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Significant Scots
John Law

LAW, JOHN, of Lauriston, comptroller-general of the finances of France, under the regency of Orleans, was born at Edinburgh, in the month of April, 1671. His mother, Jean Campbell, was descended from one of the numerous branches of the ducal house of Argyle. His father, William Law, was great-grandson of James Law, archbishop of Glasgow, and second son of James Law of Brunton in Fife. William Law acquired a considerable fortune by his profession as a goldsmith in the Scottish metropolis, and purchased the two estates of Lauriston and Randleston, a property of about 180 acres, in the parish of Cramond, and county of Edinburgh. He died shortly after making this purchase, leaving an only son, the subject of the present memoir, then fourteen years of age.

John received his education at Edinburgh, and early evinced an uncommon aptitude for the more abstruse branches of study. He likewise became skilled in games of dexterity and hazard, and acquired an enviable reputation in the tennis-court, a place of amusement then much frequented by young men of fashion in Scotland. But the early death of his father had relieved him from many salutary restraints, and Beau Law—as he was commonly called by his companions—shortly after reaching majority, found his affairs in a state of embarrassment, from which they were only extricated by the kindness and excellent management of his mother, who having obtained a disposition of the fee of Lauriston from her son, paid his debts, relieved the estate of its incumbrances, and executed an entail of the property.

Law was now in London, where his personal accomplishments, fascinating manners, and devotion to gambling, procured him admittance into some of the first circles. An affair of gallantry, however, with another dissolute young man, led to a hostile meeting, in which Law killed his antagonist on the spot. After a trial before the king and queen’s commissioners in the Old Bailey, which lasted three days, the jury found the survivor in this duel guilty of murder, and sentence of death was accordingly passed upon him, 20th April, 1694. On a representation of the case to the crown, Law obtained a pardon; but was detained in the King’s Bench, in consequence of an appeal against this extension of royal clemency towards him having been lodged by a brother of the deceased. He found means, however, to make his escape, and got clear off to the continent. [On this occasion the following advertisement was published in the London Gazette of Monday, 7th January, 1695: "Captain John Law, lately a prisoner in the King’s Bench for murther, aged 26, a very tall, black lean man, well-shaped, above six feet high, large pock-holes in his face, big high nosed, speaks broad and loud, made his escape from the said prison. Whoever secures him, so as he may be delivered at the said prison, shall have fifty pounds paid immediately by the Marshall of the King’s Bench." We may here observe, that this description was upon the whole inaccurate, and leaves room to believe that it was designed rather with the view of facilitating than impeding his escape.]

Law was at this critical period of his life in the 26th year of his age. His dissipation had not destroyed the tone of his mind, nor enfeebled those peculiar powers which had so early developed themselves in him. He visited France, then under the brilliant administration of Colbert, where his inquiries were particularly directed to the state of the public finances, and the mode of conducting banking establishments. From France he proceeded to Holland, where the mercantile system of those wealthy republicans, who had succeeded the merchant princes of Venice in conducting the commerce of Europe, presented to his mind a vast and most interesting subject of investigation. Amsterdam was at this period the most important commercial city in Europe, and possessed a celebrated banking establishment, on the credit of which her citizens had been enabled to baffle the efforts of Louis XIV., to enslave the liberties of their country; a treasury, whose coffers seemed inexhaustible, and the whole system of which was an enigma to the political economists of other countries. Law, with the view of penetrating into the secret springs and mechanism of this wonderful establishment, took up his residence for some time at Amsterdam, where he ostensibly officiated as secretary to the British resident.

About the year 1700, he returned to Scotland. He was now nearly thirty years of age, and had acquired a more accurate acquaintance with the theory of commercial and national finances, as well as with their practical details, than perhaps any single individual in Europe possessed at this time. The contrast which Scotland presented to those commercial countries which he had visited during his exile now struck him forcibly, and he immediately conceived the design of creating that capital to the want of which he attributed the depressed state of Scottish agriculture, manufacture, and commerce. Law’s views were not without foundation; but unfortunately, he stumbled at the outset, by mistaking the true nature of capital. The radical delusion under which he laboured from the outset to the close of his financial career, originated in the idea which had got possession of his mind, that by augmenting the circulating medium of a country we proportionally augment its capital and productive energies. Now, money is not always convertible into capital, that is, into something which may be employed towards further production; for the creation of exchangeable products must, in the nature of things, precede the creation of a general medium of commerce, and it is quite evident, that if we double the amount of the circulating medium without doubling the products of industry, we just depreciate the currency in the degree of the excess, and do not increase the resources or industry of a country in the least. But Law conceived that to her overflow of money alone Holland owed her national prosperity; and he calculated that the increase of the circulating medium in Scotland would be absorbed by the increase of industry, and have no other effect than to lower the rate of interest. This view he developed in a publication entitled "Proposals and Reasons for constituting a Council of Trade," dated at Edinburgh, 31st December, 1700, and published at Glasgow in the following year; and in a second and more important work, entitled "Money and Trade considered, with a Proposal for supplying the nation with money," printed at Edinburgh in 1705.

In the latter work, Law developed his views of banking and the credit system. He proposed to supply Scotland with money by means of notes to be issued by certain commissioners appointed by parliament; which notes were to be given out to all who demanded them, upon the security of land. In answer to the supposition, that they might be depreciated by excess or quantity, he observed, that "the commissioners giving out what sums are demanded, and taking back what sums are offered to be returned, this paper-money will keep the value, and there will always be as much money as there is occasion or employment for, and no more. Here his project evidently confounds the quantity of good security in the country, and the quantity of money which people may wish to borrow at interest, with the quantity necessary for the circulation, so as to keep paper-money on a level with the precious metals, and the currency of surrounding countries,—a mistake which has prevailed to a very considerable extent in our own times. But notwithstanding of this capital error, Law has in the latter publication developed the principles and mechanism of banking in an astonishingly able and luminous manner for the period at which he wrote. The court party, and the squadrone, headed by the duke of Argyle and the marquess of Tweeddale, entered warmly into Law’s views; but parliament passed a resolution "that to establish any kind of paper-credit, so as to oblige it to pass, were an improper expedient for the nation."

