FOOTNOTES:

FOOTNOTES:[1]SeeDefeat of the Young Pretender at Culloden, page 117.[2]SeeCotton Manufacture Developed, page 341.[3]SeeJohn Law Promotes the Mississippi Scheme, page 1.[4]SeeBursting of the South Sea Bubble, page 22.[5]SeeVoltaire Directs European Thought from Geneva, page 144.[6]SeeBach Lays the Foundation of Modern Music, page 31.[7]SeeFirst Modern Novel, page 100.[8]SeeWatt Improves the Steam-engine, page 302.[9]SeeBenjamin Franklin Experiments with Electricity, page 130.[10]SeeSettlement of Georgia, page 44.[11]SeeRise of Methodism: Preaching of the Wesleys and of Whitefield, page 57.[12]SeePrince Eugene Vanquishes the Turks: Siege and Battle of Belgrad, page 16.[13]SeeConquests of Nadir Shah: Capture of Delhi, page 72.[14]See Frederick the Great Seizes Silesia: Maria Theresa Appeals to the Hungarians, page 108.[15]SeeSeven Years' War: Battle of Torgau, page 204.[16]See Clive Establishes British Supremacy in India: The Black Hole of Calcutta: Battle of Plassey, page 185.[17]SeeBraddock's Defeat, page 163.[18]SeeExile of the Acadian Neutrals, page 181.[19]SeeConquest of Canada: Victory of Wolfe at Quebec, page 229.[20]SeeUsurpation of Catharine II in Russia, page 250.[21]SeeFirst Partition of Poland, page 313.[22]SeeIntellectual Revolt of Germany, page 347.[23]SeePestalozzi's Method of Education, page 364.[24]SeeConspiracy of Pontiac, page 267.[25]SeeAmerican Colonies Oppose the Stamp Act, page 289.[26]SeeBoston Tea Party, page 333.

[1]SeeDefeat of the Young Pretender at Culloden, page 117.

[2]SeeCotton Manufacture Developed, page 341.

[3]SeeJohn Law Promotes the Mississippi Scheme, page 1.

[4]SeeBursting of the South Sea Bubble, page 22.

[5]SeeVoltaire Directs European Thought from Geneva, page 144.

[6]SeeBach Lays the Foundation of Modern Music, page 31.

[7]SeeFirst Modern Novel, page 100.

[8]SeeWatt Improves the Steam-engine, page 302.

[9]SeeBenjamin Franklin Experiments with Electricity, page 130.

[10]SeeSettlement of Georgia, page 44.

[11]SeeRise of Methodism: Preaching of the Wesleys and of Whitefield, page 57.

[12]SeePrince Eugene Vanquishes the Turks: Siege and Battle of Belgrad, page 16.

[13]SeeConquests of Nadir Shah: Capture of Delhi, page 72.

[14]See Frederick the Great Seizes Silesia: Maria Theresa Appeals to the Hungarians, page 108.

[15]SeeSeven Years' War: Battle of Torgau, page 204.

[16]See Clive Establishes British Supremacy in India: The Black Hole of Calcutta: Battle of Plassey, page 185.

[17]SeeBraddock's Defeat, page 163.

[18]SeeExile of the Acadian Neutrals, page 181.

[19]SeeConquest of Canada: Victory of Wolfe at Quebec, page 229.

[20]SeeUsurpation of Catharine II in Russia, page 250.

[21]SeeFirst Partition of Poland, page 313.

[22]SeeIntellectual Revolt of Germany, page 347.

[23]SeePestalozzi's Method of Education, page 364.

[24]SeeConspiracy of Pontiac, page 267.

[25]SeeAmerican Colonies Oppose the Stamp Act, page 289.

[26]SeeBoston Tea Party, page 333.

A.D. 1716

Known under the various titles of the "Mississippi Scheme," the "Mississippi Bubble," and the "System," the financial enterprise originated by John Law, under authority of the French government, proved to be the most disastrous experiment of the kind ever made by a civilized state.Louis XIV ended his long reign in 1715, leaving his throne to his great-grandson, a child of five years, Louis XV. The impoverished country was in the hands of a regent, Philippe, Duke of Orléans, whose financial undertakings were all unfortunate. John Law, the son of a Scotch banker, was an adventurer and a gambler who yet became celebrated as a financier and commercial promoter. After killing an antagonist in a duel in London, he escaped the gallows by fleeing to the Continent, where he followed gaming and at the same time devised financial schemes which he proposed to various governments for their adoption. His favorite notion was that large issues of paper money could be safely circulated with small security.Law offered to relieve Orléans from his financial troubles, and the Regent listened with favor to his proposals. In 1716 Law, with others, organized what he called the General Bank. It was ably managed, became popular, and by means of it Law successfully carried out his paper-currency ideas. His notes were held at a premium over those of the government, whose confidence was therefore won. Two years later Law's institution was adopted by the state and became the Royal Bank of France. The further undertakings of this extraordinary "new light of finance," the blowing and bursting of the great "bubble," are recorded by Thiers, the French statesman and historian, himself eminent as his country's chief financier during her wonderful recovery after the Franco-German War.

