Memoirs of Popular Delusions Vol 1 | Page 9

up her head; the
taxes were paid with greater regularity and less murmuring, and a
degree of confidence was established that could not fail, if it continued,
to become still more advantageous. In the course of a year Law's notes
rose to fifteen per cent. premium, while the billets d'etat, or notes
issued by the government, as security for the debts contracted by the
extravagant Louis XIV, were at a discount of no less than seventy-eight
and a half per cent. The comparison was too great in favour of Law not
to attract the attention of the whole kingdom, and his credit extended
itself day by day. Branches of his bank were almost simultaneously
established at Lyons, Rochelle, Tours, Amiens, and Orleans.
The Regent appears to have been utterly astonished at his success, and
gradually to have conceived the idea, that paper, which could so aid a
metallic currency, could entirely supersede it. Upon this fundamental

error he afterwards acted. In the mean time, Law commenced the
famous project which has handed his name down to posterity. He
proposed to the Regent, who could refuse him nothing, to establish a
company, that should have the exclusive privilege of trading to the
great river Mississippi and the province of Louisiana, on its western
bank. The country was supposed to abound in the precious metals, and
the company, supported by the profits of their exclusive commerce,
were to be the sole farmers of the taxes, and sole coiners of money.
Letters patent were issued, incorporating the company, in August 1717.
The capital was divided into two hundred thousand shares of five
hundred livres each, the whole of which might be paid in billets d'etat,
at their nominal value, although worth no more than 160 livres in the
market.
It was now that the frenzy of speculating began to seize upon the nation.
Law's bank had effected so much good, that any promises for the future
which he thought proper to make were readily believed. The Regent
every day conferred new privileges upon the fortunate projector. The
bank obtained the monopoly of the sale of tobacco; the sole right of
refinage of gold and silver, and was finally erected into the Royal Bank
of France. Amid the intoxication of success, both Law and the Regent
forgot the maxim so loudly proclaimed by the former, that a banker
deserved death who made issues of paper without the necessary funds
to provide for them. As soon as the bank, from a private, became a
public institution, the Regent caused a fabrication of notes to the
amount of one thousand millions of livres. This was the first departure
from sound principles, and one for which Law is not justly blameable.
While the affairs of the bank were under his control, the issues had
never exceeded sixty millions. Whether Law opposed the inordinate
increase is not known, but as it took place as soon as the bank was
made a royal establishment, it is but fair to lay the blame of the change
of system upon the Regent.
Law found that he lived under a despotic government, but he was not
yet aware of the pernicious influence which such a government could
exercise upon so delicate a framework as that of credit. He discovered
it afterwards to his cost, but in the mean time suffered himself to be

impelled by the Regent into courses which his own reason must have
disapproved. With a weakness most culpable, he lent his aid in
inundating the country with paper money, which, based upon no solid
foundation, was sure to fall, sooner or later. The extraordinary present
fortune dazzled his eyes, and prevented him from seeing the evil day
that would burst over his head, when once, from any cause or other, the
alarm was sounded. The Parliament were from the first jealous of his
influence as a foreigner, and had, besides, their misgivings as to the
safety of his projects. As his influence extended, their animosity
increased. D'Aguesseau, the Chancellor, was unceremoniously
dismissed by the Regent for his opposition to the vast increase of paper
money, and the constant depreciation of the gold and silver coin of the
realm. This only served to augment the enmity of the Parliament, and
when D'Argenson, a man devoted to the interests of the Regent, was
appointed to the vacant chancellorship, and made at the same time
minister of finance, they became more violent than ever. The first
measure of the new minister caused a further depreciation of the coin.
In order to extinguish the billets d'etat, it was ordered that persons
bringing to the mint four thousand livres in specie and one thousand
livres in billets d'etat, should receive back coin to the amount of five
thousand livres. D'Argenson plumed himself mightily upon thus
creating