The Crayon Papers

On the eleventh of December, Law obtained another prohibitory decree, for the purpose of sweeping all the remaining specie in circulation into the bank. By this it was forbidden to make any payment in silver above ten livres, or in gold above three hundred.

The repeated decrees of this nature, the object of which was to depreciate the value of gold, and increase the illusive credit of paper, began to awaken doubts of a system which required such bolstering. Capitalists gradually awoke from their bewilderment. Sound and able financiers consulted together, and agreed to make common cause against this continual expansion of a paper system. The shares of the bank and of the company began to decline in value. Wary men took the alarm, and began to realize, a word now first brought into use, to express the conversion of ideal property into something real.

The prince of Conti, one of the most prominent and grasping of the Mississippi lords, was the first to give a blow to the credit of the bank. There was a mixture of ingratitude in his conduct that characterized the venal baseness of the times. He had received from time to time enormous sums from Law, as the price of his influence and patronage. His avarice had increased with every acquisition, until Law was compelled to refuse one of his exactions. In revenge the prince immediately sent such an amount of paper to the bank to be cashed that it required four wagons to bring away the silver, and he had the meanness to loll out of the window of his hotel and jest and exult as it was trundled into his portecochère.

This was the signal for other drains of like nature. The English and Dutch merchants, who had purchased a great amount of bank paper at low prices, cashed them at the bank, and carried the money out of the country. Other strangers did the like, thus draining the kingdom of its specie, and leaving paper in its place.

The regent, perceiving these symptoms of decay in the system, sought to restore it to public confidence by conferring marks of confidence upon its author.

He accordingly resolved to make Law Comptroller General of the Finances of France. There was a material obstacle in his way. Law was a Protestant, and the regent, unscrupulous as he was himself, did not dare publicly to outrage the severe edicts which Louis XIV., in his bigot days, had fulminated against all heretics. Law soon let him know that there would be no difficulty on that head. He was ready at any moment to abjure his religion in the way of business. For decency's sake, however, it was judged proper he should previously be convinced and converted. A ghostly instructor was soon found, ready to accomplish his conversion in the shortest possible time. This was the Abbe Tencin, a profligate creature of the profligate Dubois, and like him working his way to ecclesiastical promotion and temporal wealth, by the basest means.

Under the instructions of the Abbe Tencin, Law soon mastered the mysteries and dogmas of the Catholic doctrine; and, after a brief course of ghostly training, declared himself thoroughly convinced and converted. To avoid the sneers and jests of the Parisian public the ceremony of abjuration took place at Melun. Law made a pious present of one hundred thousand livres to the Church of St. Roque, and the Abbe Tencin was rewarded for his edifying labors by sundry shares and bank bills; which he shrewdly took care to convert into cash, having as little faith in the system as in the piety of his new convert. A more grave and moral community might have been outraged by this scandalous farce; but the Parisians laughed at it with their usual levity, and contented themselves with making it the subject of a number of songs and epigrams.

Law now being orthodox in his faith, took out letters of naturalization, and having thus surmounted the intervening obstacles, was elevated by the regent to the post of comptroller-general. So accustomed had the community become to all juggles and transmutations in this hero of finance, that no one seemed shocked or astonished at his sudden elevation. On the contrary, being now considered perfectly established in place and power, he became more than ever the object of venal adoration. Men of rank and dignity thronged his antechamber, waiting patiently their turn for an audience; and titled dames demeaned themselves to take the front seats of the carriages of his wife and daughter, as if they had been riding with princesses of the blood royal. Law's head grew giddy with his elevation, and he began to aspire after aristocratical distinction. There was to be a court ball, at which several of the young noblemen were to dance in a ballet with the youthful king. Law requested that his son might be admitted into the ballet, and the regent consented. The young scions of nobility, however, were indignant and scouted the "intruding upstart." Their more worldly parents, fearful of displeasing the modern Midas, reprimanded them in vain. The striplings had not yet imbibed the passion for gain, and still held to their high blood. The son of the banker received slights and annoyances on all sides, and the public applauded them for their spirit. A fit of illness came opportunely to relieve the youth from an honor which would have cost him a world of vexations and affronts.

