general, and
stationed a Swiss guard 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 further 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 burned before the Hotel de Ville. The public, however, had lost
confidence in everything and everybody, and suspected fraud and collusion
in those who pretended to burn the bills.
A general confusion now took place hi the financial world. Families who had
lived in opulence found themselves suddenly reduced to indigence. Schemers
who had been reveling in the delusion of princely fortune 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 20th of June a royal edict commanded
them to bring back their 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 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 that was
offered up to him! "This person," writes the regent's mother, "who was
formerly worshiped 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 price; paper money was
refused at all the shops; the people 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 streets 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 courtyard 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 rum 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 tune. 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 communicated
to parliament in the midst of a furious discussion 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:
"Messieurs, Messieurs! bonne nouvelle!
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 Abbe Dubois and Law suggested a simple mode; it was to suppress
the 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 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 gayly 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, already 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 liqueurs, 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 the house, and he
himself presided there with an air of great ease, 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 Princess Carignan, both deep gamblers in Mississippi stock,
offered the extensive garden of the Hotel de Soissons as a rallying-place
for the worshipers 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 the depths of the infernal regions.
They have given my son more 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 meantime, 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 traveled
in a chaise bearing the arms of the regent, and was escorted by a kind of
safeguard of 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 Law,
for the disastrous effects of his financial projects. His 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 subjected 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 conjurer
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 who had enriched
themselves by all kinds of juggles and extortions, 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 safe
pursuits 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. He carried away with him barely enough to maintain 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 in Paris." An elder brother of Law remained in
France, and was protected by the Duchess of Bourbon. His descendants have
acquitted themselves honorably, in various public employments; and one of
them is the Marquis Lauriston, some time lieutenant-general and peer of
France.
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