B A N'K. 



235 



Bant. of the bank were so prosperous, that at a general 



I ' meeting held the 20th December 1717, a dividend 



was ordered at 74- per cent, for six months. There 

 can be no doubt, but this bank would soon have 

 rivalled that of Amsterdam, or of England, and pro- 

 duced consequences highly beneficial to France ; but 

 the arm of power interfered, and changed theinst 



: mstitu- 



RoyalBank 

 of France. 



Commer- 

 cial Com- 

 pany of 

 the West. 



Company 

 of the 

 I odin. 



tio.i from a private to a public concern. By act of 

 council, beai the 4th December 1718, the 



public were informed, that his majesty had taken Mr 

 Law's bank into his own hands, under the name of 

 the Royal Bank, of which Mr Law was appointed 

 director general, and branches were established at 

 Lyons, Rochelle, Tours, Orleans, and Amiens. 



The bank now proceeded on public credit, or, in 

 other words, was entirely dependent on the will of 

 the sovereign ; and, as the schemes of monarchs are 

 seldom limited by moderation or reason, it embraced 

 objects so vast and extensive, that all Europe looked 

 with anxiety for the issue. It was proposed to vest 

 the whole privileges, effects, and possessions- of fo- 

 reign trading companies, the great farms, the mint, 

 the general receipt of the king's revenues, and the 

 management and property of the bank, in one great 

 company, which having in their hands all the trade, 

 taxes, and royal revenues of the kingdom, might 

 multiply the notes of the bank to any extent they 

 pleased. Accordingly, a commercial company was 

 established by letters patent in August 1717, under the 

 name of the Company of the West, to which was 

 granted the whole province of Louisiania, through 

 which the noble Mississippi flows ; and from this cir- 

 cumstance the operations of the company obtained 

 the name of the Mitditippi System. Of this com- 

 pany 200,000 shares were issued at the rate of 500 

 livres each, bearing interest at the rate of 4 per cent, 

 after the first year, exclusive of the profits of the 

 trade. 



On the 4th September 1718, the farm of tobacco 

 was made over to the Company of the West, who en- 

 gaged to pay 2,020,000 livres advanced rent to the 

 king. On the 15th December following, they ac- 

 quired the charter and effects of the Senegal com- 

 pany ; but the most important grant they obtained 

 was in May 1719, when an edict was published, 

 transferring to them the exclusive privilege of trading 

 to the East Indies, China, and the South Seas, together 

 with all the possessions and effects of the China and 

 I ndia companies,on condition of pay ing the lawful debts 

 of these companies now dissolved. On this occasion, 

 the Company of the West assumed the title of the 

 Company of the Indies ; and 50,000 new shares were 

 ordered to be constituted at the rate of 550 livres 

 each, to be employed in satisfying the creditors of 

 the old companies, in building vessels, and in other 

 preparations for carrying on their trade. And from 

 the vain expectation of possessing a lucrative branch 

 of commerce, the price of a share rose to 1000 

 livres. 



On the 25th July 1719, the mint was made over 

 to the company, for a consideration of 50,000,000 

 livres to be paid to the king ; and in order to raise 

 that sum, 50,000 new shares, at the rate of 1000 

 livres each, were directed to be issued. On the 27th 

 August following, the great farms were made over to 



the Company of -the Indies, on their agreeing to pay 

 3,500,000 .livres in advance of rent for them; and on 

 the 31st of the same month, they obtained^he general 

 receipt of other branches of the king's revenue. The 

 company now promised an annual dividend of 200 

 livres on each share, in consequence of which, the 

 price rose in the market to 5000 livres each. The 

 company engaging to lend the king to pay off his 

 creditors 1500 millions of livres at 3 per cent, crea- 

 ted in September and October 300,000 new shares, 

 rated at 5000 livres each, so that they had now al- 

 together 600,000 shares ; but their annual income- 

 amounted to 131 millions, which arose as follows, viz. 

 48 millions interest from the king ; 39 millions from 

 the farms, the mint, and the receipt of taxes ; and 

 44 millions from their trade. From so great a revenue 

 they could well afford to pay more than 200 livres 

 of annual dividend on each share. The infatuation, 

 which at this time prevailed in France, raised the 

 price of shares in the market to more than 10,000 

 livres each, and the original proprietors acquired im- 

 mense fortunes. But the public had full confidence 

 in the stability of the bank ; money was abundant ; 

 the agriculture, manufactures, and commerce of the 

 French flourished ; plenty displayed itself in the 

 capital, the cities, and provinces ; and government 

 were enabled to relieve the people from the burden 

 of 87,000,000 of duties and taxes. 



Notwithstanding the general confidence in the sta- 

 bility of the Bank and India company, yet there were 

 individuals who held a different opinion ; and they 

 eagerly converted their paper into specie, which they 

 either hoarded up or remitted abroad. This occa- 

 sioned a constant drain of gold and silver ; and 

 specie became so scarce, that there was not a suffi- 

 ciency left in France for the ordinary purposes of 

 circulation. A run on the bank was now apprehend- 

 ed, and to avert the danger which 'hreatened the 

 whole system, several edicts were passed in January, 

 February, and March 1720, restricting payments in 

 specie to small sums; prohibiting the manufacture of 

 plate without the royal licence ; and declaring, that 

 all rents, taxes, and customs, should be paid in notes, 

 the value of which was to remain always invariable, 

 while the standard of the coin was kept in constant 

 fluctuation. But the plan of restriction was carried 

 toits greatest height, by the edict of the 27th February 

 1720, which prohibited individuals, and secular or 

 religious communities, from having in their possession 

 more than 500 livres in specie, under pain of a 

 heavy fine and confiscation of" the sums found in their 

 custody. These measures could not fail to have the 

 effect, to throw an immense sum in specie into the 

 coffers of the bank ; and it is said, that betwixt the 

 27th February and the 1st April 1720, not less than 

 300 millions of livres were paid in coin into the bank. 

 The Royal Bank was now incorporated with the 

 Company of the Indies, and the king remained guar- 

 rantee of the bank notes, of which none were to be 

 fabricated in future, except in virtue of edicts of 

 council. The profits which had been made by the 

 bank since his majesty had taken it into his own 

 hands, in December 1718, were given up to the com- 

 pany ; and as they were supposed to be immense, the 

 public entertained a high idea of the company's opu- 



'Baufc. 



