that fifty millions in cash was sufficient to secure five hundred
millions of each issue, we shall understand how the state notes which
remained in market and the receipts already delivered would suffice to
monopolize the shares offered to the public. The creditors who had not
liquidated their claims--and the greater number had not--could not avail
themselves of the right to subscribe for shares, and were obliged to buy
them in the market at an exorbitant price. The shares subscribed for at
the Hôtel de Nevers for five thousand francs were re-sold in the Rue
Quincampoix for six, seven, and eight thousand francs. To the need of
having some of this investment was joined the hope of seeing the shares
rise in the market to an indefinite extent, and it is not surprising
that the eagerness to obtain them soon increased to frenzy. In order to
satisfy this demand a third subscription was opened on October 2d, three
days after the second. Similar in every respect to the first two, it
ought to bring in a capital of five hundred millions and complete the
fifteen hundred millions which the company needed to redeem the public
debt.
The concourse of people was as great as ever at the treasury, where the
receipts were given and at the Hôtel de Nevers, where the applications
for shares were received. The occasion of this eagerness is evident,
since that which was obtained at the Hôtel de Nevers for five thousand
francs was worth seven and eight thousand in the Rue Quincampoix. This
new issue at five thousand francs caused the rates in the Rue
Quincampoix to diminish: in an instant they were below five thousand
francs--even as low as four thousand--so blind were these movements,
and, so to speak, convulsive, during this period of feverish excitement.
There was no possible reason for selling in one place for four thousand
francs that for which they paid five thousand at another. But this
phenomenon lasted only a few hours; the rates rose again rapidly, and,
the subscription being taken up, the shares sold again for seven and
eight thousand francs. The crafty brokers had already had two
opportunities of making some profitable operations.
Having obtained the state notes at a very small price, they procured
shares at the most moderate rates, between five hundred and a thousand
francs; then they sold them for from seven to eight thousand francs; and
October 2d, the day of the decline, they repurchased them for four
thousand, to sell them again the next day for seven or eight thousand.
It will be seen how they must have made money with these opportunities.
It was no longer a few scattered groups which were seen in the Rue
Quincampoix, but a compact crowd engaged in speculating from morning
till night. The subscriptions had been divided into coupons,
transferable, like notes, to the bearer by an indorsement simply formal.
During the course of October the shares had already risen above ten
thousand francs, and it was impossible to know where they would stop.
The end of the month of December, 1719, was the term of this delusion of
three months. A certain number of stock-jobbers, better advised than
others, or more impatient to enter upon the enjoyment of their riches,
combined to dispose of their shares. They took advantage of the rage
which led so many to sell their estates--they purchased them, and thus
obtained the real for the imaginary. They established themselves in
splendid mansions, upon magnificent domains, and made a display of their
fortunes of thirty or forty millions. They possessed themselves of
precious stones and jewels, which were still eagerly offered, and
secured solid value in exchange for the semblance of it, which had
become so prized by the crowd of dupes. The first effect of this desire
to realize was a general increase in the price of everything. An
enormous mass of paper being put in the balance with the existing
quantity of merchandise and other property, the more paper there was
offered against purchasable objects the more rapid the increase became.
Cloth which heretofore brought fifteen to eighteen francs a yard rose to
one hundred twenty-five francs a yard. In a cook-shop a "Mississippian,"
bidding against a nobleman for a fowl, ran the price up to two hundred
francs.
From this instant the shares suffered their first decline, and a heavy
uneasiness began to spread abroad. The extent of the fall was not
measured by those whom it menaced; but people wondered, doubted, and
began to be alarmed. The shares declined to fifteen thousand francs.
However, the bank-notes were not yet distrusted. The bank was, in fact,
entirely distinct from the company, and their fate, up to this time,
appeared in no way dependent the one on the other. The notes had not
undergone any fictitious and extraordinary advance. Large amounts had
been issued, certainly, but for gold and silver, and upon the deposit of
shares. The portion which had been issued upon the deposit of shares
partook of the danger of the shares themselves; but no one thought of
that, and the bank-notes still possessed the entire confidence of the
public; only they no longer had the same advantage over specie since the
latter had been so much sought by the "realizers." The notes already
began to be presented at the bank for coin, and the vast reserve which
it had possessed began to diminish perceptibly.
