making the use of metallic currency inconvenient or impossible. The notes were received to the exclusion of gold for subscriptions to shares and for taxes in towns where the Company had its branches. Decrees of December, 1719, excused the Bank from paying its notes in specie, gave creditors the right to refuse payment in specie, and forbade payments being made in commerce of more than ten livres in silver or six hundred livres in gold. The great want of transport and the insecurity of the roads in France must have helped this craze for paper money. At the same time, search was made of persons suspected of hiding the discredited specie. Cash was seized especially among religious communities, Law saying that if they put it in circulation the poor would not have relief. On January 28th, 1720, letters patent made the notes legal tender throughout the kingdom. These measures raised prices in Paris several hundred per cent.

Although the Government had declared that an issue of 360 millions in December, 1719, would be the last, it issued another two hundred millions in February, 1720. On April 28th, 1720, ten per cent. discount on payment of taxes in the notes was allowed. In order to give the notes preference, while their value was kept steady, Law varied the rates of currency for gold 28 times, and for silver 85 times, between May, 1719, and December, 1720.

But decay now set in. The edict of March 5th, 1720, which authorized the exchange of the Bank stock against notes, brought a deluge of notes, 1,500 millions in two months, so that for some time there was in commerce more than two and a half milliards of paper money of no value, wanted by no one. In May, 1720, it was found that the Bank possessed 21 millions in specie, 28 millions in bullion, and 240 millions in bills of exchange. Then a decree of the Council reduced the value of both notes and stock by half. When the Bank reopened on the first of June, it paid only very small amounts, and was besieged day and night by a crowd. On January 21st, 1721, it ceased to exist. But before this came, the Regent had transferred to the public some fifteen hundred millions of the king's debts.

The history of the Banque Royale is closely tied up with that of the Compagnie des Indes. The Bank was to create the legal tender, and the Company to use it for fruitful commerce. They

would have been useful institutions but for the illusion of credit money and its abuse. Such was the effect of the crash that it killed all new creation of banking in the reign of Louis XV. Leaving the Company for the present to one side, we will deal with the English equivalent of Law's scheme, the South Sea Company.

iv. The South Sea Bubble.-In 1711 the floating debts of the Navy exceeded five million pounds. This, with many other debts, amounting altogether to £9,471,328, was thrown into one stock, for which a fund was to be formed for paying interest or annuity at six per cent. until the principal should be discharged. A further point in view was the reduction of what were called the irredeemable annuities created in the reigns of William and Anne, mostly for 99 years, amounting in all to near £800,000 per annum. "And with this was granted a monopoly of a projected trade in the South Seas, vested in the proprietors of navy bills, debentures and other public securities, which were incorporated for the purpose." This was done by the House of Commons. "Such was the origin of the South Sea Company, founded upon a chimerical supposition that the English would be allowed to trade upon the coast of Peru in the West Indies." (The South Sea Bubble, 2nd ed., 1825.) This Incorporation of the South Sea Company did not mature until 1720, when it was founded in imitation of Law's Mississipi scheme giving an exclusive trade in Louisiana which had been started in 1719.

In 1720 the King proposed to the Commons to consider the means for reducing the National Debt. Sir John Blunt, who was a director of the South Sea Company, and Aislabie, Chancellor of the Exchequer, devised a scheme in the name of the South Sea Company to reduce all the funds into one. The Company was to take into their stock the floating debt of the Government and the annuities of all kinds, either by purchase or by subscription.

The Bank of England bid against the South Sea Company for the purchase of the Government debt and the expected monopoly of trade, with the result that the South Sea Company, outbidding the Bank, bought for £7,567,500, far too high a price for success. The annuitants, who might come in or not as they pleased, rushed to exchange their Government securities

for South Sea stock. A bill (6 Geo. I.) was brought in for enabling the Company to increase their capital stock by redeeming such public debts as therein mentioned, for raising money to be applied in lessening them, and for calling in and making new Exchequer Bills. It passed without amendment. The House of Commons rejected a motion for a clause to be inserted, fixing the share in the capital stock of the Company which should be vested in the proprietors of the annuities who might voluntarily subscribe, and the number of years purchase in money they should receive. The Bill was opposed by many prominent peers on the ground that it countenanced stock jobbing to the detriment of genuine trade; that foreigners investing might realize and export specie; that the stock was speculative in character; and that there was danger to the liberty of the nation by the power given to such enormous capital.

The Royal Assurance Company and the London Assurance Company, both genuine ventures, offered to the ministry £600,000 to discharge the arrears of the Civil List on condition of obtaining the King's Charter with a Parliamentary sanction for the establishment of their Companies. This was done, and then King George went to Hanover.

