Forbonnais describes the effect of the decree. “When no more daughters were to be found, the western shares were sought for at any price. They were bought for ready money, or on credit with a premium on the price agreed on. Some sold so as to make sure of a large profit, and then seeing that the shares still went up, bought again. In such a state of fermentation, the quickness of the transactions did not admit of the employment of coin; the note was preferred to it; and so that the public might not want that, they did not put too high a price on it.”
On the other hand, the absolute confidence which the Regent placed in the Mississippi Company, and his strong intention to render every assistance to the new colonists in the development of its resources, are seen in his consistent attitude of approval of all Law’s proposals at this period. One of the difficulties with which the colonists had to contend was the absence, or at least scarcity, of a medium of exchange. Barter was much too cumbrous and inconvenient a method of exchange, and operated as a serious check upon freedom of commerce. Law’s solution was the issue of bank notes. The Royal Charter granted at this time made provision for this, and the grounds upon which the Regent, in name of the King, authorised the issue, although probably inspired by Law himself, show also the steps the company were taking for the exploitation of its territories. “The King having by his Letters Patents of the month of August, 1717, established a Trading company, under the name of the West India Company; and by his edict of May last, remitted to the said Company the trade to the East Indies and China; His Majesty sees with great satisfaction that that Company takes the best measures for securing the success of its establishment; that they send a great number of inhabitants to the country Louisiana, which was granted them; that many private persons make settlements in that colony, and send thither husbandmen, tillers, and other handicraftsmen, to manure and improve the land, sow corn, plant tobacco, breed silk-worms, and do whatever is necessary to improve the country. Furthermore His Majesty being informed that the said Indian Company is at great charge for transporting the said inhabitants, and furnishing the colony with meal and other necessaries, until the land affords a sufficient quantity of provisions for their subsistence; that the company sends thither all sorts of goods and merchandise, to render the life of the inhabitants more comfortable; and that for preventing of abuses, too frequent in colonies, they have taken care to settle the price thereof at a moderate rate, by a general tariff, which dispositions have appeared so wise and necessary that His Majesty is resolved to favour the execution thereof; and knowing that the exchanging of goods not being sufficient to carry on commerce in its full extent, it is necessary in the beginning of establishments of this nature, to give them all possible protection and countenance, His Majesty is resolved to supply the said company with a sum of bank bills, to enable the inhabitants of Louisiana to trade amongst themselves, and bring into France the fruits of their labour, industry and economy, without any risk or charge.”
The effect of the deep interest taken by the Regent in the fortunes of the Company was twofold. It inspired confidence in the mind of the public at home. Of that and of its results special mention will require to be made. It also directed the eyes of suitable colonists to the new El Dorado, and set in motion a stream of emigration from the shores of France. Expeditions were fitted out by Law, and for these numerous vessels were both purchased and built. Everything was done on a scale in keeping with the dignity and magnitude of the Company. One of the pioneers, writing in 1721, has left on record an account of his experiences. The faintheartedness, however, which determined his speedy return, can hardly be attributed to his having been misled as to the character of the country, as he would wish us to believe, but rather to disappointment that the riches in quest of which he had gone could only be acquired by strenuous labour and after suffering many privations. “Our first embarkation for the Mississippi was at St. Malo; we were twelve ships, and carried with us agents, clerks, labourers, some troops, and provisions. After a tedious voyage, we arrived at Hispaniola, in the bay, and took Pensicola from the Spaniards on the Continent, being necessary for securing our navigation into the river, it lying almost at the mouth of it; the bay, which makes the mouth of the river Mississippi, is wider than from Orfordness to the North Foreland, and fuller of banks and shoals; so that it is very difficult for ships of any burthen to get into it, without very skilful pilots, of which there are none as yet; it hath three large openings, and one can hardly judge which is the mouth, though they all three come out of it, except by Mons. D’Ibberville’s Fort, which one hardly sees, till you are just upon it. After you have got into the river, it is still very shoal, though broad, till you get up to Monsieur D’Ibberville’s second Fort, at both of which we are to begin our factories and carry them higher, as our people increases. Our Fort lies in about 28 degrees of latitude; the country is prodigiously sandy; and, I must say, they might as well have sent us to the deserts of Libia, or Barco, to have settled a colony, as thither; we met with no inhabitants near the sea-side, nor indeed for a great many leagues up the river; if you believe some people from Canada, that came to us, their navigation down this river was from 42 degrees to 28, directly south and north; the mountains, water-falls, on the way from Canada, and lakes are incredible; one lake, called Illinois, is so large, that they sailed 40 leagues over it. The different nations up the country, running along the back of the English plantations, I leave to others to describe, that is no part of my business; but the Iroquois, who we were told in France were the inhabitants, are not within a thousand miles of it, nor any other inhabitants. I saw for many hundred miles but here and there some straggling Indians, natives of Florida, and poor, innocent, harmless people. I went up the river in a canoe for some hundred of miles, without seeing the country mend, and after three months stay embarked again for France.”
CHAPTER VI
Company acquires right of coinage.—Issue of fresh stock and rise in price.—Attempts made to discredit Law.—Stair’s account of the situation.—Law defeats the anti-scheme.—The concluding proposal of his schemes.—The Company’s capital and sources of revenue.—Report of directors for 1719.—Law’s bank converted into a Royal bank against Law’s wish.—The Regent divests notes of the bank of their most valuable features.—Provincial branches established.—Restriction of gold and silver tender.—Extravagance of successful speculators.
The Indian Company had only yet touched the fringe of the monopolies Law intended it to embrace. It had embarked upon a sea of dazzling speculation, but its journey was only at its commencement. Its destination, however, was by no means uncertain in the mind of the great financier, and this he was to reach in the space of four months.
The first great acquisition of value and importance was the transfer to the Company of the right of coinage. This was effected on 25th July, 1719. The right was to extend over a period of nine years, and the price was fixed at 50,000,000 livres, payable within fifteen months of the date of the grant. To place the Company in a position to carry out the bargain a fresh issue of shares was made, and Law on this occasion took greater advantage of public enthusiasm than he did on the occasion of the previous issue. In the latter case the shares were offered at a premium of ten per cent., the public, although paying 550 livres, receiving stock only of the value of 500 livres. In the present instance the 500 livres share was to be allotted on payment of 1000 livres, thus necessitating the issue of only 50,000 shares. In addition to enacting a premium, Law employed a device he had before resorted to. He made it a condition that subscribers should be already possessors of previously issued shares to the extent of five times more than the number of new shares they desired to have allotted to them. The effect of this was magical. The demand for old shares was so intense that they rose immediately to 2000 livres, and the rapidity of the rise only served to widen the circle of speculators. Law was thus bringing within his grasp practically the whole of the nation as participants in his schemes.
The universal enthusiasm, however, was not unmixed. The unaccustomed magnitude of Law’s transactions was productive in certain quarters of considerable misgivings, and not a few were able amidst the general excitement to regard his schemes with more than usual calmness. Amongst those, of course, were found the financier’s bitterest enemies. To discredit Law, and to baulk him in his efforts, they lost no opportunity; and to instil doubt in the public mind as to the sanity of their speculations was by no means a difficult task. It was only necessary to secure the support of a few in order to depress the value of the Mississippi stock. Extensive sales, ostensibly for the purpose of saving a further loss, but really for the purpose of undermining the market, produced in the following month a sharp reaction. The Earl of Stair writing to Secretary Craggs on 20th August, 1719, remarks in the course of his letter upon this sudden and disturbing attitude of the public. He says:—