Not long after the flight of Law, that is to say, on Sunday, the 24th of
January, of the new year, 1721, a council was held at the Tuileries, at
four o'clock in the afternoon, principally for the purpose of examining
the state of the finances and of Law's Bank and India Company. It was,
in fact, high time to do something to diminish the overgrown disorder and
confusion everywhere reigning. For some time there had been complete
stagnation in all financial matters; the credit of the King had step by
step diminished, private fortune had become more and more uncertain. The
bag was at last empty, the cards were cast aside, the last trick was
played: The administration of the finances had passed into the hands of
La Houssaye, and his first act was to call the attention of the Regency
Council to the position of the bank and the company. We were prepared to
hear that things were in a very bad state, but we were scarcely prepared
to find that they so closely resembled utter ruin and bankruptcy.
I need not relate all that passed at this council; the substance of it is
enough. From the statement there of M. le Duc d'Orleans, it appeared
that Law had issued 1,200,000,000 livres of bank notes more than he ought
to have issued. The first 600,00,000 livres had not done much harm,
because they had been kept locked up in the bank; but after the 22nd of
May, another issue of 600,000,000 had taken place, and been circulated
among the public, without the knowledge of the Regent, without the
authorisation of any decree. "For this," said M. le Duc d'Orleans, "Law
deserved to be hanged, but under the circumstances of the case, I drew
him from his embarrassment, by an ante-dated decree, ordering the issue
of this quantity of notes."
Thereupon M. le Duc said to the Regent, "But, Monsieur, why, knowing
this, did you allow him to leave the realm?"
"It was you who furnished him with the means to do so," replied M. le Duc
d'Orleans.
"I never asked you to allow him to quit the country," rejoined M. le Duc.
"But," insisted the Regent, "it was you yourself who sent him his
passports."
"That's true," replied M. le Duc, "but it was you who gave them to me to
send to him; but I never asked you for them, or to let him leave the
realm. I know that I have the credit for it amongst the public, and I am
glad of this opportunity to explain here the facts of the case. I was
against the proposition for sending M. Law to the Bastille, or to any
other prison, because I believed that it was not to your interest to
sanction this, after having made use of him as you had; but I never asked
you to let him leave the realm, and I beg you, Monsieur, in presence of
the King, and before all these gentlemen, to say if I ever did."
"'Tis true," replied the Regent, "you never asked me; I allowed him to
go, because I thought his presence in France would injure public credit,
and the operations of the public."
"So far was I from asking you," said M. le Duc, "that if you had done me
the honour to demand my opinion, I should have advised you to take good
care not to let him depart from the country."
This strange conversation, which roused our astonishment to an incredible
point, and which was sustained with so much out-spoken freedom by M. le
Duc, demands a word or two of explanation.
M. le Duc was one of those who, without spending a farthing, had drawn
millions from Law's notes and shares. He had had large allotments of the
latter, and now that they had become utterly valueless, he had been
obliged to make the best of a bad bargain, by voluntarily giving them up,
in order to lighten the real responsibilities of the Company. This he
had done at the commencement of the Council, M. le Prince de Conti also.
But let me explain at greater length.
The 22nd of May, the day of the decree, was the period at which commenced
the final decay of the Company, and of the bank, and the extinction of
all confidence by the sad discovery that there was no longer any money
wherewith to pay the bank notes, they being so prodigiously in excess of
the coin. After this, each step had been but a stumble: each operation a
very feeble palliation. Days and weeks had been gained, obscurity had
been allowed to give more chance, solely from fear of disclosing the true
and terrible state of affairs, and the extent of the public ruin. Law
could not wash his hands of all this before the world; he could not avoid
passing for the inventor and instrument, and he would have run great risk
at the moment when all was unveiled. M. le Duc d'Orleans, who, to
satisfy his own prodigality, and the prodigious avidity of his friends,
had compelled Law to issue so many millions of livres of notes more than
he had any means of paying, and who had thus precipitated him into the
abyss, could not let him run the chance of perishing, still less to save
him, could he proclaim himself the real criminal. It was to extricate
himself from this embarrassment that he made Law leave the country, when
he saw that the monstrous deceit could no longer be hidden.
This manifestation, which so strongly interested the shareholders, and
the holders of bank notes, especially those who had received shares or
notes as favours due to their authority, and who could show no other
title to them, threw every one into despair. The most important holders,
such as the Princes of the Blood, and others, whose profits had been
immense, had by force or industry delayed this manifestation as long as
possible. As they knew the real state of affairs, they felt that the
moment all the world knew it also, their gains would cease, and their
paper become worthless, that paper from which they had drawn so much, and
which had not cost them a farthing! This is what induced M. le Duc
d'Orleans to hide from them the day of this manifestation, so as to avoid
being importuned by them; and by a surprise, to take from them the power
of preparing any opposition to the measures it was proposed to carry out.
M. le Duc, when he learned this, flew into a fury, and hence the strange
scene between him and M. le Duc d'Orleans, which scandalised and
terrified everybody in the Council.
M. le Duc d'Orleans, who, from taste, and afterwards from necessity,
lived upon schemes and trickery, thought he had done marvels in saddling
M. le Duc with the passport of Law. He wished to lay the blame of Law's
departure upon M. le Duc; but as I have shown, he was defeated by his own
weapons. He had to do with a man as sharp as himself. M. le Duc, who
knew he had nothing to fear, would not allow it to be supposed that he
had sanctioned the flight of the financier. That was why he pressed M.
le Duc d'Orleans so pitilessly, and forced him to admit that he had never
asked him to allow Law to leave the country.
The great and terrible fact brought out by this Council was, that Law,
without the knowledge or authority of the Regent, had issued and
disseminated among the public 600,000,000 livres of notes; and not only
without being authorised by any edict, but contrary to express
prohibition. But when the Regent announced this, who did he suppose
would credit it? Who could believe that Law would have had the hardihood
to issue notes at this rate without the sanction and approbation of his
master?
However, to leave once and for all these unpleasant matters, let me say
what was resolved upon by way of remedy to the embarrassments discovered
to exist. The junction of the India Company with the bank, which had
taken place during the previous February, had led to transactions which
made the former debtor to the latter to an immense amount. But the bank
being a governmental establishment, the King became thus the creditor of
the Company. It was decreed, in fact, that the Company should be
considered as debtor to the King. It was decided, however, that other
debtors should receive first attention. Many private people had invested
their money in the shares of the Company. It was not thought just that
by the debt of the Company to the King, these people should be ruined;
or, on the other hand, that those who had left the Company in good time,
who had converted their shares into notes, or who had bought them at a
low price in the market, should profit by the misfortune of the bona fide
shareholders. Accordingly, commissioners, it was decided, were to be
named, to liquidate all these papers and parchments, and annul those
which did not proceed from real purchases.
M. le Duc said, upon this, "There are at least eighty thousand families,
the whole of whose wealth consists of these effects; how are they to live
during this liquidation?"
La Houssaye replied, that so many commissioners could be named, that the
work would soon be done.
And so the Council ended.
But I must, perforce, retrace my steps at this point to many other
matters, which I have left far behind me in going on at once to the end
of this financial labyrinth. And first let me tell what happened to that
monstrous personage, Alberoni, how he fell from the lofty pinnacle of
dower on which he had placed himself, and lost all consideration and all
importance in the fall. The story is mightily curious and instructive.