Law was now free to direct his thoughts to the business of the bank and the development of his original ideas with reference to the West India Company. Although the latter had been established in August, 1717, nothing had yet been accomplished in the direction of actual business. The capital had been issued to an over-eager public, but unless a revenue were forthcoming the consequences would be grave for its originators. It was not sufficient that the flourish of trumpets with which he heralded the boundless possibilities of wealth of the vast and unknown territories of the Mississippi should die away with its last faint echoes. He must at once give evidence that the promises would bear fruit. The situation was difficult, but his ingenuity was equal to the task imposed upon him.

Since the establishment of the company, France had been deluged with books, pamphlets, engravings, and all kinds of advertisements and prospectuses descriptive of the extent and wealth of Louisiana. Exaggerated accounts were published of its riches, of its mineral resources, and of its people. One picture would exhibit mountains declared to be “full of gold, silver, copper, lead, and quicksilver. As these metals are very common, and the savages know nothing of their value, they exchange lumps of gold and silver for European manufactures, such as knives, cooking utensils, spindles, a small looking-glass, or even a little brandy.” Another, designed to invest the natives with a highly religious disposition, would show them performing humble obeisance to the priests, and have accompanying letterpress to the effect that “the idolatrous Indians earnestly pray that they may receive baptism. Great care is taken of the education of their children.”

Glittering accounts such as these appealed to the speculative instincts of everyone. All sorts and conditions of people sold their lands and purchased shares; ships were bought to carry intending emigrants; and transportation was substituted for all other penalties for criminals in order that a supply of manual labour might be furnished in opening up the newly acquired territories. Louisiana however was to prove a bitter disappointment to those who expected to find a country where hardships and difficulties were absent, where without trouble or labour fortunes were to be amassed in the shortest time, and where without stint the pleasures and luxuries of home could be enjoyed to the fullest.

The brilliant pictures that were drawn of the capacities of Louisiana were undoubtedly largely exaggerated so far as its condition was at the time. With the knowledge of subsequent years they were however substantially accurate, but the development of these capacities required the expenditure of vast sums of capital and the lapse of many years of hard and continuous labour of an imported population. The concessions made to the company on its incorporation were of enormous ultimate value, and under different conditions, conditions which would have imported fewer elements of speculation and introduced more administrative patience and moderation, might have proved a national asset of great importance instead of a disastrous enterprise the magnitude of which had the effect of paralysing for several generations the commercial and industrial stability of France. The concessions were co-extensive with virtual sovereignty over the vast territories included in the grant, and unlimited freedom of administration was conferred.

While it is evident that Law anticipated that Louisiana would in reality be a possession which would yield to his company a large annual revenue and prove an exceedingly profitable investment to its shareholders, it is equally evident that he recognised that this result could not be accomplished at once. He was probably mistaken as to the length of time that would be required, and, if so, he was only guilty of a fault of judgment attributable to the inadequacy of contemporary knowledge of these far distant lands as well as to the fact that experience of developing companies, such as the Western Company, was then in its extreme infancy. Until operations could proceed on a sufficiently extensive scale, the only immediate income derivable by the company consisted of the annuities payable by the Treasury, the amount of which was equivalent to interest at the rate of four per cent. upon the 100 million livres of State notes absorbed at the time of incorporation. From the fact that the first year’s annuities of four million livres were to be devoted to the general purposes of the company, and that the succeeding years’ annuities were to be placed to the dividend fund, it would seem that Law was under the impression that he could sufficiently develop the company’s territories within a year to admit of further drafts upon the treasury payments being unnecessary.

On the other hand, the Western Company was but one element in the ultimate scheme which Law was ambitious to attain. His aim was to embrace in one vast undertaking not only the whole foreign trade of France, but also the large revenue departments of the government, such as the mint, and the collection of the national taxation. To these would be added the Bank, the success of which, in its present form, was now assured and had inspired the confidence of French people and foreigners alike. With these under one control, and all working together with one definite purpose, national prosperity might be placed upon a sound practical basis, trade in general be fostered and guided along lines of greatest development, and the circulation of money be more ample by the issue of notes to the extent of the real or approximate value of the incorporated assets.

During the early months of 1718, accordingly, he was engaged in laying plans for the acquisition of several monopolies and companies then in existence, but, by reason of indifferent management, not productive to their fullest capacity. In the meantime, however, the public required consideration at his hands. The shares of the Western Company were at a discount of 50 per cent., and he foresaw the necessity before proceeding further of adopting measures to create a rise in their value to par at least, and if possible to a premium. His proposals would demand further appeals to investors, and their decision would inevitably be determined by the value in the open market of the stock he had already launched. The method he pursued to bring about this object was as ingenious as it was original. He offered to buy at six months’ date in practically unlimited quantities shares of the Western Company at the minimum price of par and in many cases at a price in excess of par to the extent of 20, 30, and even 40 per cent. This proceeding naturally roused intense excitement, coming as it did from the prime mover in all the great financial operations which had so recently been agitating the community and been promising so great results. The consequence was as Law had hoped. The value of the shares was revived, the public were eager to join in the speculative fever that was produced, and Law not only employed their eagerness to his own advantage but succeeded in spreading and strengthening his already marvellous influence.

