The Firm of Nucingen

“The thing may look queer on a small scale,” said Blondet, “but on a large we call it finance. There are high-handed proceedings criminal between man and man that amount to nothing when spread out over any number of men, much as a drop of prussic acid becomes harmless in a pail of water. You take a man’s life, you are guillotined. But if, for any political conviction whatsoever, you take five hundred lives, political crimes are respected. You take five thousand francs out of my desk; to the hulks you go. But with a sop cleverly pushed into the jaws of a thousand speculators, you can cram the stock of any bankrupt republic or monarchy down their throats; even if the loan has been floated, as Couture says, to pay the interest on that very same national debt. Nobody can complain. These are the real principles of the present Golden Age.”

“When the stage machinery is so huge,” continued Bixiou, “a good many puppets are required. In the first place, Nucingen had purposely and with his eyes open invested his five millions in an American investment, foreseeing that the profits would not come in until it was too late. The firm of Nucingen deliberately emptied its coffers. Any liquidation ought to be brought about naturally. In deposits belonging to private individuals and other investments, the firm possessed about six millions of capital altogether. Among those private individuals was the Baroness d’Aldrigger with her three hundred thousand francs, Beaudenord with four hundred thousand, d’Aiglemont with a million, Matifat with three hundred thousand, Charles Grandet (who married Mlle. d’Aubrion) with half a million, and so forth, and so forth.

“Now, if Nucingen had himself brought out a joint-stock company, with the shares of which he proposed to indemnify his creditors after more or less ingenious manoeuvring, he might perhaps have been suspected. He set about it more cunningly than that. He made some one else put up the machinery that was to play the part of the Mississippi scheme in Law’s system. Nucingen can make the longest-headed men work out schemes for him without confiding a word to them; it is his peculiar talent. Nucingen just let fall a hint to du Tillet of the pyramidal, triumphant notion of bringing out a joint-stock enterprise with capital sufficient to pay very high dividends for a time. Tried for the first time, in days when noodles with capital were plentiful, the plan was pretty sure to end in a run upon the shares, and consequently in a profit for the banker that issued them. You must remember that this happened in 1826.

“Du Tillet, struck through he was by an idea both pregnant and ingenious, naturally bethought himself that if the enterprise failed, the blame must fall upon somebody. For which reason, it occurred to him to put forward a figurehead director in charge of his commercial machinery. At this day you know the secret of the firm of Claparon and Company, founded by du Tillet, one of the finest inventions – ”

“Yes,” said Blondet, “the responsible editor in business matters, the instigator, and scapegoat; but we know better than that nowadays. We put, ‘Apply at the offices of the Company, such and such a number, such and such a street,’ where the public find a staff of clerks in green caps, about as pleasing to behold as broker’s men.”

“Nucingen,” pursued Bixiou, “had supported the firm of Charles Claparon and Company with all his credit. There were markets in which you might safely put a million francs’ worth of Claparon’s paper. So du Tillet proposed to bring his firm of Claparon to the fore. So said, so done. In 1825 the shareholder was still an unsophisticated being. There was no such thing as cash lying at call. Managing directors did not pledge themselves not to put their own shares upon the market; they kept no deposit with the Bank of France; they guaranteed nothing. They did not even condescend to explain to shareholders the exact limits of their liabilities when they informed them that the directors in their goodness, refrained from asking any more than a thousand, or five hundred, or even two hundred and fifty francs. It was not given out that the experiment in aere publico was not meant to last for more than seven, five, or even three years, so that shareholders would not have long to wait for the catastrophe. It was in the childhood of the art. Promoters did not even publish the gigantic prospectuses with which they stimulate the imagination, and at the same time make demands for money of all and sundry.”

“That only comes when nobody wishes to part with money,” said Couture.

