S3
THE SUNDAY OREGOXIA3!-, POTtTXAND, JUNE 20, 1915.
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BT OOSJL KIGBT.
W
' A3 Jolm Law a great financier
t wlr . It times and whoa ffort vr
""thwarted by envlon officials, or vai
lie a scheming: and dishonest politician,
l gambler whose position gave him un
usual opportunity to fleece the public
Both of these opinions have been
strongly held and numerous books have
been written to prove both proposi
tions. If his operations had been con
fined solely to France there might have
been a greater tendency to concede that
his integrity paralleled his ambitions
and that he was the victim of the cha
otic condition of the French treasury at
that time and of the envy and jealousy
of the court. The Mississippi scheme,
however, marked the apotheosis of the
methods Introduced by the Scotsman
which sent prices skyrocketing and
brought them down with such a tre
mendous crash that a great part of the
nation was ruined.
"Whatever opinion may be held of his
moral quality, it is ccmceded that John
Law was a remarkable man. He passed
through the most hazardous adventures,
mod, t, Irtc AnmA... 1.-
" ..v..,uuo iul iUU;S, o
was a, much at home with royalty as
with the riff-raff of gambling houses,
he left his impress upon his time, and
memorials of him have come down to
our own day.
John Law, born in 1671, was the son
of "William Law. The latter, the year
before his death, had acquired territo
rial dignity by purchasing the estates
of Lauriston and Randleston, near
Edinburgh, "William Law was a gold
smith at a time when that was both a
lucrative and an honorable trade, and
he was a descendant of James Law,
Archbishop of Glasgow. Through his
mother John Law claimed kinship with
the Campbells, of whom the Duke of
Argyll was the head. He was care
fully educated and at an early age
showed great proficiency in mathe
matics and delighted in economic phe
nomena as a pastime. He had very en
gaging manners and a genial disposi
tion and was fastidious in his dress.
Ladies called him "Beau" Law: gentle-
men "Jessamy John." Soon after going less, should not this most splendid of
to London he fought a duel with an- diamonds he purchased for the mon
cther man who was also known as arch of France? This question was an
beau" and was a man about town, swered in the affirmative and, the Re
Law had made himself so popular that gent diamond became the property of
he was able to escape from the sen- bankrupt France's boy Kin sr.
tence that had been pronounced upon
him after his trial for murder, but the wealth of France and establish upon it Parliament, seeing its Buccess. became
family of the man whom he had killed a huge currency of notes?" Dominated Jealous of such a concession having
also had great influence and conditions by this spirit, all kinds of wild schemes been granted to a foreigner, and efforts
became so threatening that Law left grew up, based on easy money. A new 'were made to discredit Law. It was
the country to escape further trouble, enterprise, the Mississippi Company, even said that he was to be tried and
For several years he was a roving was established in 1717 to develop the would be likely to get a heavy sen
gambler on the Continent, residing for limitless resources of the great Missis- tence. But Law had the strongest sup
short periods in Genoa, Rome, Venice, einnl Vallev. which bad been hetnin Prt that was to be had at that time.
Amsterdam and o tiler cities. by Croiat, but had proved too much for
In spite of the danger attached to him. The scheme appealed to the im
euch a move, he went back to Scotland, jiirfnn Hon of th Pnrnch nnonln. an wp.1I
and there proposed the establishment
cf a land bank. This was supported by
jowerful interests, but a hostile party
led by the Lord Chancellor defeated It.
Ills project was to have had all the
landed property of the nation held
against notes, as gold reserves are to
day. Law was not cast down by his
setback, but negotiations for the union
of the two kingdoms were rapidly ap-
proachlng completion, and because of
the old charge against him in England
and the animosity of the "Wilson fam
ily In pushing it Law decided to leave
Scotland and crossed to The Hague,
where he introduced the excitement of
the tottery to the Dutch. "When these
prudent people discovered, however,
that the lottery's benefits accrued to
Law rather than to themselves he had
to flee from the country.
In Paris he had a great success. The
flower of the nobility was in his train.
Faro became the favorite game. In
the midst of the excited gamesters Law
was the only one who remained cool.