While Law was publicly carrying through transactions in such a manner as to rouse enthusiasm and inspire confidence in his projects, he was also at the same time engaged in securing by every possible means the good offices of those in high places without whose favourable support his plans would not likely reach maturity. The Duc de Saint-Simon reveals the nature of the efforts by which Law endeavoured to engage the good opinion of himself and others. “Law,” he says, “often pressed me to receive some shares for nothing, offering to manage them without any trouble to me, so that I must gain to the amount of several millions. So many people had already gained enormously by their own exertions that it was not doubtful Law could gain for me even more rapidly. But I never would lend myself to it. Law addressed himself to Madame de Saint-Simon, whom he found as inflexible. He would have much preferred to enrich me than many others, so as to attach me to him by interest, intimate as he saw me with the Regent. He spoke to M. le Duc d’OrlÉans, even so as to vanquish me by his authority. The Regent attacked me more than once, but I always eluded him. At last, one day when we were together by appointment at Saint Cloud, seated upon the balustrade of the orangery, which covers the descent into the wood of the goulottes, the Regent spoke again to me of the Mississippi, and pressed me to receive some shares from Law.

“The more I resisted the more he pressed me and argued. At last he grew angry, and said that I was too conceited, thus to refuse what the king wished to give me (for everything was done in the king’s name), while so many of my equals in rank and dignity were running after these shares. I replied that such conduct would be that of a fool, the conduct of impertinence, rather than of conceit; that it was not mine, and that since he pressed me so much I would tell him my reasons. They were, that since the fable of Midas, I had nowhere read, still less seen, that anybody had the faculty of converting into gold all he touched; that I did not believe this virtue was given to Law, but thought that all his knowledge was a learned trick. A new and skilful juggle, which put the wealth of Peter into the pockets of Paul, and which enriched one at the expense of the other; that sooner or later the game would be played out, that an infinity of people would be ruined finally, that I abhorred to gain at the expense of others, and would in no way mix myself up with the Mississippi Scheme.

“M. le Duc d’OrlÉans knew only too well how to reply to me, always returning to his idea that I was refusing the bounties of the king. I said that I was so removed from such madness that I would make a proposition to him, of which assuredly I should never have spoken but for his accusation.

“I related to him the expense to which my father had been put in defending Blaye against the party of M. le Prince in years gone by; how he had paid the garrison, furnished provisions, cast cannon, stocked the place, during a blockade of eighteen months, and kept up, at his own expense, within the town, five hundred gentlemen whom he had collected together; how he had been almost ruined by the undertaking, and had never received a sou, except in warrants to the amount of five hundred thousand livres, of which not one had ever been paid, and that he had been compelled to pay yearly the interest of the debts he had contracted, debts that still hung like a millstone upon me. My proposition was—that M. le Duc d’OrlÉans should indemnify me for this loss, I giving up the warrants, to be burnt before him.

“This he at once agreed to. He spoke of it the very next day to Law; my warrants were burnt by degrees in the cabinet of M. le Duc d’OrlÉans, and it was by this means I was paid for what I had done at La FertÉ. M. le Duc d’OrlÉans also distributed a large number of the Company’s shares to the general officers and others employed in the war against Spain.”

Law was by these means assured of the certainty of his coming proposals meeting with public approval, and the only step now remaining was to mature as speedily as circumstances would permit the arrangements he had been busily negotiating with the Regent and his advisers on the one hand and with the companies and the lessees of the various monopolies on the other.

The Tobacco monopoly was the first of the privileges to be acquired by the company. Although by no means an extensive trade, it was an important and lucrative one. The transfer was effected on 4th September, 1718, under burden of an annual charge of 4,000,000 livres payable to the king. Shortly after, arrangements were completed for the absorption of the Guinea Company, whose business was largely composed of slave-dealing on the West Coast of Africa. This was finally carried through on 15th December of the same year. Then came the fusion of the French East India Company, established in 1664 by Colbert, and also a dormant monopoly issued in 1713 conferring the sole privilege of carrying on trade with China.

The company was now assuming bulky proportions, and a re-arrangement of its capital was necessitated by the requirements of its wide and varied interests, and by the prospect of still further acquisitions under negotiation. Accordingly in May, 1719, a decree was published which conferred upon the Company the new and more pretentious title of the Company of the Indies; permission was given to increase the capital; and to the rights already possessed was added the monopoly of trade “from Guinea to the Japanese Archipelago, of colonising especially the Cape of Good Hope, the East Coast of Africa, that which is washed by the Red Sea, all the known islands on the Pacific, Persia, the Mougal Empire, the Kingdom of Siam, China, Japan, and South America.” The increase of capital was fixed at 27,500,000 livres divided into 50,000 shares of 550 livres each, payable in monthly instalments of 27½ livres per share.

