Part 23

The system was now complete; but it had already begun to decay. In December 1719 it was at its height. The shares had then amounted to 20,000 livres, forty times their nominal price. A sort of madness possessed the nation. Men sold their all and hastened to Paris to speculate. The population of the capital was increased by an enormous influx of provincials and foreigners. Trade received a vast though unnatural impulse. Everybody seemed to be getting richer, no one poorer. Those who could still reflect saw that this prosperity was not real. The whole issue of shares at the extreme market-price valued 12,000 million livres. It would require 600 million annual revenue to give a 5% dividend on this. Now, the whole income of the company as yet was hardly sufficient to pay 5% on the original capital of 1677 million livres. The receipts from the taxes, &c., could be precisely calculated, and it would be many years before the commercial undertakings of the company--with which only some trifling beginning had been made--would yield any considerable return. People began to sell their shares, and to buy coin, houses, land--anything that had a stable element of value in it. There was a rapid fall in the shares, a rapid rise in all kinds of property, and consequently a rapid depreciation of the paper money. Law met these new tendencies by a succession of the most violent edicts. The notes were to bear a premium over specie. Coin was only to be used in small payments, and only a small amount was to be kept in the possession of private parties. The use of diamonds, the fabrication of gold and silver plate, was forbidden. A dividend of 40% on the original capital was promised. By several ingenious but fallaciously reasoned pamphlets Law endeavoured to restore public confidence. The shares still fell. At last, on the 5th of March 1720, an edict appeared fixing their price at 9000 livres, and ordering the bank to buy and sell them at that price. The fall now was transferred to the notes, of which there were soon over 2500 million livres in circulation. A large proportion of the coined money was removed from the kingdom. Prices rose enormously. There was everywhere distress and complete financial confusion. Law became an object of popular hatred. He lost his court influence, and was obliged to consent to a decree (21st May 1720) by which the notes and consequently the shares were reduced to half their nominal value. This created such a commotion that its promoters were forced to recall it, but the mischief was done. What confidence could there be in the depreciated paper after such a measure? Law was removed from his office, and his enemies proceeded to demolish the "system." A vast number of shares had been deposited in the bank. These were destroyed. The notes were reconverted into government debt, but there was first a _visa_ which reduced that debt to the same size as before it was taken over by the company. The rate of interest was lowered, and the government now only pledged itself to pay 37 instead of 80 millions annually. Finally the bank was abolished, and the company reduced to a mere trading association. By November the "system" had disappeared. With these last measures Law, it may well be believed, had nothing to do. He left France secretly in December 1720, resumed his wandering life, and died at Venice, poor and forgotten, on the 21st of March 1729.

Of Law's writings the most important for the comprehension of the "system" is his _Money and Trade Considered_. In this work he says that national power and wealth consist in numbers of people, and magazines of home and foreign goods. These depend on trade, and that on money, of which a greater quantity employs more people; but credit, if the credit have a circulation, has all the beneficial effects of money. To create and increase instruments of credit is the function of a bank. Let such be created then, and let its notes be only given in return for land sold or pledged. Such a currency would supply the nation with abundance of money; and it would have many advantages, which Law points out in detail, over silver. The bank or commission was to be a government institution, and its profits were to be spent in encouraging the export and manufacture of the nation. A very evident error lies at the root of the "system." Money is not the result but the cause of wealth, he thought. To increase it then must be beneficial, and the best way is by a properly secured paper currency. This is the motive force; but it is to be applied in a

