Daily State sentinel. [volume] (Indianapolis, Ind.) 1861-1865, 1863-12-05
Prom the Philadelphia Age.
THE LAW nU BLE-rtEE SOUTH SEA
BUBBLE.


CHEsTKR COUNT, November Is. 1863.
The VALLEY OF the Mississippi. known as Lou.
isiana Territory, Was possessed by France in the
year lIl2 as far as The head spring Of the Ale
gheny. aud the exclusive trade OF this immense
territory vas granted by Louis XIV TO French
merchant named Crozat Crozat, however. not
succeeding IN the colonization OF the territory
bis colony VAS resigns, 60 the King in I'LL, with
population. including the military, OF not more
than seven hundred persons
The revenues 81 the French government, were
not equal to the interest on the enormous debt
bequeathei by the extravagsnce Of Louis XIV,
aud hence there was great depression N the value
OF the national securities. just q, this time the
notorious hnancier John Law appeared on the
stage
Law was grmcraek. itinerant Scotehman.
who managed to raise himself 10 the dignity Of
Comptroller General Of the Finances Of France
upon the strength of a scheme. invented by him
self, for establishing bank, an East India and
Mississippi Company. by the profits OF which the
national district OF France was 20 be paid off lie
first offered bic plan TO Victor Amadcors, King OF
Sardinia, who told him che was not powerful
enough 10 ruin himself"
Taking advantage OF the financial depression In
France. Law proposed his credit system TO the
Regent asa relief la l7l6 he opened bank
under the protection Of the Duke Of Orleans. then
Regent OF France.
In I'LL the Western or Mississippi Company
received the transfer Of the commerce of Louisi-
ana, which bad lust been resigned by Crozat
Bancroft relates that ''the mines and commerce
and boundless extent Of Louisiana were now ia.
voked 70 relieve the burden aud renew the credit
OF the metropolis The human mind is full Of
trust; men in masses always have faith in the
approach of better times; humanity abounds in
hope. The Valley Of the Mississippi inaamed
the Imagination If Franco. finf Ia. a,
ture. the French nation beheld the certain opu-
lenee OF coming ages within their immediate
CRASH This Mississippi scheme was the great
Law bubble
Laws theory was that the currency OF coun.
try need not possess intrinsic value; that the
wealth al a nation may be Indefinitely increased
by an arbitrary infusion OF paper.
The Company Of the Mississippi instituted by
Law, was the basis upon which the credit of the
Government was to be revived. and Law was
reverenced as the greatest msn of the age"
The shares of the company we're put into the
market and paid for in public bonds; aud thus
The Government became debtor To company OF
its own creation. The bonds from depreciation
rose rapidly in value in consequence of the inter.
est having been punctually paid by the bank ca
tablished by Law, whilst extravagant and ftbu-
ulous stories we're circulated of the wealth of
Louisiana. its cities and gold mines
Ia l7l9 Laws Bank became the Bank Of
France. People of every rank and condition of
lie, seduced by the prospect Of immense gains
subscribed for snares in the Law bubble" or
this bubble, Bancroft. in his history, writes: "a
Government which had almost absolute power OF
legislation. conspired to give the widest extern
sion 10 what was called credit Law might have
regulated at his pleasure the interest of money
the value OF stocks and the price of labor and
produce. The contest between paper and specie
hpUsu A raga--fha I'm od k,,d o,n
power. the other appealing to common sense
Paper was made the legal tender in all
payments. To win the little gold and silver that
was boarded by the humble classes small bills
"a low, even AS ten livser, ga livre is about twen-
ty cents,) were put in circulation
Averice became frenzy; its fury seized every
member Of the royal family men of letters. pre-
iates and women To doubt the wealth
OF Louisiana provoked anger New Orleans was
famous at Paris, AS n beautiful city almost before
tue canebrakes began To be cut down" Shares
OF the bubble advanced to more than ten times
their original value. Two thousand millions of
bills were emitted in sixteen months But Ban
croft says 1.-THE extravaganccs of stockjobbng
were increased by the latent distrust alike of the
shares aud of the bills men purchased stocks be
cause they feared the end of the paper system
The fraud grew to be apparent" and to stfe
doubt Law was appointed Comptroller General
~
cree that no person, or corporation, should have
on hand more than five hundred Iivres in specie,
the rest must be exchanged for paper, and all
payments. except for sums under one hundred
livres. must be paid in paper Terror and the
dread OF lnformers, brought within three weeks
forty -four millions into bank. In March de-
cree OF Council fixed the value of stock at nine
thousand livres for five hundred and forbade Ger
tain corporations 10 invest money in any thing
oil III calculation Of. all A.
change. was prohibited; all payments must be in
paper, except for sums under ten vres;" conf
dence disappeared. and the Law bubble burst in
l72O. On this scheme Bancroft thus moralizes:
" When men are greatly in the wrong, especially
when they have embarked their fortunes in their
error, they willfully resist light So it has been
with the French people, they remained faithful to
the delusion till France impov ershed. public
and private credit subverted the income of capi.
talists annihilated and labor left without employ
ment. while in the midst of the universal wretch
ednoss of the middling class, few war specua-
tors gloried in their unjust acquisition and enjoy
ment of immense wealth"
The Law bubble" burst in France in 1920
and in the same year. in England Sir John Blunt
projected the South Sea scheme Blunt proposed
10 Ministers plan Nv which the South Sea trade
might be made the means Of paying off the ma
tional debt The funds were first to be consoli
ID
South Sea Company ia twenty-seven years
By means OF an immense distribution of stock
among such members OF Government IA il was
found necessary to bride, including the Chance-
Tor OF the Exchequer, Aislahie, and the Score
tary oil State. the scheme. through the purchase
influence Of Aislabie, passed Parliament, and
the stock rose from 100 10 900
Soon the same National frenzy seized the pub
lie mind as had led the French to their ruin To
ulata aa-tr ~.
OF infamous means were resor,ed To. Extavs-
CANT stories were circulated Of mines OF wealth
discovered in the South Seas. and at least fifty
per cent. dividends were promised
Landlords sold their estates, and people neg
Iected thsr business. TO rush into the share mar
ket. But IN less than six months the South
Sea bubble burst Ministers called the Bank Of
England TO their aid but this was of no avail
confidence VAS lost: the stock fell; everyt thing
was borne down before il Public credit sus-
tanned terrible shock and an infinite nu mber OF
families were overwhelmed with ruin The
nation was thrown into dangerous ierment and
nothing was heard but the rawlings oil grief, dis
appointment and despair" History (Smollet)
relates, as curious coincidence, that, "while az
the moment South Sea director was scarcely
safe IN the streets from the vengeance of the pop
rlace. Law, the protector OF the NJ ssissippi bub-
bic IN France, was hying for his life from the
people whom he bad bcggared
The investigation By Parliament showed that,
among others. the Chancellor. A~labie. had &C.
counts Of profits on this stock with differen;