In February, 1720, shortly after Law's installment in office, a decree came out uniting the bank to the India Company, by which last name the whole establishment was now known. The decree stated that as the bank was royal, the king was bound to make good the value of its bills; that he committed to the company the government of the bank for fifty years, and sold to it fifty millions of stock belonging to him, for nine hundred millions; a simple advance of eighteen hundred per cent. The decree further declared, in the king's name, that he would never draw on the bank until the value of his drafts had first been lodged in it by his receivers-general.

The bank, it was said, had by this time issued notes to the amount of one thousand millions; being more paper than all the banks of Europe were able to circulate. To aid its credit, the receivers of the revenue were directed to take bank notes of the sub-receivers. All payments, also, of one hundred livres and upward were ordered to be made in banknotes. These compulsory measures for a short time gave a false credit to the bank, which proceeded to discount merchants' notes, to lend money on jewels, plate, and other valuables, as well as on mortgages.

Still further to force on the system an edict next appeared, forbidding any individual, or any corporate body, civil or religious, to hold in possession more than five hundred livres in current coin; that is to say, about seven louis d'ors: the value of the louis-d'or in paper being, at the time, seventy-two livres. All the gold and silver they might have above this pittance was to be brought to the royal bank and exchanged either for shares or bills.

As confiscation was the penalty of disobedience to this decree, and informers were assured a share of the forfeitures, a bounty was in a manner held out to domestic spies and traitors; and the most odious scrutiny was awakened into the pecuniary affairs of families and individuals. The very confidence between friends and relatives was unpaired, and all the domestic ties and virtues of society were threatened, until a general sentiment of indignation broke forth, that compelled the regent to rescind the odious decree. Lord Stairs, the British embassador, speaking of the system of espionage encouraged by this edict, observed that it was impossible to doubt that Law was a thorough Catholic, since he had thus established the inquisition, after having already proved transubstantiation, by changing specie into paper.

Equal abuses had taken place under the colonizing project. In his thousand expedients to amass capital, Law had sold parcels of land in Mississippi, at the rate of three thousand livres for a league square. Many capitalists had purchased estates large enough to constitute almost a principality; the only evil was, Law had sold a property which he could not deliver. The agents of police, who aided in recruiting the ranks of the colonists, had been guilty of scandalous impositions. Under pretense of taking up mendicants and vagabonds, they had scoured the streets at night, seizing upon honest mechanics, or their sons, and hurrying them to their crimping-houses, for the sole purpose of extorting money from them as a ransom. The populace was roused to indignation by these abuses. The officers of police were mobbed in the exercise of their odious functions, and several of them were killed; which put an end to this flagrant abuse of power.

In March, a most extraordinary decree of the council fixed the price of shares of the India Company at nine thousand livres each. All ecclesiastical communities and hospitals were now prohibited from investing money at interest, in anything but India stock. With all these props and stays, the system continued to totter. How could it be otherwise, under a despotic government that could alter the value of property at every moment? The very compulsory measures that were adopted to establish the credit of the bank hastened its fall; plainly showing there was a want of solid security.

Law caused pamphlets to be published, setting forth, in eloquent language, the vast profits that must accrue to holders of the stock, and the impossibility of the king's ever doing it any harm. On the very back of these assertions came forth an edict of the king, dated the 22d of May, wherein, under pretense of having reduced the value of his coin, it was declared necessary to reduce the value of his bank-notes one-half, and of the India shares from nine thousand to five thousand livres.

This decree came like a clap of thunder upon shareholders. They found one-half of the pretended value of the paper in their hands annihilated in an instant; and what certainty had they with respect to the other half? The rich considered themselves ruined; those in humbler circumstances looked forward to abject beggary.

