and issue notes, both on that and on landed security. He further proposed that this bank should be administered in the King’s name, but subject to the control of commissioners, to be named by the States- General.

While these memorials were under consideration, Law translated into French his essay on money and trade, and used every means to extend through the nation his renown as a financier. He soon became talked of. The confidants of the Regent spread abroad his praise, and every one expected great things of Monsieur Lass.⁶

On the 5th of May, 1716, a royal edict was published, by which Law was authorised, in conjunction with his brother, to establish a bank, under the name of Law and Company, the notes of which should be received in payment of the taxes. The capital was fixed at six millions of livres, in twelve thousand shares of five hundred livres each, purchasable one-fourth in specie and the remainder in billets d’etat. It was not thought expedient to grant him the whole of the privileges prayed for in his memorials until experience should have shown their safety and advantage.

Law was now on the high road to fortune. The study of thirty years was brought to guide him in the management of his bank. He made all his notes payable at sight, and in the coin current at the time they were issued. This last was a master-stroke of policy, and immediately rendered his notes more valuable than the precious metals. The latter were constantly liable to depreciation by the unwise tampering of the government. A thousand livres of silver might be worth their nominal value one day and be reduced one-sixth the next, but a note of Law’s bank retained its original value. He publicly declared at the same time that a banker deserved death if he made issues without having sufficient security to answer all demands. The consequence was, that his notes advanced rapidly in public estimation, and were received at one per cent. more than specie. It was not long before the trade of the country felt the benefit. Languishing commerce began to lift up her head; the taxes were paid with greater regularity and less murmuring, and a degree of confidence was established that could not fail, if it continued, to become still more advantageous. In the course of a year Law’s notes rose to fifteen per cent. premium, while the billets d’etat, or notes issued by the government, as security for the debts contracted by the extravagant Louis XIV, were at a discount of no less than seventy-eight and a half per cent. The comparison was too great in favour of Law not to attract the attention of the whole kingdom, and his credit extended itself day by day. Branches of his bank were almost simultaneously established at Lyons, Rochelle, Tours, Amiens, and Orleans.

The Regent appears to have been utterly astonished at his success, and gradually to have conceived the idea, that paper, which could so aid a metallic currency, could entirely supersede it. Upon this fundamental error he afterwards acted. In the mean time, Law commenced the famous project which has handed his name down to posterity. He proposed to the Regent, who could refuse him nothing, to establish a company, that should have the exclusive privilege of trading to the great river Mississippi and the province of Louisiana, on its western bank. The country was supposed to abound in the precious metals, and the company, supported by the profits of their exclusive commerce, were to be the sole farmers of the taxes, and sole coiners of money. Letters patent were issued, incorporating the company, in August 1717. The capital was divided into two hundred thousand shares of five hundred livres each, the whole of which might be paid in billets d’etat, at their nominal value, although worth no more than 160 livres in the market.

It was now that the frenzy of speculating began to seize upon the nation. Law’s bank had effected so much good, that any promises for the future which he thought proper to make were readily believed. The Regent every day conferred new privileges upon the fortunate projector. The bank obtained the monopoly of the sale of tobacco; the sole right of refinage of gold and silver, and was finally erected into the Royal Bank of France. Amid the intoxication of success, both Law and the Regent forgot the maxim so loudly proclaimed by the former, that a banker deserved death who made issues of paper without the necessary funds to provide for them. As soon as the bank, from a private, became a public institution, the Regent caused a fabrication of notes to the amount of one thousand millions of livres. This was the first departure from sound principles, and one for which Law is not justly blameable. While