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transactions whatever, and was tied down, by rules which admitted of no evasion, to the narrow provinces of circulation and of deposit.
Mr. Law did not hesitate to declare in public that a banker merited the punishment of death, if he issued notes without an exact equivalent in his vaults. The most favorable exposition was made at the first general court of the prospects of the institution, and so great was the confidence excited, not only by the warm expressions of the founder, but by his plausible statements, that in the course of a few months the notes passed current at one per cent beyond the value of specie itself. The taxes which formerly were transmitted at great expense from extremity to centre, were sent through post with little difficulty, in the shape of this newly stamped paper. Paris had before drained from the provinces, by means of the royal rovenue, the entire amount of their specie, so that they were reduced to the greatest distress by the annual requisitions of the collectors : under the new economy, notes were passed to and fro without exhausting the one, or throwing a diseased fulness into the other. The balance of exchange with England and Holland, which had formerly been so depressed that sometimes fifty per cent was paid for drafts by travellers going from Paris to London, changed so completely, that it came now to be four or five per cent in favor of the French capital. It would seem that a sudden thaw had broken up the icy chains which had till then bound up the commercial system of the empire, and in a moment its channels become gay with life, while on their bosoms floated to and fro, in sudden activity, vessels whose movements restored at once its lost circulation.
But the Duke of Orleans, who as regent held the reins of the kingdom, by no means relished the prosperity of an institution, whose failure he had confidently anticipated. It had been usual in former times, whenever a merchant became rich while the crown remained poor, for the public informers to discover that the merchant was a Jew, and that therefore his goods became a just confiscation to the Christian government under which he lived; it became congenial to the policy of the regent to renovate the exhausted vigor of his finances by a similar inoculation, and he at once declared his intention of transferring the legers of the bank into the trea. sury department of the state. By an act of council, bearing date 4th De. cember, 1718, the stockholders were informed that the king had taken Mr. Law's bank under his protection; that his majesty had reimbursed to the original proprietors their shares; and that he had assumed as a na. tional debt the outstanding notes, amounting in fact to fifty-five millions of livres. The same stipulations which had formerly been made, were renewed on the credit of the king, with the simple difference that then they were made in the name of merchants whose estates were involved in their good faith—now, in that of a government who had become so habituated to deception, that it was expected from them on all sides, and had been cal. culated on by themselves.
It was as a government measure that was opened that great scheme for colonizing the valley of the Mississippi, which a few years after made the French people bankrupt. Mr. Law was continued at the head of the institution, but he found that he was no longer a private banker, who was dogged in his motions by a band of cautious proprietors, but that he had become the unlimited master of an establishment of boundless resources, with the whole influence of the monarchy in his hands, and the theatre of both continents stretched out before him. As a first stroke, the bank
threw out two billions of livers in paper based on government credit, without even the hypothecation of a tax, or the establishment of a security ; and on this gigantic basis, the comptroller-general commenced his move. ments. He laid his hands upon the colonies, the revenues, the prerogatives of the crown, as a capital in gross upon which there was to be issued a currency which should be in essence irredeemable. A five livre note might be emitted on the basis of an obscure tax, or a distant fishery ; and should it be presented at the treasury for redemption, the holder would have been sent to the St. Lawrence for its realization. A commercial company was erected, who became the shadowy representation of the bank itself, or rather of the colossus who stood at its head, to whom was granted the country of Louisiana, then described by the most exaggerated limits, and embracing in its boundaries provinces which were painted as the most cultivated and the most fertile in creation. The map was stud. ded with gold mines, and the speculater who glanced over the scheme that was hung up in the royal treasury, could no longer hesitate to advance his capital on securities which were safer than the mint which they were to supply. 200,000 actions, or shares, rated at 500 livres each, were at once issued, and their value immediately increased in the most exorbitant degree. They were looked upon as the titles of unlimited wealth, and their price consequently was only limited by the amount of money in the market. The valley of the Mississippi was surveyed into lots of the most fantastic dimensions, so that the fancy of the capitalist was consulted as to the proposed condition of his estate, and the diagrams of Euclid were exhausted in furnishing patterns for the new investments. A square league in Louisiana, even in its most unknown regions, could rarely be bought at less than 30,000 livres; and sometimes the mineral productions of par. ticular neighborhoods became so highly extolled, that they rose to a price much beyond that of the most cultivated lands in France itself.