## particular way. Law had a profound belief in the omnipotence of

government. He saw the evils of minor monopolies, and of private farming of taxes. He proposed to centre foreign trade and internal finance in one huge monopoly managed by the state for the people, and carrying on business through a plentiful supply of paper money. He did not see that trade and commerce are best left to private enterprise, and that such a scheme would simply result in the profits of speculators and favourites. The "system" was never so far developed as to exhibit its inherent faults. The madness of speculators ruined the plan when only its foundations were laid. One part indeed might have been saved. The bank was not necessarily bound to the company, and had its note-issue been retrenched it might have become a permanent institution. As Thiers points out, the edict of the 5th of March 1720, which made the shares convertible into notes, ruined the bank without saving the company. The shares had risen to an unnatural height, and they should have been allowed to fall to their natural level. Perhaps Law felt this to be impossible. He had friends at court whose interests were involved in the shares, and he had enemies eager for his overthrow. It was necessary to succeed completely or not at all; so Law, a gambler to the core, risked and lost everything. Notwithstanding the faults of the "system," its author was a financial genius of the first order. He had the errors of his time; but he propounded many truths as to the nature of currency and banking then unknown to his contemporaries. The marvellous skill which he displayed in adapting the theory of the "system" to the actual condition of things in France, and in carrying out the various financial transactions rendered necessary by its development, is absolutely without parallel. His profound self-confidence and belief in the truth of his own theories were the reasons alike of his success and his ruin. He never hesitated to employ the whole force of a despotic government for the definite ends which he saw before him. He left France poorer than he entered it, yet he was not perceptibly changed by his sudden transitions of fortune. Montesquieu visited him at Venice after his fall, and has left a description of him touched with a certain pathos. Law, he tells us, was still the same in character, perpetually planning and scheming, and, though in poverty, revolving vast projects to restore himself to power, and France to commercial prosperity.

The fullest account of the Mississippi scheme is that of Thiers, _Law et son système des finances_ (1826, American trans. 1859). See also Heymann, _Law und sein System_ (1853); Pierre Bonnassieux, _Les Grandes Compagnies de commerce_ (1892); S. Alexi, _John Law und sein System_ (1885); E. Levasseur, _Récherches historiques sur le système de Law_ (1854); and Jobez, _Une Préface au socialisme, ou le système de Law et la chasse aux capitalistes_ (1848). Full biographical details are given in Wood's _Life of Law_ (Edinburgh, 1824). All Law's later writings are to be found in Daire, _Collection des principaux économistes_, vol. i. (1843). Other works on Law are: A. W. Wiston-Glynn, _John Law of Lauriston_ (1908); P. A. Cachut, _The Financier Law, his Scheme and Times_ (1856); A. Macf. Davis, _An Historical Study of Law's System_ (Boston, 1887); A. Beljame, _La Pronunciation du nom de Jean Law le financier_ (1891). See also E. A. Benians in _Camb. Mod. Hist._ vi. 6 (1909). For minor notices see Poole's _Index to Periodicals_. There is a portrait of Law by A. S. Belle in the National Portrait Gallery, London. (F. Wa.)

FOOTNOTE:

[1] A work entitled _Proposals and Reasons for constituting a Council of Trade in Scotland_ was published anonymously at Edinburgh in 1701. It was republished at Glasgow in 1751 with Law's name attached; but several references in the state papers of the time mention William Paterson (1658-1719), founder of the Bank of England, as the author of the plan therein propounded. Even if Law had nothing to do with the composition of the work, he must have read it and been influenced by it. This may explain how it contains the germs of many of the developments of the "system." Certainly the suggestion of a central board, to manage great commercial undertakings, to furnish occupation for the poor, to encourage mining, fishing and manufactures, and to bring about a reduction in the rate of interest, was largely realized in the Mississippi scheme. See Bannister's Life of William Paterson (ed. 1858), and _Writings of William Paterson_ (2nd ed., 3 vols., 1859).

LAW, WILLIAM (1686-1761), English divine, was born at King's Cliffe, Northamptonshire. In 1705 he entered as a sizar at Emmanuel College, Cambridge; in 1711 he was elected fellow of his college and was ordained. He resided at Cambridge, teaching and taking occasional duty until the accession of George I., when his conscience forbade him to take the oaths of allegiance to the new government and of abjuration of the Stuarts. His Jacobitism had already been betrayed in a tripos speech which brought him into trouble; and he was now deprived of his fellowship and became a non-juror. For the next few years he is said to have been a curate in London. By 1727 he was domiciled with Edward Gibbon (1666-1736) at Putney as tutor to his son Edward, father of the historian, who says that Law became "the much honoured friend and spiritual director of the whole family." In the same year he accompanied his pupil to Cambridge, and resided with him as governor, in term time, for the next four years. His pupil then went abroad, but Law was left at Putney, where he remained in Gibbon's house for more than ten years,