The parliament seized the occasion to stand forth as the protector of the public, and refused to register the decree. It gained the credit of compelling the regent to retrace his step, though it is more probable he yielded to the universal burst of public astonishment and reprobation. On the 27th of May the edict was revoked, and bank bills were restored to their previous value. But the fatal blow had been struck; the delusion was at an end. Government itself had lost all public confidence, equally with the bank it had engendered, and which its own arbitrary acts had brought into discredit. "All Paris," says the regent's mother, in her letters, "has been mourning at the cursed decree which Law has persuaded my son to make. I have received anonymous letters stating that I have nothing to fear on my own account, but that my son shall be pursued with fire and sword."

The regent now endeavored to avert the odium of his ruinous schemes from himself. He affected to have suddenly lost confidence in Law, and, on the 29th of May, discharged bin from his employ as comptroller-general, and stationed a Swiss guard of sixteen men in his house. He even refused to see him, when, on the following day, he applied at the portal of the Palais Royal for admission; but having played off this farce before the public, he admitted him secretly the same night, by a private door, and continued as before to co-operate with him in his financial schemes.

On the first of June the regent issued a decree, permitting persons to have as much money as they pleased in their possession. Few, however, were in a state to benefit by this permission. There was a run upon the bank, but a royal ordinance immediately suspended payment, until further orders. To relieve the public mind, a city stock was created, of twenty-five millions, bearing an interest of two and a half per cent, for which bank notes were taken in exchange. The bank notes thus withdrawn from circulation were publicly burned before the Hotel de Ville. The public, however, had lost confidence in everything and everybody, and suspected fraud and collusion in those who pretended to burn the bills.

A general confusion now took place hi the financial world. Families who had lived in opulence found themselves suddenly reduced to indigence. Schemers who had been reveling in the delusion of princely fortune found their estates vanishing into thin air. Those who had any property remaining sought to secure it against reverses. Cautious persons found there was no safety for property in a country where the coin was continually shifting in value, and where a despotism was exercised over public securities, and even over the private purses of individuals. They began to send their effects into other countries; when lo! on the 20th of June a royal edict commanded them to bring back their effects, under penalty of forfeiting twice their value; and forbade them, under like penalty, from investing their money in foreign stocks. This was soon followed by another decree, forbidding any one to retain precious stones in his possession, or to sell them to foreigners; all must be deposited in the bank, in exchange for depreciating paper!

Execrations were now poured out on all sides against Law, and menaces of vengeance. What a contrast, in a short time, to the venal incense that was offered up to him! "This person," writes the regent's mother, "who was formerly worshiped as a god, is now not sure of his life. It is astonishing how greatly terrified he is. He is as a dead man; he is pale as a sheet, and it is said he can never get over it. My son is not dismayed, though he is threatened on all sides; and is very much amused with Law's terrors."

About the middle of July the last grand attempt was made by Law and the regent to keep up the system and provide for the immense emission of paper. A decree was fabricated, giving the India Company the entire monopoly of commerce, on condition that it would, in the course of a year, reimburse six hundred millions of livres of its bills, at the rate of fifty millions per month.

On the 17th this decree was sent to parliament to be registered. It at once raised a storm of opposition in that assembly, and a vehement discussion took place. While that was going on a disastrous scene was passing out of doors.

The calamitous effects of the system had reached the humblest concerns of human life. Provisions had risen to an enormous price; paper money was refused at all the shops; the people had not wherewithal to buy bread. It had been found absolutely indispensable to relax a little from the suspension of specie payments, and to allow small sums to be scantily exchanged for paper. The doors of the bank and the neighboring streets were immediately thronged with a famishing multitude, seeking cash for bank notes of ten livres. So great was the press and struggle that several persons were stifled and crushed to death. The mob carried three of the bodies to the courtyard of the Palais Royal. Some cried for the regent to come forth and behold the effect of his system; others demanded the death of Law, the impostor, who had brought this misery and rum upon the nation.

