Chap。XXIII
OfthefirstEstablishmentofMrLaw’sBankinFrance，intheyear1716
Indeducingtheprinciplesofcredit，Ihaveitchieflyinview，tosetinafairlight，thesecurityuponwhichpapermoneyisestablished:andasIimagine，thisimportantbranchofmysubjectwillstillberenderedmoreintelligible，byanexampleoftheabusetowhichthisgreatengineofcommerceisexposed，I
nowproposetogivemyreaderashortaccountofthefamousbankofcirculationfirstestablishedinFrancebyMrLaw；butafterwardsprostitutedwhetherbydesign，orbyfatality，I
shallnotheredeterminetoservetheworstofpurposes；
defraudingthecreditorsofthestate，andamultitudeofprivatepersons。
Sodreadfulacalamitybroughtuponthatnation，bytheabuseofpapercredit，maybeawarningtoallstatestobewareofthelike。Thebestwaytoguardagainstit，istobeapprisedofthedelusionofit，andtoseethroughthespringsandmotivesbywhichtheMissisippibankwasconducted。
AfterthedeathofthelateKingofFrance，LouisXIV，thedebtscontractedbythatMonarchwerefoundtoextendto2000
millionsoflivres，thatis，toupwardsof140millionssterling。
ItwasproposedtotheDukeofOrleans，regentofthekingdom，toexpungethedebtsbyatotalbankruptcy。Thisproposalherejectednobly；and，insteadofit，establishedacommissioncalledtheVisatoinquireintotheclaimsofsuchofthenation’screditorsaswerenotthenproperlyliquidated，norsecuredbytheappropriationofanyfundforthepaymentoftheinterest。
Inthecourseofthiscommission，manyexorbitantfraudswerediscovered；bywhichitappeared，thatvastsumsofdebthadbeencontracted，fornoadequatevaluepaidtotheKing。
Aftermanyarbitraryproceedings，thiscommissionthrewtheKing’sdebts，atlast，intoakindoforder。
Thoseformerlyprovidedforwereallputat4percent。Thecreditorstotheamountofsixhundredmillions，whichhadnotbeenliquidated，norprovidedfor，hadtheirclaimsreduced，bythecommission，totwohundredandfiftymillions。forwhichtheyobtainednotesofstate，Billetsd’閠at，astheywerecalled，
bearinganinterestof4percentalso。
Theseoperationsperformed，thetotaldebtsofthelateKingwerereducedtothesumabovementioned；towit，twothousandmillions；bearinganinterestof4percentoreightymillionperannum。
Fromthenecessitiesofgovernment，andthedistressedsituationofthekingdom，thisinterestwasillpaid；andtherehardlyremained，outofanill-paidrevenue，wherewithtodefraytheexpenceofthecivilgovernment。
Aboutthistime，MrLawpresentedtotheRegenttheplanofabankofcirculation。
Chap。XXV
ContinuationoftheAccountofLaw’sBankThebankaccordinglywasestablishedinfavourofLawandCompany，byletterspatent，ofthe2ndofMay1716。TheCompanywascalled，theGeneralBank；andthenoterunthus:
Thebankpromisestopaytothebeareratsightlivres，incoinofthesameweightandfinenesswiththecoinofthisday，valuereceivedatParis。
Thefirstfundofthisbankconsistedin1200actionsorsharesofonethousandcrownsor5000livresbankmoney；inallsixmillions；thecrownbeingthen5livres，8tothemarc；
silvercoinat40livrespermarc，ashasbeensaid:whichmakesthislivrejustworthoneshillingsterling:consequently，theshareswereworth250l。sterling，andthebankstockworth300，000l。sterling。
Bytheclauseinthenote，bywhichthebankwasobligedtopayaccordingtothethenweightandfinenessofthecoin，thosewhoreceivedtheirpaperweresecuredagainstthearbitrarymeasurescommoninFranceofraisingthedenominationofthecoin；andthebankwassecuredagainsttheloweringofit。Inashorttime，mostpeoplepreferredthenotestothecoin；andaccordinglytheypassedfor1percentmorethanthecoinitself。
Thisbanksubsisted，andobtainedgreatcredit，untilthe1stofJanuary1719:atwhichtimetheKingreimbursedalltheproprietorsoftheshares，andtookthebankintohisownhand，underthenameoftheRoyalBank。
Uponthisrevolution，thetenorofthenotewaschanged。Itranthus:Thebankpromisestopaytothebeareratsight，livres，insilvercoin，valuereceivedatParis。
Bythisalteration，themoneyinthenoteswasmadetokeeppacewiththemoneyinthecoin；andbothwereequallyaffectedbyeveryarbitraryvariationuponit。Thiswascalledrenderingthepapermonnoiefixe；becausethedenominationscontainedinitdidnotvaryaccordingtothevariationsofthecoin:Ishouldhavecalleditmonnoievariable；becauseitwasexposedtochangeswithrespecttoitsrealvalue。
MrLawstrenuouslyopposedthischangeinthebanknotes。Nowonder！itwasdiametricallyoppositetoallprinciplesofcredit。Ittookplace，however；andnobodyseemeddissatisfied:
thenationwasratherpleased:sofamiliarwerethevariationsofthecoininthosedaysthatnobodyeverconsideredanythingwithregardtocoinormoney，butitsdenomination:theconsequencesofthevariationsinthevalueofdenominations，upontheaccomptsbetweendebtorsandcreditors，werenotthenattendedto；andthecreditofthenotesoftheroyalbankcontinuedjustasgoodasthecreditofthoseofMrLaw’shadbeen；althoughthelivresinthiscontainedadeterminatevalue；andthelivresinthatcouldhavebeenreducedatanytimetothevalueofhalfpence，byanactoftheKing’sauthority，whowasthedebtorinthem。Naymore，theyinfactstoodmanyvariationsduringthecourseofthesystem，withoutsufferingthesmallestdiscredit。
Thisappearswonderful；andyetitisafact。5*
PoliticalwritersupontheaffairsofFranceatthisperiod，suchasDeMelon，Savarie，Dutotandothers，abundantlycertifytheincredibleadvantageproducedbytheoperationsofMrLaw’sBank；andthechainofeventswhichfollowed，intheyears1719，and1720，whenitwasintheKing’shands，shewtowhataprodigiousheightcreditaroseuponthefirmfoundationlaidbyMrLaw。6*
Butalas！thesuperstructure，then，becamesofarbeyondtheproportionofthefoundation，thatthewholefabricfelltoruin，andinvolvedanation，justemergingfrombankruptcyandruin，intonewcalamities，almostequaltotheformer。
Aslongasthecreditofthisbanksubsisted，itappearedtotheFrenchtobeperfectlysolid。Thebubblenosoonerbursted，thanthewholenationwasthrownintoastonishmentandconsternation。Nobodycouldconceivefromwhencethecredithadsprung；whathadcreatedsuchmountainsofwealthinsoshortatime；andbywhatwitchcraftandfascinationithadbeenmadetodisappearinaninstant，intheshortperiodofoneday。
VolumeshavebeensincewritteninFrance，bymenofspeculation，inordertoprove，thatitwasawantofconfidenceinthepublic，andnotthewantofapropersecurityforthepaper，whichoccasionedthisdownfal。
This，ifwejudgebywhathasbeenwritten，hasbeenthegeneralopinionofthatnationtothisday:andsinceitwasfoundimpossible，inFrance，tocreateconfidenceincirculatingpaper，whichhadnosecurityforitsvalue，manypeoplethere，andsomeevenamongourselves，conclude，thatagreatpartofthewealthofGreatBritain，whichconsistsinpaper，wellsecured，isfalseandfictitious。
IshallnowproceedtosetbeforemyreaderthegreatlinesoftheroyalMissisippibankofFrance，fromthe1stofJanuary1719，tothetotaloverthrowofallcredit，uponthefatal21stdayofMay1720。Thiswasagoldendream，inwhichtheFrenchnation，andagreatpartofEuropewasplunged，fortheshortspaceof506days。
Chap。XXVI
AccountoftheRoyalMissisippiBankofFrance，establishedonPublicCreditInordertounravelthechaosofthisaffairinapropermanner，itwillnotbeamisstobeginbygivingthereaderanideaoftheplanwhichnaturallymightsuggestitselftotheregentofFrance，fromthehintofMrLaw’sbank。Bythehelpofthisclue，hewillbethebetterabletoconducthimselfthroughtheoperationsofthissystem，astheFrenchcallit。