He made friends with the Due de
Chartres, afterward the Due d'Orleans,"
Regent of France, and of others in high
positions, and talked with them about
the embarrassing condition of the
treasury and schemes for Its improve
ment. He was then in a fair way to
carry all before him, but the Lleuten-ant-General
of Police was suspicious
of Law's methods and succeeded in get
ting authority to give him 24 hours'
notice to leave Paris, on the ground
that he knew how to play too well the
games he introduced.
After a prolonged round of visits to
other cities Law returned to Paris,
where financial affairs were daily be
coming more hopeless. Here he again
became intimate with the Due d'Or
leans, thl3 time by playing backgam
mon with him. Lord Stairs, the British
Ambassador, was such an admirer of
Law that he wrote to Stanhope of him
as a man who might be useful in sug
gesting a method of liquidating the
British national debt. Stanhope laid
the matter before the King, but Law
was meanwhile very much occupied
with his projects in France and nothing
came of the suggestion
Louis XIV had left France with a
debt of 80,000,000 livres, and the Re
gent, the Due d'Orleans, could only
raise 9,000,000 livres. Law undertook
to make this sum pay the debt by issu
ing notes based on the real estate of
the realm. The bank, founded in 1716
under the name of the "General Bank
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of Law & Co.," with & capital ef
6,000,000 llvres, had the royal sanction.
The notes bore promises to pay in the
fcv JT
coin of the weight and standard of the
day of ,88ua and wfire 8hortJ e8tab.
llshed In the confidence of all classes.
Business on credit became possible and
industry experienced a tremendous ex
pansion. The notes became the me
dium of exchange and soon acquired a
greater value than the specie they rep
resented. Lethargies branches of busi
ness revived and new ones were estab
lished. All the credit was given, to
Law, who became as popular with the
masses as he was with the highest cir
cles of society.. He was admitted to
the Palais Royal on terms of excep
tional intimacy. Everywhere John Law,
the Scotsman, an exile because of
crime, was hailed as the savior of
France.
His Influeence was manifested In the
purchase of the famous Regent dia
mond which Pitt, the grandfather of
the Earl of Chatham, offered to sell for
4,500,000. The available capital In
France was only 75,000, but, neverthe-
Law asked. ,rWhv not centralize the
as to their cupidity. The great valley
was to become populous and a profit-
able commerce was to be built up be
tween the two countries, to Inure to
the superior advantage of the mother
country. There were to be great op
portunities, too, for trade with Spanish
South America. No enterprise was com
plete at that time without the addition
of gold and silver mines, and these the
projectors of the Mississippi Company
assured the public would be found rich-
er than any that had ever daazled the
eyes of explorers. The Spaniards had
already found gold and this would be
added to the toll that was to be taken
able trade In furs which had been
founded some time before was to be
greatly enlarged. All of these enter
prises were to benefit Law's bank.
To educate the people as to the pos
sibilities of the great Mississippi Val
ley and to arouse their enthusiasm for
h hm mh1ot. r.hn.,,ri
1.
r bucji renjarit.ay le iniurm
"The rivor i ro rich in eold
tion as:
that the precious metal can b profi
tably taken from its deposit in great
quantities. Bars alleged to have been
made from this precious dust were dis
played in the shop windows of Paris.
The liquid found in the cup of a cer
tain flower in Lousiana turned to dia
monds in a single night and diamonds
said to be from this miraculous flower
were also displayed."
When the books were opened for
subscription prominent men fought for
places in the line. The company's ships,
too, were besieged by men eager to go
to this rich country across the sea and
pick up its abundant gold and silver.
What a different condition awaited
them in the desolate new country to
which they journeyed with such radi
ant hopesl Many of them sent back
bitter reports of their hardships, so
that others were deterred from seek
ing the false El Dorado.
Then the company, under license, re
sorted to press gangs to fill the neces
sary quota. "These gangs.' as one
writer has said, "swept the beggars
from the streets, the tramps from the
highways and the vile from the houses
of correction."