Law now resolved to offer his system to some of those continental states whose finances had been exhausted by the wars of Louis XIV., and in which the principles of credit were imperfectly understood. With this view he went to Brussels, and from that city proceeded to Paris, where he won immense sums at play, and introduced himself into the good graces of the young duke of Orleans. The Succession war was at this moment occupying the attention of the French court; Chamillart, unable to extricate himself from the difficulties of his situation in any other manner, was about to resign his functions as minister of finance; the moment appeared favourable to our projector, and he made offer of his services to the French monarch. But the leading men of the day were totally unable to comprehend the plans of the new financier, and the name of Huguenot was no passport to the royal favour: so that the unexpected result of this negotiation was an order from the intendant of police to quit Paris in twenty-four hours as a state-enemy. Law, found himself in a similar predicament at Genoa and Turin, but not before he had pursued his usual run of luck at the gaming-tables in these cities. After visiting several other continental cities, in all of which his fascinating manner procured him admission to the first circles, our adventurer found himself possessed of a tangible fortune of considerably more than £100,000,—the fruits of his skill and success at play. The death of Louis XIV.,—the succession of the duke of Orleans to the regency,—and the deplorable state of the French finances, prompted Law to present himself once more to the attention of the French ministry.

During the war of Succession--now brought to a close—Demarest, who had succeeded Chamillart as comptroller-general, had exhausted every possible means of raising money; he had issued promissory notes under every conceivable name and form,—Promesses de la caisse des emprunts, Billets de Legendre, Billets de l’ extraordinaire des guerres, but all without success; the credit of the government was gone, and its effets of every description had sunk from seventy to eighty per cent in value. In this extremity, the expedient of a national bankruptcy was proposed to and rejected by the regent, who also refused to give a forced circulation to the royal billets, but appointed a commission to inquire into the claims of the state-creditors. The commission executed its duties with great ability; but after reducing the national debt to its lowest possible form, and providing for the payment of the interest amounting to 80,000,000 of livres, or about one half of the revenue, there hardly remained a sum sufficient to defray the ordinary expenses of the civil government, and that too, after having had recourse to a measure tantamount, in its effects at least, to a breach of faith, namely, a change in the nominal value of the currency. By the latter scheme, the government foolishly imagined that they would pocket 200,000,000 of livres, but the sum on which they had calculated, only went into the pockets of the Dutch and the clandestine money-dealers. At this critical juncture, Law stepped forward in the full confidence of being yet able to rescue the government from bankruptcy, by the establishment of a well-regulated paper-credit. His first proposal was to establish a national bank, into which was to be transferred all the metallic currency of the nation, which was to be replaced by bank-notes. Law regarded the whole nation as one grand banking-company, and his reasoning was this:—If a bank may increase the issue of its notes beyond the amount of its funds in bullion, without risking its solvency, a nation may also do the same. But the private fortunes of the individuals of a nation, it is quite evident, can never be held as security for the notes which the sovereign authority may choose to issue; and unless such security is to be found in the resources of the government itself, it is equally clear that a paper-currency might sink in the course of a few months fifty or a hundred per cent below the value of the precious metals, and deprive individuals of half or the whole of their fortunes. Law seems to have regarded credit as every thing,—as intrinsic worth,—as specie itself. Still, notwithstanding this capital delusion, the memoirs which he addressed to the regent on the subject, contain many just observations on the peculiar facilities afforded to trade by the existence of a paper-currency: though they failed to remove the doubts of one sapient objector, who thought a paper-currency highly dangerous, on account of its liability to being cut or violently destroyed! The council of finance, however, rejected this scheme. The present conjuncture, they thought, was not favourable for the undertaking; and this reason, added to some particular clauses of the project, determined them to refuse it.

Law next proposed a private bank for the issue of notes, the funds of which should be furnished entirely from his own fortune, and that of others who might be willing to engage with him in the speculation. He represented the disastrous consequences which had resulted from a fluctuating currency, the enormous rate at which discounts were effected, the difficulties in the exchange between Paris and the provinces, and the general want of an increased currency; and succeeded in convincing the regent that these evils might be obviated by the adoption of his plans even in their limited modification. The bank was accordingly established by letters patent, bearing date the 2nd of May, 1716. Its capital was fixed at 1200 shares of 5000 livres each, or about £300,000 sterling. The notes were payable at sight in specie of the same weight and fineness as the money in circulation at the period of their issue; and hence they soon bore a premium above the metallic currency itself, which had been subjected to many violent alterations since 1689. The good faith which the bank observed in its proceedings,—the patronage which it received from the regent,—and the want of private credit, soon procured for it a vast run of business. Had Law confined his attention to this single establishment, he would justly have been considered as one of the greatest benefactors of the country, and the creator of a beautiful system of commercial finance; but the vastness of his own conceptions, his boundless ambition, and the unlimited confidence which the public now reposed in him, suggested more gigantic enterprizes, and led the way to that highly forced and unnatural system of things which eventually entailed ruin upon all connected with it.