Law did then what governments do so often, and always with ill-success:
he resorted to forced measures. He declared, in the first place, by
decree, that the bank-notes should always be worth 5 per cent. more than
coin.
In consideration of this superiority in value the prohibition which
forbade the deposits of gold and silver for bills, at Paris, was taken
off, so that notes could be procured at the bank for coin. This
permission was simply ridiculous, for no one now wished to exchange
specie for paper, even at par. But this was not all; the decree declared
that thereafter silver should not be used in payments of over one
hundred francs nor gold in those over three hundred francs. This was
forcing the circulation of notes in large payments, and that of specie
in small, and was designed to accomplish by violence what could only be
expected from the natural success of the bank.
These measures did not bring any more gold and silver to the bank. The
necessity of using bank-notes in payment of over three hundred francs
gave them a certain forced employment, but did not procure them
confidence. Notes were used for large payments, but coin was amassed
secretly as a value more real and more assured. The creditors of the
state ceased to carry their receipts to the Rue Quincampoix, because
they already distrusted the shares; they could not decide to buy real
estate, because the price had been quadrupled; they suffered the most
painful anxiety, and in their turn embarrassed the holders of shares
who needed the receipts to pay their instalments of one-tenth. The
catastrophe approached, and nothing could avert it, unless some magic
wand could give the company an income of four or five hundred millions a
year, which was now only seventy or eighty millions.
Law, adding measures to measures, at last prohibited the circulation of
gold, because this metal was, by its convenience, a rival of bank-notes
infinitely more dangerous than silver. He then announced an approaching
reduction in the value of coin, which he had raised by a decree in
February, only to reduce it again in a short time. The mark, in silver,
raised from sixty to eighty francs, was reduced to seventy on April 1st,
and sixty-five on May 1st. But this measure was utterly insufficient to
bring it to the bank.
The situation grew worse every day; the issue of notes to pay for the
shares presented at the bank had risen to two billions six hundred
ninety-six millions; their depreciation increased; and creditors of
every description, being paid in paper which was at a discount of 60 per
cent., complained bitterly of the theft authorized by law.
In this juncture there remained but one step to be taken. As the
necessary sacrifice had not been made in the first place, and the shares
abandoned to their fate in order to protect the notes, both must now be
sacrificed, shares and notes together, in order to finish this wicked
fiction. The falsehood of this nominal value, which obliged men to
receive at par what was depreciated 30 or 40 per cent., could not be
prolonged. The immediate reduction of the nominal value of the shares
and bank-notes was the only resource. Sacrifices cannot be too hastily
made when they are inevitable.
M. d'Argenson, although dismissed from the treasury, still remained
keeper of the seals; he had risen in the esteem of the Regent as Law had
declined, and he advised the reduction of the nominal value of the
shares and notes as an urgent necessity. Law, who saw in this reduction
an avowal of the fiction in the legal values, and a blow which must
hasten the fall of the "System," opposed it with his whole strength.
Nevertheless, M. d'Argenson prevailed. On May 21, 1720, a decree, which
remains famous in the history of the "System," advertised the
progressive reduction in the value of shares and notes. This reduction
was to begin on the very day of the publication of the decree, and to
continue from month to month until December 1st. At this last term the
shares were to be estimated at five thousand francs, and a bank-note of
ten thousand francs at five thousand; one of a thousand at five hundred,
etc. The notes were thus reduced 50 per cent., and the shares only
four-ninths per cent. Law, although opposed to the decree, consented to
promulgate it.
Scarcely was it published when a fearful clamor was raised on all sides.