## acting as a religious guide not only to the family but to a number of

earnest-minded folk who came to consult him. The most eminent of these were the two brothers John and Charles Wesley, John Byrom the poet, George Cheyne the physician and Archibald Hutcheson, M.P. for Hastings. The household was dispersed in 1737. Law was parted from his friends, and in 1740 retired to King's Cliffe, where he had inherited from his father a house and a small property. There he was presently joined by two ladies: Mrs Hutcheson, the rich widow of his old friend, who recommended her on his death-bed to place herself under Law's spiritual guidance, and Miss Hester Gibbon, sister to his late pupil. This curious trio lived for twenty-one years a life wholly given to devotion, study and charity, until the death of Law on the 9th of April 1761.

Law was a busy writer under three heads:--

1. _Controversy._--In this field he had no contemporary peer save perhaps Richard Bentley. The first of his controversial works was _Three Letters to the Bishop of Bangor_ (1717), which were considered by friend and foe alike as one of the most powerful contributions to the Bangorian controversy on the high church side. Thomas Sherlock declared that "Mr Law was a writer so considerable that he knew but one good reason why his lordship did not answer him." Law's next controversial work was _Remarks on Mandeville's Fable of the Bees_ (1723), in which he vindicates morality on the highest grounds; for pure style, caustic wit and lucid argument this work is remarkable; it was enthusiastically praised by John Sterling, and republished by F. D. Maurice. Law's _Case of Reason_ (1732), in answer to Tindal's _Christianity as old as the Creation_ is to a great extent an anticipation of Bishop Butler's famous argument in the _Analogy_. In this work Law shows himself at least the equal of the ablest champion of Deism. His _Letters to a Lady inclined to enter the Church of Rome_ are excellent specimens of the attitude of a high Anglican towards Romanism. His controversial writings have not received due recognition, partly because they were opposed to the drift of his times, partly because of his success in other fields.

2. _Practical Divinity._--The _Serious Call to a Devout and Holy Life_ (1728), together with its predecessor, _A Treatise of Christian Perfection_ (1726), deeply influenced the chief actors in the great Evangelical revival. The Wesleys, George Whitefield, Henry Venn, Thomas Scott and Thomas Adam all express their deep obligation to the author. The _Serious Call_ affected others quite as deeply. Samuel Johnson, Gibbon, Lord Lyttelton and Bishop Horne all spoke enthusiastically of its merits; and it is still the only work by which its author is popularly known. It has high merits of style, being lucid and pointed to a degree. In a tract entitled _The Absolute Unlawfulness of Stage Entertainments_ (1726) Law was tempted by the corruptions of the stage of the period to use unreasonable language, and incurred some effective criticism from John Dennis in _The Stage Defended_.

3. _Mysticism._--Though the least popular, by far the most interesting, original and suggestive of all Law's works are those which he wrote in his later years, after he had become an enthusiastic admirer (not a disciple) of Jacob Boehme, the Teutonic theosophist. From his earliest years he had been deeply impressed with the piety, beauty and thoughtfulness of the writings of the Christian mystics, but it was not till after his accidental meeting with the works of Boehme, about 1734, that pronounced mysticism appeared in his works. Law's mystic tendencies divorced him from the practical-minded Wesley, but in spite of occasional wild fancies the books are worth reading. They are _A Demonstration of the Gross and Fundamental Errors of a late Book called a "Plain Account, &c., of the Lord's Supper_" (1737); _The Grounds and Reasons of the Christian Regeneration_ (1739); _An Appeal to all that Doubt and Disbelieve the Truths of Revelation_ (1740); _An Earnest and Serious Answer to Dr Trapp's Sermon on being Righteous Overmuch_ (1740); _The Spirit of Prayer_ (1749, 1752); _The Way to Divine Knowledge_ (1752); _The Spirit of Love_ (1752, 1754); _A Short but Sufficient Confutation of Dr Warburton's Projected Defence (as he calls it) of Christianity in his "Divine Legation of Moses"_ (1757); _A Series of Letters_ (1760); a _Dialogue between a Methodist and a Churchman_ (1760); and _An Humble, Earnest and Affectionate Address to the Clergy_ (1761).