Louis XIV ended his long reign in 1715, leaving his throne to his great-grandson, a child of five years, Louis XV. The impoverished country was in the hands of a regent, Philippe, Duke of Orléans, whose financial undertakings were all unfortunate. John Law, the son of a Scotch banker, was an adventurer and a gambler who yet became celebrated as a financier and commercial promoter. After killing an antagonist in a duel in London, he escaped the gallows by fleeing to the Continent, where he followed gaming and at the same time devised financial schemes which he proposed to various governments for their adoption. His favorite notion was that large issues of paper money could be safely circulated with small security.

Law offered to relieve Orléans from his financial troubles, and the Regent listened with favor to his proposals. In 1716 Law, with others, organized what he called the General Bank. It was ably managed, became popular, and by means of it Law successfully carried out his paper-currency ideas. His notes were held at a premium over those of the government, whose confidence was therefore won. Two years later Law's institution was adopted by the state and became the Royal Bank of France. The further undertakings of this extraordinary "new light of finance," the blowing and bursting of the great "bubble," are recorded by Thiers, the French statesman and historian, himself eminent as his country's chief financier during her wonderful recovery after the Franco-German War.

Law was always scheming to concentrate into one establishment his bank, the administration of the public revenues, and the commercial monopolies. He resolved, in order to attain this end, to organize, separately, a commercial company, to which he would add, one after another, different privileges inproportion to its success, and which he would then incorporate with the General Bank. Constructing thus separately each of the pieces of his vast machine, he proposed ultimately to unite them and form the grand whole, the object of his dreams and his ardent ambition.

An immense territory, discovered by a Frenchman, in the New World, presented itself for the speculations of Law. The Chevalier de la Salle, the famous traveller of the time, having penetrated into America by Upper Canada, descended the river Illinois, arrived suddenly at a great river half a league wide, and, abandoning himself to the current, was borne into the Gulf of Mexico. This river was the Mississippi. The Chevalier de la Salle took possession of the country he had passed through for the King of France, and gave it the beautiful name of Louisiana.

There was much said of the magnificence and fertility of this new country, of the abundance of its products, of the richness of its mines, which were reported to be much more extensive than those of Mexico or Peru. Law, taking advantage of this current of opinion, projected a company which should unite the commerce of Louisiana with the fur trade of Canada. The Regent granted all he asked, by an edict given in August, 1717, fifteen months after the first establishment of the bank.

The new company received the title of the "West Indian Company." It was to have the sovereignty of all Louisiana on the condition only of liege homage to the King of France, and of a crown of gold of thirty marks at the commencement of every new reign. It was to exercise all the rights of sovereignty, such as levying troops, equipping vessels-of-war, constructing forts, establishing courts, working mines, etc. The King relinquished to it the vessels, forts, and munitions of war which belonged to the Crozat Company,[27]and conceded, furthermore, the exclusive right of the fur trade of Canada. The arms of this sovereign company represented the effigy of an old river-god leaning upon a horn of plenty.

Law revolved in his mind many other projects relating to his Western company. He spoke, at first mysteriously, of the benefits which he was preparing for it. Associating with a large number of noblemen, whom his wit, his fortune, and the hope of considerable gains attracted around him, he urged them strongly to obtain for themselves some shares, which would soon rise rapidly in the market. He was himself soon obliged to buy some above par. The par value being five hundred francs, two hundred of them represented at par a sum of one hundred thousand francs. The price for the day being three hundred francs, sixty thousand francs were sufficient to buy two hundred shares. He contracted to pay one hundred thousand francs for two hundred shares at a fixed future time; this was to anticipate that they would gain at least two hundred francs each, and that a profit of forty thousand francs could be realized on the whole. He agreed, in order to make this sort of wager more certain, to pay the difference of forty thousand francs in advance, and to lose the difference if he did not realize a profit from the proposed transfer.

This was the first instance of a sale at an anticipated advance. This kind of trade consisted in giving "earnest-money" called a premium, which the purchaser lost if he failed to take the property. He who made the bargain had the liberty of rescinding it if he would lose more by adhering to it than by abandoning it. No advantage would accrue to Law for the possible sacrifice of forty thousand francs, unless at the designated time the shares had not been worth as much as sixty thousand francs, or three hundred francs each; for having engaged to pay one hundred thousand francs for what was worth only fifty thousand, for instance, he would suffer less to lose his forty thousand francs than to keep his engagement. But, evidently, if Law did wish by this method to limit the possible loss, he hoped nevertheless not to make any loss at all; and, on the contrary, he believed firmly that the two hundred shares would be worth at least the hundred thousand francs, or five hundred francs each, at the time fixed for the expiration of the contract. This large premium attracted general attention, and people were eager to purchase the Western shares. They rose sensibly during the month of April, 1719, and went nearly to par. Law disclosed his projects; the Regent kept his promise, and authorized him to unite the great commercial companies of the East and West Indies.

