Part 3
Those who intended to subscribe had accomplished comparatively little by obtaining receipts or state notes; it was still necessary to go to the Hôtel de Nevers, where the subscriptions were received. The entrances there were crowded to suffocation. The hall servants made considerable sums by subscribing for those who could not get through the crowd to the offices. Some adventurers, assuming the livery of Law, performed this service, charging and obtaining a very large fee. The most humble employees of the company became patrons who were very much courted. As to the higher officers and Law himself, they received as much adulation as if they were the actual dispensers of the favors of Fortune. The approaches to Law's residence were encumbered with carriages. All that was most brilliant among the nobility of France came to beg humbly for the subscriptions, which were already much above the nominal price of shares, and which were sure to rise much higher. By a clause creating the company, the ownership of the shares entailed nothing derogatory to rank. The nobility, therefore, could indulge in this speculation without endangering its titles. It was as much in debt as the King, thanks to its prodigality and the long wars of that century, and it sought to win, at least, the amount of its debt by fortunate speculations. It surrounded, it fawned upon Law, who, very anxious to gain partisans, reserved very few shares for himself, but distributed them among his friends of the court.
This new subscription was also taken up in a few days. If we reflect that fifty millions in cash was sufficient to secure five hundred millions of each issue, we shall understand how the state notes which remained in market and the receipts already delivered would suffice to monopolize the shares offered to the public. The creditors who had not liquidated their claims--and the greater number had not--could not avail themselves of the right to subscribe for shares, and were obliged to buy them in the market at an exorbitant price. The shares subscribed for at the Hôtel de Nevers for five thousand francs were re-sold in the Rue Quincampoix for six, seven, and eight thousand francs. To the need of having some of this investment was joined the hope of seeing the shares rise in the market to an indefinite extent, and it is not surprising that the eagerness to obtain them soon increased to frenzy. In order to satisfy this demand a third subscription was opened on October 2d, three days after the second. Similar in every respect to the first two, it ought to bring in a capital of five hundred millions and complete the fifteen hundred millions which the company needed to redeem the public debt.
The concourse of people was as great as ever at the treasury, where the receipts were given and at the Hôtel de Nevers, where the applications for shares were received. The occasion of this eagerness is evident, since that which was obtained at the Hôtel de Nevers for five thousand francs was worth seven and eight thousand in the Rue Quincampoix. This new issue at five thousand francs caused the rates in the Rue Quincampoix to diminish: in an instant they were below five thousand francs--even as low as four thousand--so blind were these movements, and, so to speak, convulsive, during this period of feverish excitement. There was no possible reason for selling in one place for four thousand francs that for which they paid five thousand at another. But this phenomenon lasted only a few hours; the rates rose again rapidly, and, the subscription being taken up, the shares sold again for seven and eight thousand francs. The crafty brokers had already had two opportunities of making some profitable operations.
Having obtained the state notes at a very small price, they procured shares at the most moderate rates, between five hundred and a thousand francs; then they sold them for from seven to eight thousand francs; and October 2d, the day of the decline, they repurchased them for four thousand, to sell them again the next day for seven or eight thousand. It will be seen how they must have made money with these opportunities.
It was no longer a few scattered groups which were seen in the Rue Quincampoix, but a compact crowd engaged in speculating from morning till night. The subscriptions had been divided into coupons, transferable, like notes, to the bearer by an indorsement simply formal. During the course of October the shares had already risen above ten thousand francs, and it was impossible to know where they would stop.
The end of the month of December, 1719, was the term of this delusion of three months. A certain number of stock-jobbers, better advised than others, or more impatient to enter upon the enjoyment of their riches, combined to dispose of their shares. They took advantage of the rage which led so many to sell their estates--they purchased them, and thus obtained the real for the imaginary. They established themselves in splendid mansions, upon magnificent domains, and made a display of their fortunes of thirty or forty millions. They possessed themselves of precious stones and jewels, which were still eagerly offered, and secured solid value in exchange for the semblance of it, which had become so prized by the crowd of dupes. The first effect of this desire to realize was a general increase in the price of everything. An enormous mass of paper being put in the balance with the existing quantity of merchandise and other property, the more paper there was offered against purchasable objects the more rapid the increase became. Cloth which heretofore brought fifteen to eighteen francs a yard rose to one hundred twenty-five francs a yard. In a cook-shop a "Mississippian," bidding against a nobleman for a fowl, ran the price up to two hundred francs.
