appeared the best established; it is impossible to comprehend without seeing, or to see without the most lively sorrow, the effects that have taken place. There is an end with us to all commerce and labour, and confidence and industry; even friendship and charity are no more. These are not exagge

rations," &c. &c.

Particulars like these are surely curious, when they appear on the face of history as the result of the philosophic speculations of an individual like Law; one who had left his own country in search of a better, and was then brought forward to attempt his experiments in one of the first kingdoms in Europe. But all who hear me must be very conscious that finances, and paper money, and stockjobbing, are sounds not unknown to ourselves; and it is very possible, that if one of the purposes of history be instruction, these transactions may afford us some lessons, not without their importance. We may consider ourselves, as a nation, very intelligent and experienced, but it must be noted, that the regent who adopted the schemes of Law was a man of very brilliant talents. Law was, certainly, a person of no ordinary cast; and it does not necessarily follow, from the failure of his schemes, that he meant originally to deceive. The French people are inferior to none in quickness and sagacity; yet was there produced on this occasion in France, what Smith declares to be the most extravagant project, both of banking and stockjobbing, that perhaps the world ever saw; and it is certain that the most serious and extensive confusion and distress were the consequence.

Having made these observations with a hope of recommending these transactions to your attention, I now proceed to consider what means can be found for gratifying any curiosity which you may happen to entertain on the subject.

I am sorry to be obliged to confess to you some disappointments with respect to this point.

I have not found it possible to comprehend what was the exact theory of Law in his banking and Mississippi schemes, from any of the historical writers of France. This projector and his projects are both mentioned by Voltaire, who lived at the time; but he gives no detail, and attempts no philosophic analysis, either of the system or its success. If we turn to the Memoirs of St. Simon, a cotemporary also, he gives no

assistance whatever. Duclos, in like manner, affords no proper information; nor does even Lacretelle, though he has a chapter dedicated to the subject; nor do the writers of the French Encyclopædia. Adam Smith, unfortunately, gives no account of it, "because," says he, "it has been so fully and clearly explained by M. Du Verney," a work which I have never been able to procure.

But we have another treatise in our own language, on political economy, which, though eclipsed by the more enlightened and profound work of Smith, is still a work in many respects deserving of attention; it is particularly so on the present occasion-I allude to the book of Stuart-Stuart's Political Economy. Stuart gives a regular account of the system of Law; and as the whole is concise, and yet, as I conceive, satisfactory, I not only recommend it to your study, but it is upon this book, I confess, that I depend for furnishing you with proper knowledge on the subject.

Law was a man of a contriving, speculative mind, one who had his fortune to make; and who, after in vain proposing his financial schemes to his own country, Scotland, and to other countries, at last settled in France, and succeeded in getting a bank established in Paris by the regent's authority, in May, 1716.

This bank seems to have been founded on the common principles; circulating notes, and cash reserved to pay them, when occasionally presented. As he was a man of great address, with a fine person, and every attractive quality, both himself and his bank seem to have prospered most completely. No common success, however, could satisfy him; his ambition was unbounded. Unfortunately, too, he thought himself possessed of a secret for making a kingdom rich; and his dreams therefore of personal aggrandizement were, probably, of the most unlimited extent and splendour. His secret was this:-He held, that by increasing the circulating medium of a country, you increase its prosperity, and that therefore you were to supersede the use of the precious metals, and issue paper money to any requisite extent.

Now it happened at the time, that the finances of France were in a most deplorable state of embarrassment; and it happened also, that the regent was a man of very quick

talents, and alike fitted to comprehend, and to be seduced, by the reasonings and promises of any new and extraordinary system: Law and he were therefore made for each other. The finances were low, and Law had riches to bestow; this was all the regent wanted. Law was an insignificant individual, and the regent could furnish him with all the authority of government; this was all that Law wanted. Their operations were therefore soon begun.

In the first place, to Law's private bank was united, in September, 1717, a great commercial company-the Mississippi Company, which was formed by subscriptions in the usual manner. And in the second place, on the first of January, 1719, Law's private bank, which had now flourished for three years, was converted into a royal bank.

But it will be naturally asked, what were the foundations of this new royal bank, and what of this Mississippi company? What were the funds, and what the security?