Law had always entertained the idea of uniting the operations of banking with those of commerce. Every one knows that nothing can be more hazardous than such an attempt; for the credit of the banker cannot be made to rest upon the uncertain guarantee of commercial speculations. But the French had yet no accurate ideas on this subject. Law’s confidence in the resources of his own financial genius was unbounded, and the world at this moment exhibited a theatre of tempting enterprise to a comprehensive mind. The Spaniards had established colonies around the gulf of Mexico,—the English were in possession of Carolina and Virginia,—and the French held the vast province of Canada. Although the coast lands of North America were already colonized, European enterprize had not yet penetrated into the interior of this fertile country; but the chevalier de Lasalle had descended the Mississippi, to the gulf of Mexico, and, taking possession of the country through which he passed in the name of the French monarch, gave it the appellation of Louisiana. A celebrated merchant of the name of Crozat had obtained the privilege of trading with this newly discovered country, and had attempted, but without success, to establish a colony within it. Law’s imagination, however, was fired at the boundless field of enterprise which he conceived was here presented; he talked of its beauty, of its fertility, of the abundance and rarity of its produce, of the richness of its mines outrivalling those of Mexico or Peru,—and in the month of August, 1717, within five months after his embarkation in the scheme of the bank, our projector had placed himself, under the auspices of the regent, at the head of the famous Mississippi scheme, or West Indian company. This company was invested with the full sovereignty of Louisiana, on condition of doing homage for the investiture to the king of France, and presenting a crown of gold, of thirty marcs, to each new monarch of the French empire on his accession to the throne. It was authorised to raise troops, to fit out ships of war, to construct forts, institute tribunals, explore mines, and exercise all other acts of sovereignty. The king made a present to the company of the vessels, forts, and settlements which had been constructed by Crozat, and gave it the monopoly of the beaver trade with Canada for twenty-five years. In December following, the capital of the West Indian company was fixed at 100,000,000 livres, divided into 200,000 shares; and the billets d’ etat, were taken at their full value from those wishing to purchase shares. Government paper was at this moment vastly depreciated on account of the irregular payment of the interest; but although 500 livres nominal value in the public funds could not have been sold for more than 150 or 160 livres, the billets d’ etat, by this contrivance, soon rose to par. It was evident that these fictitious funds could not form stock for commercial enterprise; nevertheless, the advance of the government debts to a rate so advantageous to the holders, increased the value of the government securities that remained in circulation, and the depreciated paper rose to full credit with the astonished public, who now began to place implicit confidence in Law’s schemes. The council of finance, however, looked with mistrust on these proceedings; and its president, the duke de Noailles gave in his resignation, and was replaced by d’ Argenson, a man far less skilled in matters of finance. The jealousy of the parliament, too, was excited by the increasing influence of the Scottish financier, who had been heard imprudently to boast that he would render the court independent of parliamentary supplies. By an aret of the 18th of August, 1717, the parliament attempted to destroy the credit of the notes of the bank, by prohibiting the officers of the revenue from taking them in payment of the taxes; but the regent interposed, and Law was allowed to continue his operations. He, however, encountered another formidable rival in d’ Argenson, who now proposed, with the assistance of the four brothers Paris, men of great wealth and influence in the commercial world, to form a company which, with a capital as large as that of the West Indian company, should advance large sums of money secured on the farms, posts, and other branches of the public revenue. This anti-system, as it was called, soon fell to pieces for want of the same energetic and fearless direction which characterized the schemes of its rival.

Law now prevailed on the regent to take the bank under royal guarantee, persuading him that it was quite possible to draw into it the whole circulating specie of the kingdom, and to replace it by the same amount of paper-money. The notes issued by the royal bank, however, did not promise, as those of Law’s private establishment had done, to pay in specie of the same weight and fineness as the specie then in circulation, but merely to pay in silver coin. This opened a door for all the fluctuations which might occur in the real value of the coin called a livre, affecting the value of the paper-money. Law was made director-general of the royal bank, which, in a few months, issued 1,000,000,000 of livres in new notes; "less," says the royal arêt, "not being sufficient for its various operations:" although this sum was more than all the banks of Europe could circulate, keeping good faith with their creditors. The director-general found it extremely difficult to support the credit of such an enormous issue, and for a while hesitated between the plan of insensibly transforming bank-notes into a real paper-money, by giving the latter a decided advantage over specie, which should be kept constantly fluctuating, and by receiving it in payment of the taxes; or of creating a new and apparently lucrative investment for this paper, so as to prevent its returning upon the bank to be exchanged for specie. The latter plan appeared at last the preferable one. A colossal establishment was projected with a capital equal in amount to the public debt. This capital was to be divided into shares, which the regent was to buy with the paper-money that he was to manufacture; he was then to borrow this paper anew to pay the creditors of the state; and then by selling the shares, to retire the paper-money, and thus transfer the creditors of the state to the company.

Accordingly, in May, 1719, the East India company, established by Richelieu, in 1664, the affairs of which were then at a very low ebb, was incorporated with that of the West Indies; and the conjoined companies received the name of the Company of the Indies, "with the four quarters of the world to trade in." "Moreover," says the edict issued on this occasion, "beside the 100,000,000 of public debts already subscribed into the Western Company’s capital, there shall be a new subscription of 50,000 shares of 550 livres each, payable in specie." In a short time, the newly created company engaged, by extending its capital to 624,000 shares, to lend the king the immense sum of 1,600,000,000, at three per cent interest, and declared itself in a condition to pay a dividend of 200 livres upon each share. The public faith being yet unshaken, the shares hereupon rose to 5000 livres; and when the king began to pay off the state-creditors with the loan now procured, many not knowing how to employ their capital, a new competition for shares in the great company arose, and shares actually rose in consequence to 10,000 livres. The slightest consideration might have served to convince any cool speculator, that the company had come under engagements which, in no circumstances, however prosperous, it could fulfil. How was it possible that the company could raise annually 124,800,000 livres for the dividend upon 624,000 shares? Or, supposing it able to make an annual dividend of 200 livres a share, still the rate of interest being at this time about four percent., the shareholder who had bought in at 10,000, thus lost one-half of the revenue be might otherwise have drawn from the employment of his capital. The truth is, the whole scheme was designed for the sole purpose of relieving the state from its debts by the ruin of its creditors; but the immense fortunes which were realized by stock-jobbing at the very outset of the scheme, led on others to engage in the same speculation; splendid fortunes were realized in the course of a single day; men found themselves suddenly exalted as if by the wand of an enchanter, from the lowest station in life to the command of princely fortunes; twelve hundred new equipages appeared on the streets of Paris in the course of six weeks; half a million of people hastened from the country, and even from distant kingdoms to procure shares in the India company; and happy was he who held the greatest number of these bubbles. The negotiations for the sale and purchase of shares were at first carried on in the Rue Quincampoix, where fortunes were made by letting lodgings to the crowds who hastened thither for the purpose of speculating in the stocks. The murder of a rich stock-jobber, committed here on the 22nd of March, 1720, by a young Flemish nobleman, occasioned the proscription of that street as a place of business, and the transference of the stock-jobbing to the Place Vendome, and finally to the hotel de Soissons, which Law is said to have purchased from the prince of Carignan for the enormous sum of 1,400,000 livres.