The South Sea stock had already risen in value, but as it did not rise fast enough Blunt circulated a rumour to the effect that Gibraltar and Port Mahon were to be exchanged for some places in Peru, and the British trade in the South Seas was to be protected and enlarged. This had its effect. In April, 1720, the directors opened a subscription for two millions at £300 for the £100, which was enormously oversubscribed. Then, after the start had been made, all sorts of people, including, of course, the King and his mistresses, and the quality, and the politicians, went into a wild speculation in the stock of the Company. The Company was to give for the irredeemable long annuities, which had already overpaid their principal, twenty years purchase, and fourteen years for the short annuities. But there was no limit to the price of the stock which the Company might give for them.

The stock continued to rise, the directors voted a dividend of ten per cent. for the midsummer half year, and on April 30th they offered a second subscription for a million at £400. They then proposed to buy the annuities and other securities for

South Sea stock at 375 for the £100 and a small sum of money. The directors forced up the stock and took a third subscription at £1,000. This had the effect of forcing up the stock of the East India Company and of the Bank of England, as many persons, making a profit on their South Sea stock, sold out and invested in the safer Companies. At midsummer, 1720, the advanced prices of all the stocks were computed at about 500 millions, or about five times as much as all the cash in Europe, the utmost value of all the lands and houses in Great Britain not exceeding 224 millions.

Then any number of speculative Companies, frauds or absurdities or genuine ventures, were put forward, headed by the guinea pigs of those days, the Prince of Wales, the Dukes of Chandos and Bridgwater, and so on, and were eagerly subscribed for. The Prince of Wales became Governor of the Welsh Copper Company, but finding that the Company would be prosecuted, he retired with a loot of £40,000. Nothing was too gross or too absurd for the credulity of the public. The Companies covered every variety of human effort and ingenuity, from genuine Insurance and other Companies to projects for importing great jackasses from Spain, for trading in human hair, a wheel for perpetual motion, the extraction of silver from lead, or the extraction of oil from radish seed. Shares could be taken in this various nonsense on sixpence per cent. deposit, the dealer sometimes, content with what he had taken in the morning, leaving with his books mid-day, not to be seen again. One obscure projector, pretending to have found a very advantageous scheme which he did not explain, published proposals for a subscription in which he promised that in one month the particulars of his project should be disclosed. In the meantime everyone paying two guineas should be entitled to subscription for £100, which would produce that sum yearly. In one morning he had one thousand such subscriptions, and in the evening he left the kingdom. (The South Sea Bubble, Anon., 1825.)

There was a variety of useful projects among these, and some things possible or before their time, such as the making of iron with pit coal, building hospitals for bastard children, working of tin plates which were formerly brought from Germany and the making of china ware and delft ware. In fact, it was a redeeming feature of the gamble on both sides of the

Channel that it set men to thinking out improvements in manufacture and novelties of invention, putting to work the unaccustomed brain. The novelties of idea were so captivating that the first purchasers were generally easily able at once to transfer their new stock at a premium.

When the gamble was at its height, the directors committed suicide. The smaller bubbles had been of good service to the South Sea Company, for people who had put money into these and made a little sold out and invested in South Sea stock. The directors do not appear to have understood this. On August 18th they sued out writs of scire facias against the lesser frauds, the Copper Companies and others, as being contrary to law. The South Sea stock was then standing at 850. The lesser bubbles shrank to nothing, while the South Sea Company opened a fourth subscription for a million at £1,000, subscribed in a few hours, and sold in the evening at 40 per cent. advance. The Directors on the 30th declared that the next half yearly dividend should be 30 per cent., and for the next twelve years not less than 50 per cent. per annum.

But the stock from various causes now began steadily to decline. On September 12th it went up to 675 on account of a proposed contract by which the Bank of England was to lend to the Company three and a half millions, a transaction managed by Robert Walpole who decried the Company while making a very good thing out of it himself. But the Bank, being themselves in danger from a run on their own resources, repudiated the agreement. The stock continued to fall; by the end of the year the ruin of many wealthy families had come.

Application was made to King George at Hanover, and he came to England on November 11th. He was much blamed as involved; some of his Hanoverian ministers recommended abdication; others an appeal to the army. When in December Parliament assembled, the directors were ordered to produce accounts, were forbidden to leave the country, and had to disclose their effects. Secret Committees were appointed, which found that large sums had been given to ministers and members of the House of Commons, that before any subscription could be made a fictitious stock of £574,000 had been given away by the directors to get the Bill passed. Among the persons who had received this were the Earl of Sunderland, Mr. Secre