With respect to the new royal bank, its notes were always payable in money. The security must have been Law's personal security, and the faith of the regent: and it was the great art and anxiety of this projector to make his bank notes preferable to the coin of the country; so that though coin might be legally demanded from him, in point of fact it never would be demanded from him. In this he greatly succeeded for a considerable time.

With respect to the Mississippi Company, they were to have an exclusive trade to Louisiana: they were to have the farming of the taxes, and other privileges, and therefore there appeared ample income for their dividends; and the profits of their trade might be considered as indefinite.

It was settled, that the shares of the company could only be purchased by bank paper, not by coin. The more, therefore the shares were wanted, the more were the bank notes called for to purchase them. Law and the regent had the fabrication of both-of the shares and of the bank notes. Shares therefore were created, and notes were issued to answer the demand of the public.

Every man seems to have supposed, that the profits of Law's company were to be indefinite; all eyes were fixed, it must be supposed, upon Louisiana, and the revenue to be

derived from farming the taxes and other privileges, resulting from his connexion with the regent. It seems scarcely credible, but the fact was, that such was the rage for buying and selling shares, and for gambling in these concerns, that the counting and recounting of hard money would have been a process too tedious and slow; and even this circumstance gave a preference to the paper money-to the bank notes. The hopes and fears of the individuals concerned, and the various modes of managing the company's shares and the notes of the bank by Law, gave occasion to all that stockjobbing, and those strange occurrences, some of which I have alluded to, and which have been transmitted to us even in the records of history.

The system flourished while the public thought of nothing but of procuring the bank notes with which to buy the shares. While this was the case, Law could answer occasional demands on his bank in gold and silver, and the shares of the company kept continually rising.

Such was the state of things through the whole of the year 1719, till the end of November. But in the course of the preceding month of August, Law had promised a very large dividend on the shares of the Mississippi Company; he then increased the number of shares to an excessive degree. He also issued the bank notes profusely; and continued to do so, till before the end of May in the next year, 1720, he had, in fact, increased this issue to a most preposterous extent.

For some time it had been suspected by many, that the profits of the company could not be such as the holders of the shares had expected; that therefore there was no real foundation for the edifice that had been erected: the circulation, too, was overloaded by the paper-issue. Early, therefore, in the year 1720, the whole system evidently tottered. From the first, the parliament of Paris had constantly resisted Law, and all his schemes and operations. For some time it had been necessary to make use of the assistance of government forcibly to support his projects; and at last a false step that was made on the 21st of May, 1720, produced a run upon the bank, and as he could not find gold and silver to pay his bank notes, the whole system fell at once into disgrace and ruin.

It may be said, therefore, to have flourished from January, 1719, to the month of December; during that month, and the first months of 1720, to have declined; and to have expired at the end of May, 1720.

Such is the general description that may be offered of these transactions.

We may now, perhaps, enter a little into some particulars. Some questions occur. What could be the design of the regent, a very able man, in adopting this scheme? What were his ends? What did he suppose his means?

To these questions, the answer according to Stuart, seems to be this: The state was indebted two thousand millions of livres capital, at an interest of four per cent. His wish, therefore, was, to take advantage of the disposition the public were in, to buy the shares of Law's trading company; to transfer the debts of the state from himself (the regent) to that company; to become himself a debtor to Law's company, and not to the public; to pay the company a smaller interest than he did the public creditors; and by this difference to relieve the state.

But the operation by which all this was to be effected, was sadly circuitous; so it will appear to you, and scarcely intelligible. It was this:-The regent was, in the first place, to coin bank notes at his royal bank, and with these was to buy the shares of the company; in this manner to keep up the price of those shares: the company were then to lend him the bank notes they had thus received, at a low interest; with these bank notes he was to pay off the state creditors. After this process he remained, it is true, with the shares in his hand; but these shares he was to sell to the public, and get rid of them from the public he was to receive bank notes once more, and as these were the notes of his own bank, these he was to burn. And the result of the whole would then have been, that the public creditor would have stood with one of the company's shares in his hand, instead of one of his former claims on the state; and would have been left to find his interest, no longer from the regent, but from the dividends of the company. The regent, or the state, would in the mean time have remained debtors to the bank for the notes which the bank had lent, but would have had less