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By Root 636 0

was unwavering, second to make his notes and his bank so attractive and powerful that only the foolish or destitute would ignore them. He began by allying himself to the regent’s most trusted friend, Saint-Simon. Once a week Law visited Saint-Simon to let him know how business was progressing. This, he hoped, would gain him credibility, as well as useful snippets of inside information. But Saint-Simon was no fool: “I soon knew that if Law desired these regular interviews it was not that he expected to make me an able financier; but as a man of intelligence, and he had plenty of it, he wanted access to a servitor of the Regent who was more than all others truly in his confidence.” But exposed to Law’s mesmeric charm even Saint-Simon capitulated: “We soon began to talk with a confidence which I never had reason to regret.”

At the bank’s offices Law adopted a more straightforward approach to boost business. Rather like the incentives dangled before students today by Wall Street banks, he offered a tempting range of free or inexpensive banking services. At the Banque Générale, he proclaimed, you could transfer money from Paris to the provinces, discount bills, and exchange foreign currency for little or no charge. Even the hostile Gazette de la Régence was beguiled when one of the author’s friends with 1,800 livres to transfer from Marseille to Paris paid a visit to Monsieur Law’s office. Here, according to the report in the Gazette, a Swiss footman, magnificently uniformed in green, introduced him to the bank’s officials. They told him that if someone in Marseille handed his coins to the local director of the mint he would be given the 1,800 livres at the bank in Paris. There would be no charge for a transaction of this small size.

The regent helped by making his well-publicized deposits and ensured that everyone knew he was using the bank for foreign transactions. Foreigners followed his lead, and at last found somewhere in Paris to discount their bills of exchange with ease and at reasonable prices. The influx of foreign currency alleviated the shortage of coins, and, with the slow trickle of banknotes Law printed and issued to depositors, boosted the money supply sufficiently for commerce to begin to pick up. Traders liked the banknotes because the guarantee of being paid in coin of fixed value meant that they knew exactly what something would cost or what price they would receive. The notes began to command a premium, like those issued by the Bank of Amsterdam.

The small shoots of recovery were nurtured by the regent’s continuing sponsorship of the bank. In October 1716 he ordered tax collectors to remit payments to the Treasury in Law’s banknotes. A few months later another edict declared that the public could pay their taxes in notes. Eighteen months after opening there were profits enough to pay shareholders a six-monthly dividend of 7 percent, and Law’s inconspicuous white notes, engraved with the legend “The bank promises to pay the bearer at sight, the sum of—livres, in coin of the weight and standard of this day, value received,” were circulating throughout France and had begun to effect the revival he had promised.

But profit brought obstacles as well as dividends. Law was damaging the business of the private bankers of Paris: his offer of cut-rate services to the public encroached on business they regarded as their domain. According to some accounts, mounting resentment inspired a group of anonymous opponents to combine their resources with the express intention of bringing him down. When their hoard reached 5 million livres in notes, they presented them at the bank for immediate payment. Law knew that his promise to “pay on demand” underpinned the public’s confidence, on which every bank depends. Without it the dream would crumble. He also knew that the bank reserves did not contain 5 million livres’ worth of coins.

9

KING OF HALF AMERICA

But the bank is not the only nor the greatest of my ideas. I will produce a work that will surprise Europe by the changes it will bring in France’s favour,