Those who intended to subscribe had accomplished comparatively little by obtaining receipts or state notes; it was still necessary to go to the Hôtel de Nevers, where the subscriptions were received. The entrances there were crowded to suffocation. The hall servants made considerable sums by subscribing for those who could not get through the crowd to the offices. Some adventurers, assuming the livery of Law, performed this service, charging and obtaining a very large fee. The most humble employees of the company became patrons who were very much courted. As to the higher officers and Law himself, they received as much adulation as if they were the actual dispensers of the favors of Fortune. The approaches to Law's residence were encumbered with carriages. All that was most brilliant among the nobility of France came to beg humbly for the subscriptions, which were already much above the nominal price of shares, and which were sure to rise much higher. By a clause creating the company, the ownership of the shares entailed nothing derogatory to rank. The nobility, therefore, could indulge in this speculation without endangering its titles. It was as much in debt as the King, thanks to its prodigality and the long wars of that century, and it sought to win, at least, the amount of its debt by fortunate speculations. It surrounded, it fawned upon Law, who, very anxious to gain partisans, reserved very few shares for himself, but distributed them among his friends of the court.
This new subscription was also taken up in a few days. If we reflect that fifty millions in cash was sufficient to secure five hundred millions of each issue, we shall understand how the state notes which remained in market and the receipts already delivered would suffice to monopolize the shares offered to the public. The creditors who had not liquidated their claims—and the greater number had not—could not avail themselves of the right to subscribe for shares, and were obliged to buy them in the market at an exorbitant price. The shares subscribed for at the Hôtel de Nevers for five thousand francs were re-sold in the Rue Quincampoix for six, seven, and eight thousand francs. To the need of having some of this investment was joined the hope of seeing the shares rise in the market to an indefinite extent, and it is not surprising that the eagerness to obtain them soon increased to frenzy. In order to satisfy this demand a third subscription was opened on October 2d, three days after the second. Similar in every respect to the first two, it ought to bring in a capital of five hundred millions and complete the fifteen hundred millions which the company needed to redeem the public debt.
The concourse of people was as great as ever at the treasury, where the receipts were given and at the Hôtel de Nevers, where the applications for shares were received. The occasion of this eagerness is evident, since that which was obtained at the Hôtel de Nevers for five thousand francs was worth seven and eight thousand in the Rue Quincampoix. This new issue at five thousand francs caused the rates in the Rue Quincampoix to diminish: in an instant they were below five thousand francs—even as low as four thousand—so blind were these movements, and, so to speak, convulsive, during this period of feverish excitement. There was no possible reason for selling in one place for four thousand francs that for which they paid five thousand at another. But this phenomenon lasted only a few hours; the rates rose again rapidly, and, the subscription being taken up, the shares sold again for seven and eight thousand francs. The crafty brokers had already had two opportunities of making some profitable operations.
Having obtained the state notes at a very small price, they procured shares at the most moderate rates, between five hundred and a thousand francs; then they sold them for from seven to eight thousand francs; and October 2d, the day of the decline, they repurchased them for four thousand, to sell them again the next day for seven or eight thousand. It will be seen how they must have made money with these opportunities.
It was no longer a few scattered groups which were seen in the Rue Quincampoix, but a compact crowd engaged in speculating from morning till night. The subscriptions had been divided into coupons, transferable, like notes, to the bearer by an indorsement simply formal. During the course of October the shares had already risen above ten thousand francs, and it was impossible to know where they would stop.
The end of the month of December, 1719, was the term of this delusion of three months. A certain number of stock-jobbers, better advised than others, or more impatient to enter upon the enjoyment of their riches, combined to dispose of their shares. They took advantage of the rage which led so many to sell their estates—they purchased them, and thus obtained the real for the imaginary. They established themselves in splendid mansions, upon magnificent domains, and made a display of their fortunes of thirty or forty millions. They possessed themselves of precious stones and jewels, which were still eagerly offered, and secured solid value in exchange for the semblance of it, which had become so prized by the crowd of dupes. The first effect of this desire to realize was a general increase in the price of everything. An enormous mass of paper being put in the balance with the existing quantity of merchandise and other property, the more paper there was offered against purchasable objects the more rapid the increase became. Cloth which heretofore brought fifteen to eighteen francs a yard rose to one hundred twenty-five francs a yard. In a cook-shop a "Mississippian," bidding against a nobleman for a fowl, ran the price up to two hundred francs.
From this instant the shares suffered their first decline, and a heavy uneasiness began to spread abroad. The extent of the fall was not measured by those whom it menaced; but people wondered, doubted, and began to be alarmed. The shares declined to fifteen thousand francs. However, the bank-notes were not yet distrusted. The bank was, in fact, entirely distinct from the company, and their fate, up to this time, appeared in no way dependent the one on the other. The notes had not undergone any fictitious and extraordinary advance. Large amounts had been issued, certainly, but for gold and silver, and upon the deposit of shares. The portion which had been issued upon the deposit of shares partook of the danger of the shares themselves; but no one thought of that, and the bank-notes still possessed the entire confidence of the public; only they no longer had the same advantage over specie since the latter had been so much sought by the "realizers." The notes already began to be presented at the bank for coin, and the vast reserve which it had possessed began to diminish perceptibly.
Law did then what governments do so often, and always with ill-success: he resorted to forced measures. He declared, in the first place, by decree, that the bank-notes should always be worth 5 per cent. more than coin.
In consideration of this superiority in value the prohibition which forbade the deposits of gold and silver for bills, at Paris, was taken off, so that notes could be procured at the bank for coin. This permission was simply ridiculous, for no one now wished to exchange specie for paper, even at par. But this was not all; the decree declared that thereafter silver should not be used in payments of over one hundred francs nor gold in those over three hundred francs. This was forcing the circulation of notes in large payments, and that of specie in small, and was designed to accomplish by violence what could only be expected from the natural success of the bank.
These measures did not bring any more gold and silver to the bank. The necessity of using bank-notes in payment of over three hundred francs gave them a certain forced employment, but did not procure them confidence. Notes were used for large payments, but coin was amassed secretly as a value more real and more assured. The creditors of the state ceased to carry their receipts to the Rue Quincampoix, because they already distrusted the shares; they could not decide to buy real estate, because the price had been quadrupled; they suffered the most painful anxiety, and in their turn embarrassed the holders of shares who needed the receipts to pay their instalments of one-tenth. The catastrophe approached, and nothing could avert it, unless some magic wand could give the company an income of four or five hundred millions a year, which was now only seventy or eighty millions.