“In short, there was no competition in investments,” continued Bixiou. “Paper-mache manufacturers, cotton printers, zinc-rollers, theatres, and newspapers as yet did not hurl themselves like hunting dogs upon their quarry – the expiring shareholder. ‘Nice things in shares,’ as Couture says, put thus artlessly before the public, and backed up by the opinions of experts (‘the princes of science’), were negotiated shamefacedly in the silence and shadow of the Bourse. Lynx-eyed speculators used to execute (financially speaking) the air Calumny out of The Barber of Seville. They went about piano, piano, making known the merits of the concern through the medium of stock-exchange gossip. They could only exploit the victim in his own house, on the Bourse, or in company; so they reached him by means of the skilfully created rumor which grew till it reached a tutti of a quotation in four figures – ”

“And as we can say anything among ourselves,” said Couture, “I will go back to the last subject.”

“Vous etes orfevre, Monsieur Josse!” cried Finot.

“Finot will always be classic, constitutional, and pedantic,” commented Blondet.

“Yes,” rejoined Couture, on whose account Cerizet had just been condemned on a criminal charge. “I maintain that the new way is infinitely less fraudulent, less ruinous, more straightforward than the old. Publicity means time for reflection and inquiry. If here and there a shareholder is taken in, he has himself to blame, nobody sells him a pig in a poke. The manufacturing industry – ”

“Ah!” exclaimed Bixiou, “here comes industry – ”

“ – is a gainer by it,” continued Couture, taking no notice of the interruption. “Every government that meddles with commerce and cannot leave it free, sets about an expensive piece of folly; State interference ends in a maximum or a monopoly. To my thinking, few things can be more in conformity with the principles of free trade than joint-stock companies. State interference means that you try to regulate the relations of principal and interest, which is absurd. In business, generally speaking, the profits are in proportion to the risks. What does it matter to the State how money is set circulating, provided that it is always in circulation? What does it matter who is rich or who is poor, provided that there is a constant quantity of rich people to be taxed? Joint-stock companies, limited liability companies, every sort of enterprise that pays a dividend, has been carried on for twenty years in England, commercially the first country in the world. Nothing passes unchallenged there; the Houses of Parliament hatch some twelve hundred laws every session, yet no member of Parliament has ever yet raised an objection to the system – ”

“A cure for plethora of the strong box. Purely vegetable remedy,” put in Bixiou, “les carottes” (gambling speculation).

“Look here!” cried Couture, firing up at this. “You have ten thousand francs. You invest it in ten shares of a thousand francs each in ten different enterprises. You are swindled nine times out of the ten – as a matter of fact you are not, the public is a match for anybody, but say that you are swindled, and only one affair turns out well (by accident! – oh, granted! – it was not done on purpose – there, chaff away!). Very well, the punter that has the sense to divide up his stakes in this way hits on a splendid investment, like those who took shares in the Wortschin mines. Gentlemen, let us admit among ourselves that those who call out are hypocrites, desperately vexed because they have no good ideas of their own, and neither power to advertise nor skill to exploit a business. You will not have long to wait for proof. In a very short time you will see the aristocracy, the court, and public men descend into speculation in serried columns; you will see that their claws are longer, their morality more crooked than ours, while they have not our good points. What a head a man must have if he has to found a business in times when the shareholder is as covetous and keen as the inventor! What a great magnetizer must he be that can create a Claparon and hit upon expedients never tried before! Do you know the moral of it all? Our age is no better than we are; we live in an era of greed; no one troubles himself about the intrinsic value of a thing if he can only make a profit on it by selling it to somebody else; so he passes it on to his neighbor. The shareholder that thinks he sees a chance of making money is just as covetous as the founder that offers him the opportunity of making it.”

“Isn’t he fine, our Couture? Isn’t he fine?” exclaimed Bixiou, turning to Blondet. “He will ask us next to erect statues to him as a benefactor of the species.”

“It would lead people to conclude that the fool’s money is the wise man’s patrimony by divine right,” said Blondet.

“Gentlemen,” cried Couture, “let us have our laugh out here to make up for all the times when we must listen gravely to solemn nonsense justifying laws passed on the spur of the moment.”

“He is right,” said Blondet. “What times we live in, gentlemen! When the fire of intelligence appears among us, it is promptly quenched by haphazard legislation. Almost all our lawgivers come up from little parishes where they studied human nature through the medium of the newspapers; forthwith they shut down the safety-valve, and when the machinery blows up there is weeping and gnashing of teeth! We do nothing nowadays but pass penal laws and levy taxes. Will you have the sum of it all! – There is no religion left in the State!”