In the following June three ships
brought out colonists, convicts and
troops, and, later. Just before the col
lapse of the project, some Germans,
who could and would work, came out
to the new country and settled what is
still known as the German coast.
The French Company rivaled the
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East India Company, and the French
The Regent transformed the Banque
Generals into the Banque Koyaie and
made its entire capital of 100,000,000
livres Payable in state notes, guaran
teed by the King. Law was made di
rector-general of the new bank, but
even he could not prevent the Regent
from Increasing the Issue of paper
money to cover his own extravagances.
The King's accountants could not go
behind the King's receipts in those
days.
An- effort was made to transfer a
twentieth part of the national debt
from state to private individuals and
on tn other hand advance the num-
ucr ul in o Dauoa b creuuurs u sev
eral thousand. In a . letter Law had
written: "The bank is not only not
the grandest of my ideas, but I will
Produce a work which will suprUe Eu
rope by the changes
will effect in
favor of France, more powerful than
were those produced by the discovery
of the Indies or the introduction of
credit."
In the Fall of 1718 there began a
-erles of privileges for this favored
company which, scattered over several
. . ....
months, gradually stimulated public in-
terest until all France plunged Into a
wild delirium of excited speculation.
All the roads leading into Paris were
crowded with persons eager to ' buy
shares and fearing lest they might be
too late to avail themselves of the
privilege. Dealing in futures was in
troduced to meet a popular demand.
Already there had been secured for
v,, cC "'"'6
Louisiana company, a monopoly of Its
the company the management of the
trade, the beaver trade in Canada and
tobacco farming. ' The privileges of the
company in Senegal and Africa were
added.
My shares which on Monday I bought
"Were worth millions. I thought.
So on Wednesday I chose my abode.
In ray carriage on Thursday I rode.
To the ballroom on Friday I went.
To the workhouse next day I was sent."
This was an epitome of the way
things were moving in Paris at that
time, although the climax was not
reached so speedily In most cases.
An attempt to defeat Law by a run
on the bank for coin was foiled by the
skU1 and courase ot Law, Intrenched
'" vi
Kent. There was a greater demand
man ever ior me notes alter tne edict
was issued reducing the value of
money, and those who. had withdrawn
coin made haste to exchange It for
i?e public confidence in Law grew
The public confidence in Law grew
apace. His rival company lost Its
privilege of farming the revenues, this
ma . K & E 1,
t,emB- given to the Compagnie des Indes
ior nino years in return for a payment
of 52,000,000 livres. He proposed to
take over the national debt of 1.500.-
000 000 livres. the government paying
Der cent for the loan. The Issue of
.hsu-ps w nounced upon by the
- . -
greedy public, although they sold at a
high premium. Law had more than
regal power; the exiled Stuarts paid
Mm nmirt nrnl ti nrnuriest of Euro-
pean aristocracy bowed before him,
while his liberality made him Immense-
ly popular with the masses. It was
hv. rented helns- keot waiting 30
minutes by royalty waited patiently
ior nours 10. see tms commoner, r.
ladies had to wait, although he was
for hours to see this commoner. Even
notorious ior nis weakness in inai ai-
. . . . .
rectlon. One lady of rank had her car-
riage overturned in front of his win-
dows to compel his attention.
So much business was transacted In
the Rue Qulncampolx, the mart, for the
traffic in Law's enterprises, that the
rents for houses and rooms reached the
most exorbitant figures 'and every Inch
of ontdnnr ktuloa wait nn?onntAr1 niA.
clous. It was said that a humpbacked
th cour, of . faw dav. n,.,,,,,
150,000 livres by letting out his hump
to brokers.
Law. Vhoi. offr hui hn
by Louis XTV because he was a Protes-
tant. became a Catholic before being
promoted to the position of Controller
General of Finance, and the bank, in
name as well as In reality, was united
to the company. Everybody was get-
ting richer and none poorer. That con-
000? francs' from the four
,8Uea of 8hare t th nurnb- of fi0o-
ooo had risen to s.ooo.ooo.ooo fni-iL
Persons began to sell their' shares and
XX-.
buy houses, lands, coin, anything with
an intrinsic value. There was a rapid
fall in the shares and a rapid rise in
property, also a rapid depreciation of
paper money.
