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 c
hancellor 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 beehive. 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!”
Complete Fictional Works of Washington Irving (Illustrated) Page 144