The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-06-16
The Past and Present Financial Condition
of the Country and Its Recent Indus
trial Depression and the ....
Reasons Thereof
We Have Had Experience That Kind During the Civil War
Every Nation That Has Tried Unonverble Currencyohn Law
Of French Nation Behind
He Busted .4s.
NO. Ill
BY James T. Van RuessIaer

that value for it has all the qualities ne
cessary in money"
| AS a beginning Law had notes to the
amount of $40, 600, 900 sterling struck off
and circulated. They were receivable in
taxes, nominally redeemable in coin and
made legal tender. A great wave of IN
Simultaneous prosperity seemed to rush
over France. The parliament OF Paris
alarmed by the iurore which seized the
whole people. tried to check it by legis-
lation but was overborne at once. Law
even threatened to abolish 1t for presum-
| ing to stand in his way. This bank lent
the king twelve hundred billions of francs
to pay off the debt. An eye witness of
| the scenes in Paris. writing at the time,
| says: 'All the town is in CONFUSION
over the shares; the capital is thrown in
to kind OF state fever; we see the DEBT
diminish before our eyes: private for
tunes are made out of nothing" From
all parts of France men poured into Paris
to speculate. The street was crammed
day and night The shares rose to forty
times their value in specie at the time OF
their issue. Everybody seemed to be get
ting richer. nobody poorer. Tho bank
continued to pour forth paper money
1873. 0OJ, 900 mere than it was legally au-
thorized to emit. Its issue of shares at
the extreme market value. when the
craze was at its height, was twelve billion
francs, which had been built up on an
original issue of less than two millions.
NJ. TIMERS, in his account of the s;tua-
tion at this time, says: The variations
Of fortune we're so rapid that stock JOB
bers, receiving shares to sell, by keeping
them one single day had time to make
enormous profits. A story is tola of one
who, charged with selling some shares.
thought the shares were stolen; not at
all; he faithfully returned their value,
but he had taken time to win a million
for himself. This power which capita.
had of producing so rapidly had brought
about traffic; people lent the funds by
the hour, and exacted unprecedented
rates of interest. The stockholders found,
moreover, way to pay the interest de-
manded and to reap profit themselves.
One could even gain million a day"
Law himself reaped a colossal fortune In
paper, which he turned into land as fast
as he could. He bought no less than
fourteen titled estates in France, a fact
which is cited as evidence that no had
faith in his own schemes, for had he been
a swlndler he would have invested his
profits in some other country.
OF course such condition of affairs
could not last. Scarcely had the whole
system been made conf lete before the
inevitable collapse began to threaten.
People began to sell their shares for land,
houses. coin, or anything that had stable
value. Prices rose enormously, and gold
began to be boarded. The shares began
to fall and the paper money to deprecate.
Then Law, began to try to save his paper
money from destruction by edicts or
forcing acts. 1t was forbidden to convert
the notes into gold or silver. and decreed
that they should bear premium over
specie. 1t was decreed that coin should
be used only in small payments. and that
only small amount of it should be kept
in tho possession of private persons.
Any one keeping more than 400 or 500
francs. The wearing Of gems and dia-
monds was prohibited. Nothing made
of gold was to weigh over one ounce. Old
specie was confiscated, and domiciliary
visits were ordered to discover it. OF
course these signs of desperation only
FASTENED the end. The shares. which. had
been huctuating wildly, began to 60 down
steadily. This was in February, 1720.
less than two years after the founding of
the bank. When all the violent edicts
failed to stop the decline, the government
decreed in May that.sthe value of the
shares and notes should be reduced one
half. This was the end. The great bub-
Bile collapsed. for credit had been COM
pletely destroyed. The bank stopped
payment, and the whole nation gave it,
self over to rage and despair. Laws lile
was in Danger, and that of the regent
was threatened. The bank was abolished;
its notes were reconverted into the pub
lie debt, leaving it as it was when the
bank was established; Laws estates were
confiscated, and by November of 1920 not
trace of the bank OF it's various COM
panies remained. Law himself remained
in France till the end of the year, when
he became a wanderer on the face of the
earth, dying at Venice in 1923 almost a
pauper." "Of all the industrial values
produced under the hot atmosphere of