Richard Tighe wrote a short account of Law's life in 1813. See also Christopher Walton, _Notes and Materials for a Complete Biography of W. Law_ (1848); Sir Leslie Stephen, _English Thought in the 18th century_, and in the _Dict. Nat. Biog._ (xxxii. 236); W. H. Lecky, _History of England in the 18th Century_; C. J. Abbey, _The English Church in the 18th Century_; and J. H. Overton, _William Law, Nonjuror and Mystic_ (1881).

LAW (O. Eng. _lagu_, M. Eng. _lawe_; from an old Teutonic root _lag_, "lie," what lies fixed or evenly; cf. Lat. _lex_, Fr. _loi_), a word used in English in two main senses--(1) as a rule prescribed by authority for human action, and (2) in scientific and philosophic phraseology, as a uniform order of sequence (e.g. "laws" of motion). In the first sense the word is used either in the abstract, for jurisprudence generally or for a state of things in which the laws of a country are duly observed ("law and order"), or in the concrete for some

## particular rule or body of rules. It is usual to distinguish further

between "law" and "equity" (q.v.). The scientific and philosophic usage has grown out of an early conception of jurisprudence, and is really metaphorical, derived from the phrase "natural law" or "law of nature," which presumed that commands were laid on matter by God (see T. E. Holland, _Elements of Jurisprudence_, ch. ii.). The adjective "legal" is only used in the first sense, never in the second. In the case of the "moral law" (see ETHICS) the term is employed somewhat ambiguously because of its connexion with both meanings. There is also an Old English use of the word "law" in a more or less sporting sense ("to give law" or "allow so much law"), meaning a start or fair allowance in time or distance. Presumably this originated simply in the liberty-loving Briton's respect for proper legal procedure; instead of the brute exercise of tyrannous force he demanded "law," or a fair opportunity and trial. But it may simply be an extension of the meaning of "right," or of the sense of "leave" which is found in early uses of the French _loi_.

In this work the laws or uniformities of the physical universe are dealt with in the articles on the various sciences. The general principles of law in the legal sense are discussed under JURISPRUDENCE. What may be described as "national systems" of law are dealt with historically and generally under ENGLISH LAW, AMERICAN LAW, ROMAN LAW, GREEK LAW, MAHOMMEDAN LAW, INDIAN LAW, &c. Certain broad divisions of law are treated under CONSTITUTION AND CONSTITUTIONAL LAW, CANON LAW, CIVIL LAW, COMMON LAW, CRIMINAL LAW, ECCLESIASTICAL LAW, EQUITY, INTERNATIONAL LAW, MILITARY LAW, &c. And the particular laws of different countries on special subjects are stated under the headings for those subjects (BANKRUPTCY, &c.). For courts (q.v.) of law, and procedure, see JURISPRUDENCE, APPEAL, TRIAL, KING'S BENCH, &c.

AUTHORITIES.--The various legal articles have bibliographies attached, but it may be convenient here to mention such general works on law, apart from the science of jurisprudence, as (for English law) Lord Halsbury's _Laws of England_ (vol. i., 1907), _The Encyclopaedia of the Laws of England_, ed. Wood Renton (1907), Stephen's _Commentaries on the Laws of England_ (1908), Brett's _Commentaries on the present Laws of England_ (1896), Broom's _Commentaries on the Common Law_ (1896) and Brodie-Innes's _Comparative Principles of the Laws of England and Scotland_ (vol. i., 1903); and, for America, Bouvier's _Law Dictionary_, and Kent's _Commentaries on American Law_.

