Millionaire - Janet Gleeson [75]
The withdrawal of banknotes and shares from circulation began with more than a touch of melodrama, with vast public bonfires witnessed by thousands of astonished onlookers. The first burning of 100,000 shares owned by the Crown and 300,000 belonging to the company took place outside the Hôtel de Ville. In the following weeks thousands of livres’ worth of notes and shares were crammed into iron cages and similarly ignited, as an array of ingenious schemes, each aimed at pruning the paper system and partially restoring the metallic one, was set in train. The regent’s mother shook her head over the irony of it all: while no one in France had a sou, she quipped, they had toilet paper in plenty.
But confidence once lost is hard to regain, and burning vast quantities of money and shares was not the way to restore it. Every smoldering bonfire further sapped the credibility of paper, and the press for coins grew more insistent. The poor could only scour the street for coins, or barter to feed themselves. The most basic necessities of life were affected by the crisis. Coins had to be specially dispatched to the bakers of Gonesse, who supplied Paris with bread, so that they could buy wheat: corn merchants refused any form of payment in paper.
While the poor scavenged, the privileged inhabitants of the grand hôtels and palais danced on. Cocooned by credit, which no supplier dared deny them, they reveled in ever more conspicuous excess, as if by an orgy of spending they could hold the menace at bay. Just as during the 1930s depression the Waldorf Astoria was fully booked, in 1720 ten times more was spent at the opera than in the previous year; theatrical productions were more lavish than ever; people dressed with ever more extravagant ostentation and gorged themselves at banquets with scores of exotic courses. “There is still a great deal of money in France,” wrote the Princess Palatine in August 1720. “They are very fond of luxury, which has never been indulged in to such an extent as it is at present.”
For foreign investors who held French banknotes the situation was particularly dire. Their losses were amplified when the French exchange rate plummeted even more dramatically than the share price. A pound sterling, worth 39 livres in May, was fetching 92 livres by September, and was unquoted for the next three months. One expatriate who managed to profit from the falling value of French currency was Law’s friend and sometime business partner Richard Cantillon, who had returned to Paris in search of further investment opportunities. With a foresight that sets him apart from every other financial pundit of the day, he anticipated the downward slide in French currency and by various currency dealings—advancing loans in one currency while taking deposits in another, fixing French currency loans in sterling, then waiting for the livre’s value to fall—made a second fortune. The size of some of these deals, sufficient further to depress the livre and worsen the shortage of coins, inevitably drew Law’s attention. Legend has it that he paid a visit to Cantillon’s office and presented him with a curt ultimatum: “If we were in England we would be able to talk and reach an agreement, but in France, as you know, I can tell you that you will be in the Bastille this evening if you do not give me your word to leave the country in forty-eight hours.” Cantillon, who understood the importance of quitting while ahead, left Paris for London, where he turned his attention to South Sea shares—and a similarly spectacular fortune.
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