In the meantime the duke of Berwick conducted a French army toward the frontiers of Spain, and made himself master of St. Sebastian and Fontarabia; the duke of Ormond failed in his attempt to land a Spanish army in Great-Britain; and the duke of Berwick, having made preparations for opening the next campaign with the siege of Roses and Pampeluna, Philip V. acceded to the terms prescribed by the quadruple alliance, and Alberoni was disgraced 3.

A. D. 1720.

While this Italian priest, the son of a peasant, and formerly the curate of a petty village near Parma, was ambitiously attempting to change the political state of Europe, a great and real change was brought about in the commercial world, in the finances of nations and the fortunes of individuals, by a Scottish adventurer, named John Law. Professionally a gamester, and a calculator of chances, Law had been obliged to abandon his native country, for having killed his antagonist in a duel. He visited several parts of the continent: and, on his arrival at Paris, he was particularly struck with the confusion into which the ambition of Lewis XIV. had thrown the French finances. To remedy that evil, appeared a task worthy of his daring genius :—and he flattered himself that he could accomplish it. The greatness of the idea recommended it to the duke of Orleans, whose bold spirit and sanguine temper induced him to adopt the wildest projects.

Law's scheme was, by speedily paying off the immense national debt, to clear the public revenue of the enormous interest that absorbed it. The introduction of paper-credit could alone effect this amazing revolution, and the exigencies of the state seemed to require such an expedient. Law accordingly established a bank, which was soon declared royal, and united with the Missisippi or West-India company, from whose commerce the greatest riches were expec

3. Id. ibid.

ted,

ted, and which soon swallowed up all the other trading companies in the kingdom. It undertook the management of the trade to the coast of Africa: it also obtained the privileges of the old East-India company, founded by the celebrated Colbert, which had gone to decay, and given up trade to the merchants of St. Malo; and it, at length, engrossed the farming of the national taxes.

its

The Missisippi company, in a word, seemed established on such solid foundations, and pregnant with such vast advantages, that a share in its stock rose to above twenty times its original value. The cause of this extraordinary rise deserves to be traced.

. It had long been believed, on the doubtful relations of travellers, that the country in the neighbourhood of the river Missisippi contained inexhaustible treasures. Law availed himself of this credulity, and endeavoured to encourage and increase it by mysterious reports. It was whispered, as a secret, that the celebrated, but supposed fabulous mines of St. Barbe, had at length been discovered; and that they were much richer than even fame had reported them. In order to give the greater weight to this deceitful rumour, a number of miners were sent out to Louisiana, to dig, as was pretended, the abundant treasure, with a body of troops sufficient to defend them against the Spaniards and Indians, as well as to protect the precious produce of their toils!

The impression which this stratagem made upon a nation naturally fond of novelty, is altogether astonishing. Every one was eager to obtain a share in the stock of the new company: The Missisippi Scheme became the grand object, and the ultimate aim of all pursuits 4. Even Law himself, deceived

4. The adventurers were not satisfied with a bare association with the company, which had obtained the disposal of that fine country. The proprietors were applied to from all quarters for large tracts of land for plantations; which, it was represented, would yield, in a few years, an hundred times the sum necessary to be laid out upon them. The richest and most intelligent men in the nation were the most forward in making these purchases ;

and

ceived by his own calculations, and intoxicated with the public folly, had fabricated so many notes, that the chimerical value of the funds, in 1719, exceeded fourscore times the real value of the current coin of the kingdom, which was almost all in the hands of government.

This profusion of paper, in which only the debts of the state were paid off, first occasioned suspicion, and afterwards spread a general alarm. The late financiers, in conjunction with the great bankers, exhausted the royal bank, by continually drawing upon it for large sums. Every one wanted to convert his notes into cash; but the disproportion of specie was immense. Public credit sunk at once; and a tyrannical edict, forbidding private persons to keep by them, · above five hundred livres, served only to crush it more effectually, and to inflame the injured and insulted nation against the regent. Law, who had been appointed comptroller-general of the finances, and loaded with respect, was now execrated and obliged to fly from a country he had beggared, without enriching himself, in order to discharge the debts of the crowns. The distress of the kingdom was so great, and the public creditors so numerous, that government was under the necessity of affording them relief. Upward of five hundred thousand sufferers, chiefly fathers of families, presented their whole fortunes in paper; and government, after liquidating these debts, which are said to have originally amounted to a sum too incredible to be named, charged itself with the enormous debt of sixteen hundred and thirty-one millions of livres, to be paid in specie

