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at three per cent. On the faith of this arrangement, it publicly declared itself able to make an annual dividend of 200 livres a share. As interest was then four per cent., the shares, with such a dividend, would be worth 5000 livres; and they immediately rose to that price.
The bank continued to fabricate more notes, as the company had continued to create more shares, until, in October, 1719, the shares amounted to 624,000, and by the 1st of May following, the notes amounted to 2,696,400,000 livres ! The scheme that had been previously concerted being now ripe for execution, the regent became the purchaser of the new shares with the notes of his bank, and then borrowing back the same notes of the company, he with them paid off the public debt. The great object being thus effected, he, in February, 1720, reunited the bank with the company.
The effect of these financial operations on the community was immense. The large fortunes which had been made by the first subscribers to the Mississippi Company, whose shares had, in the course of a single year (from September 1718 to 1719), risen from 170 livres to 5000, produced a mania for speculation and stock-jobbing that was without example, and which attracted men of capital and adventurers from all parts of Europe, to Paris, to share in its enormous profits. This real accession of wealth, added to the redundancy of the paper in circulation, raised the price of every species of property, and thus deluded the public with the belief of extraordinary national prosperity. Among other consequences of the depreciation of money, land sold at fifty years' purchase; and consequently, as so large a part of the national capital yielded but two per cent., that became the market rate of interest for large sums, and the shares of the company, which the credulous public estimated at 200 livres a year, accordingly now rose to 10,000 livres a share.
But this state of things could not last. The depreciation of money, necessarily tending to expel gold and silver from the kingdom, soon began to be felt at the bank. To counteract the apprehended diminution of these metals, every device which Law's ingenuity could suggest, or the power of an arbitrary government could enforce, was resorted to for the purpose of retaining the coin in the bank, and of replenishing its coffers. Bills of exchange were required to be paid solely in bank notes. Public officers were to receive them in preference to coin. The value of the livre was greatly reduced in value, then raised, and
lowered again, to induce persons to deposit their specie (the value of which was thus suddenly and capriciously changed) in the bank, as a place of safety. These expedients proving insufficient, it was at length declared penal for any one to have more than 500 livres in his possession, or any articles of gold or silver, or to make any payment for more than 100 livres, except in bank notes; and domiciliary visits were enjoined on all public officers, for the purpose of enforcing these tyrannical edicts. If we had no other data for estimating the motives of the authors of the scheme, we may judge of the probity of their intentions by the means they adopted for their execution.
These harsh measures brought some coin to the bank, but not enough to counterbalance the previous drain, and that which was still going on by the conversion of small notes into specie. Nor was this all the difficulty in the execution of the plan. After the shares rose to 5000 livres, and yet more, to 10,000 livres, many of the original holders were tempted to sell out, and the number thus thrown into the market at once, interfered with the sales of those belonging to the government, and tended to lower their prices. Money, too, would recover somewhat from its extreme depreciation, both by the export of coin, and by the withdrawal from circulation of those notes which were paid to the regent for shares; and as money rose in value, the market price of shares would fall. Had the project, then, been an honest one, these inherent and insuperable defects must have prevented its complete execution. Accordingly, in May, 1720, its authors, finding it impracticable either to sustain a paper currency, wbich then amounted to 2,235,000,000, or to withdraw it from circulation, reduced its value one half, by seven successive reductions, to take place between May and December. This royal edict broke the spell which had hitherto bound the people of France, and the day after its promulgation bank notes ceased to have circulation. .
The government, seeing the fatal consequences of its last decree, repealed it six days afterwards; but the credit of the notes had received its death-blow, and could not be revived. After several ineffectual attempts to restore it, their circulation was formally suppressed in October.
On the winding up of this colossal scheme of stock-jobbing and fraud, it appeared that, of the 2,696,000,000 of notes struck off, 700,000,000 were found in the bank, and the rest were in circula
ed by the part of the no
tion. The cash in the bank amounted to 90,000,000, which were used to pay off notes to the same amount; and the greater part of the residue were funded by the government, at an interest of from two and a half to two per cent., and a part remained a caput mortuum in the hands of its owners. The holders of the notes thus lost about onehalf of their nominal value by the bankruptcy.
The loss sustained by the shareholders of the company was much greater. Of these shares, 200,000 were in the hands of the community, and the remaining 424 were found to be in the possession of the regent. The affairs of the company were in utter confusion after the explosion of the scheme; but when they were brought to a final adjustment with the government, in 1725, their whole capital—all that remained from the wreck of their splendid hopes-amounted only to 137,000,000; so that, if we estimate the 200,000 shares at the price they had actually borne a short time before, the loss of their holders amounted to 1,863,000,000! Besides the thousands and tens of thousands who were thus reduced from affluence to penury, 500,000,000 of coin are computed to have found their way to foreign countries; the govern. ment was pennyless; confidence between man and man was destroyed; in the unsettled value of money, no one knew in his dealings what to ask or what to give; and France, lately thought to be overflowing with wealth, now presented one general scene of poverty, distrust, and wretchedness.
The gambling spirit which the Mississippi scheme had engendered in France extended soon after to England, and manifested itself in the South Sea scheme, and a thousand projects yet more visionary. It did not, however, produce the same mischief there, since it was not accompanied in that country, as in France, with an increase of cur. rency.
BUTLER. SAMUEL BUTLER, the author of 'Hudibras,' the son of a farmer at Strensham in Worcestershire, was born about 1612, and was educated at the Free School of Worcester. The records of his life are very meagre. His great poem exhibits his political and religious opinions. He died in London in 1680. The wit of Butler is unrivalled; and
the popularity of Hudibras' must have been at one time universal, for some of his axiomatic lines have passed into proverbs, which are still to be found amongst the colloquial pleasantries of the English people.]
He had been long t’ward mathematics,
Best to set garlic, or sow pease ;
How many dukes, and earls, and peers,