TheRegentperceived，thatinconsequenceofthecreditofLaw’sbank，peoplegrewfondofpaper-money。Theconsequenceofthis，hesaw，wastobringagreatquantityofcoinintothebank。ThedebtsofFrancewereverygreat，being，ashasbeensaid，above2000millions。Thecoin，atthistime，inFrance，wasreckonedatabout1200millions，at60livresthemarc，or40
millionssterling。TheRegentthought，thatifhecoulddraweitherthewhole，oreventhegreatestpartofthis1200millionsofcoinintohisbank，andreplacetheuseofittothekingdom，byasmuchpaper，secureduponhisword，thatheshouldthenbeabletopayoff，withit，nearonehalfofallthedebtsofFrance:andbythusthrowingbackthecoinintocirculation，inpayingoffthedebts，thatitwouldreturnofitselfintothebank，inthecourseofpaymentsmadetothestate；thatcreditwouldbetherebysupported，asthebankwouldbeenabledtopayincointhenotesastheyhappenedtoreturn，inthecourseofdomesticcirculation。
Thiswasbothaplausibleandanhonestscheme，relativelytoaDukeofOrleans，whomwecannotsupposetohavebeenmasteroftheprinciplesofcredit；andverypracticableinacountrywheretherewassogreataquantityofcoinas40millionssterling，andawell-establishedcreditinthebank，whichpreventedallrunsuponitfromdiffidence。Nothingbutawrongbalanceoftradecouldhaveoccasionedanyrunforcoin；because，forthereasonalreadygiven，thepaperboreforthemostpartapremiumof1percentaboveit。
Accordingly，duringthewholeyear1719，thecreditoftheroyalbankwaswithoutsuspicion，althoughtheregenthad，bythelastdayofDecemberofthatyear，coinedofbankpaper，fornolessasumthan769millions，reckoningin59millionsofpaper，whichhadbeenformerlyissuedbythegeneralbankofLawandcompany；forwhichhehadgivenvaluetotheproprietors，whenhetookthebankintohisownhands，aswehavesaidabove。
Imusthereobserve，thatbythisplanoftheRegent，therewas，inonesense，akindofsecurityforthenotesissued。Sofarastheywereissuedforcoinbroughtinfromtheadvancedvalueofthepaper，thiscoinwasthesecurity:inthesecondplace，whenthecoinwaspaidawaytothecreditorsofthestate，theRegentwithdrewtheobligationswhichhadbeengrantedtothem；andalthoughIallowthattheKing’sownobligationwithdrawn，wasnosecuritytothepublic，whohadreceivedbanknotesforthepaymentofit；yetstilltheinterestformerlypaidtothecreditors，wasafundoutofwhich，upontheprinciplesofpubliccredit，theannualinterestforthenoteswassecured。
Had，indeed，theFrenchnationperceiveduponwhatbottomthesecurityforthepaperstood，duringtheyear1719，perhapsthecreditofthebankmighthavebeenrenderedprecarious；buttheyneithersawitorsoughtafterit:andthemenofspeculationwereallofopinion，thataslongastherewasnomorepaperissuedbythebankthantherewascoininthekingdom，therecouldbenoharmdone。Ofthis，anypersonwhohasreadDutot，DeMelon，Savarie，andothers，willbeperfectlysatisfied。AndI
desirenofartherproofofthetotalignoranceoftheFrenchinmattersofthiskind，thantofindthemagreeing，thatbankpapermustalwaysbegood，providedtherebecoininthenationtorealizeit，althoughthatcoinbenotthepropertyofthebank。
Dutot，p。132，133。Onthecontrary，itisveryevidentfromwhathasbeensaid，thatalthoughthereshouldbeathousandtimesmorecoininacountrythanthebankpaper，stillthatbankpapermustbeameredelusion，and，infact，ofnovaluewhatsoever，exceptsofarasthebankispossessedofthevalueofitinonespeciesofpropertyoranother。
Andontheotherhand，letthebankpaperexceedthequantityofcoinintheproportionofathousandtoone，yetstillitisperfectlygoodandsufficient，providedthebankbepossessedofanequivalentvalueinanyspeciesofgoodproperty。ThisIthrowinheretopointouthowfartheFrenchwere，atleastatthattime，andmanyyearsafter，whenDutotandMelonwrote，fromforminganyjustnotionoftheprinciplesofbanking。And，I
believe，Imayventuretosay，thattheonlyreasonwhybankshaveneverbeenestablishedinFrance，is，becausethewholeoperationisstillamysterytothem。IgroundthisconjectureuponanopinionofM。deMontesquieu，whothinksthatbanksareincompatible，withpuremonarchy；apropositionhewouldneverhaveadvanced，hadheunderstoodtheprinciplesuponwhichtheyareestablished。
Thenextremarkableandinterestingrevolutionmadeuponthisfamousbank，wasbythearretofFebruary22，1720；whichconstitutedtheunionoftheroyalbankwiththecompanyoftheIndies。
Bythisarret，theKingdeliveredtothatcompanythewholemanagementofthebankwithalltheprofitsmadebyhimsincethefirstofJanuary1719，andtobemadeintimetocome。
Notwithstandingthiscession，theKingremainedguaranteeforallthenotes，whichwerenottobecoinedwithoutanorderofcouncil:thecompanywastoberesponsibletotheKingatalltimesfortheiradministration；and，asasecurityfortheirgoodmanagement，theyengagedtolendtheKingnolessthansixteenhundredmillionsoflivres。
Hereistheaeraandbeginningofalltheconfusion。Fromthisloanproceededthedownfalofthewholesystem。
Chap。XXIX
ContinuationoftheAccountoftheRoyalBankofFrance，untilthetimethattheCompanyoftheIndiespromisedaDividendof200LivresperActionThesethingspremised，whatfollowswill，Ihope，beeasilyunderstood。
AssoonastheRegentofFranceperceivedthewonderfuleffectsproducedbyLaw’sbank，heimmediatelyresolvedtomakeuseofthatengine，forclearingtheKing’srevenueofapartoftheunsupportableloadof80millionsofyearlyinterest，due，thoughindeedveryirregularlypaid，tothecreditors。
Itwastocompassthisend，thathebestowedonLawthecompanyoftheWestIndies，andthefarmofthetobacco。
Toabsorb100millionsofthemostdiscreditedarticlesoftheKing’sdebts，200，000actionsorsharesofthiscompanywerecreated。Thesewereratedat500livreseach，andthesubscriptionfortheactionswasorderedtobepaidinbilletsd’閠at，somuchdiscreditedbyreasonofthebadpaymentoftheinterest，that500livres，nominalvalueinthesebillets，wouldnothavesolduponchangeforabove160or170livres。Inthesubscriptiontheyweretakenforthefullvalue。Astheseactionsbecamepartofthecompany’sstock，andastheinterestofthebilletswastobepaidtothecompanybytheKing，thiswaseffectuallyaloanfromthecompanytotheKingof100millionsat4percent。
Thenextstepwastopaytheinterestregularlytothecompany。Uponthistheactionswhichhadbeenboughtfor170
livres，realvalue，mountedtopar，thatis，to500livres。
Thiswasascribedtothewonderfuloperationsofthebank；
whereasitwaswhollyowingtotheregularpaymentoftheinterest。
InMayfollowing1719，theEastIndiacompanywasincorporatedwiththeWestIndiacompany:anditwasstipulatedthatthe200，000actionsformerlycreated，weretobeentitledtoacommonshareoftheprofitsofthejointtrade。
Butasthesaleofthefirst200，000actionshadproducednoliquidvaluewhichcouldbeturnedintotradehavingbeenpaidforinstatebillets，acreationof50，000newactionswasmadeinJune1719，andthesubscriptionopenedat550livrespayableineffectivecoin。
TheconfidenceofthepublicinMrLaw，wasatthistimesogreat，thattheymighthavesoldformuchmore:butitwasjudgedexpedienttolimitthesubscriptionstothissum；leavingthepriceoftheactionstoriseinthemarket，accordingtodemand，infavouroftheoriginalsubscribers。