Innumerable anecdotes are on record of the extraordinary vicissitudes of fortune which took place during this season of marvellous excitement; footmen stepped from the back to the inside of carriages; cooks appeared at the public places with diamond necklaces; butlers started their berlins; and men educated in poverty and of the lowest rank suddenly exchanged the furniture and utensils of their apartments for the richest articles which the upholsterer and silversmith could furnish. Law himself, now arrived "summa ad vestigia rerum," shone super-eminent above all the other attractions of the day; princes, dukes, marshals, prelates, flocked to his levees, and counted themselves fortunate if they could obtain a smile from the great dispenser of fortune’s favours; peeresses of France, in the excess of their adulations, lavished compliments upon the Scottish adventurer which set even decency at defiance; his daughter’s hand was solicited by princes; and his lady bore herself with hauteur towards the duchesses of the kingdom. Land in the neighbourhood of Paris rose to eighty or a hundred year’s purchase; the ell of cloth of fifteen livres sold for fifty; coffee rose from fifty sous to eighteen livres; stock-jobbers were known to treat their guests to green pease at a hundred pistoles the pint; every yard of rich cloth or velvet was bought up for the clothing of the new élèves of fortune; and the value of the silver plate manufactured in the course of three months for supplying the demands of the French capital amounted to 7,200,000 pounds! The regent, sharing in the general delusion, wished to place the wonderful foreigner at the head of the finances of the kingdom; but then, in addition to his being an alien, he was a protestant also; so l’Abbé de Tencin was charged with the important duty of his conversion, and this ecclesiastic succeeded so well in the task assigned to him, that on the 5th of January, 1720, all obstacles being removed, Law was elevated to the comptroller-generalship of the finances of France, and for some time after his elevation to the premiership, governed France with almost absolute power. Law’s fame had now reached its acme; his native city of Edinburgh hastened to transmit to her illustrious son the freedom of citizenship in a gold box of the value of £300; the earl of Ilay re-published some of his works with an adulatory preface; British noblemen disdained not to pay their court to so successful an adventurer; even the earl of Stair, then the British ambassador at Paris, trembled at the idea of Law’s overweening influence in the affairs of France, and viewed his boastful speeches in so serious a light, as to deem them matter of grave communication and advice to his government,--a piece of good faith for which the meritorious and discerning minister met with small thanks.

The great drama, however, which Law was now enacting before the astonished eyes of all Europe, was soon to shift; the glittering bubble on which he had fixed the eyes and expectations of all France was rapidly attenuating to its explosion; the charm by which he had swayed the mind of the million lay not in the rod of the magician, but in the implicit faith which people reposed in the skill and the power of its master,—and, that faith once shaken, the game of delusion was over.

We have said that the shares of the India company had risen to 10,000 livres each in the month of November, 1719. So long as they kept at this elevation, the credit of the bank remained unshaken. Its notes were found so very convenient in conducting the rapid negotiations of the Rue Quincampoix, that they were sought after with avidity, and even bore a premium of ten percent in exchange for specie! Notwithstanding, however, of the boundless delusion under which men acted at this moment, it could not escape the eyes of the vigilant financier, that a constant and enormous drain of specie was going on, either in the way of exportation to foreign countries, or for the consumption of the jewellers and goldsmiths. To answer the large orders of the wealthy Mississippians, and to guard against a run upon the bank in these circumstances, the master-projector had again recourse to forced measures. Edicts were issued declaring the value of bank-notes to be five per cent, above that of specie, and forbidding the use of silver for the payment of any sum exceeding 100 livres, or of gold, in payments exceeding 300 livres. Law thought by these expedients to confine the use of specie to small transactions alone, while those of any magnitude could still be conducted by the fictitious currency which he had called into existence. At the same time, to give a fresh impulse to the stock-jobbing transactions, which had experienced a perceptible decline, he presented himself personally in his ministerial robes, and surrounded by a number of the nobility in the Rue Quincampoix, where his presence instantly excited a lively sensation; and the report being industriously propagated that new edicts were about to be issued, conferring additional privileges on the great company, the actions which had fallen to 12,000 livres, rose to 15,000. Still the public creditors hesitated to employ the notes now issuing in extinction of their debts in purchasing India stock; and the enormous sum of 1,000,000,000, remained floating in the form of bank notes, for which no species of investment could be found.