From this instant the shares suffered their first decline, and a heavy uneasiness began to spread abroad. The extent of the fall was not measured by those whom it menaced; but people wondered, doubted, and began to be alarmed. The shares declined to fifteen thousand francs. However, the bank-notes were not yet distrusted. The bank was, in fact, entirely distinct from the company, and their fate, up to this time, appeared in no way dependent the one on the other. The notes had not undergone any fictitious and extraordinary advance. Large amounts had been issued, certainly, but for gold and silver, and upon the deposit of shares. The portion which had been issued upon the deposit of shares partook of the danger of the shares themselves; but no one thought of that, and the bank-notes still possessed the entire confidence of the public; only they no longer had the same advantage over specie since the latter had been so much sought by the "realizers." The notes already began to be presented at the bank for coin, and the vast reserve which it had possessed began to diminish perceptibly.
Law did then what governments do so often, and always with ill-success: he resorted to forced measures. He declared, in the first place, by decree, that the bank-notes should always be worth 5 per cent. more than coin.
In consideration of this superiority in value the prohibition which forbade the deposits of gold and silver for bills, at Paris, was taken off, so that notes could be procured at the bank for coin. This permission was simply ridiculous, for no one now wished to exchange specie for paper, even at par. But this was not all; the decree declared that thereafter silver should not be used in payments of over one hundred francs nor gold in those over three hundred francs. This was forcing the circulation of notes in large payments, and that of specie in small, and was designed to accomplish by violence what could only be expected from the natural success of the bank.
These measures did not bring any more gold and silver to the bank. The necessity of using bank-notes in payment of over three hundred francs gave them a certain forced employment, but did not procure them confidence. Notes were used for large payments, but coin was amassed secretly as a value more real and more assured. The creditors of the state ceased to carry their receipts to the Rue Quincampoix, because they already distrusted the shares; they could not decide to buy real estate, because the price had been quadrupled; they suffered the most painful anxiety, and in their turn embarrassed the holders of shares who needed the receipts to pay their instalments of one-tenth. The catastrophe approached, and nothing could avert it, unless some magic wand could give the company an income of four or five hundred millions a year, which was now only seventy or eighty millions.
Law, adding measures to measures, at last prohibited the circulation of gold, because this metal was, by its convenience, a rival of bank-notes infinitely more dangerous than silver. He then announced an approaching reduction in the value of coin, which he had raised by a decree in February, only to reduce it again in a short time. The mark, in silver, raised from sixty to eighty francs, was reduced to seventy on April 1st, and sixty-five on May 1st. But this measure was utterly insufficient to bring it to the bank.
The situation grew worse every day; the issue of notes to pay for the shares presented at the bank had risen to two billions six hundred ninety-six millions; their depreciation increased; and creditors of every description, being paid in paper which was at a discount of 60 per cent., complained bitterly of the theft authorized by law.
In this juncture there remained but one step to be taken. As the necessary sacrifice had not been made in the first place, and the shares abandoned to their fate in order to protect the notes, both must now be sacrificed, shares and notes together, in order to finish this wicked fiction. The falsehood of this nominal value, which obliged men to receive at par what was depreciated 30 or 40 per cent., could not be prolonged. The immediate reduction of the nominal value of the shares and bank-notes was the only resource. Sacrifices cannot be too hastily made when they are inevitable.
M. d'Argenson, although dismissed from the treasury, still remained keeper of the seals; he had risen in the esteem of the Regent as Law had declined, and he advised the reduction of the nominal value of the shares and notes as an urgent necessity. Law, who saw in this reduction an avowal of the fiction in the legal values, and a blow which must hasten the fall of the "System," opposed it with his whole strength. Nevertheless, M. d'Argenson prevailed. On May 21, 1720, a decree, which remains famous in the history of the "System," advertised the progressive reduction in the value of shares and notes. This reduction was to begin on the very day of the publication of the decree, and to continue from month to month until December 1st. At this last term the shares were to be estimated at five thousand francs, and a bank-note of ten thousand francs at five thousand; one of a thousand at five hundred, etc. The notes were thus reduced 50 per cent., and the shares only four-ninths per cent. Law, although opposed to the decree, consented to promulgate it.
Scarcely was it published when a fearful clamor was raised on all sides. The reduction was called a bankruptcy; the government was reproached with being the first to throw discredit upon the values which it had created, with having robbed its own creditors, a number of whom had just been paid in bank-notes, even as late as the preceding day--in a word, with assailing the fortunes of all the citizens. The crowd wished to sack Law's hotel and to tear him in pieces. Nothing that could have happened would have produced a greater clamor; but in times like those it was not only necessary not to fear these clamors: it was even a duty to defy them.
