Page:A biographical dictionary of eminent Scotsmen, vol 5.djvu/306

366 a door for all the fluctuations which might occur in the real value of the coin called a livre, affecting the value of the paper-money. Law was made director- general of the royal bank, which, in a few months, issued 1,000,000,000 of livres in new notes; "less," says the royal aret, "not being sufficient for its various operations:" although this sum was more than all the banks of Europe could circulate, keeping good faith with their creditors. The director-general found it extremely difficult to support the credit of such an enormous issue, and for a while hesitated between the plan of insensibly transforming bank-notes into a real paper-money, by giving the latter a decided advantage over specie, which should be kept constantly fluctuating, and by receiving it in payment of the taxes; or of creating a new and apparently lucrative investment for this paper, so as to prevent its returning upon the bank to be exchanged for specie. The latter plan appeared at last the preferable one. A colossal establishment was projected with a capital equal in amount to the public debt. This capital was to be divided into shares, which the regent was to buy with the paper-money that he was to manufacture; he was then to borrow this paper anew to pay the creditors of the state; and then by selling the shares, to retire the paper-money, and thus transfer the creditors of the state to the company.

Accordingly, in May, 1719, the East India company, established by Richelieu, in 1664, the affairs of which were then at a very low ebb, was incorporated with that of the West Indies; and the conjoined companies received the name of the Company of the Indies, "with the four quarters of the world to trade in" "Moreover," says the edict issued on this occasion, "beside the 100,000,000 of public debts already subscribed into the Western Company's capital, there shall be a new subscription of 50,000 shares of 550 livres each, payable in specie." In a short time, the newly created company engaged, by extending its capital to 624,000 shares, to lend the king the immense sum of 1,600,000,000, at three per cent, interest, and declared itself in a condition to pay a dividend of 200 livres upon each share. The public faith being yet unshaken, the shares hereupon rose to 5000 livres; and when the king began to pay off the state-creditors with the loan now procured, many not knowing how to employ their capital, a new competition for shares in the great company arose, and shares actually rose in consequence to 10,000 livres. The slightest consideration might have served to convince any cool speculator, that the company had come under engagements which, in no circumstances, however prosperous, it could fulfil. How was it possible that the company could raise annually 124,800,000 livres for the dividend upon 624,000 shares? Or, supposing it able to make an annual dividend of 200 livres a share, still the rate of interest being at this time about four per cent., the shareholder who had bought in at 10,000, thus lost one-half of the revenue he might otherwise have drawn from the employment of his capital. The truth is, the whole scheme was designed for the sole purpose of relieving the state from its debts by the ruin of its creditors; but the immense fortunes which were realized by stock-jobbing at the very outset of the scheme, led on others to engage in the same speculation; splendid fortunes were realized in the course of a single day; men found themselves suddenly exalted as if by the wand of an enchanter, from the lowest station in life to the command of princely fortunes; twelve hundred new equipages appeared on the streets of Paris in the course of six weeks; half a million of people hastened from the country, and even from distant kingdoms to procure shares in the India company; and happy was he who held the greatest number of these bubbles. The negotiations for the sale and purchase of shares were at first carried on in the Rue Quincampoix, where fortunes were made by letting lodgings to the crowds who hastened thither for the purpose of speculating in the stocks. The murder