A publication issued at this juncture by Law, under the title of Lettre a un Créancier, failed to satisfy their scruples, and actions again fell to 12,000 livres. Meanwhile, specie, in spite of successive depreciations effected upon it at the suggestion of the minister of finance, entirely disappeared; still the government kept issuing notes to the immense amount of 1,925,000,000, between the 1st of January, and the 20th of May, 1720, and the price of every thing advanced in almost hourly progression. On the 11th of March, a second letter from the minister of finance appeared, in which he employed the most ingenious sophistry in defence of the exaggerated value at which the paper-currency was attempted to be maintained. The choice of a standard value, the great financier contended, was wholly a matter of opinion. To support the value of any article in the opinion of the community, it is only necessary to decline selling it under a certain price. Houses, lands, and other articles of property, have a certain value in the opinion of mankind, just because some people desire to purchase them, and others will not part with them; but if all the proprietors of houses and land were willing to get rid of their property at one and the same time what value would it have in the market? It is easy to answer such palpable sophistry as this. Houses and lands are possessions fit for certain purposes which men require; it is their fitness which constitutes their value; but in the case of those shares whose value, Law contended, ought to be quite as real as that of any other article of property, it is most evident that they have no value, unless the profit to be derived from commerce in them be not proportioned to the price at which the stock was purchased; from the moment, in fact, that they cease to become marketable they are, stripped of their value. A system supported by such desperate reasoning as Law had here recourse to, must have appeared tottering to its fall in the eyes of every rational man; the public credit of France was about to give way; the Atlantean shoulders on which it had been hitherto supported, could no longer prop the mighty burden. Government at last perceived that too great an extension had been given to what Law called credit, and that to re-establish the value of paper, it would be necessary to diminish its amount. On the 21st of May, the death-blow was given to the whole gigantic system of our Scottish projector, by an edict which announced that a progressive reduction of the India company’s action, and of bank-notes, was to take place from that day till the 1st of December, when it was declared that the bank-notes should remain fixed at one-half of their present value, and the actions at four-ninths. Law, whose influence with the government was now rapidly sinking, or rather was annihilated, felt himself too weak to resist this measure, and actually consented to announce it himself. The public eye was now opened in one instant to the delusion which had been practised upon it, and the next day every one was anxious to get rid of his paper-money at any sacrifice. The catastrophe, though inevitable in the nature of things, was hastened by the artifices of the cardinal Dubois, who used every means to injure Law in the opinion of the regent; and by the irritation of the finance-general, and the parliament of Paris, who regarded the foreign projector as their bitter enemy. The united efforts of such a powerful party appear to have made a deep impression on the mind of the regent, who, in a letter of lord Stair’s, dated 12th March, 1720, is represented as abusing the comptroller cruelly to his face, and even threatening him with the Bastile. The same authority informs us that the minister himself was at this period reeling under the weight of that complicated and stupendous system of which he now found himself the prime support and mover, "Law’s head is so heated," he writes, "that he does not sleep at nights, and has formal fits of frenzy. He gets out of bed almost every night, and runs stark-staring mad about the room making a terrible noise,—sometimes singing and dancing,—at other times swearing, staring, and stamping, quite out of himself. Some nights ago, his wife, who had come into the room upon the noise he made, was forced to ring the bell for people to come to her assistance. The officer of Law’s guard was the first that came, and found Law in his shirt, who had set two chairs in the middle of the room, and was dancing round them quite out of his wits."

The consequences of this rash edict were frightful; the government was upbraided for having been the first to impeach that credit to which it had itself given original existence, and charged with the design to ruin the fortunes of the citizens; seditious and inflammatory libels were posted throughout the streets; the mob assailed the hotels of Law and other members of the cabinet; and even the life of the regent himself was threatened. In this emergency, the parliament assembled on the 27th of May, and terrified at the consequences of their own measures, were about to petition the regent to revoke the unfortunate edict; but, while yet deliberating with this purpose, an officer announced to them that the paper had been restored to its former value, by a new proclamation. However, if the first step had been bad, the second was little less weak and unwary. To declare that the actions and billets had resumed their full value, was doing nothing of real consequence to allay the ferment of the public mind; for such a measure was founded on no principle which could operate in the slightest degree to restore to paper-money the confidence it had lost; it was doing nothing to recompense those who had already suffered injury, and it was effectually securing the ruin of all others on whom the valueless paper could now be fixed as a legal tender. And to add to all this confusion and distress, the repositories of the bank were sealed up the same day, under pretence of examining the books, but in reality to prevent the specie from being paid away in exchange for notes. At last, after the first moments of alarm and outrage were over, the regent ventured to resume those expressions of confidence towards Law which he had been compelled to withhold from him for a time; he received him in his own box at the opera, and gave him a guard to protect his hotel from the insult of the exasperated populace. The infamous Dubois, who had enriched himself by his speculations during the height of the Mississippi madness, now united with Law to expel Argenson from the cabinet; and the regent, whose character though intrepid was not without its weak points, was persuaded at their instigation, to take the seals from his faithful minister, and bestow them upon Agnesseau, who tamely resumed the high office, from which he had been expelled by the very men to whose influence he now beheld himself indebted for his second elevation.

