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And to enable the people to pay, the more easily, the heavy taxes to which they were subjected.

The letters patent, establishing this bank, stipulated, that the stock should consist of 1200 shares, of 5,000 livres each, at the rate of 40 livres the mark; so that each share was worth £250 sterling, and the whole stock of the bank at £300,000 sterling, or $1,333,333.33.

The regulations of this bank were wise and salutary. It was declared, that the bank securities belonging to, as well as the money lodged by foreigners, should not be subject to confiscation, even in case of war with the nations to which the proprietors belonged.

The bank, of which Mr. Law and his brother William were the proprietors, assumed the firm of THE GENERAL BANK OF LAW & COMPANY; and the affairs of the bank were so prosperous, that, at a general meeting, on the 20th December, 1717, a dividend was declared of 7 per cent., for six months, amounting to $100,000.

There can be no doubt, but this bank would soon have rivalled that of Amsterdam, or of England, and produced consequences equally beneficial to France: but the strong arm of power interfered, and changed the institution from a private, to a public concern.

By an edict of council, bearing date the 4th December, 1718, the public were informed, that his majesty had taken Mr. Law's bank into his own hands, under the name of THE ROYAL BANK; of which, Mr. Law was appointed director general; and branches were established in different cities.

The bank now proceeded on public credit, or in other words, was entirely dependent on the will of the sovereign; and as the schemes of monarchs are seldom guided by moderation or reason, it embraced objects so magnificent, so vast, and extensive, that all Europe looked on with anxiety, and trembled for the issue!

It was proposed to vest the whole privileges, effects, and possessions of foreign trading companies, the Great Farms,

the mint, the general receipt of the king's revenues, and the management and property of the bank, in one great company; which, having in their hands all the trade, taxes, and royal revenues of the kingdom, might-multiply the notes of the bank to any extent they pleased.

Accordingly, a company was formed in 1717, under the name of THE COMPANY OF THE WEST, to which was granted the province of Louisiana, and from this circumstance, the operations of the company obtained the name of the MISSISSIPPI SYSTEM.

Of this company 200,000 shares were issued, at the rate of 500 livres each,

amounting to 100,000,000 livres, or $18,750,000. On the 4th September, 1718, THE FARM OF TOBACCO was made over to the Company of the West, on their agreeing to pay to the king rent in advance,

2,020,000 livres, or $378,750.

On the 15th December following, they obtained the charter and effects of the SENEGAL COMPANY; but the most important grant they obtained, was in May, 1719, when an edict was published, transferring to them the exclusive privilege of trading to the East Indies, China, and the South seas, on condition of paying the lawful debts of these companies, now dissolved. On this condition, the Company of the West assumed the titleof THE COMPANY OF THE INDIES, and 50,000 new shares were constituted, at the rate of 550 livres each, amounting to 27,500,000 livres, or $5,156,250, to be employed in building vessels, in satisfying the creditors of the old companies, and in preparations for the general trade; and from the vain expectation of possessing a lucrative branch of commerce, the price of a share rose in the market to 1000 livres, or $187.50. On the 25th July, 1719, the mint was made over to the company, for a consideration

to be paid to the king.

of 50,000,000 livres, or $9,375,000,

In order to raise that sum 50,000 new shares were ordered, at the rate of 1000 livres,

amounting to 50,000,000 livres, or $9,375,000. On the 27th of August following, the great farms were made over to the company, on their agreeing to pay in advance of rent to the king for them

3,500,000 livres, or $656,250. And, on the 31st of same month, they obtained the general receipt of other branches of the king's revenue.

The company now promised an annual dividend of 200. livres on a share.

There was now 301,000 shares, which, at 200 livres each, amounted to 60,240,000 livres, or $11,295,000. In consideration of which, the price rose in the market to 5,000 livres, or $937.50. The company now agreeing to lend the king, to pay off his creditors 1,500,000,000 livres, or $281,250,000, at 3 per cent. interest, created, in September and October, 300,000 new shares, at 5,000 livres each,

amounting to 1,500,000,000 livres, or $281,250,000. The company's capital was now 601,200 shares; which, at 5,000 livres each, is 3006,000,000 livres, or $563,625,000. And the annual income arose as follows, viz.

or $24,562,500.

From so great a revenue they could well afford to pay 200 livres on a share, as a dividend; which, on their present capital, amounted to 120,240,000 livres, or $22,545,000. The infatuation, which at this time prevailed in France, was so great, as to raise the price of shares

to 10,000 livres each, or $1,875.

The original proprietors acquired immense fortunes. Money was abundant; agriculture, manufactures and commerce flourished; and the government were enabled to relieve the people from taxes, to the

amount of 87,000,000 livres, or $16,312,500. Notwithstanding, the general confidence in the stability of the bank, and India company, there were individuals who held a different opinion; and they converted their paper into specie, which they either hoarded up, or shipped to other countries; and this occasioned a run upon the bank, until there was not enough left in France, for the common purposes of circulation.

To avert the danger, which now threatened the whole system, several edicts were passed, restricting payments in specie; prohibiting the manufacture of plate, without the royal license; and declaring, that all rents, taxes, and customs, should be paid in notes, the value of which, was to remain always invariable; while the standard of coin was kept in constant fluctuation.

But the restriction was carried to its greatest height by the edict of 27th February, 1720, which prohibited individuals, and secular or religious communities, from having in their possession more than 500 livres in specie, under penalty of confiscation, fine, and imprisonment.

These measures had the effect of throwing into the bank in specie, between the months of February and April, 1720, the sum of 300,000,000 livres, or $56,250,000.

The royal bank was now incorporated with the company of the Indies, and the king remained guaranty of the notes, of which none were to be fabricated in future, except by an edict of council.

The profits of the bank, since his majesty had taken it into his own hands, in December, 1718, were given up to the company; and as they were supposed to be immense, the public entertained a high idea of the company's opulence.

At this period, the credit of France was at its height; but it soon experienced a reverse, that involved thousands in misery and distress.

The ministry, who were opposed to no law, represented to the regent that it was necessary to equalize the value of paper currency, and the coin, by either raising the denomination of the latter to 130 livres the mark, or reducing the former one half.

This absurd notion prevailed in the council, and it was resolved to diminish the value of the bank notes, and the India company's actions, that a just proportion between them and the coin might be maintained.

For that purpose, an edict was passed on the 21st May, 1720, ordering that shares should be reduced to 8000 livres, and on the 1st of July, 7500 livres, and so on 500 livres a month, till the 1st of December, when they were to be fixed at 5000 livres.

It ordered, also, that bank notes should be reduced as 10 to 8, but that on the first day of July they should be further reduced-those of 10,000 livres to 7,500, and so on monthly, at the rate of 500 livres, until December, when they should remain fixed.

This impolitic, and disgraceful measure, was followed with corresponding consequences: the notes lost all credit, and the whole paper fabric fell to the ground. Mr. Law's system was overturned; and, in its ruin, involved thousands, who had converted their property into bank currency, on the faith and declarations of government, which had solemnly engaged, that, whatever should change the coin, the bank notes should always remain the same, and be paid in full.

At this time, the notes in circulation, amounted to the enormous sum of 2,235,085,590 livres, or $419,078,535.62.

And, as they would not pass for any fixed value, the distress of the people became extreme, and threatened the very existence of government.