Thus the final grand expedient of Law to restore the Company’s fortunes was destroyed.
On the 17th of July an edict was published which prohibited the people from assembling in crowds, under pain of heavy penalties, and it was also declared to be necessary in the interests of public peace and safety to close the Bank for an indefinite period, and that no further notes could be received there for conversion into coin.
CHAPTER XII
Starvation produced amongst poorer classes by issue of new edict.—Law’s expulsion from France demanded.—Law resigns all his offices and leaves for Venice.—Privileges of Company withdrawn.—Commission appointed to value unliquidated securities.—Law in vain applies for recovery of a portion of his wealth.—His death at Venice.—Attitude of French people towards Law.—Circumstances to be considered in passing judgment.
The creation of 25 millions of perpetual annuities at 2½ per cent. and 4 millions of life annuities at 4 per cent. in June as a means of absorbing notes to that extent was not attended with the success which had been anticipated. While the interest was small, it yet offered greater security than the notes themselves afforded, and on that ground alone ought to have appealed to holders of large amounts who were debarred by edicts from employing their paper in other directions for investment. Only a few possessed sufficient confidence to take advantage of the annuities, and the issue was accordingly of very insignificant amount. Law, however, was determined to secure the issue of the whole amount, and if necessary to do so by artificial means. His determination was made the stronger by the refusal of Parliament to agree to his last proposal. Accordingly, on 15th August, an edict was published which declared that all notes of 1000 livres in value and upwards should have no currency and would be regarded as cancelled, except those which were utilised either for purchase of annuities, or for opening credit accounts at the Bank, or for the payment of the uncalled liability on the new shares issued by the Company. This was followed by a second edict on 10th October, containing provisions of a similar nature with reference to all other notes, and requiring their utilisation before 1st November.
These drastic regulations had the effect of withdrawing from circulation a large quantity of paper, but still there were many holders who refused to part with their notes although rapidly becoming valueless. Some refused in the belief that their wealth might probably in the future become more liquid at its nominal value; others because their paper was required for ordinary daily purposes and could not therefore be spared for permanent investment. As a result, the country found itself at 1st November in possession of notes of enormous aggregate value which had automatically become absolutely worthless. Since the issue of the edicts, the trading community refused to accept payment in notes of goods supplied except at ruinous rates of discount, amounting in instances to 80 and 90 per cent. Provisions and all classes of necessaries reached extravagant prices, and being unattainable by the poorer people, starvation reigned in the homes of thousands not only in Paris itself but also in the provinces. Decrees were issued fixing the maximum prices of food, but these were openly disregarded by every merchant, who could not have sold at the prices named without incurring loss to themselves. The difficulty in securing food and other necessaries had also been increased by the operations of wealthy speculators, who during the previous months of the year had purchased all available supplies with the paper in their possession and stored them in secret places or transported them from the country for realisation and for investment of the proceeds in foreign securities. Complaints, accordingly, continually reached the Government from those who were unable to satisfy the demands of the traders, and the Government was compelled to visit the culprits with the penalties they had power to impose, which included not only physical punishment but confiscation of all their goods, and frequently the payment of a heavy fine. The bakers of Paris suffered most from the tyrannical edicts, and on one occasion no fewer than eighteen were fined, placed in the stocks, and had their goods confiscated.
The final edict, published during the period of Law’s management of the Bank and of the Company, appeared on 24th October, which directed that all the original shareholders of the Company who still retained their shares should deposit these with the Company, and that those who had sold the whole or part of their shares should now purchase the necessary number from the Company to make up the total of their original holdings at the price of 13,500 livres per share. To provide for the new purchases which this edict required an additional 50,000 shares were created, so that on the assumption that this number represented the minimum necessary to make up the deficiencies of holdings the Company would have absorbed over 600,000,000 livres of depreciated paper. But the edict contained the elements of its own destruction. It was impossible of accomplishment. The victims refused to purchase from the Company shares for 13,500 livres which were obtainable in the market for a mere tithe of that sum, and many of them immediately prepared to leave the country with all their belongings. So general were these preparations that no person was allowed to cross the frontier without the permission of the Regent on pain of death. The closest watch was kept upon all the main highways, and numerous arrests were made of suspected emigrants. Many millions of livres and considerable quantities of plate and jewellery, which their possessors attempted to smuggle across the frontiers, were seized and appropriated, the culprits being sent back to Paris to undergo punishment. In no case however was the extreme penalty imposed, confiscation and ruin being mercifully judged sufficient punishment.
Law’s position was now becoming highly critical. On the one hand the people were clamouring for his expulsion from the country, and even for his life. On the other hand, the Parliament, still at Pontoise, had not forgotten the author of their exile. His ingenuity had been used to the utmost to escape from the daily accumulating complications which surrounded him. All his efforts had failed in their purpose, and now he was resourceless. He stood alone a foreigner in a hostile country. His erstwhile friends had now deserted him, the tie of friendship broken by his inability to further increase their fortunes. One man, and one alone, the Regent himself, remained faithful to the last, and yet not openly. The safety of the crown forbade the Regent from employing his influence and power in order to retain the financier in his service, and prohibited him from ignoring indefinitely the demands of the people.