The two companies of the East Indies and of China, chartered in 1664 and 1713, had conducted their affairs very badly: they had ceased to carry on any commerce, and had underlet their privileges at a charge which was very burdensome to the trade. The merchants who had bought it of them did not dare to make use of their privileges, for fear that their vessels would be seized by the creditors of the company. Navigation to the East was entirely abandoned, and the necessity of reviving it had become urgent. By a decree of May, 1719, Law caused to be accorded to the West India Company the exclusive right of trading in all seas beyond the Cape of Good Hope. From this time it had the sole right of traffic with the islands of Madagascar, Bourbon, and France, the coast of Sofola in Africa, the Red Sea, Persia, Mongolia, Siam, China, and Japan. The commerce of Senegal, an acquisition of the company which still carried it on, was added to the others, so that the company had the right of French trade in America, Africa, and Asia. Its title, like its functions, was enlarged; it was no longer called the "West India Company," but the "IndianCompany." Its regulations remained the same as before. It was authorized to issue another lot of shares, in order to raise the necessary funds either to pay the debts of the companies which it succeeded or for organizing the proper establishments. Fifty thousand of these shares were issued at a par of five hundred francs, which made a nominal capital of twenty-five millions. But the company demanded five hundred fifty francs in cash for them, or a total of twenty-seven millions two hundred fifty thousand francs, inasmuch as it esteemed its privileges as very great and its popularity certain. It required fifty francs to be paid in advance, and the remaining five hundred in twenty equal monthly payments. In case the payments should not be fully made, the fifty francs paid in advance were forfeited by the subscriber. It was nothing but a bargain made at a premium with the public.

The prompt realization of the promises of Law, the importance and extent of the last privileges granted to the company, the facilities accorded to the subscribers, everything, induced a subscription to the new shares. The movement became animated. One could, by the favorable terms offered, by paying out five hundred fifty francs, obtain eleven shares instead of one, andthus, with a little money, speculate to a considerable amount. To this method of attracting speculators Law added another; he procured a decision that no one should subscribe for the new shares without exhibiting four times as many old ones. It was necessary, therefore, to hasten to obtain them in order to fulfil the requisite condition. In a short time they were carried up to par, and far above that. From three hundred francs, at which they were at the start, they rose to five hundred, five hundred fifty, six hundred, and seven hundred fifty francs; that is, they gained 150 per cent. These second shares were called the "daughters," to distinguish them from the first.

Law contemplated at last the completion of his project by uniting the collection of the revenues to the other privileges of the Indian Company, and redeeming the national debt. This was the greatest and most difficult part of his plan.

The national debt was fifteen to sixteen hundred millions, partly in contracts for perpetual annuities, partly in State notes which would soon be due. The interest on the debt was eighty millions, or one-half the revenue of the government. Some combination was necessary to meet the state notes at their maturity, and to reduce the annual charges which the public treasury could no longer sustain.

Law conceived the idea of substituting the company for the government, and converting the whole national debt into shares in the Indian Company. To accomplish this he wished the company to lend the treasury the fifteen to sixteen hundred millions which would redeem the debt; and that, to obtain this enormous sum, it should issue shares to that amount. In this manner the fifteen or sixteen hundred millions furnished to the government by the company, and paid out by the government to its creditors, must return to the company by the sale of its shares. Let us see the means which Law had devised to insure the success of his scheme. The government would pay 3 per cent. interest for the sum loaned to it, which would make forty-five or forty-eight millions a year. The treasury would thus effect an annual saving of thirty-two or thirty-five millions in the interest on the debt. In return, the collection of the revenue must be transferred to the company, notwithstanding that it had been actually granted to the brothers Paris. The collection wouldpay the collectors a net profit of fifteen or sixteen millions. The company, receiving 3 per cent. interest on the capital invested, and reaping from another source a profit of fifteen or sixteen millions, would be in a position to pay 4 per cent. on the sixteen hundred millions of the debt converted into shares.

The profits from commerce and its future success might soon enable it to increase this dividend. According to the prevailing rates of interest, which had fallen to 3 per cent. since the establishment of the bank, this was a sufficient remuneration on the shares. They had, besides, the hope of increasing their capital. The shares having, in fact, doubled in value during the opposition of the "Antisystem," they ought to increase still more rapidly since they were relieved from this opposition. The expectation that the fifteen or sixteen hundred millions of the debt would be invested in the shares was well founded. There was even a certainty of it; for this immense capital, forcibly expelled from its investment in state securities, could find no other place for investment than in the company.

This plan of Law's was vast and bold. Its success would liquidate the state debt and diminish the annual charges on the treasury, reducing the interest from eighty millions to forty-five or forty-eight millions. The annual charges from which the treasury was to be relieved were to be paid from the profits on the collection of the revenue and the contingent profits of commerce. The whole operation was to pay the creditors of the state 3 per cent. per annum, and the profits and monopolies heretofore granted to farmers of the revenue and commercial companies. This 3 per cent. interest, these profits, and these monopolies, as we shall soon see, might easily amount to the sum of eighty millions annually, which the creditors were formerly paid. Thus far they were not defrauded by this forced conversion of securities; a credit entirely new was substituted for one which was worn out; an establishment had been created, which, combining the functions of a commercial bank and the administration of the finances, must become the most colossal financial power ever known.

The first subscription having been taken up in a few days, Law opened a new one on September 28th, for the same amount and on exactly the same conditions as the preceding.