Thismoneyamountingto27，500，000livresincoin，wastobeemployedinbuildingofships，andotherpreparationsforcarryingonthetrade。
Thehopesofthepublicweresomuchraisedbythefavourableappearanceofamostlucrativetrade，thatmoreactionsweregreedilydemanded。
AccordinglyinamonthafterJuly1719anothercreationwasmadeof50，000actions；andthepriceofthemfixedat1000
livres。
Itmustbeobserved，thatallactionsdeliveredbythecompanyoftheIndies，originallycontainedanobligationonthecompanyfornomorethan4percentuponthevalueof500livres，withaproportionoftheprofitsonthetrade；sothattheriseoftheactionsproceededentirelyfromthehopesofthosegreatprofits，andfromthesinkingoftherateofinterest；aconsequenceoftheplentyofmoneytobelent。
Butbesidesthetrade，whatraisedtheirvalueatthistime，was，thatjustbeforethelastcreationofactions，June10，1719，theKinghadmadeovertheminttothecompanyforaconsiderationof50millionsoflivres；andthisopenedanewbranchofprofittoeveryoneinterested。
Thesaleofthelastcoinedactionstakingplaceat1000
livreseach，sogreatariseseemstohaveengagedtheRegenttoextendhisviewsmuchfartherthanever。Tosaythatheforesawwhatwastohappen，wouldbedoinghimthegreatestinjustice。Heforesawitnot，mostcertainly；fornomancouldforeseesuchcomplicatedevents。Buthadheconductedhimselfuponsolidprinciples；orbytheruleswhich，wenowsay，commonhonestyrequired，hecertainlyneverwouldhavecountenancedthesubsequentoperation。
ThefourthcreationofactionswasinthebeginningofSeptember1719。
Intheintervalbetweenthethirdandthefourthcreation，theRegentmadeoverthegeneralfarmstothecompany，whopaidthreemillionsandahalfadvancedrentforthem。AndthecompanyobligedthemselvestolendtheKingincludingthe100millionsalreadylentuponthefirstcreationofactionstheimmensesumof1600millionsat3percentthatis，for48millionsinterest。
Nowitisveryplain，thatbeforethemonthofSeptember1719，itwasimpossibletheycouldlendtheKingsogreatasum。
Theyhadalreadylenthim，inSeptember1718，100millions，bytakingthebilletsd’閠atforthesubscriptionofthefirstcreationofactions；thesecondcreationhadproducedcoin，laidoutinmercantilepreparations；andthethirdcreationofactions，atthestandardvalue，wasworthnomorethan50
millionsoflivres:thiswastheirwholestock。Wherethencouldtheyfind1500millionsmoretolend？
Ithereforeconclude，thatatthistime，theschemewhichI
amnowtounfold，musthavemoreorless，takenplacebetweentheRegentandthisgreatcompany。
Thepublicwasabundantlypersuadedoftheprodigiousprofitsofthecompany，beforetheygotpossessionofthegeneralfarms。
Nosoonerhadtheygotthisnewsourceofrichesintotheirhands，thantheypromisedadividendofnolessthan200livresoneveryaction，whichwastentimesmorethanwasdividedonthemwhenatfirstcreated。
Theconsequenceofthiswas，thatsupposingthedividendtohavebeenpermanentandsecureanactionthenbecameaswellworth5000livresasatfirstitwasworth500livres；
accordinglyto5000diditrise，uponthepromiseofthisnewdividend。
Butwhatcouldbethemotiveofthecompanytopromisethisdividend，threemonthsonlyaftertheirestablishment？Surely，nottheprofitsuponatradewhichwasnotasyetopened。Surely，nottheprofitsupontheKing’sfarms；fortheseprofitsitwasgreatlytheirinteresttoconceal。
Theirviewslaydeeper。TheRegentperceivedthatthespiritofthenationwastoomuchinflamed，tosufferpeopletoenterintoanexaminationofthewonderfulphaenomenaarisingfromtheestablishmentofthebank，andcompanyoftheIndies。Ifthecompanypromised200livresdividend，thepublicconcludedthattheirprofitswouldenablethemtopayit；andreallyinthisparticularthepublicmightbeexcused。
Theplan，therefore，concertedbetweentheRegentandthecompanyseemstohavebeen，toraisetheactionstothisgreatvalue，inordertokeepupagreaterquantityofnotesincirculation。
Thiswastobeaccomplished，firstbytheRegent’spurchasingtheactionshimselffromthecompany；secondly，byborrowingbackthenoteshehadpaidforthem，inordertofilluptheloanwhichthecompanyhadagreedtomake；thirdly，topayoffallthepubliccreditorswiththosenotessoborrowedback；andfourthly，whenthenationwasoncefilledwithbankpaper，tosellatanadequateprice，theactionshehadpurchasedfromthecompany，towithdrawhisownpaper，andthentodestroyit。
BythisoperationthewholedebtsofFranceweretobeturnedintoactions；andthecompanywastobecomethepublicdebtor，insteadoftheKing，whowouldhavenomoretopaybut48
millionsofinteresttothecompany。
Bythisoperationalso，theRegentwastowithdrawallthebanknoteswhichhehadissuedfornoothervaluebutforthepaymentofdebts；whichnotesweredemandableatthebank:andforthefuture，hewastoissuenomoreIsupposebutforvaluepreserved。
Chap。XXX
InquiryintotheMotivesoftheDukeofOrleansinconcertingthePlanoftheMissisippiNowifweexaminethemotivesoftheRegent，withregardtothisplan，andsupposethatheforsawallthatwastohappeninconsequenceofit；andifwealsosupposethathereallybelievedthatthecompanynevercouldbeinasituationtomakegoodthedividendof200livres，whichtheyhadpromisedupontheiractions；inaword，ifweputtheworstinterpretationuponallhisactions，wemustconcludethatthewholewasamostconsummatepieceofknavery。
Butasthisdoesnotappearevidently，eitherbythesucceedingoperations，orultimateconsequencesofthisscheme，I
amlothtoascribe，tothatgreatman，asentimentsooppositetothatwhichanimatedhim，onhisentranceupontheregency，whenhenoblyrejectedtheplanproposedtohimforexpungingthedebtsaltogether。
Imaythereforesuppose，thathemightbelievethatthecompanytowhomhehadgiventhemint，thetobacco，thefarms，andthetradeofFrance，andtowhomhesoonaftergavethegeneralreceiptofalltherevenue，mightbythesemeansbeenabledtomakegoodtheirengagementstothepublic。Isay，thismaybesupposed；inwhichcasejusticewastobedonetoeveryone；andtheKing’sdebtsweretobereducedto48millionsayear，insteadof80millions。
Thatthisisasupposeablecase，IgatherfromDutot，whogivesusanenumerationoftherevenueofthecompany，Vol。I，p。
162，asfollows:
RevenueoftheCompanyoftheIndies。
Interestpaidtothecompanyperannum……48，000，000
Profitsuponthegeneralfarms……15，000，000
Dittouponthegeneralreceiptofothertaxes……1，500，000
Dittouponthetobacco……2，000，000
Dittouponthemint……4，000，000
Dittoupontheirtrade……10，000，000
Inallofyearlyincome……80，500，000
Nowifwesupposetheinterestofmoneyat3percentthissumwouldanswertothecapitalof2664millions，whichwasmorethanallthedebtsofthekingdom，forwhichtheyweretobecomeanswerable。
Uponthisviewofthematter，Isay，itwaspossible，thattheRegentmightformthisplan，withoutanyintentiontodefraudthecreditors；andmoreIdonotpretendtoaffirm。
Ihavesaidthathepurposelymadethecompanyraisethepriceoftheiractions，inordertodrawmorenotesintocirculation。
Tothisitmaybeobjected，thathemightaswellhavepaidoffthecreditorswithbanknotes，withoutgoingthisround-aboutwaytowork；andhaveleftthemtopurchasetheactionsdirectlyfromthecompany。
Ianswer，thatsuchanoperationwouldhaveappearedtoobarefacedandmighthaveendangeredthecreditofthebank。
Whereasinbuyingtheactions，whichweresoughtafterbyeverybody，thestateappeareddesirousonlyofacquiringashareofthevastprofitstobemadebythecompany。Farther:
Asthecompanyappearedwillingtoacceptofbanknotesfromthestate，inpaymentoftheiractions，thismanoeuvregaveanadditionalcreditbothtotheactions，andtothenotes；athingverynecessarytobeattendedto，inaschemewhichwascalculatedtobringaboutatotaltransformationofthesecurityfortheKing’sdebts。
Imusthoweverobserve，thatattheperiodconcerningwhichwearenowspeakingviz。atthetimethecompanypromisedthedividendof200livresperactiontheplanwehavebeendescribingcouldnothavebeencarriedintoexecution。
Therewereatthattimenomorethan400，000actionscreated，ratedat777millions:ofthesewerealreadydisposedofatleast250，000，towit，theoriginal200，000；andthesecondcreationof50，000，soldforcoin。Besides，therewerethenonlycoinedinbanknotesfor520millions。SotherewasnotapossibilityofexecutingtheplanIhavementioned，asmattersthenstood。
Itisfromthesubsequentoperationsofthesystem，thatitappearsevidentthatthisandthisonlycouldbetheintention。
Weshallseehowthenumberofactionsweremultiplied，withoutanyotherviewthantomakethepublicimagine，thatthefundsnecessaryforcarryingonthetradeofthecompanywereimmense。
Thenumberoftheactionssoldtothepublicwasveryinconsiderable，comparedwiththosesoldtotheRegent，andfoundinhishandsattheblowingupofthesystem。
Besides，attheperiodwhenthenumberofactionswascarriedtotheutmost，viz。to624，000，thebanknotesborenoproportiontotheirvalue；for，onthe4thofOctober1719，whenthelastcreationofactionswasmade，thebanknotesdidnotexceedthesumabovespecified，towit，520millions。
Butintracingtheprogressofthesystemuponthepreceedingtable，weperceive，thataftertheactionswereoncecarriedtotheirfullnumberOctober4th1719，thecoiningofbanknoteswentonatamostprodigiousrate:somuchthatbythemonthofMay1720，theywereincreasedfrom520millions，toabove2696
millions；andonthe21stofthatmonth，allthissum，except461
millions，werefoundincirculation。
Farther:Weshallsee，thatwhentheRegentandthecompanymadeouttheiraccompts，therewerefoundintheRegent’shandsnolessthan400，000actions，whichwereburnt；andinconsequenceofthis25millionsofinterestuponthesumofmoneyduebytheKingtothecompany，wereextinguished。
Thesefactsprovebeyondadoubt，thatthese400，000actionshadbeenboughtwiththenotescoinedposteriortothe4thofOctober1719；otherwisetheactionscouldnothavebecomethepropertyofthestate。
Besides，itwasacknowledgedpublicly，thatthenoteswerecoinedforthispurpose。SeeDutot，Vol。I，p。144。Inthenextplace，itisevident，thatthenoteswhichhadbeengivenbythestateinpaymentfortheseactions，musthavebeenpaidbacktothestate，bythecompany，inordertofilluptheloanof1600
millionsoflivres；whichthecompanynevercouldhaveotherwiselenttotheKing。Andinthelastplace，itiscertainthatthepublicdebtswerepaidoffwiththesenotes，soborrowedbackfromthecompany:becauseweshallfindthenotesincirculationattheblowingupofthesystem，onthe21stofMay1720；andweshallseehowtheywerepaidandwithdrawninOctoberfollowing。
Thisdetailis，Iconfess，alittlelong，andperhapstoominute:butIthoughtitnecessarytoprovethesolidityofmyconjecturesconcerningtheRegent’smotivesinconcertingthisplan；whichnoFrenchauthor，thateverIsaw，haspretendedtounfold，exceptbyhintstoodarktobeeasilycomprehended。
Whatisnowtofollow，willstillsetmyconjecturesinafairerlight。Wehaveseenalreadyfromthetable，withwhatrapiditythecreationofactionswentonfromthe13thofSeptembertothe4thofOctober1719。Nolessthan324，000werecreatedinthisinterval。
YetDutot，vol。ii，p。169，etseq。positivelysays，thatonthe4thofOctober，thecompanyhadnotsoldformorethan182，500，000livresoftheiractions。Nowthetotalvalue，astheywereratedwhencreated，extendedto1，797，500，000；sotherewaslittlemorethanonetenthpartofthevaluesoldoff。
Whythereforecreatesuchimmensequantitiesofactions，andsofarbeyondthedemandforthem，buttothrowdustintheeyesofthepublic；tokeepupthespiritofinfatuation；andtopavethewayforthefinalexecutionoftheplan？
Theactionsbeingbrought，byfoursuccessivecreations，ofthe13thand28thofSeptember，the2ndand4thofOctober，totheirfullnumber，thecompany，duringthisinterval，obtainedthegeneralreceiptofthewholerevenue。Thus，saysDutot，vol。
ii，p。197，thecompanywasintrustedwiththewholerevenue，debtsandexpensesofthestate，andallunnecessarychargewasavoidedincollectingandadministeringit。
InthemonthofNovember1719，thecreditofthebank，andofthecompany，wassogreat，thattheactionsroseto10，000
livres。Notwithstanding，saysDutot，vol。ii，p。198，thatthecompanydidwhattheycouldtokeepdowntheprice，bythrowingintothemarket，inoneweek，fornolessthan30millions。Heassignssevendifferentreasonsforthis，which，allputtogether，arenotworthone；towit，thattheRegentwasreadytobuyupeveryonethatlayuponhand，inconcertwiththecompany。
Ifthecompanyhadbeeninclinedtokeepdownthepriceoftheactions，theyhadnothingmoretodothantodeliverpartofthevastnumbertheystillhadunsold，atthestandardvalueof5000livres，atwhichtheywereratedwhencreated；andthiswouldhaveeffectuallypreventedtheirrisingto10，000livres。
ButitwastheinterestoftheRegent，whowasatthattimewellprovidedwithactions，tostock-job，andtobuywithonehand，whilehewassellingwiththeother:theseoperationswerethenaswellknowninthestreetcalledQuinquempoix，asnowinChange-alley。
Asaproofofthejustnessofmyallegation，thattheRegentwasdoingallhecouldtoraisethepriceoftheactions，Dutotinformsus，intheplaceabovecited，thatthebank，atthisverytime，waslendingmoney，uponthesecurityofactions，at2percent。Sincethiswasthecase，howwasitpossiblethatanaction，with200livresdividend，shouldsellforlessthan10，000livres，whichisthecapitalcorrespondingto200livres，at2percent？
Thisisevident；andwereitnecessary，itmaybeprovedtodemonstration，thattheriseoftheactionswasmerelytheconsequenceofapoliticalcontrivance。
Butifmoney，atthattime，cametobearnomorethan2percentandifthecompanywereabletoafford200livresupontheaction；wherewastheiniquityofraisingtheactionsto10，000
livres？IconfessIcanseenone，nordoIperceiveeithertheimpossibilityorimprobabilityofthetwopostulata，hadmattersbeenrightlyconducted。
Astomoney’sfallingto2percentanymanof20yearsoldmayexpecttoseeit，withoutaMissisippi:andasforthepaymentofthedividends，thereneverwereinthehandsofthepublic，norevercouldbe，hadallthecreditorsofthe2000
millionsofpublicdebtsinvestedinactionsat10，000a-piece，onehalfof624，000actionsdisposedof:consequently，the200
livresdividendwouldnothaveamounted，upon312，000actions，tomorethan62，400，000livres；andtherevenueofthecompany，aswehaveseen，exceeded80millionsayear。
ThisstilltendstojustifytheRegentfromthegrossimputationoffraud，intheconductoftheMissisippi。
ButwhatshouldstillmoreexculpatethisPrince，intheeyesofeveryimpartialmanwhoexaminesthewholeconductoftheaffair，istheuniformsentimentsofthemostintelligentmeninFranceconcerningthedoctrineofmoneyandcredit。