Nothing could now save the system of the great financier; his billets and actions were for ever stripped of their value in the eye of the public; and the most expedient measure that could now be adopted with regard to them, was to withdraw them as promptly as possible from circulation. To demolish in the most prudent manner the vast structure reared by his own labour was now the highest praise to which Law could aspire. By a series of arbitrary financial operations, which it would be tedious here to relate, the public creditors were reduced to the utmost distress, the national debt annihilated; and the whole affairs of the kingdom thrown into the utmost perplexity. "Thus ended," to use the words of Voltaire, "that astonishing game of chance played by an unknown foreigner against a whole nation." Its original success stimulated various individuals to attempt imitations of it,—among which the most famous was the South Sea bubble of England, which entailed disgrace and ruin on many thousands of families. It would be doing injustice to Law’s character were we to view him as the sole author of these misfortunes: his views were liberal beyond the spirit of the times in which he lived; he had unquestionably the real commercial interests of his adopted foster-country at heart; he did not proceed on speculation alone; on the contrary, his principles were to a certain degree the very same as those the adoption of which has raised Britain to her present commercial greatness, and given an impulse to trade throughout the world, such as was never witnessed in the transactions of ancient nations. His error lay in over-estimating the strength and breadth of the foundation on which his gigantic superstructure rested. Unquestionably in his cooler moments he never contemplated carrying the principle of public credit to the enormous and fatal length to which he was afterwards driven by circumstances; it was the unbounded confidence of the public mind, prompted by the desire of gain and the miraculous effects of the system in its earliest development,—the enthusiasm of that mind, transported beyond all bounds of moderation and forbearance, by a first success eclipsing its most sanguine expectations, realizing to thousands of individuals the possession of wealth to an amount beyond all that they had ever conceived in imagination,—the contagious example of the first fortunate speculators intoxicated with success, and fired to the most extravagant and presumptuous anticipations, by which men can be lured into acts of blinded infatuation or thoughtless folly,—it was these circumstances we say, over which Law had necessarily little control, that converted his projects into the bane of those for whom they were at first calculated to serve as a wholesome antidote.

Law was in fact more intent on following out his idea than aggrandizing his fortunes. Riches, influence, honours, were showered upon him in the necessity of things; the man who had given birth to the wealth of a whole kingdom, whose schemes had for a while invested all who entered into them with imaginary treasures,—by whose single mind the workings of that complicated engine which had already produced such dazzling results as seemed to justify the most extravagant anticipations of the future, were comprehended and directed,—must have risen during the existence of that national delusion, to the highest pinnacle of personal wealth and influence, and might, though only endowed with a mere tithe of the forecasting sagacity of Law, have provided for his retreat, and secured a sufficient competency at least beyond the possibility of loss or hazard, as thousands in fact did upon the strength of his measure. But Law, in deluding others, laboured under still stronger delusion himself; like the fabled Frankenstein, he had created a monster whose power he had not at first calculated, and the measure of which he now found he could not prescribe, and he awaited the result with mingled feelings of hope, fear, and distrust. It was the ignorant interference of others with his own mysterious processes, which finally determined the fatal direction of those energies which he had called into being, and which he might have been able, if not to restrain, at least to direct in another and less ruinous manner. We are far from professing ourselves the unqualified apologists of our enterprising countryman. It was criminal in him to make use of remedies of such a desperate kind as those to which he had recourse when his system began to stagger under its first revulsions; doubtless his temptations were strong, but, invested as he was with authority, it was in his power to have resisted them, and adopted a less empirical mode of treatment. In estimating his moral character, it does not appear to us, that his renouncing protestantism, under the circumstances in which he was placed, ought to weigh much against the uprightness of his intentions. Religion was with him a matter of inferior moment. In his previous life he had manifested no symptoms of piety; an utter stranger to the faith and power of the gospel, protestantism was superior to any other ism with him, just in as far as it favoured his worldly policy. He believed himself possessed of means to elevate a whole nation in the scale of wealth and power, with all their attendant benign influences, and to give an impulse by means of the fortunes of France to the destinies of the human species: and is it to be supposed, that this consideration, thrown into the balance, should not have caused that scale in which was placed a mere nominal profession of a religion--the truth of which he neither knew nor respected—to kick the beam?

Before resuming the thread of our biography, let us for a moment compare the financial catastrophe we have now been considering with that of the assignats of revolutionary France, and the celebrated crisis of the bank of England in 1797: we shall discover striking points of resemblance in the circumstances which led to these events, and draw from their comparison a few important truths. Credit is founded on the supposition of future value; it is this prospective value which is made to circulate as if it were existing value, in the form of a bank-note. Law founded his schemes upon the great basis of credit, which again he proposed to create by the profits arising from speculation in the shares of his India company. The financiers of revolutionary France wished to pay the national debt and the expenses of a universal war, with the national funds; but finding it impossible from the want of public confidence, or credit, to sell these funds, they anticipated their sale, and represented their supposed future value by paper-money called assignats. The bank of England, in return for its loans to the government, supposed the existence of two species of value, and accepted of these species in payment: the effects themselves, namely, of commerce, and the securities of the state; the former a certain value, and the latter necessarily fluctuating with the political aspect of the times. In these three cases, we perceive three species of doubtful value; Law’s share represented a future, but speculative and very uncertain value; the assignats represented certain funds which might ere long pass from under the hands of their present administrators; and the notes of the bank of England represented a value depending upon engagements, regarding the ability of the state to fulfil which there existed no absolute certainty. Now the crisis produced by the fluctuation of these three species of credit corresponded to the difference of circumstances in the three cases. The sudden displacement of an enormous sum raised the shares of the East India company to an enormous premium; but a rapidly established credit is exposed to an equally or still more precipitous decline; for that true credit which is founded on the solid basis of real success, must necessarily be as slow in its growth as the success itself. The assignats again could not experience such a sudden rise in value, for they represented a certain portion of land, a species of value least of all exposed in the nature of things to rapid fluctuation. In proportion, however, as the public confidence in the permanence of the administration declined, the assignats declined in value; and in proportion as they declined in value, the existing government was compelled to supply the loss of funds by increasing the issue, which again operated to depreciate its paper money. The notes of the bank of England, depending on mercantile credit or the real security of responsible funds, as well as on government security, were only slightly affected in credit by the political aspect of the times. In all the three cases, public credit was attempted to be supported by forcible measures, the injustice of which was just in proportion to the degree of suspicion which attached to that false system of credit which they were designed to support. Law fixed the value of shares in notes, and thus forced a circulation for the latter. The French revolutionary government punished the refusal of its assignats, at their nominal value, with death. In England the bank was relieved of the obligation to cash its notes at sight. Law again endeavours to drive specie altogether out of the market, and render paper the only legal tender; the revolutionists fix the maximum of all exchange; and the bank of England, whose security was less questionable, threw itself on the patriotism of the London merchants, who relieved it from its embarrassment by agreeing to accept of its notes in payment from their debtors. Thus we see, 1st, that every system of public credit ought to represent a certain real value, and not to be founded on mere anticipation of a value yet to be created; 2ndly, that it is impossible, by fixed measures, to sustain an arbitrary value; and, 3rdly, that where forced values are resorted to, they are rejected by all who are at liberty to reject them, and are followed by the ruin of those who are not in a condition to refuse them.