The eagerness of subscribers was the same. The creditors passed whole days at the offices of the treasury to obtain their receipts, and there were some even who had their meals brought to them there, so that they might not lose their turn in the ranks. The state notes were, of course, much in demand, and had rapidly risen to par. They had even given rise to a most reprehensible speculation. A confidential clerk of Law, the Prussian Versinobre, having known in advance of the decree regarding the payment, abused his knowledge of the secret, and caused to be bought by brokers with whom he was associated a large amount of state notes at 50 or 60 per cent. below their nominal value, and employed them for the subscriptions when they were received at par. When it is considered that the subscriptions, already, were sold at a large advance, and that by means of the state notes they were bought at about half price, it will be understood what a profit this company of brokers must have realized.

Those who intended to subscribe had accomplished comparatively little by obtaining receipts or state notes; it was still necessary to go to the Hôtel de Nevers, where the subscriptions were received. The entrances there were crowded to suffocation. The hall servants made considerable sums by subscribing for those who could not get through the crowd to the offices. Some adventurers, assuming the livery of Law, performed this service, charging and obtaining a very large fee. The most humble employees of the company became patrons who were very much courted. As to the higher officers and Law himself, they received as much adulation as if they were the actual dispensers of the favors of Fortune. The approaches to Law's residence were encumbered with carriages. All that was most brilliant among the nobility of France came to beg humbly for the subscriptions, which were already much above the nominal price of shares, and which were sure to rise much higher. By a clause creating the company, the ownership of the shares entailed nothing derogatory to rank. The nobility, therefore, could indulge in this speculation without endangering its titles. It was as much in debt as the King, thanks to its prodigality and the long wars of that century, and it sought to win, at least, the amount of its debt by fortunate speculations. It surrounded, it fawned upon Law, who, very anxious to gain partisans, reservedvery few shares for himself, but distributed them among his friends of the court.

This new subscription was also taken up in a few days. If we reflect that fifty millions in cash was sufficient to secure five hundred millions of each issue, we shall understand how the state notes which remained in market and the receipts already delivered would suffice to monopolize the shares offered to the public. The creditors who had not liquidated their claims—and the greater number had not—could not avail themselves of the right to subscribe for shares, and were obliged to buy them in the market at an exorbitant price. The shares subscribed for at the Hôtel de Nevers for five thousand francs were re-sold in the Rue Quincampoix for six, seven, and eight thousand francs. To the need of having some of this investment was joined the hope of seeing the shares rise in the market to an indefinite extent, and it is not surprising that the eagerness to obtain them soon increased to frenzy. In order to satisfy this demand a third subscription was opened on October 2d, three days after the second. Similar in every respect to the first two, it ought to bring in a capital of five hundred millions and complete the fifteen hundred millions which the company needed to redeem the public debt.

The concourse of people was as great as ever at the treasury, where the receipts were given and at the Hôtel de Nevers, where the applications for shares were received. The occasion of this eagerness is evident, since that which was obtained at the Hôtel de Nevers for five thousand francs was worth seven and eight thousand in the Rue Quincampoix. This new issue at five thousand francs caused the rates in the Rue Quincampoix to diminish: in an instant they were below five thousand francs—even as low as four thousand—so blind were these movements, and, so to speak, convulsive, during this period of feverish excitement. There was no possible reason for selling in one place for four thousand francs that for which they paid five thousand at another. But this phenomenon lasted only a few hours; the rates rose again rapidly, and, the subscription being taken up, the shares sold again for seven and eight thousand francs. The crafty brokers had already had two opportunities of making some profitable operations.

Having obtained the state notes at a very small price, they procured shares at the most moderate rates, between five hundred and a thousand francs; then they sold them for from seven to eight thousand francs; and October 2d, the day of the decline, they repurchased them for four thousand, to sell them again the next day for seven or eight thousand. It will be seen how they must have made money with these opportunities.

It was no longer a few scattered groups which were seen in the Rue Quincampoix, but a compact crowd engaged in speculating from morning till night. The subscriptions had been divided into coupons, transferable, like notes, to the bearer by an indorsement simply formal. During the course of October the shares had already risen above ten thousand francs, and it was impossible to know where they would stop.

The end of the month of December, 1719, was the term of this delusion of three months. A certain number of stock-jobbers, better advised than others, or more impatient to enter upon the enjoyment of their riches, combined to dispose of their shares. They took advantage of the rage which led so many to sell their estates—they purchased them, and thus obtained the real for the imaginary. They established themselves in splendid mansions, upon magnificent domains, and made a display of their fortunes of thirty or forty millions. They possessed themselves of precious stones and jewels, which were still eagerly offered, and secured solid value in exchange for the semblance of it, which had become so prized by the crowd of dupes. The first effect of this desire to realize was a general increase in the price of everything. An enormous mass of paper being put in the balance with the existing quantity of merchandise and other property, the more paper there was offered against purchasable objects the more rapid the increase became. Cloth which heretofore brought fifteen to eighteen francs a yard rose to one hundred twenty-five francs a yard. In a cook-shop a "Mississippian," bidding against a nobleman for a fowl, ran the price up to two hundred francs.

