Millionaire - Janet Gleeson [74]
Meanwhile, within the grandiose offices of the bank, an investigation into the accounts was drawing to a close amid murmurings that it was no more than a token gesture, intended to endorse the regent’s support of Law. “It is thought he [the regent] will influence the commissaries a point to take Mr. Law’s accounts to make a report in his favour,” Pulteney observed perceptively. A week later, when the commissioners reported that they had found no evidence of irregularities, few believed them. Their skepticism was later justified: the inquiry had discovered that large unauthorized issues of notes had been circulated but to save the regent embarrassment the matter was glossed over.
Elsewhere in Europe the speculative boom was still gathering pace. By the summer of 1720, in the fetid passages of London’s Exchange Alley, the skin on the South Sea bubble was perilously overstretched. Shares that in January had traded for £130 were changing hands for £1050 at the end of June. As in France, every echelon of society—country parsons, impoverished widows, kings, princes, courtesans, yeoman farmers, eminent scientists, philosophers, writers, artists—caught the contagion, and with loans easily available, they joined the multitude, though few fully comprehended its shady complexities. Even Isaac Newton blindly took part and when asked for advice on the subject is said to have responded that while he could calculate the motions of the heavenly bodies, he could not do the same for the madness of the people. “Our South Sea Equipages increase every day,” wrote Daniel Defoe in early August. “The city ladies buy South Sea jewels, hire South Sea maids, and take new country South Sea houses; the gentlemen set up South Sea coaches, and buy South Sea estates.” The boom in London’s other bubble companies continued equally frenziedly. “The hurry of our stock-jobbing bubblers has been so great this week that it has exceeded all that was ever known. There has been nothing but running about from one coffee-house to another and from one tavern to another, to subscribe without examining what the proposals were. The general cry has been, ‘For God’s sake, let us subscribe to something, we don’t care what it is,’” reported the London Journal on June 11, 1720. Mainland Europe was similarly sucked into the craving for effortless fortune. The stock markets of Amsterdam and Hamburg boomed as never before. Dealers jostled for Dutch West India stock, which by midsummer had doubled in price since the beginning of the year; Dutch East India was similarly coveted and rose from £800 to £1000; prices of insurance shares in at least half a dozen Dutch cities also rose.
In Paris, the story was very different. Law returned to the bank’s offices in early June to find himself confronted by the pitiful sight of hordes congregating outside in the sweltering summer heat in the hope of exchanging their banknotes for coins. Such visible evidence of vanished confidence—a run on the bank—represented, and represents still, every banker’s worst fear. Law had always been a man of high ideals. The desire to do good, to bring happiness and prosperity, had, he always claimed, spurred him more than the desire for personal wealth or status. Now, witnessing people’s suffering, he must have been stung more profoundly than by any criticisms from his peers. He had to find an answer.
Only about 2 percent of the money now in circulation was in silver and gold. To eke out the dwindling supply as fairly as possible and to ensure that the neediest had access to coin, he decided on a system of rationing. From early June, only a single 10-livre note per person