The reduction was called a bankruptcy; the government was reproached
with being the first to throw discredit upon the values which it had
created, with having robbed its own creditors, a number of whom had just
been paid in bank-notes, even as late as the preceding day--in a word,
with assailing the fortunes of all the citizens. The crowd wished to
sack Law's hotel and to tear him in pieces. Nothing that could have
happened would have produced a greater clamor; but in times like those
it was not only necessary not to fear these clamors: it was even a duty
to defy them.
The reply to the complaints would have soon been evident to the
intelligence of everybody. Without doubt the creditors of the state, and
some private individuals, who had been paid in bank-notes, were half
ruined by the reduction, but this was not the fault of the decree of May
21st--the real reduction was long before this; the decree only stated a
loss already experienced, and the notes were worth still less than the
decree declared. Because a number of creditors had been ruined by the
falsity of nominal values, was it a reason to continue the fiction that
it might extend the ruin? On the contrary, it was necessary to put an
end to it, to save others from becoming victims. The official
declaration of the fact, although it was known before, must produce a
shock and hasten the discredit, but it was of little importance that it
was hastened, since it was inevitable.
The public thought Law the author of this measure, advised exclusively
by M. d'Argenson, and he became the sole object of hatred. The
Parliament, making common cause with the public, thought it a good
opportunity to take up arms. It did not perceive, in its blind hatred of
the "System," that it was going to render a service to its author, and
that to declare itself against the reduction of the bank-notes was to
maintain that the values created by Law had a solid foundation. It
assembled on May 27th to demand a revocation of the decree of the 21st.
At the very moment when it was deliberating, the Regent sent one of his
officers to prohibit all discussion, announcing the revocation of the
decree.
The Regent had the weakness to yield to the public clamor. Had the
decree been bad, its revocation would have been worse. To declare that
the shares and notes were still worth what they purported to be availed
nothing, for no one believed it, and their credit was not restored by
it. A legal falsehood was reaffirmed, and, without rendering any service
to those who were already ruined, the ruin of those who were obliged to
receive the notes at their nominal value was insured. The decree of May
21st, wise if it had been sustained, became disastrous as soon as it was
revoked. Its only effect was to hasten the general discredit, without
the essential advantage of reëstablishing a real, legal value.
We have just said that the bank was not obliged to pay notes of over one
hundred francs. It paid them slowly, and employed all imaginable
artifices to avoid the payment of them. Nevertheless, its coffers were
almost exhausted, and it was necessary to authorize it to confine its
disbursements to the payment of notes of ten francs only. The people
rushed to the bank in crowds to realize their notes of ten francs,
fearing that these would soon share the fate of those of one hundred.
The pressure was so great that three persons were suffocated. The
indignant mob, ready for any excess, already menaced the house of Law.
He fled to the Palais Royal to seek an asylum near the Regent. The mob
followed him, carrying the bodies of the three who had been suffocated.
The carriage which had just conveyed him was broken to pieces, and it
was feared that even the residence of the Regent would not be respected.
The gates of the court of the Palais Royal had been closed; the Duke of
Orléans, with great presence of mind, ordered them to be opened. The
crowd rushed into the court and suddenly stopped upon the steps of the
palace. Leblanc, the chief of police, advanced to those who bore the
corpses, and said, "My friends, go place these bodies in the Morgue,
and then return to demand your payment." These words calmed the tumult;
the bodies were carried away and the sedition was quelled.
Severities against the rich "Mississippians" were commenced in this same
month of October. For a long time it had been suspected that the
government, following an ancient usage, would deprive them, by means of
_visas_ and _chambres-ardentes_, of what they had acquired by
stock-jobbing. A list was made of those known to have speculated in
shares. A special commission arbitrarily placed on this list the names
of those whom public opinion designated as having enriched themselves by
speculation in paper. They were ordered to deposit a certain number of
shares at the offices of the company, and to purchase the required
number if they had sold their own. The "realizers" were thus brought
back by force to the company which they had deserted. Eight days were
given to speculators of good faith to make, voluntarily, the prescribed
deposit. To prevent flight from the country, it was prohibited, under
pain of death, to travel without a passport.