WhenwefindDutot，whowroteagainstthearbitrarychangeofthecoin；andDeMelon，theRegent’smanofconfidenceandsecretary，whowroteinfavourofit，twopersonsconsideredinFranceasmostablefinanciers，bothagreeing，thatduringtheoperationsofthesystem，moneyneverwastobeconsideredbutaccordingtodenominations；thattherewasnothingagainstgoodpolicyinchangingthevalueofthesedenominations；andthatpaper-money，whetherissuedforvalue，orfornovalue，orforthepaymentofdebts，wasalwaysgood，providedtherewascoinenoughinFranceforthechangingofit；andthis，althoughthecoinitselfdidnotbelongtothedebtorsinthepaper:whentheseprinciples，Isay，wereadoptedbythemenofpenetrationinFrance；whenwefindthempublishedintheirwritings，manyyearsaftertheRegent’sdeath，asmaximsofwhattheycalltheircreditpublic；IthinkitwouldbethehighestinjusticetoloadtheDukeofOrleanswiththegrossimputationofknavery，intheMissisippischeme。
Lawnodoubtsawitstendency。ButLawsawalso，thatcreditsupporteditselfonthoseoccasions，whereitstoodonthemostticklishbottom；hesawbanknotestotheamountofmorethantwothousandmillions，issuedinpaymentoftheKing’sdebts，withoutoccasioninganyrunuponthebank，orwithoutsuggestinganideatothepublicthatthebankshouldnaturallyhavehadsomefund，tomakethemgood:hesawpeople，whowereinpossessionofavalueinpaperexceeding6000millionsoflivres，60tothemarc，Dutot，vol。i，p。144。lookcalmandunconcerned，when，inoneday，thecoinwasraisedinitsdenominationto80livresinthemarc；bywhichoperation，the6000millionsofthedatebeforelost25percentoftheirrealvalue。Hesawthatthisoperationdidnotintheleastaffectthecreditofthebankpaper；becausepeoplemindednothingbutdenominations。
Hesawfarther，thatbytheoperationproposed，thewholedebtoftheKingwouldbetransferreduponthecompany。Hesawthatthesedebts，beingturnedintobanknotes，wouldnotbesufficienttobuyabove200，000actions，atthevaluetheythensoldfor。HeknewthattheRegent，whohadbought400，000oftheseactionsat5000livresapiece，thatis，athalfprice，wouldremaininpossessionof200，000actions，aftersellingenoughtodrawbackthewholeofthebanknotesissuedforthepaymentofthedebts；andhesawthatthecompanyoftheIndieshadayearlyincomeofabove80millionstoenablethemtomakegoodtheirengagements:besides，hesawapowerintheKingtoraisethedenominationsofthecoinatwill，withoutshockingtheideasofhispeople；bywhichmeanshemighthavepaidthe2000
millionswithonelouisd’or。Putallthesecircumstancestogether，andIcanimaginethatLaw’sbrainwasturned；thathehadlostsightofallhisprinciples；andthathemightbelievethathisformercommonsensewas，atthattime，becomeabsolutenonsenseinFrance。
Thatcommonsensemaybecomenonsense，isathingbynomeanspeculiartoFrance，butquitepeculiartoman。
Ishallofferbutoneargumentmore，toprovethattheDukeofOrleans，andLaw，couldhavenopremeditateddesignofdefraudingthepublic，bythesewonderfuloperations；whichis，thattosupposethecontrary，wouldbetoallowthemanfinitesuperiorityofunderstandingoveralltherestofEurope。
Untilthebubbleburstednobodycouldknowwhereitwastoend:everythingappearedveryextraordinaryindeed；andthefatalcatastrophemighthavebeenexpectedfromthegreatnessoftheundertaking，merely。Buthadtherebeenanyrogueryintheplanitself，itmusthaveappearedpalpablelongbefore；becausethewholeoftheoperationsinwhichonlyitcouldconsist，werepublic。
Allthenoteswerecreatedbypublicactofcouncil；soweretheactions:theloanof1600millionstotheKing，bythecompany，wasapublicdeed；sowasthealienationintheirfavour，of48millionsfortheinterestofthissum。Noteswereavowedlycoinedinordertopurchaseactions，Dutot，VolI，p。
144。thecreditorswereavowedlypaidwithbanknotes，atatimewhenitwasforbiddentohave500livresincoininanyperson’scustody；consequently，itwasalsoforbiddentodemandcoinforbanknotes。
NowallthiswasgoingoninthemonthsofFebruary，March，AprilandthebeginningofMay1720；withoutanysuspicionofanyfailureofcredit。Thecoinalsowassometimesraised，sometimesdiminishedinitsvalue，andstillthefabricstoodfirm。
Underthesecircumstances，tosaytherewasknavery，istosaythatalltheworldwereabsolutelyblockheads，excepttheRegentandJohnLaw:andtothisopinionInevercansubscribe。
ItmayseemsurprisingthatIshouldtakesomuchpainstojustifythetwoprincipalconductorsofthisscheme。Myintentionisnotsomuchtodojusticetotheirreputation，whichhasbeengrosslycalumniatedbymany，whohavewrittenthehistoryofthosetimes，astoprove，thatanill-concertedsystemofcreditmaybringruinonanation，althoughfraudbeoutofthequestion:andifanationbeplungedintoallthecalamitieswhichapublicbankruptcycanoccasion，itisbutasmallconsolationtobeassuredofthegoodintentionsofthosewhowerethecauseofit。
Chap。XXXI
ContinuationoftheAccountoftheRoyalBankofFrance，untilthetotalBankruptcyonthe21stofMay1720
Inowresumethethreadofmystory。WeleftoffatthatperiodwhenthecreditofthecompanyandofthebankwasinallitsgloryNovember1719；theactionssellingat10，000livres，dividend200livresayearperaction，andthebanklendingat2
percent:allthiswasquiteconsistentwiththethenrateofmoney。
Inthisstatedidmatterscontinueuntilthe22ndofFebruary1720，whenthebankwasincorporatedwiththecompanyoftheIndies。
TheKingstillcontinuedguaranteeofallthebanknotes；
noneweretobecoinedbutbyhisauthority:andthecomptroller-generalforthetimebeing，wastohave，atalltimes，togetherwiththePrevotdesmarchandsofParis，readyaccesstoinspectthebooksofthebank。
Astheintention，atthetimeoftheincorporation，wastocoinaverygreatquantityofnotes，inordertobuyuptheactions，andtoborrowbackthemoney，inordertopayoffthecreditors，itwaspropertogathertogetherasmuchcoinaspossible，toguardagainstarunuponthebank:forwhichpurpose，thefamousArretdeConseil，ofthe27thofFebruary1720，waspublished，forbiddinganypersontokeepbythemmorethan500livresincoin。
Thiswasplainlyannullingtheobligationinthebankpaper，topaytothebearerondemandthesumspecified，insilvercoin。
Wasitnotverynatural，thatsuchanarretshouldhave，atonce，putanendtothecreditofthebank？Nosuchthinghoweverhappened。Thecreditremainedsolidafterthisasbefore；andnobodymindedgoldorsilveranymorethanifthedenominationintheirpaperhadhadnorelationtothesemetals。Accordingly，many，whohadcoinandconfidence，broughtitin，andweregladtogetpaperforit。
Thecoinbeingcollectedinaboutaweek’stime，anotherArretdeConseil，ofthe5thofMarch，wasissued，risingthedenominationfrom60livresto80livresthemarc。Thus，I
suppose，thecoinwhichtheweekbeforehadbeentakeninat60
livres，waspaidawayat80:andthebankgained331/3perCent。
uponthisoperation。Didthishurtthecreditofthebankpaper？
Notintheleast。
Assoonasthecoinwaspaidaway，whichwasnotalongoperation，foritwasoverinlessthanaweek；anotherArretdeConseil，ofthe11thofthesamemonthofMarch，cameout，declaringthat，bythefirstofApril，thecoinwastobeagainreducedto70livresthemarc，andonthefirstofMayto65
livres。Uponthis，thecoin，whichhadbeenpaidawaytheweekbefore，camepouringintothebank，forfearofthediminutionwhichwastotakeplacethefirstofApril。Inthisperiodofaboutthreeweeks，thebankreceivedincoinabout44millionsoflivres；andthosewhobroughtitinthoughttheywerewellridofit。
ItwasduringthemonthsofFebruary，March，andApril1720，thatthegreatoperationsofthesystemwerecarriedon。