LAWES, HENRY (1595-1662), English musician, was born at Dinton in Wiltshire in December 1595, and received his musical education from John Cooper, better known under his Italian pseudonym Giovanni Coperario (d. 1627), a famous composer of the day. In 1626 he was received as one of the gentlemen of the chapel royal, which place he held till the Commonwealth put a stop to church music. But even during that songless time Lawes continued his work as a composer, and the famous collection of his vocal pieces, _Ayres and Dialogues for One, Two and Three Voyces_, was published in 1653, being followed by two other books under the same title in 1655 and 1658 respectively. When in 1660 the king returned, Lawes once more entered the royal chapel, and composed an anthem for the coronation of Charles II. He died on the 21st of October 1662, and was buried in Westminster Abbey. Lawes's name has become known beyond musical circles by his friendship with Milton, whose _Comus_ he supplied with incidental music for the performance of the masque in 1634. The poet in return immortalized his friend in the famous sonnet in which Milton, with a musical perception not common amongst poets, exactly indicates the great merit of Lawes. His careful attention to the words of the poet, the manner in which his music seems to grow from those words, the perfect coincidence of the musical with the metrical accent, all put Lawes's songs on a level with those of Schumann or Liszt or any modern composer. At the same time he is by no means wanting in genuine melodic invention, and his concerted music shows the learned contrapuntist.

LAWES, SIR JOHN BENNET, BART. (1814-1900), English agriculturist, was born at Rothamsted on the 28th of December 1814. Even before leaving Oxford, where he matriculated in 1832, he had begun to interest himself in growing various medicinal plants on the Rothamsted estates, which he inherited on his father's death in 1822. About 1837 he began to experiment on the effects of various manures on plants growing in pots, and a year or two later the experiments were extended to crops in the field. One immediate consequence was that in 1842 he patented a manure formed by treating phosphates with sulphuric acid, and thus initiated the artificial manure industry. In the succeeding year he enlisted the services of Sir J. H. Gilbert, with whom he carried on for more than half a century those experiments in raising crops and feeding animals which have rendered Rothamsted famous in the eyes of scientific agriculturists all over the world (see AGRICULTURE). In 1854 he was elected a Fellow of the Royal Society, which in 1867 bestowed a Royal medal on Lawes and Gilbert jointly, and in 1882 he was created a baronet. In the year before his death, which happened on the 31st of August 1900, he took measures to ensure the continued existence of the Rothamsted experimental farm by setting aside £100,000 for that purpose and constituting the Lawes Agricultural Trust, composed of four members from the Royal Society, two from the Royal Agricultural Society, one each from the Chemical and Linnaean Societies, and the owner of Rothamsted mansion-house for the time being.

LAW MERCHANT or LEX MERCATORIA, originally a body of rules and principles relating to merchants and mercantile transactions, laid down by merchants themselves for the purpose of regulating their dealings. It was composed of such usages and customs as were common to merchants and traders in all parts of Europe, varied slightly in different localities by special peculiarities. The law merchant owed its origin to the fact that the civil law was not sufficiently responsive to the growing demands of commerce, as well as to the fact that trade in pre-medieval times was practically in the hands of those who might be termed cosmopolitan merchants, who wanted a prompt and effective jurisdiction. It was administered for the most part in special courts, such as those of the gilds in Italy, or the fair courts of Germany and France, or as in England, in courts of the staple or piepowder (see also SEA LAWS). The history of the law merchant in England is divided into three stages: the first prior to the time of Coke, when it was a special kind of law--as distinct from the common law--administered in special courts for a special class of the community (i.e. the mercantile); the second stage was one of transition, the law merchant being administered in the common law courts, but as a body of customs, to be proved as a fact in each individual case of doubt; the third stage, which has continued to the present day, dates from the presidency over the king's bench of Lord Mansfield (q.v.), under whom it was moulded into the mercantile law of to-day. To the law merchant modern English law owes the fundamental principles in the law of partnership, negotiable instruments and trade marks.

See G. Malynes, _Consuetudo vel lex mercatoria_ (London, 1622); W. Mitchell, _The Early History of the Law Merchant_ (Cambridge, 1904); J. W. Smith, _Mercantile Law_ (ed. Hart and Simey, 1905).