These measures increased still more the decline of the shares. All those
whose names were not upon the list of rich speculators, and who could
not tell what became of the shares not yet deposited, hastened to
dispose of all they retained.
The "System" wholly disappeared in November, 1720, one year after its
greatest credit. All the notes were converted into annuities or
preferred shares, and all the shares were deposited with the company.
Then a general visa was ordered, consisting of an examination of the
whole mass of shares, with the purpose of annulling the greater portion
of those which belonged to the enriched stock-jobbers.
Law, foreseeing the renewed rage which the visa would excite, determined
to leave France. The hatred against him had been so violent since the
scene of July 17th that he had not dared to quit the Palais Royal. The
following fact will give an idea of the fury excited against him: A
hackman, having a quarrel with the coachman of a private carriage, cried
out, "There is Law's carriage!" The crowd rushed upon the carriage, and
nearly tore in pieces the coachman and his master before it could be
undeceived.
Law demanded passports of the Duke of Orléans, who granted them
immediately. The Duke of Bourbon, made rich by the "System," felt under
obligations to Law, and offered money and the carriage of Madame de
Prie, his mistress. Law refused the money and accepted the carriage. He
repaired to Brussels, taking with him only eight hundred louis. Scarcely
was he gone when his property, consisting of lands and shares, was
sequestrated.
FOOTNOTES:
[27] A company headed by Anthony Crozat. It was chartered in 1712, and
formed a commercial monopoly in Louisiana.--ED.
PRINCE EUGENE VANQUISHES THE TURKS
SIEGE AND BATTLE OF BELGRAD
A.D. 1717
PRINCE EUGENE OF SAVOY
This struggle marked the disastrous end of a determined effort of
the Ottoman empire to recover lost possessions. It also resulted in
giving all Hungary, with Belgrad and a part of Servia, permanently
to Austria. After their last great invasion of Austrian territory
and their crushing defeat by Sobieski and the Imperialists (1683),
the Turks suffered many losses of territory at the hands of various
European powers. In 1696 Peter the Great took from them Azov, an
important entrance to the Black Sea. By the treaty of the Pruth
(1711) this, with other Russian possessions, was again ceded to the
Turks.
The temporary success led them to seek further recoveries. Their aim
was chiefly directed against Austria and Venice, which had
aggrandized themselves at the expense of the Moslem power. Turkish
victories caused the Venetians to call in the aid of Austria. The
Austrian intervention not only saved Venice, but once more checked
the Turkish arms.
The Emperor Charles VI appointed as leader of the Austrian forces
Prince Eugene of Savoy, already distinguished through a long series
of wars as one of the greatest soldiers of his time, the companion
of Marlborough. In 1716 Eugene defeated the grand vizier at
Temesvar, and in the following year took Belgrad and destroyed the
Turkish army, as told in his own racy and cavalier style.
From all sides men flocked to serve under me. There were enough to form
a squadron of princes and volunteers. Among the former a Prince of
Hesse, two of Bavaria, a Bevern, a Culenbach, one of Wuertemberg, two of
Ligne, one of Lichtenstein, of Anhalt-Dessau, the Count of Charolai, the
Princes of Dombes, of Marsillac, of Pons, etc.
The Emperor made me a present of a magnificent diamond crucifix, and
strongly assured me that all my victories came, and would come, from
God; this was getting rid of gratitude toward me; and I set off for
Futack, where I assembled my army toward the end of May, 1717.
It was necessary to possess myself of Belgrad, which for three centuries
had been so many times taken and retaken. Luckily, I did not find there
the cordelier, John de Capistran, who, with the crucifix in his hand,
and in the hottest part of the fire during the whole day, defended the
place so well: and Hunyady, who commanded there, against Mahomet II in
1456. Hunyady died of his wounds. The Emperor lost Belgrad; Mahomet lost
an eye, and the cordelier was canonized.