Wemayseebythechronologicalanecdotesinthe28thchapter，whatprodigioussumsofbanknoteswerecoined，andissuedduringthattime。Itwasduringthisperiodalso，thatafinalconclusionwasputtothereimbursingallthepubliccreditorswithbanknotes:inconsequenceofwhichpayment，theformersecuritiesgrantedtothembytheKing，undertheauthorityoftheparliamentofParis，werewithdrawnandannulled。
Herethenwehaveconductedthisschemetothelastperiod。
Thereremainedonlyonesteptobemadetoconcludetheoperation；towit，thesaleoftheactions，whichtheRegenthadinhiscustodytothenumberof400，000。
Theseweretobesoldtothepublic，whowereatthistimeinpossessionofbanknotestothevalueof2，235，083，590livres。
Seetheforegoingtable。
Hadthesaleoftheactionstakenplace，thenoteswouldallhavereturnedtothebank，andtherehavebeendestroyed:bywhichoperation，thecompanywouldhavebecomedebtortothepublicforthedividendsofalltheactionsintheirhands，andtotheKingforallthosewhichmighthaveremainedinthehandsoftheRegent。Theseproportionswecannotbringtoanycalculation，asitwouldhavedependedentirelyonthepriceoftheactionsduringsogreatanoperation；andontheprivateconventionsbetweentheparties，theRegentandthecompany。
Butalas！allthisisavainspeculation。Thesystem，whichhithertohadstooditsgroundinspiteofthemostviolentshocks，wasnowtotumbleintoruinfromachildishwhim。
Inordertosetthisstrokeofpoliticalarithmeticinthemostludicrouslightpossible，ImustdoitinDutot’sownwords，utteredwithasoreheartandinsobersadness。
Hehadsaidbefore，thatthecoinofFrancewasequalto1200
millionsoflivresat60livresthemarc。Thismarcwasnowat65
livresinMay1720，asabovesothenumeraryvalue，ashecallsit，thatisthedenomination，ofthecoinwasnowrisento1，300，000，000；butthebanknotescirculatinginthemonthofMaywerecarriedto2，696，400，000；thenheadds，’The1300millionsofcoinwhichwereinFrance，wereveryfarfrom2696millionsofnotes。Inthatcasethesumofnoteswastothesumofcoin，nearlyas22/27areto1；thatistosay，that207livres8sols17/8denierinnotes，wasonlyworth100livresincoin；orotherwise，thatabanknoteof100livreswasonlyworth48livres4sols5deniersincoin，orthereabouts。’WouldnotanymortalconcludefromthiscalculationofDutot’s，thatthewholesumof1300millionshadbeeninthebank，astheonlyfundforthepaymentofthepaper？
Thisisalabouredequation，andfromitwehaveaspecimenofthisgentleman’smethodofcalculatingthevalueofbankpaper:butletushearhimout。
’Thisprodigiousquantityofmoneyincirculation’，sayshe，’hadraisedthepriceofeverythingexcessively:soinordertobringdownprices，itwasjudgedmoreexpedienttodiminishthedenominationofthebanknotes，thantoraisethedenominationofthecoin；becausethatdiminishedthequantityofmoney，thisaugmentedit。’
Thiswasthegrandpointunderdeliberation，beforethefamousarretofthe21stofMaywasgiven，viz。whetheritwerebettertoraisethevalueofthecoin，whichdidnotbelongtothebank，buttotheFrenchnation，todoublethedenominationitboreatthistime，thatis，to130livresthemarc，bywhichmeansthe1300millionswouldhavemade2600millions，ortoreducethe2600millionsofbanknotestoonehalf，thatis，to1300millions，thetotaldenominationofthecoin。
Tosomepeopleitwouldhaveappearedmorerationaltorejectboththealternatives，andtoallowmatterstostandastheywere，aslongastheywouldstand，atleastuntiltheactionshadbeenallsoldoff；butthiswasnotthoughtproper。Afteramostlearneddeliberation，itwasresolvedtoreducetoonehalf，thedenominationofallthepaperofFrance，banknotesaswellasactions，insteadofraisingthedenominationofthecoin；andthisbecausethepricesofcommoditiesweresupposedtobeinproportiontothequantityofthedenominationsofmoney。
Thearretwasnosoonerpublishedthanthewholepaperfabricfelltonothing。Thedayfollowing，the22ndofMay，amanmighthavestarvedwithahundredmillionsofpaperinhispocket。
Thiswasacatastrophethelikeofwhich，Ibelieve，neverhappened:itissoridiculousthatitisasubjectfitonlyforafarce。
HereDutot’slamentationsandregretsareinimitable。
Inoneplacehesays，’Creditwastoofarfetchedtobesolid。Itwasthereforepropertosacrificeonepart，togiveasoliditYtotheother。Eventhiswasdone；buttheconsequencesdidnotcorrespondtotheintention。Confidence，whichisthesoulofcredit，eclipseditself，andthelossofthebanknote，drewonthelossoftheaction。’
Inanotherplacehesays，’Thisarretofthe21stofMay，whichaccordingtosomeblessoitl’閝uit*，’averymildexpression！’destroyedallconfidenceinthepublic；becausetheKinghaddiminishedonehalfofthatpapermoneythebanknotes
whichhadbeendeclaredfixed。’
Isitnotathousandpitiesthatconfidenceshouldhavedisappeareduponsoslightawoundgiventoequity，onlyintheopinionofsome？ForDutotthoughttheoperationperfectlyconsistentwiththeprinciplesofpubliccredit。
Hetellsus，thataletterwaswrittentocalmthemindsofthepeople，andtoshewthemhowabsurditwas，toallowthepapertobefixed，whilethecoinvaried；but，sayshe，’astherewasarevenueattachedtotheaction，thevalueofthatpaperdidnotdependsomuchuponthecapital，asonthesumoftheinterest。’Veryjust。Butwerethedividendstostandat200
livres，withoutsufferingthesamediminutionastheaction？Andhowwasconfidencetosubsistinacounty，wherethedenominationsofboththepaperandthecoinwereatthedisposalofaminister？
Thediminutionuponthepaper，bythearretofthe21stofMay，raisedamostterribleclamour；andLawbecametheexecrationofFrance，insteadofbeingconsideredasitssaviour。
Hewasbanished，andreducedtobeggarythesameday。
WhatprofitcouldeithertheRegent，orLaw，havereapedfromthesuccessofsuchanoperation？Hadthecoinbeenraisedto130
livresthemarc，nohurtwouldprobablyhaveensued，andthesameeffectwouldhavebeenproduced。
Hadmattersbeenleftwithoutanychangeatall，nobadconsequenceswouldhavefollowed:theseexistedonlyintheheadsoftheFrenchtheorists。Therewas，indeed，twiceasmuchmoneyinbanknotesasincoin，inthewholekingdomofFrance:andwhatthen？
WhentheRegentsawthefataleffectsofhisarretofthe21stofMay，herevokeditonthe27thofthesamemonth。Onthe29th，heraisedthecointo82livres10solsinthemarc，andre-establishedallthepaperatitsformerdenomination:but，asDutothassaid，confidencewasgone，andwasnomoretoberecalled。Nothingsurprisesme，butthatshelivedsolongundersuchroughmanagement。
Dutot，intalkingofthisaugmentationofthecoin，onthe29thofMay，to82livres10sols，says，’Thisoperationwasconsistentwiththeprinciplesofpubliccredit，andadvantageous。Theywouldhavedonebetterhadtheypushedtheaugmentationto135livresthemarc；whichwouldhavemadethespecieofFranceequaltothesumofbanknotes。’Thesearehiswords，p。165。
Arenottheseverysensibleprinciples，comingfromamanwhohaswrittenabook，whichindeedfewpeoplecanunderstand，inordertoprovethegreathurtoftamperingwiththecoinofFrance？
Chap。XXXII
ConclusionoftheMississippiSchemeTheRegent，persuadedthattheblunderofthe21stofMaywasabsolutelyirreparable，felltoworknexttoclearaccomptswiththecompany。
Heowedthem1600millionscapital，and48millionsayearofinterestuponit。
Ontheotherhand，hehadinhispossessionnolessthan400，000actions，whichat200livresdividend，whichthecompanywasobligedtopay，amountedto80millionsayear。
