CHAP. LXXIX.

Of the Mississippi Scheme in France, A. D. 1720.

A GREAT and real change was brought about in the commercial world, in the finances of nations and the fortunes of individuals, by a Scottish adventurer named John Law. This man, professionally a gamester, and a calculator of chances, had been obliged to abandon his own country, for having killed his antagonist in a duel. He visited several parts of the continent; and, on his arrival at Paris, he was particularly struck with the confusion into which the ambition of Lewis XIV. had thrown the French finances. To remedy this evil, appeared a task worthy of his daring genius; and he flattered himself that he could accomplish it. The greatness of the idea recommended it to the duke of Orleans, whose bold spirit and sanguine temper, inclined him to adopt the wildest expedients. Law's scheme was, by speedily paying off the immense national debt, to clear the public revenue of the enormous interest that absorbed it. The introduction of paper credit could alone effect this amazing revolution, and the exigences of the state seemed to require such an expedient. Law accordingly established a bank, which was soon declared royal, and united with the Mississippi or West India company, from whose commerce great riches were expected, and which soon swallowed up all the other trading companies in the kingdom. It undertook the man

agement of the trade to the coast of Africa; it also acquired the privileges of the old East-India company, founded by the celebrated Colbert, which had gone to decay, and given up its trade to the merchants of St. Malo; and it, at length, engrossed the farming of the national taxes.

The Mississippi company, in a word, seemed established on such solid foundations, and pregnant with such vast advantages, that a share in its stock rose to above twenty times its original value. The cause of this extraordinary power deserves to be traced.

It had long been believed, on the doubtful relations of travellers, that the country in the neighborhood of the river Mississippi, contained inexhaustible treasures. Law availed himself of this credulity, and endeavored to encourage and increase it by mysterious reports. It was whispered as a secret, that the celebrated but fabulous mines of St. Barbe, had at length been discovered; and that they were much richer than ever fame had reported them. In order to give the greater weight to this deceitful rumor, a number of miners were sent to Louisiana, to dig, as was pretended, the abundant treasure, with a body of troops sufficient to defend them against the Spaniards and Indians, as well as to protect the precious produce of their toils!

The impression which this stratagem made upon a nation naturally fond of novelty, is alto. gether astonishing. Every one was eager to obtain a share in the stock of the new company. The Mississippi scheme became the grand object, and the ultimate end of all pursuits. Even

Law himself, deceived by his own calculations, and intoxicated with the public folly, had fabricated so many notes, that the chimerical value of the funds, in 1719, exceeded four-score times the real value of the current coin of the kingdom, which was almost all in the hands of the government.

This profusion of paper, in which only the debts of the state were paid off, first occasioned suspicion, and afterwards spread a general alarm. The late financiers, in conjunction with the great bankers, exhausted the Royal Bank, by continually drawing upon it for large sums. Every one wanted to convert his notes into cash; but the disproportion of specie was immense. Public credit sunk at once; and a tyrannical edict, forbidding private persons to keep by them above five hundred livres, served only to crush it more effectually, and to inflame the injured and insulted nation against the regent. Law, who had been appointed comptroller general of the finances, and loaded with respect, was now execrated, and obliged to flee from a country he had beggared, without enriching himself, in order to discharge the debts of the crown. The distress of the kingdom was so great, and the public creditors so numerous, that government was under the necessity of affording them relief. Upwards of five hundred thousand sufferers, chiefly fathers of families, presented their whole fortunes in paper; and government, after liqui dating these debts, which are said to have originally amounted to a sum too incredible to be named, charged itself with the enormous debt

of sixteen hundred and thirty-one millions, to be paid in specie.

Thus ended in France the famous Mississippi scheme; so ruinous to the fortunes of individuals, but ultimately beneficial to the state, which it relieved from an excessive load of debt, though it threw the finances, for a time, into the utmost disorder. Its effects, however, were not confined to that kingdom. Many foreigners had adventured in the French funds, and the contagion of stock-jobbing infected other nations. Holland received a slight shock; but its violence was more peculiarly reserved for England, where it appeared in a variety of forms, and exhausted all its fury.

CHAP. LXXX.

Of the South Sea Scheme.

THE South Sea scheme, evidently borrowed from that of Law, excited the avidity of the English nation. But it will be necessary, before I enter upon that subject, to give some account of the nature of the Stocks, and the rise of the South Sea Company.

Nothing is so much talked of in London, or so little understood, as the National Debt, the Public Funds, and the Stocks. I shall, therefore, endeavor to give a general idea of them. The National Debt is the residue of those immense sums, which government has, in times

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of exigency, been obliged to raise, by way of voluntary loan, for the public service, beyond what the annual revenue of the crown could supply, and which the state has not found it hitherto convenient to pay off.

The public Funds consist of certain ideal aggregations, or masses of the money thus deposited in the hands of government, together with the general produce of the taxes appropriated by parliament to pay the interest of that money; and the surplus of these taxes, which has always been more than sufficient to answer the charge upon them, composes what is called the Sinking Fund, as it was originally intended to be applied towards the reduction, or sinking of the National debt.

The Stocks are the whole of this public and funded debt; which being divided into an infinity of portions or shares, bearing a known interest, but different in the different funds, may be readily transferred from one person to another, and converted into cash for the purposes of business or pleasure, and which rise or fall in value, according to the plenty or scarcity of money in the nation, or the opinion the proprietors have of the security of public credit.

Such is the present state of the Stocks, which are subject to little fluctuations, except in times of national danger or calamity; for as the public creditors have long given up all expectation of ever receiving their capital from government, they are not much affected by great national prosperity, unless attended with a sudden or extraordinary influx of money. A strong probabil