Unfortunately the Grand Seignior had but too well replaced the
wrong-headed grand vizier, who had been killed. It was the Pacha of
Belgrad, who supplied the vacancy, called Hastchi Ali, who made the most
judicious arrangements for the preservation of the place, and caused me
a great deal of embarrassment. On June 10th I passed the Danube: my
volunteer princes threw themselves into boats to arrive among the first,
and to charge the spahis with some squadrons of Mercy, which had already
passed below Panczova, to protect the disembarkation of some, and the
bridge constructed for the others, with eighty-four boats. On the 19th I
went, with a large escort, to reconnoitre the place where I wished to
pitch my camp. Twelve hundred spahis rushed upon us with unequalled
fury, and shouted "_Allah! Allah!_" I know not why one of their officers
broke through a squadron which was in front, to find me at the head of
the second, where I placed myself from prudential motives, having many
orders to give. He missed me, and I was going to obtain satisfaction
with my pistol when a dragoon at my side knocked him under his horse. On
the same day we had a naval combat, which lasted two hours; and our
saics having the advantage I remained master of the operations on the
Danube. On the 20th I continued working on the lines of contravallation,
under a dreadful fire from the place. Toward the end of June I advanced
my camp so near Belgrad that the bullets were constantly flying over my
head. A storm destroyed all my bridges: and, but for the courage of a
Hessian officer, in a redoubt, I do not know how I should have been able
to reëstablish the one upon the Save.
Wishing to take the place on the side next the water, I caused a fort at
the mouth of the Donawitz to be attacked by Mercy, who fell from his
horse, in an apoplectic fit. They carried him away, thinking him dead.
He was afterward successfully cured; but, being informed of his
accident I went to replace him, and the fort was taken. The Prince of
Dombes narrowly escaped being killed at my side by a bullet which made
my horse rear. Marcilly was killed in bravely defending a post which I
had charged him to intrench. He demanded succor from Rudolph Heister,
who refused him, and who was deservedly killed as a punishment for his
cowardice, by a cannon-ball which reached him behind his
chevaux-de-frise. I arrived, accidentally at first, with a large escort;
I sent for a large detachment; I halted, and completely beat the
janizaries, leaving, indeed, five hundred men killed upon the field,
Taxis, Visconti, Suger, etc. The Pacha of Roumelia, the best officer of
the Mussulmans, lost his life also.
On July 22d my batteries were finished. I bombarded, burned, and
destroyed the place so much that they would have capitulated if they had
not heard that the grand vizier had arrived at Missa, on the 30th, with
two hundred fifty thousand men.
On August 1st we saw them on the heights which overlooked my camp,
extending in a semicircle from Krotzka as far as Dedina. The Mussulmans
formed the most beautiful amphitheatre imaginable, very agreeable to
look at, excellent for a painter, but hateful to a general. Enclosed
between this army and a fortress which had thirty thousand men in
garrison, the Danube on the right, and the Save on the left, my
resolution was formed. I intended to quit my lines and attack them,
notwithstanding their advantage of ground: but the fever, which had
already raged in my army, did not spare me. Behold me seriously ill, and
in my bed, instead of being at the head of my troops, whom I wished to
lead the road to honor.
I can easily conceive that this caused a little uneasiness at the court,
in the city, and even in my army. It required boldness and good-fortune
to extricate one's self from it. The general who might have succeeded me
would, and indeed, almost must, have thought that he should be lost if
he retreated, and be beaten if he did not retreat. Every day made our
situation worse. The numerous artillery of the Turks had arrived on the
heights of which I have spoken. We were so bombarded with it, as well as
with that from the garrison, that I knew not where to put my tent, for,
in going in and out, many of my domestics had been killed. In the small
skirmishes which we often had with the spahis, my young volunteers did
not fail to be among them, discharging their pistols, though
cannon-balls intermingled also. And one day, D'Esrade, the governor of
the Prince of Dombes, had his leg shot off by his side, and one of his
pages was killed. All our princes, whom I have enumerated above,
distinguished themselves, and loved me like their father.