In March, a most extraordinary decree of the council fixed the price of shares of the India Company at nine thousand livres each. All ecclesiastical communities and hospitals were now prohibited from investing money at interest, in anything but India stock. With all these props and stays, the system continued to totter. How could it be otherwise, under a despotic government that could alter the value of property at every moment? The very compulsory measures that were adopted to establish the credit of the bank hastened its fall; plainly showing there was a want of solid security.
Law caused pamphlets to be published, setting forth, in eloquent language, the vast profits that must accrue to holders of the stock, and the impossibility of the king’s ever doing it any harm. On the very back of these assertions came forth an edict of the king, dated the 22d of May, wherein, under pretense of having reduced the value of his coin, it was declared necessary to reduce the value of his bank-notes one-half, and of the India shares from nine thousand to five thousand livres.
This decree came like a clap of thunder upon shareholders. They found one-half of the pretended value of the paper in their hands annihilated in an instant; and what certainty had they with respect to the other half? The rich considered themselves ruined; those in humbler circumstances looked forward to abject beggary.
The parliament seized the occasion to stand forth as the protector of the public, and refused to register the decree. It gained the credit of compelling the regent to retrace his step, though it is more probable he yielded to the universal burst of public astonishment and reprobation. On the 27th of May the edict was revoked, and bank bills were restored to their previous value. But the fatal blow had been struck; the delusion was at an end. Government itself had lost all public confidence, equally with the bank it had engendered, and which its own arbitrary acts had brought into discredit. “All Paris,” says the regent’s mother, in her letters, “has been mourning at the cursed decree which Law has persuaded my son to make. I have received anonymous letters stating that I have nothing to fear on my own account, but that my son shall be pursued with fire and sword.”
The regent now endeavored to avert the odium of his ruinous schemes from himself. He affected to have suddenly lost confidence in Law, and, on the 29th of May, discharged bin from his employ as comptroller-general, and stationed a Swiss guard of sixteen men in his house. He even refused to see him, when, on the following day, he applied at the portal of the Palais Royal for admission; but having played off this farce before the public, he admitted him secretly the same night, by a private door, and continued as before to co-operate with him in his financial schemes.
On the first of June the regent issued a decree, permitting persons to have as much money as they pleased in their possession. Few, however, were in a state to benefit by this permission. There was a run upon the bank, but a royal ordinance immediately suspended payment, until further orders. To relieve the public mind, a city stock was created, of twenty-five millions, bearing an interest of two and a half per cent, for which bank notes were taken in exchange. The bank notes thus withdrawn from circulation were publicly burned before the Hotel de Ville. The public, however, had lost confidence in everything and everybody, and suspected fraud and collusion in those who pretended to burn the bills.
A general confusion now took place hi the financial world. Families who had lived in opulence found themselves suddenly reduced to indigence. Schemers who had been reveling in the delusion of princely fortune found their estates vanishing into thin air. Those who had any property remaining sought to secure it against reverses. Cautious persons found there was no safety for property in a country where the coin was continually shifting in value, and where a despotism was exercised over public securities, and even over the private purses of individuals. They began to send their effects into other countries; when lo! on the 20th of June a royal edict commanded them to bring back their effects, under penalty of forfeiting twice their value; and forbade them, under like penalty, from investing their money in foreign stocks. This was soon followed by another decree, forbidding any one to retain precious stones in his possession, or to sell them to foreigners; all must be deposited in the bank, in exchange for depreciating paper!
Execrations were now poured out on all sides against Law, and menaces of vengeance. What a contrast, in a short time, to the venal incense that was offered up to him! “This person,” writes the regent’s mother, “who was formerly worshiped as a god, is now not sure of his life. It is astonishing how greatly terrified he is. He is as a dead man; he is pale as a sheet, and it is said he can never get over it. My son is not dismayed, though he is threatened on all sides; and is very much amused with Law’s terrors.”
About the middle of July the last grand attempt was made by Law and the regent to keep up the system and provide for the immense emission of paper. A decree was fabricated, giving the India Company the entire monopoly of commerce, on condition that it would, in the course of a year, reimburse six hundred millions of livres of its bills, at the rate of fifty millions per month.
On the 17th this decree was sent to parliament to be registered. It at once raised a storm of opposition in that assembly, and a vehement discussion took place. While that was going on a disastrous scene was passing out of doors.