From this instant the shares suffered their first decline, and a heavy uneasiness began to spread abroad. The extent of the fall was not measured by those whom it menaced; but people wondered, doubted, and began to be alarmed. The shares declined to fifteen thousand francs. However, the bank-notes were not yet distrusted. The bank was, in fact, entirely distinct from the company, and their fate, up to this time, appeared in no way dependent the one on the other. The notes had not undergone any fictitious and extraordinary advance. Large amounts had been issued, certainly, but for gold and silver, and upon the deposit of shares. The portion which had been issued upon the deposit of shares partook of the danger of the shares themselves; but no one thought of that, and the bank-notes still possessed the entire confidence of the public; only they no longer had the same advantage over specie since the latter had been so much sought by the "realizers." The notes already began to be presented at the bank for coin, and the vast reserve which it had possessed began to diminish perceptibly.

Law did then what governments do so often, and always with ill-success: he resorted to forced measures. He declared, in the first place, by decree, that the bank-notes should always be worth 5 per cent. more than coin.

In consideration of this superiority in value the prohibition which forbade the deposits of gold and silver for bills, at Paris, was taken off, so that notes could be procured at the bank for coin. This permission was simply ridiculous, for no one now wished to exchange specie for paper, even at par. But this was not all; the decree declared that thereafter silver should not be used in payments of over one hundred francs nor gold in those over three hundred francs. This was forcing the circulation of notes in large payments, and that of specie in small, and was designed to accomplish by violence what could only be expected from the natural success of the bank.

These measures did not bring any more gold and silver to the bank. The necessity of using bank-notes in payment of over three hundred francs gave them a certain forced employment, but did not procure them confidence. Notes were used for large payments, but coin was amassed secretly as a value more real and more assured. The creditors of the state ceased to carry their receipts to the Rue Quincampoix, because they already distrusted the shares; they could not decide to buy real estate, because the price had been quadrupled; they suffered the most painful anxiety, and in their turn embarrassed the holders ofshares who needed the receipts to pay their instalments of one-tenth. The catastrophe approached, and nothing could avert it, unless some magic wand could give the company an income of four or five hundred millions a year, which was now only seventy or eighty millions.

Law, adding measures to measures, at last prohibited the circulation of gold, because this metal was, by its convenience, a rival of bank-notes infinitely more dangerous than silver. He then announced an approaching reduction in the value of coin, which he had raised by a decree in February, only to reduce it again in a short time. The mark, in silver, raised from sixty to eighty francs, was reduced to seventy on April 1st, and sixty-five on May 1st. But this measure was utterly insufficient to bring it to the bank.

The situation grew worse every day; the issue of notes to pay for the shares presented at the bank had risen to two billions six hundred ninety-six millions; their depreciation increased; and creditors of every description, being paid in paper which was at a discount of 60 per cent., complained bitterly of the theft authorized by law.

In this juncture there remained but one step to be taken. As the necessary sacrifice had not been made in the first place, and the shares abandoned to their fate in order to protect the notes, both must now be sacrificed, shares and notes together, in order to finish this wicked fiction. The falsehood of this nominal value, which obliged men to receive at par what was depreciated 30 or 40 per cent., could not be prolonged. The immediate reduction of the nominal value of the shares and bank-notes was the only resource. Sacrifices cannot be too hastily made when they are inevitable.

M. d'Argenson, although dismissed from the treasury, still remained keeper of the seals; he had risen in the esteem of the Regent as Law had declined, and he advised the reduction of the nominal value of the shares and notes as an urgent necessity. Law, who saw in this reduction an avowal of the fiction in the legal values, and a blow which must hasten the fall of the "System," opposed it with his whole strength. Nevertheless, M. d'Argenson prevailed. On May 21, 1720, a decree, which remains famous in the history of the "System," advertised theprogressive reduction in the value of shares and notes. This reduction was to begin on the very day of the publication of the decree, and to continue from month to month until December 1st. At this last term the shares were to be estimated at five thousand francs, and a bank-note of ten thousand francs at five thousand; one of a thousand at five hundred, etc. The notes were thus reduced 50 per cent., and the shares only four-ninths per cent. Law, although opposed to the decree, consented to promulgate it.

Scarcely was it published when a fearful clamor was raised on all sides. The reduction was called a bankruptcy; the government was reproached with being the first to throw discredit upon the values which it had created, with having robbed its own creditors, a number of whom had just been paid in bank-notes, even as late as the preceding day—in a word, with assailing the fortunes of all the citizens. The crowd wished to sack Law's hotel and to tear him in pieces. Nothing that could have happened would have produced a greater clamor; but in times like those it was not only necessary not to fear these clamors: it was even a duty to defy them.

The reply to the complaints would have soon been evident to the intelligence of everybody. Without doubt the creditors of the state, and some private individuals, who had been paid in bank-notes, were half ruined by the reduction, but this was not the fault of the decree of May 21st—the real reduction was long before this; the decree only stated a loss already experienced, and the notes were worth still less than the decree declared. Because a number of creditors had been ruined by the falsity of nominal values, was it a reason to continue the fiction that it might extend the ruin? On the contrary, it was necessary to put an end to it, to save others from becoming victims. The official declaration of the fact, although it was known before, must produce a shock and hasten the discredit, but it was of little importance that it was hastened, since it was inevitable.