and such as could not afford to become purchasers, solicited the management of plantations, or even to be employed in cultivating them! During this general infatuation, all persons who offered themselves, whether natives or foreigners, were promiscuously and carelessly crowded into ships, and landed on the burning sands of the Biloxi, a district in West-Florida, between Pensacola and the mouth of the Missisippi, where a French settlement had been inconsiderately formed, and where these unhappy men perished in thousands, of want and vexation; the miserable victims of a political imposture, and of their own blind avidity. Raynal, Hist. Philos. et Politique, liv. xvi. 5. Voltaire, Raynal, and other French authors. 6. Voltaire.

Thus

1

Thus ended, in France, the famous Missisippi scheme; so ruinous to the fortune of individuals, but ultimately beneficial to the state, which it relieved from an excessive load of debt, though it threw the finances, for a time, into the utmost disorder. Its effects, however, were not confined to that kingdom. Many foreigners had adventured in the French funds, and the contagion of stock-jobbing infected other nations. Holland received a slight shock; but its violence was more peculiarly reserved for England, where it appeared in a variety of forms, and exhausted all its fury. The South-Sea scheme, evidently borrowed from that of Law, first excited the avidity of the nation. But it will be necessary, before I enter upon that subject, to give some account of the nature of the stocks, and the rise of the SouthSea company.

Nothing, my dear Philip, is so much talked of in London, or so little understood, as the national debt, the public funds, and the stocks: I shall, therefore, endeavour to give you a general idea of them. The national debt is the residue of those immense sums which government has, in times of exigency, been obliged to raise, by way of voluntary loan, for the public service, beyond what the annual revenue of the crown could supply, and which the state has not hitherto found it convenient to pay off. The public funds consist of certain ideal aggregations, or masses of the money thus deposited in the hands of government, together with the general produce of the taxes appropriated by parliament to pay the interest of that money; and the surplus of these taxes, which have always been more than sufficient to answer the charge upon them, composes what is called the sinking fund, as it was originally intended to be applied toward the reduction, or sinking of the national debt. The stocks are the whole of this public and funded debt; which being divided into an infinity of portions or shares, bearing a known interest, but different in the different funds, may be readily transferred from one person to another, and converted into cash for the purposes of business or pleasure, and which

rise or fall in value according to the plenty or scarcity of money in the nation, or the opinion the proprietors have of the security of public credit.

Such is the present state of the stocks; which are subject to little fluctuation, except in times of national danger or calamity. For as the public creditors have long given up all expectation of ever receiving their capital from government, the stocks are not much affected by great national prosperity, unless when attended with a sudden or extraordinary influx of money. A strong probability, amounting to a speculative certainty, that the interest of the national debt will continue to be regularly paid, without any farther reduction, must raise the stocks nearly as high as they can go; and this is the common effect of peace and tranquillity. Formerly, however, the case was otherwise. The loans were chiefly made by corporations, or great companies of merchants ; who, beside the stipulated interest, were indulged with certain commercial advantages. To one of those companies was granted, in 1711, the monopoly of a projected trade to the Spanish settlements on the South-Sea, an entire freedom to visit which, it was supposed, England would obtain, either from the house of Austria or that of Bourbon, in consequence of the prodigious successes of the war.

At the peace of Utrecht, no such freedom was obtained. But the assiento, or contract for supplying the Spanish colonies with negroes, conveyed to Great-Britain by the commercial treaty with Philip V. as well as the singular privilege of sending annually to the fair of Porto-Bello a ship of five hundred tuns burden, laden with European commodities, was vested exclusively in the SOUTH-SEA COMPANY. By virtue of this contract, British factories were established at Carthagena, Panama, Vera Cruz, Buenos Ayres, and other Spanish settlements: and the company was farther permitted to freight, in the ports of the South-Sea, vessels of four hundred tuns burden, in order to convey its negroes to all the towns on the coasts of Mexico and Peru; to equip them as