“Oh, bravo, Blondet!” cried Bixiou, “thou hast set thy finger on the weak spot. Meddlesome taxation has lost us more victories here in France than the vexatious chances of war. I once spent seven years in the hulks of a government department, chained with bourgeois to my bench. There was a clerk in the office, a man with a head on his shoulders; he had set his mind upon making a sweeping reform of the whole fiscal system – ah, well, we took the conceit out of him nicely. France might have been too prosperous, you know she might have amused herself by conquering Europe again; we acted in the interests of the peace of nations. I slew Rabourdin with a caricature.”1

“By religion I do not mean cant; I use the word in its wide political sense,” rejoined Blondet.

“Explain your meaning,” said Finot.

“Here it is,” returned Blondet. “There has been a good deal said about affairs at Lyons; about the Republic cannonaded in the streets; well, there was not a word of truth in it all. The Republic took up the riots, just as an insurgent snatches up a rifle. The truth is queer and profound, I can tell you. The Lyons trade is a soulless trade. They will not weave a yard of silk unless they have the order and are sure of payment. If orders fall off; the workmen may starve; they can scarcely earn a living, convicts are better off. After the Revolution of July, the distress reached such a pitch that the Lyons weavers – the canuts, as they call them – hoisted the flag, ‘Bread or Death!’ a proclamation of a kind which compels the attention of a government. It was really brought about by the cost of living at Lyons; Lyons must build theatres and become a metropolis, forsooth, and the octroi duties accordingly were insanely high. The Republicans got wind of this bread riot, they organized the canuts in two camps, and fought among themselves. Lyons had her Three Days, but order was restored, and the silk weavers went back to their dens. Hitherto the canut had been honest; the silk for his work was weighed out to him in hanks, and he brought back the same weight of woven tissue; now he made up his mind that the silk merchants were oppressing him; he put honesty out at the door and rubbed oil on his fingers. He still brought back weight for weight, but he sold the silk represented by the oil; and the French silk trade has suffered from a plague of ‘greased silks,’ which might have ruined Lyons and a whole branch of French commerce. The masters and the government, instead of removing the causes of the evil, simply drove it in with a violent external application. They ought to have sent a clever man to Lyons, one of those men that are said to have no principle, an Abbe Terray; but they looked at the affair from a military point of view. The result of the troubles is a gros de Naples at forty sous per yard; the silk is sold at this day, I dare say, and the masters no doubt have hit upon some new check upon the men. This method of manufacturing without looking ahead ought never to have existed in the country where one of the greatest citizens that France has ever known ruined himself to keep six thousand weavers in work without orders. Richard Lenoir fed them, and the government was thickheaded enough to allow him to suffer from the fall of the prices of textile fabrics brought about by the Revolution of 1814. Richard Lenoir is the one case of a merchant that deserves a statue. And yet the subscription set on foot for him has no subscribers, while the fund for General Foy’s children reached a million francs. Lyons has drawn her own conclusions; she knows France, she knows that there is no religion left. The story of Richard Lenoir is one of those blunders which Fouche condemned as worse than a crime.”