The reply to the complaints would have soon been evident to the intelligence of everybody. Without doubt the creditors of the state, and some private individuals, who had been paid in bank-notes, were half ruined by the reduction, but this was not the fault of the decree of May 21st--the real reduction was long before this; the decree only stated a loss already experienced, and the notes were worth still less than the decree declared. Because a number of creditors had been ruined by the falsity of nominal values, was it a reason to continue the fiction that it might extend the ruin? On the contrary, it was necessary to put an end to it, to save others from becoming victims. The official declaration of the fact, although it was known before, must produce a shock and hasten the discredit, but it was of little importance that it was hastened, since it was inevitable.
The public thought Law the author of this measure, advised exclusively by M. d'Argenson, and he became the sole object of hatred. The Parliament, making common cause with the public, thought it a good opportunity to take up arms. It did not perceive, in its blind hatred of the "System," that it was going to render a service to its author, and that to declare itself against the reduction of the bank-notes was to maintain that the values created by Law had a solid foundation. It assembled on May 27th to demand a revocation of the decree of the 21st. At the very moment when it was deliberating, the Regent sent one of his officers to prohibit all discussion, announcing the revocation of the decree.
The Regent had the weakness to yield to the public clamor. Had the decree been bad, its revocation would have been worse. To declare that the shares and notes were still worth what they purported to be availed nothing, for no one believed it, and their credit was not restored by it. A legal falsehood was reaffirmed, and, without rendering any service to those who were already ruined, the ruin of those who were obliged to receive the notes at their nominal value was insured. The decree of May 21st, wise if it had been sustained, became disastrous as soon as it was revoked. Its only effect was to hasten the general discredit, without the essential advantage of reëstablishing a real, legal value.
We have just said that the bank was not obliged to pay notes of over one hundred francs. It paid them slowly, and employed all imaginable artifices to avoid the payment of them. Nevertheless, its coffers were almost exhausted, and it was necessary to authorize it to confine its disbursements to the payment of notes of ten francs only. The people rushed to the bank in crowds to realize their notes of ten francs, fearing that these would soon share the fate of those of one hundred. The pressure was so great that three persons were suffocated. The indignant mob, ready for any excess, already menaced the house of Law. He fled to the Palais Royal to seek an asylum near the Regent. The mob followed him, carrying the bodies of the three who had been suffocated. The carriage which had just conveyed him was broken to pieces, and it was feared that even the residence of the Regent would not be respected.
The gates of the court of the Palais Royal had been closed; the Duke of Orléans, with great presence of mind, ordered them to be opened. The crowd rushed into the court and suddenly stopped upon the steps of the palace. Leblanc, the chief of police, advanced to those who bore the corpses, and said, "My friends, go place these bodies in the Morgue, and then return to demand your payment." These words calmed the tumult; the bodies were carried away and the sedition was quelled.
Severities against the rich "Mississippians" were commenced in this same month of October. For a long time it had been suspected that the government, following an ancient usage, would deprive them, by means of _visas_ and _chambres-ardentes_, of what they had acquired by stock-jobbing. A list was made of those known to have speculated in shares. A special commission arbitrarily placed on this list the names of those whom public opinion designated as having enriched themselves by speculation in paper. They were ordered to deposit a certain number of shares at the offices of the company, and to purchase the required number if they had sold their own. The "realizers" were thus brought back by force to the company which they had deserted. Eight days were given to speculators of good faith to make, voluntarily, the prescribed deposit. To prevent flight from the country, it was prohibited, under pain of death, to travel without a passport.
These measures increased still more the decline of the shares. All those whose names were not upon the list of rich speculators, and who could not tell what became of the shares not yet deposited, hastened to dispose of all they retained.
The "System" wholly disappeared in November, 1720, one year after its greatest credit. All the notes were converted into annuities or preferred shares, and all the shares were deposited with the company. Then a general visa was ordered, consisting of an examination of the whole mass of shares, with the purpose of annulling the greater portion of those which belonged to the enriched stock-jobbers.