The public thought Law the author of this measure, advised exclusively by M. d'Argenson, and he became the sole object of hatred. The Parliament, making common cause with the public, thought it a good opportunity to take up arms. It did not perceive, in its blind hatred of the "System," that it was goingto render a service to its author, and that to declare itself against the reduction of the bank-notes was to maintain that the values created by Law had a solid foundation. It assembled on May 27th to demand a revocation of the decree of the 21st. At the very moment when it was deliberating, the Regent sent one of his officers to prohibit all discussion, announcing the revocation of the decree.

The Regent had the weakness to yield to the public clamor. Had the decree been bad, its revocation would have been worse. To declare that the shares and notes were still worth what they purported to be availed nothing, for no one believed it, and their credit was not restored by it. A legal falsehood was reaffirmed, and, without rendering any service to those who were already ruined, the ruin of those who were obliged to receive the notes at their nominal value was insured. The decree of May 21st, wise if it had been sustained, became disastrous as soon as it was revoked. Its only effect was to hasten the general discredit, without the essential advantage of reëstablishing a real, legal value.

We have just said that the bank was not obliged to pay notes of over one hundred francs. It paid them slowly, and employed all imaginable artifices to avoid the payment of them. Nevertheless, its coffers were almost exhausted, and it was necessary to authorize it to confine its disbursements to the payment of notes of ten francs only. The people rushed to the bank in crowds to realize their notes of ten francs, fearing that these would soon share the fate of those of one hundred. The pressure was so great that three persons were suffocated. The indignant mob, ready for any excess, already menaced the house of Law. He fled to the Palais Royal to seek an asylum near the Regent. The mob followed him, carrying the bodies of the three who had been suffocated. The carriage which had just conveyed him was broken to pieces, and it was feared that even the residence of the Regent would not be respected.

The gates of the court of the Palais Royal had been closed; the Duke of Orléans, with great presence of mind, ordered them to be opened. The crowd rushed into the court and suddenly stopped upon the steps of the palace. Leblanc, the chief of police, advanced to those who bore the corpses, and said, "Myfriends, go place these bodies in the Morgue, and then return to demand your payment." These words calmed the tumult; the bodies were carried away and the sedition was quelled.

Severities against the rich "Mississippians" were commenced in this same month of October. For a long time it had been suspected that the government, following an ancient usage, would deprive them, by means ofvisasandchambres-ardentes, of what they had acquired by stock-jobbing. A list was made of those known to have speculated in shares. A special commission arbitrarily placed on this list the names of those whom public opinion designated as having enriched themselves by speculation in paper. They were ordered to deposit a certain number of shares at the offices of the company, and to purchase the required number if they had sold their own. The "realizers" were thus brought back by force to the company which they had deserted. Eight days were given to speculators of good faith to make, voluntarily, the prescribed deposit. To prevent flight from the country, it was prohibited, under pain of death, to travel without a passport.

These measures increased still more the decline of the shares. All those whose names were not upon the list of rich speculators, and who could not tell what became of the shares not yet deposited, hastened to dispose of all they retained.

The "System" wholly disappeared in November, 1720, one year after its greatest credit. All the notes were converted into annuities or preferred shares, and all the shares were deposited with the company. Then a general visa was ordered, consisting of an examination of the whole mass of shares, with the purpose of annulling the greater portion of those which belonged to the enriched stock-jobbers.

Law, foreseeing the renewed rage which the visa would excite, determined to leave France. The hatred against him had been so violent since the scene of July 17th that he had not dared to quit the Palais Royal. The following fact will give an idea of the fury excited against him: A hackman, having a quarrel with the coachman of a private carriage, cried out, "There is Law's carriage!" The crowd rushed upon the carriage, and nearly tore in pieces the coachman and his master before it could be undeceived.

Law demanded passports of the Duke of Orléans, who granted them immediately. The Duke of Bourbon, made rich by the "System," felt under obligations to Law, and offered money and the carriage of Madame de Prie, his mistress. Law refused the money and accepted the carriage. He repaired to Brussels, taking with him only eight hundred louis. Scarcely was he gone when his property, consisting of lands and shares, was sequestrated.

FOOTNOTES:[27]A company headed by Anthony Crozat. It was chartered in 1712, and formed a commercial monopoly in Louisiana.—Ed.

[27]A company headed by Anthony Crozat. It was chartered in 1712, and formed a commercial monopoly in Louisiana.—Ed.

A.D. 1717

This struggle marked the disastrous end of a determined effort of the Ottoman empire to recover lost possessions. It also resulted in giving all Hungary, with Belgrad and a part of Servia, permanently to Austria. After their last great invasion of Austrian territory and their crushing defeat by Sobieski and the Imperialists (1683), the Turks suffered many losses of territory at the hands of various European powers. In 1696 Peter the Great took from them Azov, an important entrance to the Black Sea. By the treaty of the Pruth (1711) this, with other Russian possessions, was again ceded to the Turks.The temporary success led them to seek further recoveries. Their aim was chiefly directed against Austria and Venice, which had aggrandized themselves at the expense of the Moslem power. Turkish victories caused the Venetians to call in the aid of Austria. The Austrian intervention not only saved Venice, but once more checked the Turkish arms.The Emperor Charles VI appointed as leader of the Austrian forces Prince Eugene of Savoy, already distinguished through a long series of wars as one of the greatest soldiers of his time, the companion of Marlborough. In 1716 Eugene defeated the grand vizier at Temesvar, and in the following year took Belgrad and destroyed the Turkish army, as told in his own racy and cavalier style.