“Suppose that there is a tinge of charlatanism in the way in which concerns are put before the public,” began Couture, returning to the charge, “that word charlatanism has come to be a damaging expression, a middle term, as it were, between right and wrong; for where, I ask you, does charlatanism begin? where does it end? what is charlatanism? do me the kindness of telling me what it is not. Now for a little plain speaking, the rarest social ingredient. A business which should consist in going out at night to look for goods to sell in the day would obviously be impossible. You find the instinct of forestalling the market in the very match-seller. How to forestall the market – that is the one idea of the so-called honest tradesman of the Rue Saint-Denis, as of the most brazen-fronted speculator. If stocks are heavy, sell you must. If sales are slow, you must tickle your customer; hence the signs of the Middle Ages, hence the modern prospectus. I do not see a hair’s-breadth of difference between attracting custom and forcing your goods upon the consumer. It may happen, it is sure to happen, it often happens, that a shopkeeper gets hold of damaged goods, for the seller always cheats the buyer. Go and ask the most upright folk in Paris – the best known men in business, that is – and they will all triumphantly tell you of dodges by which they passed off stock which they knew to be bad upon the public. The well-known firm of Minard began by sales of this kind. In the Rue Saint-Denis they sell nothing but ‘greased silk’; it is all that they can do. The most honest merchants tell you in the most candid way that ‘you must get out of a bad bargain as best you can’ – a motto for the most unscrupulous rascality. Blondet has given you an account of the Lyons affair, its causes and effects, and I proceed in my turn to illustrate my theory with an anecdote: – There was once a woolen weaver, an ambitious man, burdened with a large family of children by a wife too much beloved. He put too much faith in the Republic, laid in a stock of scarlet wool, and manufactured those red-knitted caps that you may have noticed on the heads of all the street urchins in Paris. How this came about I am just going to tell you. The Republic was beaten. After the Saint-Merri affair the caps were quite unsalable. Now, when a weaver finds that besides a wife and children he has some ten thousand red woolen caps in the house, and that no hatter will take a single one of them, notions begin to pass through his head as fast as if he were a banker racking his brains to get rid of ten million francs’ worth of shares in some dubious investment. As for this Law of the Faubourg, this Nucingen of caps, do you know what he did? He went to find a pothouse dandy, one of those comic men that drive police sergeants to despair at open-air dancing saloons at the barriers; him he engaged to play the part of an American captain staying at Meurice’s and buying for export trade. He was to go to some large hatter, who still had a cap in his shop window, and ‘inquire for’ ten thousand red woolen caps. The hatter, scenting business in the wind, hurried round to the woolen weaver and rushed upon the stock. After that, no more of the American captain, you understand, and great plenty of caps. If you interfere with the freedom of trade, because free trade has its drawbacks, you might as well tie the hands of justice because a crime sometimes goes unpunished, or blame the bad organization of society because civilization produces some evils. From the caps and the Rue Saint-Denis to joint-stock companies and the Bank – draw your own conclusions.”

“A crown for Couture!” said Blondet, twisting a serviette into a wreath for his head. “I go further than that, gentlemen. If there is a defect in the working hypothesis, what is the cause? The law! the whole system of legislation. The blame rests with the legislature. The great men of their districts are sent up to us by the provinces, crammed with parochial notions of right and wrong; and ideas that are indispensable if you want to keep clear of collisions with justice, are stupid when they prevent a man from rising to the height at which a maker of the laws ought to abide. Legislation may prohibit such and such developments of human passions – gambling, lotteries, the Ninons of the pavement, anything you please – but you cannot extirpate the passions themselves by any amount of legislation. Abolish them, you would abolish the society which develops them, even if it does not produce them. The gambling passion lurks, for instance, at the bottom of every heart, be it a girl’s heart, a provincial’s, a diplomatist’s; everybody longs to have money without working for it; you may hedge the desire about with restrictions, but the gambling mania immediately breaks out in another form. You stupidly suppress lotteries, but the cook-maid pilfers none the less, and puts her ill-gotten gains in the savings bank. She gambles with two hundred and fifty franc stakes instead of forty sous; joint-stock companies and speculation take the place of the lottery; the gambling goes on without the green cloth, the croupier’s rake is invisible, the cheating planned beforehand. The gambling houses are closed, the lottery has come to an end; ‘and now,’ cry idiots, ‘morals have greatly improved in France,’ as if, forsooth, they had suppressed the punters. The gambling still goes on, only the State makes nothing from it now; and for a tax paid with pleasure, it has substituted a burdensome duty. Nor is the number of suicides reduced, for the gambler never dies, though his victim does.”