The Company of the Indies, as it was generally styled, finding itself at a loss for money to defray its current expenses, determined to buy up the mint, and the taxes by which it was fed. The consideration money was to be drawn from a fresh creation of stock, and the institution found itself therefore, by a simple vote of its proprietors, endowed with the entire di. rection of the commerce of the nation, of the collection and management of its revenues, and the territorial possessions of the crown. An annual dividend was promised, which was to amount to 200 livres annually, and the result was that the stoc rose in the market 40 per cent above par. The revenue of the company has been computed, even at this day, at no less than 131 millions of livres, which was made up from 48 millions inte. rest from the king ; 39 millious income upon the farms, the mints, and the taxes; and 44 millions profits from their trade. Possessed, therefore, of such stupendous resources; dealing with money as if it were the chaff which flew off in the process of its more substantial labors; ranking as its supporters the governments of the continent of Europe—it is no wonder that the French people, unpractised as they were in such deception, should have looked upon the Mississippi bank as the foundation on which the kingdom was to be built up in the splendor of universal supremacy. In November, 1719, the price of shares had arisen to 10,000 livres each, being more than sixty times the sum at which at first they were actually sold.
M. Chirac, who was at that time chief court physician, is said to have
been called upon when the excitement was in its climax, to visit a female patient of high degree, whose complaints were probably assumed in com. pliance with the demands of some particular object of etiquette. He seized her hand, and cried out suddenly with an oath which it is not necessary to repeat, “ It falls, it falls !” The invalid, naturally ascribing the physician's horror to the extraordinary position of her pulse, rang the bell with all her force to bring up the family confessor; and it was not until ghostly con. solation had been offered, that M. Chirac recovered himself sufficiently to state, that wrapped up as he had been in the evolutions of Mississippi stock, his mind was unable to withdraw itself from the contemplation of the invisible barometer that was thus placed before it. So great was the rage displayed for dealing in the new investment, that all Paris was converted into one vast gambling shop. There was no exchange in which the bankers could meet, and the rue Quinquempoix, on which the first banking-house was situated, became the spot in which its business was conducted. In the narrow walls of the first banking-room, were woven plots in which were involved the destiny of France, and the peace of Europe. After the doors had been closed, and the setting of the sun had announced the time in which the speculations of the day must cease, Mr. Law held in his private apartments above, the council which decided not only the measures of the bank, but the policy of the government. It was there that the Duke of Orleans, at that time regent, was accustomed to spend the first half of the night, in contriving with his chief adviser the schemes which were ne. cessary to preserve his tottering power. The comptroller-general, for such was the ministerial office to which Mr. Law had been raised, had assumed as his province, not only the regulating of the trade, but the graduation of the taxes of the kingdom. Where could there be a more momentous task, and one more essential to the prosperity of the French people, than that which was entered into by the ministers of the day, of restoring France to the tone which she had possessed before the usurpations of Louis XIV? If we look back a little further than perhaps we are allowed by the limits of this paper, we will find, that at the period in which the English kings had imposed the most arbitrary taxes at pleasure on their parliaments, the French parliaments had maintained their su. premacy with a firmness which reduced their kings to obtain their support by the concession of their most lofty demands. But while the English commoner had learned to refuse the calls of the crown when directed against the liberty of the subject, the French civilian had gradually yielded up privilege after privilege, till he contented himself with registering the decrees of the government of the day. Louis XIV. came to the throne with a possession more absolute than that which had been allotted to any European prince. The crown of England was restrained by the freedom of the subject, that of Spain by the usurpations of the church, but the king of France found himself able to involve a well-nursed treasury, and a broken-spirited people into whatever crusades it suited his ambition to lead them. The king absolved himself at once from the hereditary restraints which the established officers of the treasury placed on the disbursements of the crown. By an edict issued a short time after he came of age, he declared that he was responsible in person for his administration to God alone, and with so great a weight upon his neck, he was determined in no instance to transfer his duties from the shoulders of one whom God has selected for support, to others, who though they might share his labors,
could never lay claim to his office. Unfortunately, however, while he re. fused the aid of the regular officers of the treasury, he was obliged to call in a variety of subordinates to assist him in the more laborious parts of his duties, who by their avarice alone, would have been able in a few years to have disordered the finances of the state. Of the annual income, but a small sum entered into the king's coffers ; for every channel that it passed through, absorbed a large portion of it on its passages; so that some of the most profitable sources of revenue were sometimes lost in the marshes and ravines of court rapacity, before they reached the borders of the treasury in which they were to be emptied. For every fresh campaign in which the king was engaged a new tax would be raised, and for every new tax a fresh number of sinecures were created, who employed themselves in sucking away the greater part of its productions before it reached the troops whom it was to set in motion. It is said that when