The temporary success led them to seek further recoveries. Their aim was chiefly directed against Austria and Venice, which had aggrandized themselves at the expense of the Moslem power. Turkish victories caused the Venetians to call in the aid of Austria. The Austrian intervention not only saved Venice, but once more checked the Turkish arms.

The Emperor Charles VI appointed as leader of the Austrian forces Prince Eugene of Savoy, already distinguished through a long series of wars as one of the greatest soldiers of his time, the companion of Marlborough. In 1716 Eugene defeated the grand vizier at Temesvar, and in the following year took Belgrad and destroyed the Turkish army, as told in his own racy and cavalier style.

From all sides men flocked to serve under me. There were enough to form a squadron of princes and volunteers. Among the former a Prince of Hesse, two of Bavaria, a Bevern, a Culenbach, one of Wuertemberg, two of Ligne, one of Lichtenstein, of Anhalt-Dessau, the Count of Charolai, the Princes of Dombes, of Marsillac, of Pons, etc.

The Emperor made me a present of a magnificent diamond crucifix, and strongly assured me that all my victories came, and would come, from God; this was getting rid of gratitude toward me; and I set off for Futack, where I assembled my army toward the end of May, 1717.

It was necessary to possess myself of Belgrad, which for three centuries had been so many times taken and retaken. Luckily, I did not find there the cordelier, John de Capistran, who, with the crucifix in his hand, and in the hottest part of the fire during the whole day, defended the place so well: and Hunyady, who commanded there, against Mahomet II in 1456. Hunyady died of his wounds. The Emperor lost Belgrad; Mahomet lost an eye, and the cordelier was canonized.

Unfortunately the Grand Seignior had but too well replaced the wrong-headed grand vizier, who had been killed. It was the Pacha of Belgrad, who supplied the vacancy, called Hastchi Ali, who made the most judicious arrangements for the preservation of the place, and caused me a great deal of embarrassment. On June 10th I passed the Danube: my volunteer princes threw themselves into boats to arrive among the first, and to charge the spahis with some squadrons of Mercy, which had already passed below Panczova, to protect the disembarkation of some, and the bridge constructed for the others, with eighty-four boats. On the 19th I went, with a large escort, to reconnoitre the place where I wished to pitch my camp. Twelve hundred spahis rushed upon us with unequalled fury, and shouted "Allah! Allah!" I know not why one of their officers broke through a squadron which was in front, to find me at the head of the second, where I placed myself from prudential motives, having many orders to give. He missed me, and I was going to obtain satisfaction with my pistol when a dragoon at my side knocked him under his horse. On the same day we had a naval combat, which lasted two hours; and our saics having the advantage I remained master of the operations on the Danube. On the 20th I continued working on the lines of contravallation, under a dreadful fire from the place. Toward the end of June I advanced my camp so near Belgrad that the bullets were constantly flying over my head. A storm destroyed all my bridges: and, but for the courage of a Hessian officer, in a redoubt, I do not know how I should have been able to reëstablish the one upon the Save.

Wishing to take the place on the side next the water, I caused a fort at the mouth of the Donawitz to be attacked by Mercy, who fell from his horse, in an apoplectic fit. They carried him away, thinking him dead. He was afterward successfully cured; but, being informed of his accident I went to replace him, and the fort was taken. The Prince of Dombes narrowly escaped being killed at my side by a bullet which made my horse rear. Marcilly was killed in bravely defending a post which I had charged him to intrench. He demanded succor from Rudolph Heister, who refused him, and who was deservedly killed as a punishment for his cowardice, by a cannon-ball which reached him behind his chevaux-de-frise. I arrived, accidentally at first, with a large escort; I sent for a large detachment; I halted, and completely beat the janizaries, leaving, indeed, five hundred men killed upon the field, Taxis, Visconti, Suger, etc. The Pacha of Roumelia, the best officer of the Mussulmans, lost his life also.

On July 22d my batteries were finished. I bombarded, burned, and destroyed the place so much that they would have capitulated if they had not heard that the grand vizier had arrived at Missa, on the 30th, with two hundred fifty thousand men.

On August 1st we saw them on the heights which overlooked my camp, extending in a semicircle from Krotzka as far as Dedina. The Mussulmans formed the most beautiful amphitheatre imaginable, very agreeable to look at, excellent for a painter, but hateful to a general. Enclosed between this army and a fortress which had thirty thousand men in garrison, the Danube on the right, and the Save on the left, my resolution was formed. I intended to quit my lines and attack them, notwithstanding their advantage of ground: but the fever, which had already raged in my army, did not spare me. Behold me seriously ill, and in my bed, instead of being at the head of my troops, whom I wished to lead the road to honor.

