I04 A. D. 1720. 



We mufl again return back to the French ftock-jobbing or bubble 

 affairs of this year 1720. In February, an arret came out for uniting 

 their bank to their India company, (now eftabhflied in perpetuity) as 

 we have already feen the later united to thcMiflifippi company, and the 

 appellation of MilTifippi funk in the more general name of the India 

 company. The arret fets forth, ' that, as this bank is royal, the king 

 ' is bound to make good the full value of its notes or bills ; and that, 

 ' as there is a great conneclion between the operations of this bank 

 ' and thofe of the India company, he commits to the later the go- 

 ' vernment and profits of the bank during their term of fifty years. 

 ' Hereby alfo the king fells to the company the fifty milhons of India 

 ' flock, belonging to him, for nine hundred millions:' (i. e. 1800 per 

 cent.) ' The king alfo hereby declares,' (though it was foon after feen 

 how far fuch declarations were to be relied on,) ' that he will ne- 

 ' ver draw on the bank till they have the value firll brought in to them 

 ' by his receivers-general, &c. Nor fliall the company be obliged 

 ' to advance any money hereafter for his fervice on any pretence what- 

 ' ever, farther than what their cafliier fliall previoufly have of his ma- 

 ' jcfly's in his cufl:ody.' 



This junction of the bank to the India company hafiened the down- 

 fal of both. It was faid, that this bank had already iffued notes to the 

 amount of one thoufand millions*, which was more paper than all the 

 banks in Europe are able to circulate: for that of Amflerdam is ra- 

 ther a depofit of credit than a proper circulating bank. And, to make 

 this bank the more reputable, the receivers of the king's revenue were 

 direded to take bank-notes of their fub-receivers : and it was farther 

 ordered, that all payments of one hundred livres and upwards fhould be 

 made in bank-notes ; fo that, for a fhort fpace, they began to have great 

 credit, whereby they fell into dilcounting merchants bills, and lending 

 money on jewels, plate, &.C. and alfo on mortgages. All thefe, however, 

 proved too little, under fo delpotic a government. For, though by fuch 

 methods, and by altering the nominal value of the coin, &c. they 

 thought to fupport public credit, yet its bottom being rotten, thofe 

 compulfive means were highly improper for eftablifliing credit, which 

 ever mufi; be as free as common air, and plainly argued the want 

 of folid fecurity. For, as nothing but the inviolable fecurity and 

 freedom of property can ever create a confidence in people for eftablifli- 

 ing a permanent paper credit; who could poilibly, for any long fpace, 

 confide in a bank which had only the bare parole d'honeur of a mo- 

 narch, who, at his pleafure, can, and frequently does, alter the value of 

 private property, and who may at once lay his iron hands on the whole 

 cafh of the bank ? Louis XIV had tried" every means, but the only 

 rruc one, which human art could devife for creating a real public 



* A! out forty millions flerling:, as tlic cxcliange tJien wk. A. 