the herrings are expected to make their annual visits to the north of Scotland, the peasantry from hill and valley flock together, and lay listlessly on the shore, with their nets stretched out, and their eyes uplifted, till the expected visiters are felt in their thread prison-houses, and the draw is made that brings them in myriads to the shore. There were a series of idlers in Paris, who made it their business to slide themselves in every commission that was issued for the collection of the revenue; and as one noble army was struck down on the Rhine, or another melted away in the fevers of the Pyrenees, the court fishermen would hurry to the spot from whence the new impost should be extracted, or the spot where it was to be applied, and hang around it on its passage, till it was unfit for the object to which it was to be applied. Louis XIV. might have looked back, when stretched before his confessor on his dying bed, and recited a series of crimes more serious and more destructive than any which it had been the fortune of his princely predecessors to have achieved. He might have passed over those trivial topics of repentance with which he amused his ghostly counsellor-he might have overlooked the penance which would be necessary for his omission to have persecuted Huguenots more thirstily, or to have conformed more thoroughly to the outward decencies of etiquette-and when he made up his last account, have measured the degree of good which had been achieved by his long administration, and the degree of evil that was to be repented of. There were Spanish wars which had been unsuccessful, he might have said, and which had drawn from the south of France its food for the support of a foreign army. There were wars in Germany, also, which were unsucce
cessful, and which laid waste the provinces on which they bordered. From the first to the last there had been crusades against the powers of England and of Austria, which had finally exhausted the crusader himself, till he was obliged to retire nerve. less from the field. Louis XIV. was in a state of ignorance of the great debt he had created, it is true, because he refused to look into its accounts; but it was an ignorance which displayed the cowardice of his vanity, rather than the indolence of his disposition. He left the crown to his great grandson, mortgaged to an amount which it required a revolution to redeem.
We have gone, we fear, somewhat out of our path, in the consideration of the causes which led to the extraordinary embarrassments of the finances of France, on the opening of the Mississippi Scheme. It is necessary to look more narrowly than a superficial glance, at the profligacy of the VOL. V.NO. I.
time, to comprehend the entire prostration of the resources of the state. France was actually insolvent ; public creditors were starting up in all quarters; capitalists in other lands, who had lent money to the French king, were calling on their governments to support their claims ; the necessary movements of the administration were clogged from a want of money to carry them on; and the same cloud of ruin which hung over the commencement of the reign of Louis XVI., was hovering over the advent of his predecessor. But suddenly, the sky brightened. Money became again plenty—the taxes flowed without difficulty—the machinery of state was placed in rapid motion—trade acquired an unknown facilityadventures were fitted out to the remotest points of the globe—and the nation seemed recovering, with a quickness which threw all precedent into confusion, from the misery into which she had been cast by the childish ambition of the great monarch whom she just had buried. A banking institution had been established, which had assumed the whole province of commercial regulation in its hands—which farmed the taxes—which
gov. erned the colonies—and which finally reduced the value of money, and raised that of wages, throughout the land, to an extent which realized the wildest fables of the Troubadours.
If we look more closely into the management of the Mississippi Scheme at the time of its highest prosperity, we will see at once the character of the extraordinary advances which had been made. The bank had issued notes in bales; but they were notes which represented isles in the Indian sea, perhaps, or towns on the Mississippi, but certainly not the current coin of the realm. The specie of the bank was vanishing, as if melted away by some mysterious influence that diminished it without its guardians being able to discover to what quarter it was carried. Some of the largest proprietors of the company, who had prudence enough to preserve their equilibrium in the midst of the extraordinary success which waited on their speculations, had made a practice of converting their gains into gold and silver, and remitting them abroad for security. In the splendid era also which was about to dawn upon the country, men of wealth disdained the homely utensils with which they had once been contented, and converted the coins which came into their hands into the most gorgeous equipages. We have heard of the hero of a German legend, who was cast, as the consummation of all ambition, on the crest of a mountain which was composed of the greatest luxuries which the palate could suggest. He passed through a lengthened holiday of enjoyment, but in his self-gratification had not calculated on the probable duration of the feast, and one morning he was startled by an unusual motion, and found that he had eaten through the mountain, and was sliding rapidly down the dusty plain that flanked it. The proprietors of the Mississippi bank had miscalculated on the extent of their magical possessions. They had seen them raised up with a rapidity which had surpassed whatever their imagination could have suggested, but as soon as they assured themselves of the reality of the wealth that was spread before them, they entered upon it as if it could have no end. Strangers from all quarters rushed to Paris to divide the quarry; for, from the peak of the London Exchange, or the peak of St. Mark's, at Venice, it had become visible to the eyes of distant speculators, who flocked like birds of prey, to be present at its spoil. There were no less than three hundred and five thousand foreigners in the capital in November, 1719, who are said to have been drawn there by the prey in view. The films