Efforts were made to stop this tend-
encv by successive edicts. Notes were
-
to bear a premium over specie; coin
was to be used only in smau payments,
and only small amounts were to pi
lcent bv nrivate parties: the use of dia
monds and of gold and silver plate wJtt
forbidden. By ingenious, though falla-
clous, pamphlets Law strove to restore
ued to fall.
At last on March 20, 1720, an edict
fixed the price of the shares at 9000
nxea tne price 01 io t
livres and ordered the bank to buy and
... . ,1 . . ,
sell at mat price. io j.an wa uuw
transferred to the notes, of which there
were about 2,600,000,000 in circulation,
Prices rose enormously and there was
widespread distress and financial con-
fusion. Law was as wildly denounced
as he had been lauded before,
He wrote a letter in which he said
that all value Is a matter of opinion
onlv one thinsr necessary to sustain it.
not to sell but men were in a panic
and sellinsr was the only thing they
thought of as they had thought only of
buying before.
The reduction of the nominal value of
shares and bank notes, which helped ob.
me panic, was oiamea on a-aw, ai-
though d'Agenson, who had been re-
called, was really responsible for it.
As soon as it was perceived how much
damage this act was doing it was re-
voked, but credit was not restored. Law
Ssrb '.f
nrivatelv received him an .rave him a
ntM to nrotaet klmieif an h) honuL
This was very, necessary, for so thor-
oughly had the populace turned against
the ont.tlma idol that his carriage
was demolished as he was driving
through the streets. When this was
reported In the Parliament It was
asked eagerly if Law had been killed,
too. Bets were made that he would be
hanged.
The French ministers sought to
purge themselves of the blame which
the enraged investors attached to
them, and In doing so did not hesi
tate to bring the kingdom to the brink
of destruction.
Finally the banks would pay no more
than ten franc notes, and In the rush
to get the money of these before the
privilege was withdrawn three per
sons were suffocated. Their bodies
were carried to the Palais Royal and
vengeance demanded. The city was In
an uproar. Shares that had sold for
18,000 livres In 1719 were worth only
200 lives in 1720.
Law got away secretly through tht
connivance of the Due d'Orleans and
the Duo de Bourbon, who had been
enriched by him. He repaired to Brus
sels, where he was received with great
honors, and he even ventured back to
England, where he was received cor-
dially by the King and members of the
nobility, but so much opposition to his
presence in that country developed
that no lef t for the Continent and died
in obscurity and poverty In Venice m
1729.
The bank that he had established
t , .
with such prestige in Paris was. sdoi
Ished, and the ambitious Mississippi
Company, deprived of almost all of its
privileges, continued to exist under the
names of the Indies Company. Thus
perished the great financial structure
erected by John Law.
Nt week's article will tell about
the "South Sea and Minor Bubbles,
wherein members of England's Cabinet
. Parliament were Involved in en-
and Parliament were invoivea in en
rmrises to kcl ava w v. tuo
---
aeot--'
Diplomacy and
Cables
Contlnned from Page S.)
wished to Inform the Ambassador, say
in London, that the actions of a cer-
tain American official abroad were not
meeting with the approval of the Sec-
retary of State, It is altogether prob-
able that either the blue or red codes
would serve me purpose.
All code messages or cable messages
of any kind are adressed to "Secstate,
Washington," the department's cable
address, and are signed simply with
tho laat name of the Ambassador or
other diplomatio or consular agent
sending the message.
The work of decoding or coding cable
messages Is In itself a big task. The
ordinary work of this kind is left to
the confidential clerks in the Index
bureau, under the supervision of Dr.
Buck, but when there comes a com
munication of the utmost Importance,
or when a communication of & strictly
important and confidential nature
needs to be put In code, it Is usually
Ben G. Davis, chief clerk of the De
partment of Btate and Secretary
Bryan's right-hand man. who does the
work.
It Is not uncommon, however, to send
a cable message "plain" that la, with
out putting it into code. Such things
as political and diplomatio conditions,
however, are entirely confidential.