The moment was critical, the popular fury was rising to a tempest, when Le Blanc, the Secretary of State, stepped forth. He had previously sent for the military, and now only sought to gain tune. Singling out six or seven stout fellows, who seemed to be the ringleaders of the mob: "My good fellows," said he, calmly, "carry away these bodies and place them in some church, and then come back quickly to me for your pay." They immediately obeyed; a kind of funeral procession was formed; the arrival of troops dispersed those who lingered behind; and Paris was probably saved from an insurrection.

About ten o'clock in the morning, all being quiet, Law ventured to go in his carriage to the Palais Royal. He was saluted with cries and curses, as he passed along the streets; and he reached the Palais Royal in a terrible fright. The regent amused himself with his fears, but retained him with him, and sent off his carriage, which was assailed by the mob, pelted with stones, and the glasses shivered. The news of this outrage was communicated to parliament in the midst of a furious discussion of the decree for the commercial monopoly. The first president, who had been absent for a short time, re-entered, and communicated the tidings in a whimsical couplet:

"Messieurs, Messieurs! bonne nouvelle!Le carrosse de Law est reduite en carrelle!""Gentlemen, Gentlemen! good news!The carriage of Law is shivered to atoms!"

The members sprang up with joy; "And Law!" exclaimed they, "has he been torn to pieces?" The president was ignorant of the result of the tumult; whereupon the debate was cut short, the decree rejected, and the house adjourned; the members hurrying to learn the particulars. Such was the levity with which public affairs were treated at that dissolute and disastrous period.

On the following day there was an ordinance from the king, prohibiting all popular assemblages; and troops were stationed at various points, and in all public places. The regiment of guards was ordered to hold itself in readiness; and the musketeers to be at their hotels, with their horses ready saddled. A number of small offices were opened, where people might cash small notes, though with great delay and difficulty. An edict was also issued declaring that whoever should refuse to take bank notes in the course of trade should forfeit double the amount!

The continued and vehement opposition of parliament to the whole delusive system of finance had been a constant source of annoyance to the regent; but this obstinate rejection of his last grand expedient of a commercial monopoly was not to be tolerated. He determined to punish that intractable body. The Abbe Dubois and Law suggested a simple mode; it was to suppress the parliament altogether, being, as they observed, so far from useful that it was a constant impediment to the march of public affairs. The regent was half inclined to listen to their advice; but upon calmer consideration, and the advice of friends, he adopted a more moderate course. On the 20th of July, early in the morning, all the doors of the parliament-house were taken possession of by troops. Others were sent to surround the house of the first president, and others to the houses of the various members; who were all at first in great alarm, until an order from the king was put into their hands, to render themselves at Pontoise, in the course of two days, to which place the parliament was thus suddenly and arbitrarily transferred.

This despotic act, says Voltaire, would at any other time have caused an insurrection; but one half of the Parisians were occupied by their ruin, and the other half by their fancied riches, which were soon to vanish. The president and members of parliament acquiesced in the mandate without a murmur; they even went as if on a party of pleasure, and made every preparation to lead a joyous life in their exile. The musketeers, who held possession of the vacated parliament-house, a gay corps of fashionable young fellows, amused themselves with making songs and pasquinades, at the expense of the exiled legislators; and at length, to pass away time, formed themselves into a mock parliament; elected their presidents, kings, ministers, and advocates; took their seats in due form, arraigned a cat at their bar, in place of the Sieur Law, and, after giving it a "fair trial," condemned it to be hanged. In this manner public affairs and public institutions were lightly turned to jest.