Law, at his last interview with the duke of Orleans, is reported to have said: "My lord, I acknowledge that I have committed great faults; I did so because I am a man, and all men are liable to err; but I declare to your royal highness that none of them proceeded from knavery, and that nothing of that kind will be found in the whole course of my conduct;" a declaration which the regent and the duke of Bourbon bore frank testimony to, at the same time that they suggested the expediency of his leaving the kingdom, for which purpose they offered to supply him with money, his whole property having been confiscated; but Mr Law, though in possession of only 800 louis d’ors, the wreck of a fortune of 10,000,000 of livres, refused to receive any assistance from other funds than his own, and on the 22nd of December, 1720, arrived at Brussels, where he was received with the greatest respect by the governor and resident nobility. Early in January, 1721, he appeared at Venice, under the name of M. du Jardin, where he is said to have had a conference with the chevalier de St George, and the famous cardinal Alberoni, minister of Spain. From Venice he travelled through Germany to Copenhagen, where he had the honour of an audience with prince Frederick. During his residence at the Danish capital he received an invitation from the British ministry to return to his native country, with which he complied, and was presented on his arrival to George I. by Sir John Norris, the admiral of the Baltic squadron. On the 28th of November he pleaded at the bar of the king’s bench his majesty’s pardon for the murder of Edward Wilson, and was attended on this occasion by the duke of Argyle, the earl of Ilay, and several other friends.

Mr Law’s reappearance in Britain excited some uneasy feelings on the part of various senators. The earl of Coningsby, in particular, moved the house of lords for an inquiry, whether Sir John Norris had orders to bring over a person of his dangerous character. The affair, however, was hushed, and it is thought that he at first received some kind of pension or allowance from the British government. Meanwhile, he maintained a constant correspondence with the regent of France, who caused his official salary of 20,000 livres per annum to be regularly remitted to him, and held several consultations with the council respecting the propriety of recalling him. The sudden death, however, of the regent, on the 2nd of December, 1723, was a fatal blow to the reviving hopes of the ci-devant minister of finance. His pension ceased to be remitted, his prospect of a reversion from the sale of his property in France was annihilated, his embarrassments at home increased, and demands were made upon him by the India company to the enormous amount of 20,236,375 livres. On the 25th of August, 1724, we find him addressing a letter to the duke of Bourbon, from London, in which he writes:

"Notwithstanding the confusion in which my affairs have become involved, one hour will suffice to put your highness in full acquaintance with them. The subjoined memoir explains by what means I purpose to fulfill my engagements and obtain a livelihood for myself. The means which I suggest are of the very simplest nature. It is likewise the interest of the state that my affairs should be wound up; for although the number of those who desire my return is not great, their confidence in me is considerable, and must either destroy or retard the success of those measures which have been adopted by those persons to whom the king has been pleased to intrust the management of the finances. If my matters were arranged, madame Law, my daughter, my brother, and his family, would return to England, and I would fix myself here in such a manner as should convince the public that I entertained no intention of ever again setting foot in France.

"Those who have set themselves to oppose me, by retarding the decision in my case, have acted thus upon a mistaken principle altogether, and against their own view of things; they accuse me of having done the thing which they would have done themselves if they had been in my place; and in examining into my conduct they are unintentionally doing me a great honour. There are few, perhaps no instances, of a stranger having acquired the unlimited confidence of a prince, and realized a real fortune by means perfectly honourable, and who yet on leaving France reserved nothing for himself and his family, not even the fortune which he had brought into the country with him.

"Your highness knows that I never entertained the idea of making my escape from France. I had made no provision for this purpose when it was announced to me that the regent had ordered me to be provided with passports; for I had indeed at one time thought of quitting the kingdom, when I requested his royal highness’s permission to resign my office; but after that I had deliberated upon the reasons which the prince then urged against my taking this step, I renounced the idea altogether, although fully aware of the personal danger to which I would expose myself, by remaining in France after having ceased to hold office in the administration.

"I have said that my enemies have advised no measures opposed even to their own principles; for if what they allege had been true; if I had carried a great sum of money with me out of the kingdom,--it would surely have been their truest policy to have induced me to return with my son. If they had acted dispassionately in this matter, they would have afforded me every facility in arranging my affairs; and it is my belief that, had his highness the duke of Orleans lived, I would have been invited back to France. A short time before the prince’s death, he was pleased to express his approbation of my conduct; to give me certain marks of his esteem; he was satisfied that my plans would have completely succeeded, if the juncture of extraordinary circumstances had not compelled others to interfere with them; he felt that he yet required my assistance; he asked my opinion regarding the present situation of the kingdom, and he was pleased to say that he yet counted on my aid in raising France to her proper elevation and weight in Europe. These are facts with which I am persuaded your highness was made acquainted by the prince himself."