“I am not speaking now of foreign capital lost to France,” continued Couture, “nor of the Frankfort lotteries. The Convention passed a decree of death against those who hawked foreign lottery-tickets, and procureur-syndics used to traffic in them. So much for the sense of our legislator and his driveling philanthropy. The encouragement given to savings banks is a piece of crass political folly. Suppose that things take a doubtful turn and people lose confidence, the Government will find that they have instituted a queue for money, like the queues outside the bakers’ shops. So many savings banks, so many riots. Three street boys hoist a flag in some corner or other, and you have a revolution ready made.

“But this danger, however great it may be, seems to me less to be dreaded than the widespread demoralization. Savings banks are a means of inoculating the people, the classes least restrained by education or by reason from schemes that are tacitly criminal, with the vices bred of self-interest. See what comes of philanthropy!

“A great politician ought to be without a conscience in abstract questions, or he is a bad steersman for a nation. An honest politician is a steam-engine with feelings, a pilot that would make love at the helm and let the ship go down. A prime minister who helps himself to millions but makes France prosperous and great is preferable, is he not, to a public servant who ruins his country, even though he is buried at the public expense? Would you hesitate between a Richelieu, a Mazarin, or a Potemkin, each with his hundreds of millions of francs, and a conscientious Robert Lindet that could make nothing out of assignats and national property, or one of the virtuous imbeciles who ruined Louis XVI.? Go on, Bixiou.”

“I will not go into the details of the speculation which we owe to Nucingen’s financial genius. It would be the more inexpedient because the concern is still in existence and shares are quoted on the Bourse. The scheme was so convincing, there was such life in an enterprise sanctioned by royal letters patent, that though the shares issued at a thousand francs fell to three hundred, they rose to seven and will reach par yet, after weathering the stormy years ‘27, ‘30, and ‘32. The financial crisis of 1827 sent them down; after the Revolution of July they fell flat; but there really is something in the affair, Nucingen simply could not invent a bad speculation. In short, as several banks of the highest standing have been mixed up in the affair, it would be unparliamentary to go further into detail. The nominal capital amounted to ten millions; the real capital to seven. Three millions were allotted to the founders and bankers that brought it out. Everything was done with a view to sending up the shares two hundred francs during the first six months by the payment of a sham dividend. Twenty per cent, on ten millions! Du Tillet’s interest in the concern amounted to five hundred thousand francs. In the stock-exchange slang of the day, this share of the spoils was a ‘sop in the pan.’ Nucingen, with his millions made by the aid of a lithographer’s stone and a handful of pink paper, proposed to himself to operate certain nice little shares carefully hoarded in his private office till the time came for putting them on the market. The shareholders’ money floated the concern, and paid for splendid business premises, so they began operations. And Nucingen held in reserve founders’ shares in Heaven knows what coal and argentiferous lead-mines, also in a couple of canals; the shares had been given to him for bringing out the concerns. All four were in working order, well got up and popular, for they paid good dividends.

“Nucingen might, of course, count on getting the differences if the shares went up, but this formed no part of the Baron’s schemes; he left the shares at sea-level on the market to tempt the fishes.

“So he had massed his securities as Napoleon massed his troops, all with a view to suspending payment in the thick of the approaching crisis of 1826-27 which revolutionized European markets. If Nucingen had had his Prince of Wagram, he might have said, like Napoleon from the heights of Santon, ‘Make a careful survey of the situation; on such and such a day, at such an hour funds will be poured in at such a spot.’ But in whom could he confide? Du Tillet had no suspicion of his own complicity in Nucingen’s plot; and the bold Baron had learned from his previous experiments in suspensions of payment that he must have some man whom he could trust to act at need as a lever upon the creditor. Nucingen had never a nephew, he dared not take a confidant; yet he must have a devoted and intelligent Claparon, a born diplomatist with a good manner, a man worthy of him, and fit to take office under government. Such connections are not made in a day nor yet in a year. By this time Rastignac had been so thoroughly entangled by Nucingen, that being, like the Prince de la Paix, equally beloved by the King and Queen of Spain, he fancied that he (Rastignac) had secured a very valuable dupe in Nucingen! For a long while he had laughed at a man whose capacities he was unable to estimate; he ended in a sober, serious, and devout admiration of Nucingen, owning that Nucingen really had the power which he thought he himself alone possessed.