The Humbugs of the World - P. T. Barnum (red white royal blue TXT) 📗

Mr. Craggs (one of the Secretaries of State,) and others. Mr. Aislabie, the Chancellor of the Exchequer, had accumulated $4,250,000 and more out of the business. Many other noblemen, gentlemen, and reputable merchants were disgracefully involved.

The trials that were had resulted in the imprisonment, expulsion or degradation of Aislabie, Craggs, Sir George Caswell (a banker and member of the House,) and others. Blunt, a Mr. Stanhope, and a number more of the chief criminals were stripped of their wealth, amounting to from $135,000 to $1,200,000 each, and the proceeds used for the partial relief of the ruined, except amounts left to the culprits to begin the world anew. Blunt, the chief of all the swindlers, was stripped of about $925,000, and allowed only $5,000. By this means and by the use of such actual property as the Company did possess, about one-third of the money lost by its means was ultimately paid to the losers. It was a long time, however, before the tone of public credit was thoroughly restored.

The history of the South Sea bubble should always stand as a beacon to warn us that reckless speculation is the bane of commerce, and that the only sure method of gaining a fortune, and certainly of enjoying it, is to diligently prosecute some legitimate calling, which, like the quality of mercy, is “twice blessed.” Every man’s occupation should be beneficial to his fellow-man as well as profitable to himself. All else is vanity and folly.

XXVII

Business humbugs⁠—​John Law⁠—​The Mississippi scheme⁠—​Johnny Crapaud as greedy as Johnny Bull.

In the “good old times,” people were just as eager after money as they are now; and a great deal more vulgar, unscrupulous, and foolish in their endeavors to get it. During about two hundred years after the discovery of America, that continent was a constant source of great and little money humbugs. The Spaniards and Portuguese and French and English all insisted upon thinking that America was chiefly made of gold; perhaps believing, as the man said about Colorado, that the hardship of the place was, that you have to dig through three or four feet of solid silver before the gold could be reached. This curious delusion is shown by the fact that the early charters of lands in America so uniformly reserved to the King his proportion of all gold and silver that should be found. And if gold were not to be had, these lazy Europeans were equally crazy about the rich merchandise which they made sure of finding in the vast and solitary American mountains and forests.

In a previous letter, I have shown how one of those delusions, about the unbounded wealth to be obtained from the countries on the South Sea, caused the English South Sea bubble.

A similar belief, at the same time, in the neighboring country of France, formed the airy basis of a similar business humbug, even more gigantic, noxious, and destructive. This was John Law’s Mississippi scheme, of which I shall give an account in this chapter. It was, I think, the greatest business humbug of history.

Law was a Scotchman, shrewd and able, a really good financier for those days, but vicious, a gambler, unprincipled, and liable to wild schemes. He had possessed a good deal of property, had traveled and gambled all over Europe, was witty, entertaining, and capital company, and had become a favorite with the Duke of Orleans and other French nobles. When the Duke became Regent of France at the death of Louis XIV, in 1715, that country was horribly in debt, and its people in much misery, owing to the costly wars and flaying taxations of the late King. When, therefore, Law came to Paris with a promising scheme of finance in his hand, the Regent was particularly glad to see him, both as financier and as friend.

The Regent quickly fell in with Law’s plans; and in the spring of 1716, the first step⁠—not, however, so intended at the time⁠—toward the Mississippi Scheme was taken. This was, the establishment by royal authority of the banking firm of Law & Co., consisting of Law and his brother. This bank, by a judicious organization and issue of paper money, quickly began to help the distressed finances of the kingdom, and to invigorate trade and commerce. This success, which seems to have been an entirely sound and legitimate business success, made one sadly mistaken but very deep impression upon the ignorant and shallow mind of the Regent of France, which was the foundation of all the subsequent trouble. The Regent became firmly convinced, that if a certain quantity of bank bills could do so much good, a hundred thousand times as many bills would surely do a hundred thousand times as much. That is, he thought printing and issuing the bills was creating money. He paid no regard to the need of providing specie for them on demand, but thought he had an unlimited money factory in the city of Paris.

So far, so good. Next, Law planned, and, with the ever ready consent of the Regent, effected, an enlargement of the business of his bank, based on that delusion I spoke of about America. This enlargement was the formation of the Mississippi Company, and this was the contrivance which swelled into so tremendous a humbug. The company was closely connected with the banks, and received (to begin with) the monopoly of all trade to the Mississippi River, and all the country west of it. It was expected to obtain vast quantities of gold and silver from that region, and thus to make immense dividends on its stock. At home, it was to have the sole charge of collecting all the taxes and coining all the money. Stock was issued to the amount of one hundred thousand shares, at $200 (five hundred livres) each. And Law’s help to the Government funds was continued by permitting this stock to be paid for in those funds, at their par value, though worth in market only about a third