Millionaire - Janet Gleeson [66]
Perhaps with the benefit of inside information gleaned over several good bottles of burgundy shared with Law, he was one of the few to anticipate the sudden upturn in share prices and begin buying Mississippi stock at the low of 150 livres. By August, when the share price rose to over 2,000 livres, remembering what his brother in Arkansas had told him, Cantillon realized that the bull market was based on little more than smoke and mirrors and ever-increasing quantities of paper money. Feeling that a crash was both inevitable and imminent, he cashed in. His profit from these few weeks’ exposure was reputed to be $80,000. He left Paris with his winnings and went on a tour of Italy to enjoy the sights and invest in art.
Cantillon was the first to turn his back on Law, but he was not alone. Several more major shareholders followed his example throughout the autumn, and by December the trickle had become a stream that seriously threatened the bank’s reserves. Most investors converted banknotes from share sales into coins and either hoarded or exported them. The stock dealers Bourdon and La Richardière did it quietly, changing notes for coin and jewels and dispatching them abroad. The most notorious seller was the Prince de Conti. Furious with Law for refusing him further handouts, Conti took some 4.5 million livres in notes to the bank and demanded coins. As in the bank’s earliest days, Law had no alternative but to comply. Conti needed three wagons to carry away the coins.
By the end of 1720 some 500 million livres in silver and gold had been taken out of the country, and the trend showed no sign of diminishing. Market vendors and merchants, aware of mounting unease, took paper with marked reluctance, often only at a discount, or spurned it altogether. In February, livestock sellers bringing their animals to market at Poissy refused to accept anything but gold and silver. Their customers, the butchers of Paris, were forced to hire a carriage to return to the city and collect the required coins.
Much of the money taken out by investors was dispatched to London, where the South Sea Company was now starting to gather its own momentum. It was one of several British chartered stock companies, and like the East India Company and the Bank of England, it had been granted a privilege in return for lending the government money. In 1711 the company lent $15.2 million to the government to pay off its floating debt and was granted a monopoly of trade with the South Seas and South America. Unlike Law’s Mississippi Company, however, revenue was not expected from the profits of colonization. The vast income generated by the company, investors were told, would be made by an agreement with Spain that allowed the company’s ships free trade with ports in Peru, Chile, and Mexico. In reality the only rights the company held with Spain enabled them to supply slaves and allowed for one ship a year to trade with the region.
Those who wisely chose to ignore British South Sea stock looked for more tangible repositories for their wealth in France. Many, including the wily widow Chaumont, invested in property, and within a few months the vast pool of paper money available had multiplied the price of land three- or four-fold. Inflation in other areas had also escalated. The recently arrived British diplomat Daniel Pulteney found difficulty in making ends meet and had to ask for an increase in his allowance. “I am told that most things are considerably dearer than they were when Mr.