I can easily conceive that this caused a little uneasiness at the court, in the city, and even in my army. It required boldness and good-fortune to extricate one's self from it. The general who might have succeeded me would, and indeed, almost must, have thought that he should be lost if he retreated, and be beaten if he did not retreat. Every day made our situation worse. The numerous artillery of the Turks had arrived on the heights of which I have spoken. We were so bombarded with it, as well as with that from the garrison, that I knew not whereto put my tent, for, in going in and out, many of my domestics had been killed. In the small skirmishes which we often had with the spahis, my young volunteers did not fail to be among them, discharging their pistols, though cannon-balls intermingled also. And one day, D'Esrade, the governor of the Prince of Dombes, had his leg shot off by his side, and one of his pages was killed. All our princes, whom I have enumerated above, distinguished themselves, and loved me like their father.

I had caused the country in the rear of the grand vizier's army to be ravaged: but these people, as well as their horses and especially their camels, will live almost upon nothing. Scarcely an hour passed in which I did not lose a score of men by the dysentery, or by the cannon from the lines, which the infidels advanced more and more every night toward my intrenchments. I was less the besieger than the besieged. My affairs toward the city went on better. A bomb which fell into a magazine of powder completed its destruction and occasioned the loss of three thousand men.

At length I recovered from my illness; and, on August 15th, notwithstanding the ill-advice of persons who were not fond of battles, the matter was fixed. I calculated that listlessness and despair would produce success.

I did not sleep, as Alexander did before the battle of Arbela; but the Turks did, who were no Alexanders: opium and predestination will make philosophers of us. I gave brief and explicit instructions touching whatever might happen. I quitted my intrenchments one hour after midnight: the darkness first and then a fog rendered my first undertakings mere chance. Some of my battalions, on the right wing, fell, unintentionally, while marching, into a part of the Turkish intrenchments. A terrible confusion among them, who never have either advanced posts or spies; and, among us, a similar confusion, which it would be impossible to describe: they fired from the left to the centre, on both sides, without knowing where. The janizaries fled from their intrenchments: I had time to throw into them fascines and gabions, to make a passage for my cavalry who pursued them, I know not how: the fog dispersed and the Turks perceived a dreadful breach. But for my second line, which I ordered to march there immediately, to stop this breach, Ishould have been lost. I then wished to march in order: impossible! I was better served than I expected. La Colonie, at the head of his Bavarians, rushed forward and took a battery of eighteen pieces of cannon. I was obliged to do better than I wished. I sustained the Bavarians; and the Turks, after having fled to the heights, lost all the advantages of their ground. A large troop of their cavalry wished to charge mine, which were too much advanced; a whole regiment was cut in pieces; but two others, who arrived opportunely to their aid, decided the victory. It was then that I received a cut from a sabre; it was, I believe, my thirteenth wound, and probably my last. Everything was over at eleven o'clock in the morning. Viard, during the battle, retained the garrison of Belgrad, which capitulated the same day. I forgot that there was no Boufflers there: I played the generous man: I granted the honors of war to the garrison, who, not knowing what they meant, did not avail themselves of them. Men, women, and children, chariots and camels, issued forth all at once, pell-mell, by land and by water.

At Vienna the devotees cried out, "A miracle!" those who envied me cried out, "Good-fortune!" Charles VI was, I believe, among the former: and Guido Stahrenberg among the latter. I was well received, as might have been expected.

Here is my opinion respecting this victory, in which I have more cause for justification than for glory; my partisans have spoken too favorably of it, and my enemies too severely. They would have had much more reason to propose cutting off my head on this occasion than on that of Zenta, for there I risked nothing. I was certain of conquering: but here, not only I might have been beaten, but totally ruined and lost in a storm, for the enemy's artillery to the left, on the shores of the Danube, had destroyed my bridges. I was, indeed, superior in saics and in workmen and artillerymen to protect or repair them: I had a corps also at Semlin.

Could I anticipate the tardiness or disinclination of the authorities who engaged in this war, where there were so many vices of the interior in administration, and so much ignorance in the chiefs of the civil and commissariat departments? Hence it was that I was in want of everything necessary to commence thesiege, and to take Belgrad before the arrival of the grand vizier, and which hindered me afterward from checking him on the heights. This, however, I should have done—but for my cursed fever—before his artillery arrived. And then that unlucky dysentery, which put my army into the hospital, or rather into the burying-ground, for each regiment had one behind its camp—could I anticipate that also? These were the two motives which induced me to attack, and to risk all or nothing, for I was as certainly lost one way as another. I threw up intrenchments against intrenchments: I knew a little more upon that subject than my comrade the grand vizier; and I had plenty of troops in health to guard them. I obliged him for want of provisions—for, as I have already said, I caused all the country in his rear to be ravaged—to decamp, and, consequently, Belgrad to surrender. Thus, if this manuscript should be read, give me neither praise, my dear reader, nor blame. After all, I extricated myself, perhaps, as Charles VI said, his confessor, and the pious souls who trust in God, and who wished me at the Devil, by the protection of the Virgin Mary, for the battle was fought on Assumption Day.

Europe was getting embroiled elsewhere. Some charitable souls advised the Emperor to send me to negotiate at London, reckoning that they might procure for another the easy glory of terminating the war.

I was not such a fool as to fall into this snare, and I set off for Hungary at the commencement of June, with a fine sword worth eighty thousand florins which the Emperor had presented to me.

A.D. 1720

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