was, that the bank money, instead of being liable to perpetual fluctuations, as it had been, when compared with the livre, should be hereafter fixed. It is said by Stewart, Law's apologist, that he strenuously opposed this change. Although this alteration in the tenor of the note was calculated to excite distrust, it seems not to have had that effect; but the bank paper retained its credit, notwithstanding the large additions which the regent made to its amount. It is even asserted by contemporary writers, that their credit seemed unimpaired throughout the year 1719, though the issues of the bank then amounted to 1,000,000,000! The first project of the regent and Law is supposed to have been to pay off portions of the public debt with the coin which was constantly flowing into the bank, in consequence of the premium it bore over coin; and in this way the regent might obtain the use of the whole coin of the kingdom; and that the money thus paid to the public creditors would gradually return to the bank, in the payment of the public revenues-or, at least, enough of it to redeem such notes as should be returned to the bank. It was not foreseen by them, that no considerable addition could be made to the currency without depreciating it; and that such large issues of paper as their plan contemplated must necessarily drive gold and silver out of the country. Accordingly it was found, soon after the regent took charge of the bank, that coin did not continue to flow into the bank as at first; and it became therefore necessary to change their plan, and to adopt one by which they might use the notes of the bank to discharge the public debt, without raising a suspicion of their credit. To effect this purpose, their plan was, for the regent to purchase shares of the Mississippi Company with the notes of the bank; then borrow of the company at a low interest, and with them, when thus endowed with a false credit, pay off the public creditors. By throwing the shares into the market, the regent might withdraw the notes from circulation. The result of these operations would be, that the public creditors would find themselves transformed into shareholders in the Mississippi Company; the government would have transferred a part of its revenues to the company, instead of owing all of them to its creditors, and be a gainer, first, by the lower interest paid to the company, and secondly, by the advance the shares would 90 THE MISSISSIPPI SCHEME. naturally experience, when so large an addition had been made to the currency, by paying off the national debt. In the execution of this vast scheme, which it seems as difficult to reconcile with uprightness of intention as soundness of judgment, the bank proceeded to make new notes, and the company to create new shares, to raise the value of which every expedient was resorted to. In May, 1719, Law's company was incorporated with the East India Company. In June the mint was transferred to it for 50,000,000; and, to give it a supply of cash, fifty thousand shares were sold for 550 livres a share. A few ships were then purchased, to aid in deluding the credulous public with the hope of gain from traffic; and, in the succeeding month, 50,000 additional shares were sold at the advanced price of 1,000 livres a share. The spirit of speculation being now called into existence, no time was lost in profiting by it. In August, the company farmed all the public revenues, and it agreed to lend to the government 1,600,000,000 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 5,000 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 5,000, 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 depre ciation 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 nsufficient, 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 dicis. If we had no other data for estimating the motives of he authors of the scheme, we may judge of the probity of their ntentions by the means they adopted for their execution. Those harsh measures brought some coin to the bank, but ot enough to counterbalance the previous drain, and that which was still going on by the conversion of small notes into pecie. Nor was this all the difficulty in the execution of the lan. After the shares rose to 5,000 livres, and yet more, to 0,000 livres, many of the original holders were tempted to ell out, and the number hus thrown on the market at once, nterfered with the sales of those belonging to the government, nd tended to lower their prices. Money, too, would recover omewhat from its extreme depreciation, both by the export of in, and by the withdrawal from circulation of those notes 92 THE MISSISSIPPI SCHEME. which were paid to the regent for shares; and as money rose ín value. the market prices of shares would fall. Had the project. then, been an honest one, these inherent and insuperable defects must have prevented its complete execution. Accord ingly, in May, 1720, its authors, finding it impracticable either to sustain a paper currency, which 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 hithert‹ 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 circulation. 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 one-half 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 wher 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 government was penniless; 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 wet more visionary. -TUCKER. HARMOSAN. Now the third and fatal conflict of the Persian throne was done, Captive overborne by numbers, they were bringing forth to die. Give me but one drink of water, and let then arrive the worst." In his hand he took the goblet, but awhile the draught forbore, Well might then have paused the bravest for around him angry foes, With an hedge of naked weapons did that lonely man enclose. 'But what fear'st thou ?" cried the Caliph : "is it, friend, a secret blow? ear it not our gallant Moslem no such treacherous dealing know : Thou may'st quench thy thirst securely, for thou shalt not die before hou hast drunk that cup of water-this reprieve is thine-no more. uick the Satrap dashed the goblet down to earth with ready hand, nd the liquid sank for ever, lost amid the burning sand. Thou hast said that mine my life is, till the water of that cup have drained-then bid thy servants that spilled water gather up." or a moment stood the Caliph, as by doubtful passions stirred, exclaimed, "For ever sacred must remain a monarch's hen word! ring another cup, and straightway to the noble Persian give: rink, I said before, and perish-now I bid thee drink and live." R. C. TRENCH, |