The Firm of Nucingen

by Honoré de Balzac

“Very good for Finot.”

“Who put him up to it?” asked Couture.

“The fact was,” continued Bixiou, “that Nucingen had twice had the luck to present the public (quite unintentionally) with a pie that turned out to be worth more than the money he received for it. That unlucky good luck gave him qualms of conscience. A course of such luck is fatal to a man in the long run. This time he meant to make no mistake of this sort; he waited ten years for an opportunity of issuing negotiable securities which should seem on the face of it to be worth something, while as a matter of fact——”

“But if you look at banking in that light,” broke in Couture, “no sort of business would be possible. More than one bona fide banker, backed up by a bona fide government, has induced the hardest-headed men on ‘Change to take up stock which is bound to fall within a given time. You have seen better than that. Have you not seen stock created with the concurrence of a government to pay the interest upon older stock, so as to keep things going and tide over the difficulty? These operations were more or less like Nucingen’s settlements.”

“The thing may look queer on a small scale,” said Blondet, “but on a large we call it finance. There are high-handed proceedings criminal between man and man that amount to nothing when spread out over any number of men, much as a drop of prussic acid becomes harmless in a pail of water. You take a man’s life, you are guillotined. But if, for any political conviction whatsoever, you take five hundred lives, political crimes are respected. You take five thousand francs out of my desk; to the hulks you go. But with a sop cleverly pushed into the jaws of a thousand speculators, you can cram the stock of any bankrupt republic or monarchy down their throats; even if the loan has been floated, as Couture says, to pay the interest on that very same national debt. Nobody can complain. These are the real principles of the present Golden Age.”

“When the stage machinery is so huge,” continued Bixiou, “a good many puppets are required. In the first place, Nucingen had purposely and with his eyes open invested his five millions in an American investment, foreseeing that the profits would not come in until it was too late. The firm of Nucingen deliberately emptied its coffers. Any liquidation ought to be brought about naturally. In deposits belonging to private individuals and other investments, the firm possessed about six millions of capital altogether. Among those private individuals was the Baroness d’Aldrigger with her three hundred thousand francs, Beaudenord with four hundred thousand, d’Aiglemont with a million, Matifat with three hundred thousand, Charles Grandet (who married Mlle. d’Aubrion) with half a million, and so forth, and so forth.

“Now, if Nucingen had himself brought out a joint-stock company, with the shares of which he proposed to indemnify his creditors after more or less ingenious manoeuvring, he might perhaps have been suspected. He set about it more cunningly than that. He made some one else put up the machinery that was to play the part of the Mississippi scheme in Law’s system. Nucingen can make the longest-headed men work out schemes for him without confiding a word to them; it is his peculiar talent. Nucingen just let fall a hint to du Tillet of the pyramidal, triumphant notion of bringing out a joint-stock enterprise with capital sufficient to pay very high dividends for a time. Tried for the first time, in days when noodles with capital were plentiful, the plan was pretty sure to end in a run upon the shares, and consequently in a profit for the banker that issued them. You must remember that this happened in 1826.

“Du Tillet, struck through he was by an idea both pregnant and ingenious, naturally bethought himself that if the enterprise failed, the blame must fall upon somebody. For which reason, it occurred to him to put forward a figurehead director in charge of his commercial machinery. At this day you know the secret of the firm of Claparon and Company, founded by du Tillet, one of the finest inventions——”

“Yes,” said Blondet, “the responsible editor in business matters, the instigator, and scapegoat; but we know better than that nowadays. We put, ‘Apply at the offices of the Company, such and such a number, such and such a street,’ where the public find a staff of clerks in green caps, about as pleasing to behold as broker’s men.”

“Nucingen,” pursued Bixiou, “had supported the firm of Charles Claparon and Company with all his credit. There were markets in which you might safely put a million francs’ worth of Claparon’s paper. So du Tillet proposed to bring his firm of Claparon to the fore. So said, so done. In 1825 the shareholder was still an unsophisticated being. There was no such thing as cash lying at call. Managing directors did not pledge themselves not to put their own shares upon the market; they kept no deposit with the Bank of France; they guaranteed nothing. They did not even condescend to explain to shareholders the exact limits of their liabilities when they informed them that the directors in their goodness, refrained from asking any more than a thousand, or five hundred, or even two hundred and fifty francs. It was not given out that the experiment in aere publico was not meant to last for more than seven, five, or even three years, so that shareholders would not have long to wait for the catastrophe. It was in the childhood of the art. Promoters did not even publish the gigantic prospectuses with which they stimulate the imagination, and at the same time make demands for money of all and sundry.”