The Mississippi Stock Trading Scheme
Some in clandestine companies combine;
Erect new stocks to trade beyond the line;
With air and empty names beguile the town,
And raise new credits first, then cry 'em down;
Divide the empty nothing into shares,
And set the crowd together by the ears.
Defoe.
The personal character and career of one man are so intimately
connected with the great scheme of the years 1719 and 1720,
that a
history of the Mississippi madness can have no fitter introduction
than a sketch of the life of its great author, John Law.
Historians
are divided in opinion as to whether they should designate
him a knave
or a madman. Both epithets were unsparingly applied to him
in his
lifetime, and while the unhappy consequences of his projects
were
still deeply felt. Posterity, however, has found reason
to doubt the
justice of the accusation, and to confess that John Law
was neither
knave nor madman, but one more deceived than deceiving;
more sinned
against than sinning. He was thoroughly acquainted with
the philosophy
and true principles of credit. He understood the monetary
question
better than any man of his day; and if his system fell with
a crash so
tremendous, it was not so much his fault as that of the
people amongst
whom he had erected it. He did not calculate upon the avaricious
frenzy of a whole nation; he did not see that confidence,
like
mistrust, could be increased, almost ad infinitum, and that
hope was
as extravagant as fear. How was he to foretell that the
French people,
like the man in the fable, would kill, in their frantic
eagerness, the
fine goose he had brought to lay them so many golden eggs?
His fate
was like that which may be supposed to have overtaken the
first
adventurous boatman who rowed from Erie to Ontario. Broad
and smooth
was the river on which he embarked; rapid and pleasant was
his
progress; and who was to stay him in his career? Alas for
him! the
cataract was nigh. He saw, when it was too late, that the
tide which
wafted him so joyously along was a tide of destruction;
and when he
endeavoured to retrace his way, he found that the current
was too
strong for his weak efforts to stem, and that he drew nearer
every
instant to the tremendous falls. Down he went over the sharp
rocks,
and the waters with him. He was dashed to pieces with his
bark, but
the waters, maddened and turned to foam by the rough descent,
only
boiled and bubbled for a time, and then flowed on again
as smoothly as
ever. Just so it was with Law and the French people. He
was the
boatman and they were the waters.
John Law was born at Edinburgh in the year 1671. His father
was
the younger son of an ancient family in Fife, and carried
on the
business of a goldsmith and banker. He amassed considerable
wealth in
his trade, sufficient to enable him to gratify the wish,
so common
among his countrymen, of adding a territorial designation
to his name.
He purchased with this view the estates of Lauriston and
Randleston,
on the Frith of Forth on the borders of West and Mid Lothian,
and was
thenceforth known as Law of Lauriston. The subject of our
memoir,
being the eldest son, was received into his father's counting-house
at
the age of fourteen, and for three years laboured hard to
acquire an
insight into the principles of banking, as then carried
on in
Scotland. He had always manifested great love for the study
of
numbers, and his proficiency in the mathematics was considered
extraordinary in one of his tender years. At the age of
seventeen he
was tall, strong, and well made; and his face, although
deeply scarred
with the small-pox, was agreeable in its expression, and
full of
intelligence. At this time he began to neglect his business,
and
becoming vain of his person, indulged in considerable extravagance
of
attire. He was a great favourite with the ladies, by whom
he was
called Beau Law, while the other sex, despising his foppery,
nicknamed
him Jessamy John. At the death of his father, which happened
in 1688,
he withdrew entirely from the desk, which had become so
irksome, and
being possessed of the revenues of the paternal estate of
Lauriston,
he proceeded to London, to see the world.