Law, foreseeing the renewed rage which the visa would excite, determined to leave France. The hatred against him had been so violent since the scene of July 17th that he had not dared to quit the Palais Royal. The following fact will give an idea of the fury excited against him: A hackman, having a quarrel with the coachman of a private carriage, cried out, "There is Law's carriage!" The crowd rushed upon the carriage, and nearly tore in pieces the coachman and his master before it could be undeceived.
Law demanded passports of the Duke of Orléans, who granted them immediately. The Duke of Bourbon, made rich by the "System," felt under obligations to Law, and offered money and the carriage of Madame de Prie, his mistress. Law refused the money and accepted the carriage. He repaired to Brussels, taking with him only eight hundred louis. Scarcely was he gone when his property, consisting of lands and shares, was sequestrated.
FOOTNOTES:
[27] A company headed by Anthony Crozat. It was chartered in 1712, and formed a commercial monopoly in Louisiana.--ED.
PRINCE EUGENE VANQUISHES THE TURKS
SIEGE AND BATTLE OF BELGRAD
A.D. 1717
PRINCE EUGENE OF SAVOY
This struggle marked the disastrous end of a determined effort of the Ottoman empire to recover lost possessions. It also resulted in giving all Hungary, with Belgrad and a part of Servia, permanently to Austria. After their last great invasion of Austrian territory and their crushing defeat by Sobieski and the Imperialists (1683), the Turks suffered many losses of territory at the hands of various European powers. In 1696 Peter the Great took from them Azov, an important entrance to the Black Sea. By the treaty of the Pruth (1711) this, with other Russian possessions, was again ceded to the Turks.
The temporary success led them to seek further recoveries. Their aim was chiefly directed against Austria and Venice, which had aggrandized themselves at the expense of the Moslem power. Turkish victories caused the Venetians to call in the aid of Austria. The Austrian intervention not only saved Venice, but once more checked the Turkish arms.
The Emperor Charles VI appointed as leader of the Austrian forces Prince Eugene of Savoy, already distinguished through a long series of wars as one of the greatest soldiers of his time, the companion of Marlborough. In 1716 Eugene defeated the grand vizier at Temesvar, and in the following year took Belgrad and destroyed the Turkish army, as told in his own racy and cavalier style.
From all sides men flocked to serve under me. There were enough to form a squadron of princes and volunteers. Among the former a Prince of Hesse, two of Bavaria, a Bevern, a Culenbach, one of Wuertemberg, two of Ligne, one of Lichtenstein, of Anhalt-Dessau, the Count of Charolai, the Princes of Dombes, of Marsillac, of Pons, etc.
The Emperor made me a present of a magnificent diamond crucifix, and strongly assured me that all my victories came, and would come, from God; this was getting rid of gratitude toward me; and I set off for Futack, where I assembled my army toward the end of May, 1717.
It was necessary to possess myself of Belgrad, which for three centuries had been so many times taken and retaken. Luckily, I did not find there the cordelier, John de Capistran, who, with the crucifix in his hand, and in the hottest part of the fire during the whole day, defended the place so well: and Hunyady, who commanded there, against Mahomet II in 1456. Hunyady died of his wounds. The Emperor lost Belgrad; Mahomet lost an eye, and the cordelier was canonized.
Unfortunately the Grand Seignior had but too well replaced the wrong-headed grand vizier, who had been killed. It was the Pacha of Belgrad, who supplied the vacancy, called Hastchi Ali, who made the most judicious arrangements for the preservation of the place, and caused me a great deal of embarrassment. On June 10th I passed the Danube: my volunteer princes threw themselves into boats to arrive among the first, and to charge the spahis with some squadrons of Mercy, which had already passed below Panczova, to protect the disembarkation of some, and the bridge constructed for the others, with eighty-four boats. On the 19th I went, with a large escort, to reconnoitre the place where I wished to pitch my camp. Twelve hundred spahis rushed upon us with unequalled fury, and shouted "_Allah! Allah!_" I know not why one of their officers broke through a squadron which was in front, to find me at the head of the second, where I placed myself from prudential motives, having many orders to give. He missed me, and I was going to obtain satisfaction with my pistol when a dragoon at my side knocked him under his horse. On the same day we had a naval combat, which lasted two hours; and our saics having the advantage I remained master of the operations on the Danube. On the 20th I continued working on the lines of contravallation, under a dreadful fire from the place. Toward the end of June I advanced my camp so near Belgrad that the bullets were constantly flying over my head. A storm destroyed all my bridges: and, but for the courage of a Hessian officer, in a redoubt, I do not know how I should have been able to reëstablish the one upon the Save.