HowtheRegentandthecompanysettledmattersIdonotknowprecisely。This，however，iscertain，thatbythearretofthe3dofJune1720，thenumberof400，000actions，belongingtotheRegent，wereburnt；and24，000more，whichhadbeencreatedbyhisparticularorder，the4thofOctober1719，andneverdeliveredtothecompany，weresuppressed。
Ontheotherhand，thecompanyceded25millionsayear，ofthe48millionswhichhadbeentransferredtothem。
Thissumwasconstitutedanewuponthetown-houseofParis，asafundtobesubscribedforbytheproprietorsofbanknotes，attherateof21/2percentorastheFrenchcallitatthe40thpenny。Dutot，p。168。Inconsequenceofthis，530millionsofbanknotesweresubscribedfor，andpaidin，inthemonthofJune1720。
Afterthedestructionofthe400，000actions，thecreditofthebanknoteslanguisheduntilthe10thofOctober1720。
Theobjectforwhichtheywerecreatedwasnowgone。ThewholeschemeoftransferringtheKing’sdebtsuponthecompanyvanishedintheconflagrationoftheactions。Whatwasthentobedone？
Thebankwasatanend:2235millionsofdiscreditedbanknotesincirculation，andasmallsumofcointomakethemgood，wasasituationwhichnoauthoritycouldlongsupport。
Theresolutionthenwastakentoputafinalconclusiontothisgreataffair；tobidalongfarewelltocreditandconfidence；andtoreturntotheoldsystemofrentsuponthetown-houseofParis；andofcomingatmoneyinthebestwaytheycould。
InthislightIseetheMissisippischeme。Imay，nodoubt，bemistakeninmanythings:thelights，orrathertheglimmerings，bywhichIhavebeenconductedthroughthisinquiry，mustpleadmyexcuse。
Butitisnotfactssomuchasprinciples，Ihavebeeninvestigatingthroughthiswholedisquisition；andtheimperfectaccountIhavebeenabletogiveoftheformer，willatleastpointout，Ihope，thenotionswhichtheFrenchnation，atthattime，hadofthelatter。IfthecontrastbetweenFrenchprinciples，andthoseIhavelaiddown，tendtocastanylightuponthesubjectofpapercreditingeneral，myendisaccomplished:iftheyeverproveofusetomankind，Ishallnotthinkmylabourlost。
Chap。XXXIII
WhyCreditfell，andhowitmighthavebeensupportedIshallnowmakeafewgeneralobservationsuponthetotalandsuddenfallofcreditinFranceinMay1720:andIshallsuggestthemeansbywhich，Ithink，itmighthavebeensustained，evenafteralltheprecedingmismanagement。
WasitanywonderthattheFrenchshouldbeastonishedatthisprodigiousrevolution，atthisimmensevalueofpaperonthe21stofMay，andatthetotaldiscreditofeverybitofittheverydayfollowing？
Iftherehadbeenavalue，saidthey，whatbecameofit？Ifthereneverwasanyvalue，howcouldanationbesodeceived？
Thisphaenomenonhaspuzzledmanyahead；butthenatureandprinciplesofcreditfurnishaneasysolutionofit。
Indeducingtheprinciplesofcredit，wehaveshewnthatapermanentandwellsecuredfundofinterestisalwaysequalinvaluetoacorrespondingcapital。
Thedifferencebetweenapermanentandwellsecuredfund，andaprecariousandillsecuredfund，consistsinthis，thatthefirstnevercandisappear，andtheothermay。
Nowthefund，inthiscase，wasatfirstrealanddidexist；
butitwasrenderedprecarious，byablunderingadministration:
thencreditfiled，andinthatconvulsion，thefundofinterestwasfraudulentlydiminishedbyanactofpower。
HadthetrueprinciplesofcreditbeenunderstoodinFrance，thebanknotesandactionsmighthavebeensupported，evenafterthearretofthe21stofMay:andallthemonstrousvalueofpaper，risedsohighbythelowrateofinterest，mighthavebeenpreferred:consequentlythisvalue，incapital，reallyexistedrelativelytotherateofinterest。
AstheobjectofthepresentdisquisitionintotheprinciplesuponwhichtheMissisippischemewasconducted，isonlyintendedasanillustrationoftheprinciplesofcreditingeneral；I
shallfirstaccountforthewonderfulphaenomenonabovementionedandthenshewhow，inthegreatestofalltheFrenchdistress，theircreditmighthavebeenreestablishedinamoresolidmannerthanever。
Astothewonderfulphaenomenonoftheprodigiouswealthcreatedbythesystem，andannihilatedinoneday，Ianswer，thattherehadbeennocreationofwealthatall，exceptinconsequenceofthefallofinterest。
First，WehaveseenthatatthedeathofthelateKingofFrance，theinterestofhisdebtsamountedto80millions。Wasnotthisafundwhichoughttohavebeenmadesolidandpermanent？Willanymansay，thataregularplanofpayingthisinterestwasameansofcreatingnewwealth？Certainlynot。
Secondly，Thesedebtsweremostlysecuredbycontractsofconstitutionofannualrentsuponthetown-houseofParis:asecuritytakeninthenameofaparticularcreditor，whichrequiresaformoflawtotransfer。
Bytheschemewehavebeenexplaining，allthesesecuritieswerechanged:andinsteadofconstitutionsofrent，banknotes，inwhichtheKingwasequallydebtor，weregiven。
Willanymansay，thatthiswasthemeansofeitherincreasingordiminishingthewealthofFrance？Certainlynot。A
manwhohasagoodbondinhispocketisasrichbeforeitispaidwithbanknotesasafter:buthehasnotsomuchmoneyinhishands；becausethebondisnotmoney，andthenotesare。
Thirdly，WehavesaidthattheinterestoftheKing’sdebtsamountedto80millionsayear，at4percent。
WehaveseenhowthecompanyoftheIndieswereprovidedwithafundequaltothissum，arisingfromthe48millionswhichtheKingpaidfortheloanofthepaperwithwhichthedebtsweretobepaid，andfrommanyotherlucrativebranchesofrevenue；whichinsteadofbeingburthensometotheKing，were，onthecontrary，themeansofaugmentinghisincome，bytheadvancedrentthecompanygaveforthedifferentfarmswhichproducedthem。
Hadthepubliccreditors，therefore，vestedtheirclaimsinactions，theywould，inconsequenceofthatoperation，havebecomesharersinthefundof80millionsayear，administeredbythemselves，andtheywouldthenhavebeenthecompanyopentobeimprovedbytradeabroad，andbyagoodadministrationathome。
Hadthissystembeencarriedoninaplaineasyway，consistentlywithcommonsense，thepubliccreditorswouldhavebeenpaid；theKing’srevenueaugmented；anditwouldhavebeenputunderagoodandacheapadministration。
But，when，bytheabsurdoperationsofchangingthedenominationsofcoinandpaper，andwantonlyplayingwitheveryman’sproperty，thecreditorssawthemselvesstandingonthebrinkofaprecipice；andfinding，insteadofagoodcontractonthetown-houseofParis，abanknoteputintotheirhands，whichmightbediminishedinitsvaluebyonehalfeverymonth，whileatthesametimethecoinmightberaisedtodouble，itwasverynaturaltosuppose，thattheintentionoftheKing’sministerswastowithdrawfromthemtotallythese80millions，towhichtheywereentitled:inwhichcase，therewasanannihilationindeedofallthenotes；buttherewasnoannihilationofwealth:
forinthatcase，thewealthwasstillthesame，onlyitwastransferredfromthecreditorstotheKingthedebtor:thatis，thecreditorsweredefrauded。
Ontheotherhand，stoodtheproprietorsoftheactionssold。
Thesehadbeenusedtomakeatrafficofbuyingandsellingthe200，000actionswhichhadbeenintheirhandseversinceSeptember1717，whentheywerefirstcreated。Forwehaveshewn，thattheposteriorcreationofactionsbytheunitedcompany，wasameredelusion，astheywereallfoundinthecustodyoftheRegent。Theactions，Isay，wereimmediatelyputintoastateofstagnation；becauseofthediscreditcastuponthebanknotes，withwhichithadbeenusualtobuythem。
Fourthly，Imustobserve，thatthestagnationofapaperwhichcarriesnointerest，isequaltoatemporaryannihilation。
Theholderthenisdeprivedoftheuseofhismoney；andheisnotpaidforthelosshesustains。