Next in importance to communication
by cable is the mall system of the de
partment. This system pertains more
particularly to the consular service, the
activities of which are not so closely
connected with confidential matters.
The relief of destitute Americans
abroad, the settlement of American
estates abroad, the certification of atrip
cargoes and the like are all matters
which can be handled In the mails.
With a few exceptions, such as Cairo.
Egypt, and other points, the mail comes
in special Department of State leather
pouches, sealed In the foreign coun
try and not opened, until they reach
Washington.
There is a generally understood, ar
rangement between all countries In
time of peace to take exceptional care
of one another's diplomatic and con
sular mail, and while it goes through
the regular machinery of foreign and
Interocean postal services, there is, un
doubtedly, special care exercised to
prevent such mail coming to harm.
In most countries the mall of the
various consulates and consular agen
cies is first forwarded to the embassy
or legation of the United States in the
capital of the country. Here the mall
from all Consuls Is gathered together,
placed in a pouch with the embassy
mall and sent to the United States
without further delay.
These pouches are sent at regular
Intervals, or oftener if the volume of
mall warrants. Some of the communi
cations received at the consular bu
reau, not only from abroad but also
from people in the United States. Is
more weird than any of the official
correspondence. This mail is handled
by EL C. Hengstler. chief of the con
sular bureau, who la the right-hand
man of Wilbur J. Carr, director of the
consular service.
Hengstler often receives shipments
from abroad of butterflies, locusts and
birds, sent by patriotic Americans to
the National Museum. One queer
looking box of ashes that came across
his desk one day turned out to be the
ashes of a deceased American who had
died abroad, been cremated and whose
ashes were being sent to the consular
bureau for forwarding to his relatives
in this country.
One man wrote to the bureau not
lon asking Mr. Hengstler to in-
lurIn n"a wnere ne coma, purcnase ins
best Bronx cocktail in Paris, and a let
ter came in recently from a consul
who reported that a drunken but af
fable American had awakened him in
the middle of the night to learn if the
word "bombshell" was pronounced
"bom-shell" or "bum-shell."
The entrance of Italy Into the Euro
pean war has rather tangled the cable
situation for the State Department.
Our note to Germany on the Lusitanla
and kindred matters was sent via
Rome and telegraphed to Berlin, but,
since Italy has entered the war. cables
to Berlin of an important nature must
be sent by wireless or by cable through
Copenhagen.
Both London and Paris have direct
cables, and in almost any event these
two capitals will furnish the depart
ment the least trouble in communicat
ing with their Ambassadors, Petrograd
however, often presents a situation of
much difficulty, as the telegraph sys
tem between Copenhagen and Petro
grad has a habit of falling at Import
ant times.
At no time, however, has the com
munication system of the department
been put to the test as occurred at the
outbreak of the European war. when
thousands of Americans abroad were
destitute and were appealing to the
American Consuls and Ambassadors for
funds.
An enormous fund was expended in
cable tolls at that time, sending money
to these refugees, but much of this
money was reimbursable, as the depart
ment charged the cost of the cable
tolls against the assisted ones when
they returned home.
In nearly all cases the Government
gets a ;"auced cable and telegraph
rate, which is about two-thirds of th
regular commercial rate, but despite
this reduction the monthly bill chargei
,
-
companies to the department account
would pay the salaries of any number
of Consuls.
The Present Meets the Fast.
World's Work.
In the Dardanelles the Past shakes
hands with the Present, face to face;
for Just round the corner from Kum
Kaleh. Homer's River Scamander, under
another name, still flows Into the Hel
lespont. Along the beach at its mouth
Agamemnon hauled up his "black ships"
3000 years ago. Its waters now, as
then, flow from springs on Mount Ida
""-' m'"" wmuy mamo ui xroy,
but in all these ages they have brought
down a lot of classic mud out of the
Troad and with it filled up the crescent
bay used by the Greeks long ago. When
landing parties went ashore In March
from the French and British ship, to
take possession of the Sigeura promon-
tory. they hauled up their cutters on
the soil of "many-towered Ilium.-