As to the exiled parliament, it lived gayly and luxuriously at Pontoise, at the public expense; for the regent had furnished funds, as usual, with a lavish hand. The first president had the mansion of the Duke de Bouillon put at his disposal, already furnished, with a vast and delightful garden on the borders of a river. There he kept open house to all the members of parliament. Several tables were spread every day, all furnished luxuriously and splendidly; the most exquisite wines and liqueurs, the choicest fruits and refreshments, of all kinds, abounded. A number of small chariots for one and two horses were always at hand, for such ladies and old gentlemen as wished to take an airing after dinner, and card and billiard tables for such as chose to amuse themselves in that way until supper. The sister and the daughter of the first president did the honors of the house, and he himself presided there with an air of great ease, hospitality, and magnificence. It became a party of pleasure to drive from Paris to Pontoise, which was six leagues distant, and partake of the amusements and festivities of the place. Business was openly slighted; nothing was thought of but amusement. The regent and his government were laughed at, and made the subjects of continual pleasantries; while the enormous expenses incurred by this idle and lavish course of life more than doubled the liberal sums provided. This was the way in which the parliament resented their exile.

During all this time the system was getting more and more involved. The stock exchange had some time previously been removed to the Place Vendome; but the tumult and noise becoming intolerable to the residents of that polite quarter, and especially to the chancellor, whose hotel was there, the Prince and Princess Carignan, both deep gamblers in Mississippi stock, offered the extensive garden of the Hotel de Soissons as a rallying-place for the worshipers of Mammon. The offer was accepted. A number of barracks were immediately erected in the garden, as offices for the stock-brokers, and an order was obtained from the regent, under pretext of police regulations, that no bargain should be valid unless concluded in these barracks. The rent of them immediately mounted to a hundred livres a month for each, and the whole yielded these noble proprietors an ignoble revenue of half a million of livres.

The mania for gain, however, was now at an end. A universal panic succeeded. "Sauve qui peut!" was the watchword. Every one was anxious to exchange falling paper for something of intrinsic and permanent value. Since money was not to be had, jewels, precious stones, plate, porcelain, trinkets of gold and silver, all commanded any price in paper. Land was bought at fifty years' purchase, and he esteemed himself happy who could get it even at this price. Monopolies now became the rage among the noble holders of paper. The Duke de la Force bought up nearly all the tallow, grease, and soap; others the coffee and spices; others hay and oats. Foreign exchanges were almost impracticable. The debts of Dutch and English merchants were paid in this fictitious money, all the coin of the realm having disappeared. All the relations of debtor and creditor were confounded. With one thousand crowns one might pay a debt of eighteen thousand livres!

The regent's mother, who once exulted in the affluence of bank paper, now wrote in a very different tone: "I have often wished," said she in her letters, "that these bank-notes were in the depths of the infernal regions. They have given my son more trouble than relief. Nobody in France has a penny… My son was once popular, but since the arrival of this cursed Law, he is hated more and more. Not a week passes, without my receiving letters filled with frightful threats, and speaking of him as a tyrant. I have just received one threatening him with poison. When I showed it to him, he did nothing but laugh."

In the meantime, Law was dismayed by the increasing troubles, and terrified at the tempest he had raised. He was not a man of real courage; and fearing for his personal safety, from popular tumult, or the despair of ruined individuals, he again took refuge in the palace of the regent. The latter, as usual, amused himself with his terrors, and turned every new disaster into a jest; but he too began to think of his own security.

In pursuing the schemes of Law, he had no doubt calculated to carry through his term of government with ease and splendor; and to enrich himself, his connections, and his favorites; and had hoped that the catastrophe of the system would not take place until after the expiration of the regency.

He now saw his mistake; that it was impossible much longer to prevent an explosion; and he determined at once to get Law out of the way, and then to charge him with the whole tissue of delusions of this paper alchemy. He accordingly took occasion of the recall of parliament in December, 1720, to suggest to Law the policy of his avoiding an encounter with that hostile and exasperated body. Law needed no urging to the measure. His only desire was to escape from Paris and its tempestuous populace. Two days before the return of parliament he took his sudden and secret departure. He traveled in a chaise bearing the arms of the regent, and was escorted by a kind of safeguard of servants in the duke's livery. His first place of refuge was an estate of the regent's, about six leagues from Paris, from whence he pushed forward to Bruxelles.