If，therefore，ithadbeenpossibletohavegivenanewactivitytothisbankpaper，withoutallowingittodieaway，asitwere，inthistemporaryfitoffainting，creditwouldhaverevived:allaccomptswouldhavebeenkeptclear，forthisistheuseofpapermoney，andsoshortashockwouldhardlyhavebeenfelt。
Butthegreatdamageresultingtothepublic，uponeveryoccasionofthiskind，proceedsfromthedelayinapplyingtheproperremedy。Whenanypaperisdiscredited，itimmediatelyfallsinitsvalue。Thepersonthenwhoistheoriginalandrealcreditorforthewholevalue，andinwhosehandsthepaperiswhenitsuffersthediscredit，sellsatdiscount:thisisanirretrievablelosstohim；andwhenthepaperrecoversitscreditagain，eitherinpart，oronthewhole，theprofitthenbelongstothepersonwhohadboughtitatdiscount，anddoesnotgotoindemnifytherealsufferer。
ThiswasthecasewithrespecttothenotesoftheFrenchbank:theywereallowedtolanguishfromthe21stofMaythattheywerediscredited，untilthe10thofOctober，whentheirfatewasdecided，ashasbeensaid。
Farther，wehaveseen，thatthiswholemovementofcredithadforitsbasis80millionsayear，originallypaidtothecreditorsfortheirinterest。Thissumansweredtothecapitalof2000millions；becauseattheoldKing’sdeath，interestwasfixedat4percent。
When，bytheoperationsofthesystem，allthiscapitalwasturnedintomoney，thatis，banknotes，theregorgingplentyofitmadeinterestfallto2percentconsequently，thecapital，whichconstantlydrawsitsvaluefromtheinterestpaidforit，roseto4000millions。Wehavesaidthatthetotalvalueofthepaperroseto6000millions，butwemustreflect，thatabove2000
millionsofthese6000millionswasinbanknotes，andemployedinbuyingofactions。Sothatboththenotesandtheactionsmustnotbereckonedasexistingtogether。
HadtheRegentsoldtheactions，hewouldhaveburnt2000
millionsofbanknotes，andthusthevalueinpaperwouldhaveremainedat4000millions，solongasinterestremainedat2percent；andhadinterestfallenstilllower，anddividendsremainedat200livresperaction，thevalueofactions，andconsequentlyofthiscapitalof4000millions，wouldhaveriseninproportion，justasthevalueofthecapitalofthedebtsofGreatBritainrisesandfallsaccordingtotherateofmoney；althoughthesamesumofinterestbepaidtothecreditorsatalltimes。
Thisaugmentation，therefore，uponthevalueofallcapitals，duringtheMissisippi，oflandsaswellasactions，wasinconsequenceofthefallofinterest，andfromnootherartificewhatever。LandsinFrance，atthattime，soldat80and100yearspurchase。Dutot，vol。II，p。200。
Whencreditfailed，andwhenallthecirculatingpaperwasthrownintoastateofstagnation，interestrose，inproportiontothedeficiencyofthesupplyforthedemandsofborrowers。Thevalueofcapitalsthendiminished。Butthismighthavehappenedfromanothercause，hadtherebeennobankruptcy，orintentiontodefraudthecreditors:awarmighthaveproducedit；oranycircumstancewhichmighthaveraisedtherateofinterest。
Therise，therefore，uponcapitals，fromthefallofinterest，Iconsiderhereasnoacquisitionofwealth:Ireckonwealthtobethatwhichistheannualproduceofthecapitals。
Somuchfortheresolutionofthiswonderfulphaenomenon。
Imustnowshewthatintheheightofthedistress，theconfidenceofthepublicwasstilltoberegained，andcreditrecovered，evenafterthefatalarretofthe21stofMay1720。
Ilayitdownasaprinciple，thatwhoeverhasasufficientfund，andpaysinterestregularlyforthemoneyheowes，runsnoriskoflosinghiscredit。
Sosoon，therefore，astheRegentfoundthatbyhisarretofthe21stofMay，allcredithaddisappeared；hadhe，uponthe27thofthesamemonth，oratthetimeheraisedthecointo82
livres10solspermarc，orderedallbanknotespresentedtothebank，eithertobepaidincoin，ormarkedinthebooksofthebankasbearinginterestat2percent。Isay，creditwouldnothavesufferedinanycomparisontowhatitdid。Nobodythenwouldhavesoldanoteatdiscount；and，haditbeennecessary，hemighthaveorderedtheinteresttobepaidmonthly。
TheauthorityIhaveforthisopinionisDutot，whosays，thatuponopeningthesubscriptionof25millionsinthemonthofJune，thenotesfellintheirvalue111/2percentonly。
Nowtherateofthissubscriptionwasat21/2percentaswehaveseen；consequently，if100livresofnoteslostbut111/2
percenttheywereworth881/2livresincoin；butthese100
livresinnoteswereworth21/2percentbecausethesubscriptionwasopenatthatrate:consequently881/2livresincoinwasalsoworth2livres10solsperannum:consequentlyinterest，atthattime，wasat2。825percentthatis，below3
percentevenafterthebankruptcy。
Wherethenwasthegreatharm？Wherewastheoccasiontoflyimmediatelytothedestructionofactions，whichwereintheRegent’sownhand？Alittlepatience，andgoodmanagement，wouldhavesetalltorights。
Ishould，therefore，haveleftthenotesincirculationunderthisregulation，viz。thatsuchasshouldbepresentedtothebankshouldhavehadatransferof2percentpaidquarterly；oravalue，inactions，at10，000livresperaction；whichisthecapitalansweringadividendof200livresat2percentattheoptionoftheholder:andincaseinteresthadcometofallstilllower，thepriceofactionsmighthavebeenaugmented。
Ishouldhavesetbeforethepublicafullandexactaccountofthecompany’sfunds。Ishouldhavebanishedallmysteryfromtheaffairsofcredit。Ishouldhaveregisteredadeclarationinparliament，settingforth，First，Thatallfuturechangeseitheruponthedenominationsofpaperorcoin，werecontrarytothemaimsofgoodgovernment。
Secondly，ThatallstipulationsbetweentheKingandhiscreditors，weretobeinviolable。And，Thirdly，ThattheparliamentofParisshouldforeverremaininvestedwithanexclusiverighttowatchovertheseregulationsintimetocome；andIshouldhaveboundtheparliamentbyaspecialoathforthispurpose。IshouldevenhavehadtheKingtotakethesameoath:andhemighthaveratifieditathiscoronationin1725。
BythesestepsIshouldhavevestedanewpowerintheKingsofFrancewhichtheyneverhadbefore:apowerofhavingmoneyfromtheirsubjects，fromtheirallies，andfromtheirenemies:apowertheyhavenot，noreverwillhave，untiltheprinciplesofcreditbebetterunderstoodamongthem。
Hadsuchaplanbeenfollowed，Ihavenottheleastdoubt，butthat，first，Theactionswouldhavebeensoldataverygreatadvancedvalueabovethestandardof5000livres，atwhichtheRegenthadboughtthem:secondly，Thatmoneywouldhavecomebackto2percentandthen，thirdly，Hadbanksbeenestablisheduponaproperplan，ease，withindustry，wouldlongerenowhaveappearedineverycornerofthatkingdom。
Howfinitelymoreeasywouldithavebeentoestablishsuchaplanin1720thanatpresent？Atthattimethemostdifficultpartofthewholewasexecuted。Thecreditorshadtakennotesfortheirclaims:thecreditthenwasgivenandaccepted。Therewasnothingtobedonebuttosupportit。Thecreditorswerethenatthemercyofthestate:atpresentthestateisatthemercyofthecreditors。Weresuchoperationsoncointotakeplaceatpresent，aswerethenfamiliar；weretheKingatpresenttoattempttoturntheconstitutionsofrent，perpetualandlife-annuities，intoanyotherformthanwhattheyhave，thecreditofFrancewouldbeundoneforalongtime；andwhoknowswhatviewsofambitionasituationsodeplorablemightnotstirupincertaincourtsofEurope。
Whatstatewouldpayitsdebts，ifitdurstdootherwise？Andwhatstatecandiminishitsdebtsinanyotherwaythanbyloweringtheinterestuponthem？Butofthismoreinitsproperplace。