Page:Dictionary of National Biography volume 32.djvu/238

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Law
Law
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System.' The decree incorporating the Compagnie d'Occident, with sovereign rights over Louisiana, was issued in August 1717. The parliament of Paris was indignant at the concessions of banking privileges and territory to a foreigner and a protestant. Its opposition reached a crisis when in August 1718 it was rumoured in Paris that the parliament intended to arrest Law, try him in three hours, and have him hanged forthwith (Saint-Simon, Mémoires, ed. Chéruel, xv. 354–5). The regent met the parliamentary resistance in December 1718 by converting the Banque Générale into the Banque Royale, the notes of which were guaranteed by the king. Law was nominated its director-general, but he was unable to prevent the regent from freely increasing the issue of paper-money in order to satisfy his extravagant personal expenditure.

Law meanwhile was enlarging the responsibilities of his Western Company. In August 1718 it acquired the monopoly of tobacco, and in December the trading rights, ships, and merchandise of the Company of Senegal. In March 1719 it absorbed the East India and China companies, and thenceforward assumed the designation of the Compagnie des Indes. In the following June the African Company came under its authority, and thus the whole of the non-European trade of France was in its hands. In July of the same year the mint was handed over to Law's company, and he could manipulate the coinage as he pleased. In August the company undertook to pay off the bulk of the national debt of the kingdom, and became practically the sole creditor of the state. The functions of the receivers-general were already assigned to it, and the farm of the revenue was abolished in its favour. The collection and disposal of the whole of the revenue of the state which was derived from taxation was thus placed under Law's control. As a fiscal administrator Law appears in a very favourable light. He repealed or reduced taxes which pressed directly, and he abolished offices the emoluments attached to which pressed indirectly, on commodities in general use, and the price of the necessaries of life was reduced by forty per cent. Rural taxation was so adjusted that the peasant could improve the cultivation of the soil without fear of losing the honestly earned increment. Free trade in cereals and other articles of food between the provinces of France was established. The abuses and grievances which Law removed revived after his fall, but Turgot's chief fiscal reforms were either executed or planned by Law.

Law promised high dividends to the shareholders of his great company, and the public expected that its enormous enterprises would ultimately yield fabulous profits. Its issues of new shares were accompanied by fresh issues of paper-money from the bank, for which the stock of the company offered a means of investment. 'The System' reached its acme in the winter of 1719–20. Multitudes of provincials and foreigners flocked to Paris eager to become 'Mississippians.' The scene of operations was a narrow street called Quincampoix, where houses that previously yielded 40l. a year now brought in over 800l. per month. Enormous fortunes were made in a few hours by speculators belonging to all classes through successful operations for the rise. The highest in the land courted Law in the hope of a promise to be allowed to participate in each new issue of shares. The market price of shares originally issued at five hundred livres reached ten thousand livres, and when on 1 Jan. 1720 a dividend of 40 per cent. was declared, the price rose to eighteen thousand livres. On 5 Jan. 1720, having as a needful preliminary abjured protestantism and been admitted into the Roman catholic church, Law was appointed controller-general of the finances. According to Lord Stair, then British ambassador in Paris, Law boasted that he would raise France to a greater height than ever before on the ruins of England and Holland, that he could destroy English trade and credit, and break the Bank of England and the English East India Company whenever he pleased. Stair resented his language, and from a friend became an enemy of Law. To appease Law, early in 1720 Stair was recalled by his government.

On 23 Feb. 1720 the Company of the Indies was united to the Royal Bank, and 'The System' was completed. But a reaction had already set in. The successful speculators in the shares of the company had begun to realise their gains, and to drain the bank of coin in exchange for their paper-money. The specie thus obtained was partly hoarded, partly exported. To check this movement Law had recourse, during the earlier months of 1720, to violent measures, enforced by royal decrees. The value of the metallic currency was made to fluctuate. Payments in specie for any but limited amounts were forbidden. The possession of more than five hundred livres in specie was punished by confiscation and a heavy fine, and domiciliary visits were paid to insure the enforced transmission of specie to the mint. Informers of infractions of this order were handsomely rewarded. Holders of paper-money began to realise by purchasing plate and jewellery, but this traffic was prohibited.