The late M. Law de Lauriston transmitted to Mr Wood, the biographer of the Comptroller-General, a complete copy of the memorial which accompanied this letter, and of which only some detached fragments are published in the "OEuvres de J. Law," Paris, 1790. Mr Wood supplies us with the following passage from this document: "When I retired to Guermande," says the memorialist, "I had no hopes that the regent would have permitted me to leave the kingdom; I had given over all thoughts thereof when your highness sent to inform me of his intention to accord that permission; and the next day, immediately on receiving the passports, I set off. Consider, my lord, if being in the country, removed from any paper and books, it were in my power to put in order affairs that required not only leisure, but also my presence in Paris, to arrange properly; and if it is not a piece of great injustice for the India company to wish to take advantage of the condition to which I was reduced; and of the dishonest conduct of clerks, in requiring from me payment of sums I do not in fact owe, and which, even though I had been owing, were, as I have shown, expended for their service, and payable in actions or notes, of which effects belonging to me they at that time had, and still have, on their books, to the amount of double or treb1e the sum they demand. No, my lord, I cannot bring myself to accuse the company of so much as the intention to injure me. That company owes its birth to me. For them I have sacrificed every thing, even my property and my credit, being now bankrupt, not only in France, but also in all other countries. For them I have sacrificed the interests of my children, whom I tenderly love, and who are deserving of all my affections; these children, courted by the most considerable families in France, are now destitute of fortune and of establishments. I had it in my power to have settled my daughters in marriage in the first houses of Italy, Germany, and England; but I refused all offers of that nature, thinking it inconsistent with my duty to, and my affection for, the state in whose service I had the honour to be engaged. I do not assume to myself any merit from this conduct, and I never so much as spoke upon the subject to the regent. But I cannot help observing, that this mode of behaviour is diametrically opposite to the idea my enemies wish to impute to me; and surely all Europe ought to have a good opinion of my disinterestedness, and of the condition to which I am reduced, since I no longer receive any proposals of marriage for my children.

"My lord, I conducted myself with a still greater degree of delicacy: for I took care not to have my son or my daughter married even in France, although I had the most splendid and advantageous offers of that kind. I did not choose that any part of my protection should be owing to alliances; but that it should depend solely upon the intrinsic merits of my project."

These representations failed to produce the desired effect; the India company refused to allow him credit for the notes and actions in their hands belonging to him; while they at the same time insisted on his making payment in specie of the sums owing to them; the government, with equal injustice, confiscated his whole property in France. In 1725, Mr Law bade a final adieu to Britain, and retired to Venice, where he died in a state little removed from indigence, on the 21st of March, 1729, in the 58th year of his age. He lies buried in one of the churches of the city, where a monument to his memory is still to be seen.

Such is a brief outline of the history of one of the most extraordinary projectors of modern times. That he deceived himself is, we think, quite evident from the whole tenor of his conduct; that he should have deceived others is not wonderful, if we consider the spirit and circumstances of the times in which he lived, the ignorance of the public mind respecting the great principles of credit and currency, and the personal advantages and experience which the master-projector possessed. He is said to have presented an uncommonly engaging external appearance. "On peut," says the French historian of his system," sans flatterie, is mettre au rang des hommes les mieux faits." In Brunley’s Catalogue of British Portraits, four engravings of Law are noticed, by Anglois, Hubert, Des Rochers, and Schmidt. The best portrait of him was a crayon portrait by Rosalba in the earl of Oxford’s gallery. Of his moral character we have already spoken. Lockhart of Carnwath relates that, even before he left Scotland, he was "nicely expert in all manner of debaucheries."

Law never composed any treatise; his works are confined to memorials and justificatory statements, or explanations of his views and plans. Towards the end of the year 1790, the epoch of the creation of the assignats, there appeared at Paris an octave volume, entitled "OEuvres de J. Law, controlleur-general des finances de France, sous le regent." This work was ably edited by M. Senour, and is in high estimation in France. The writings relating to Law’s system are very numerous; Stewart, Ganilh, and Starch, have all commented with ability upon his measures; and Duclos and Marmontel have composed very interesting memoirs of the projector and his system. In general, however, all the French writers of the 18th century have commented with great severity upon Law and his proceedings. Fourbonais was the first to do justice to this great but unfortunate man. Dutot, in his "Reflexions politiques sur le commerce et les finances," printed at the Hague in 1738, has discussed the state of affairs at the giving way of the system, and the effect of the famous edicts of the 5th March and 21st May, with great sagacity; Duverney’s" Histoire du Systeme des finances, sous la minorité de Louis XV., pendant les Années 1719 et 1720," is a most valuable collection of edicts and state papers relative to French finances in two volumes. Mr John Philip Wood’s "Memoir of the Life of John Law of Lauriston" [Edinburgh, 1824, 12 mo, pp. 234.] is the best account which has yet been given to the British public of this extraordinary man, and the rise and fall of his fortunes.

Law married lady Catharine Knollys, third daughter of Nicholas, third earl of Banbury, by whom he had one son, John Law of Lauriston, and one daughter, Mary Catharine, who married her first cousin, William viscount Wallingford, who was afterwards called to the house of peers by the title of baron Althorp. Lady Wallingford survived her husband more than half a century, and died in London on the 14th of October, 1790, leaving no issue. Her brother succeeded his father in 1729, and died a cornet of the regiment of Nassau Friesland, at Maestricht, in 1734. William Law, third son of Jean Campbell of Lauriston, succeeded to the entail on the extinction of the issue male of her eldest son. His eldest son John, rose to the rank of commandant-general and president of council of the French settlement in India, and died at Paris about 1796; and on the 21st of May, 1808, Francis John William Law, a merchant in London, of the reformed religion, was served nearest and legitimate heir of entail and provision of his father John Law, and entered into the possession of the estate of Lauriston, to the exclusion of his elder brothers, who were Roman catholics. Law’s grandson, Count de Lauriston, was one of the generals of Napoleon Bonaparte.

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