The magnitude of these transactions was now so great and unprecedented as to blind the public entirely to all other considerations, and enthusiasm for the foreigner was more than ever highly pitched. A mad scramble soon ensued for possession of shares which would produce so handsome returns as those promised by the great financier. Dividends of 200 per cent. were indicated as certain to accrue from the company’s operations, and it is said that no fewer than 300,000 applications for shares were received from eager crowds of speculators. An unfortunate hitch, however, postponed the allotment to successful applicants. Parliament was still unwilling to follow Law into all his schemes. They were always ready to place obstacles in his path. Accordingly the decree authorising the issue of additional capital was refused endorsement, and six weeks elapsed before the difficulty could be removed. This untoward incident, however, by no means dampened the ardour of Law or of the general public. The previously issued shares of the company which Law had been himself under necessity of converting from a discount to a premium were now in so great demand that they rose without his interference in the market. Artificial gave way to natural inflation of value through keen competition from without, and Law with that capacity for using every advantage with quick and ready skill turned the public feeling to immediate account. On 20th June he placed an absolute condition upon the acquisition of the newly authorised shares. With the ostensible object of laying down a standard for distribution of the new shares amongst applicants, but really of maintaining and if possible of increasing the price of the old shares, he expressed his intention of allotting the new shares in the proportion of one to four of the old shares held by the applicant. The purchase of the requisite amount of the original issue was a necessary preliminary to a favourable consideration of a further subscription. A great demand for original shares at once followed the issue of this decree, and accordingly the prices rose to double their face value within a comparatively few days. These shares were popularly known as the Mothers and the shares of the new issue as the Daughters. The excitement and competition was intense. The whole business of Paris seemed to be concentrated on the purchase and sale of Indian stock. From the highest down through every grade of the community to the lowest, every one talked and thought of nothing else. Visions of untold wealth were conjured up by rash participants in the race of reckless speculation, and the good fortune of many adventurers only served to stimulate those who as yet lagged far behind.

Forbonnais describes the effect of the decree. “When no more daughters were to be found, the western shares were sought for at any price. They were bought for ready money, or on credit with a premium on the price agreed on. Some sold so as to make sure of a large profit, and then seeing that the shares still went up, bought again. In such a state of fermentation, the quickness of the transactions did not admit of the employment of coin; the note was preferred to it; and so that the public might not want that, they did not put too high a price on it.”

On the other hand, the absolute confidence which the Regent placed in the Mississippi Company, and his strong intention to render every assistance to the new colonists in the development of its resources, are seen in his consistent attitude of approval of all Law’s proposals at this period. One of the difficulties with which the colonists had to contend was the absence, or at least scarcity, of a medium of exchange. Barter was much too cumbrous and inconvenient a method of exchange, and operated as a serious check upon freedom of commerce. Law’s solution was the issue of bank notes. The Royal Charter granted at this time made provision for this, and the grounds upon which the Regent, in name of the King, authorised the issue, although probably inspired by Law himself, show also the steps the company were taking for the exploitation of its territories. “The King having by his Letters Patents of the month of August, 1717, established a Trading company, under the name of the West India Company; and by his edict of May last, remitted to the said Company the trade to the East Indies and China; His Majesty sees with great satisfaction that that Company takes the best measures for securing the success of its establishment; that they send a great number of inhabitants to the country Louisiana, which was granted them; that many private persons make settlements in that colony, and send thither husbandmen, tillers, and other handicraftsmen, to manure and improve the land, sow corn, plant tobacco, breed silk-worms, and do whatever is necessary to improve the country. Furthermore His Majesty being informed that the said Indian Company is at great charge for transporting the said inhabitants, and furnishing the colony with meal and other necessaries, until the land affords a sufficient quantity of provisions for their subsistence; that the company sends thither all sorts of goods and merchandise, to render the life of the inhabitants more comfortable; and that for preventing of abuses, too frequent in colonies, they have taken care to settle the price thereof at a moderate rate, by a general tariff, which dispositions have appeared so wise and necessary that His Majesty is resolved to favour the execution thereof; and knowing that the exchanging of goods not being sufficient to carry on commerce in its full extent, it is necessary in the beginning of establishments of this nature, to give them all possible protection and countenance, His Majesty is resolved to supply the said company with a sum of bank bills, to enable the inhabitants of Louisiana to trade amongst themselves, and bring into France the fruits of their labour, industry and economy, without any risk or charge.”

The effect of the deep interest taken by the Regent in the fortunes of the Company was twofold. It inspired confidence in the mind of the public at home. Of that and of its results special mention will require to be made. It also directed the eyes of suitable colonists to the new El Dorado, and set in motion a stream of emigration from the shores of France. Expeditions were fitted out by Law, and for these numerous vessels were both purchased and built. Everything was done on a scale in keeping with the dignity and magnitude of the Company. One of the pioneers, writing in 1721, has left on record an account of his experiences. The faintheartedness, however, which determined his speedy return, can hardly be attributed to his having been misled as to the character of the country, as he would wish us to believe, but rather to disappointment that the riches in quest of which he had gone could only be acquired by strenuous labour and after suffering many privations. “Our first embarkation for the Mississippi was at St. Malo; we were twelve ships, and carried with us agents, clerks, labourers, some troops, and provisions. After a tedious voyage, we arrived at Hispaniola, in the bay, and took Pensicola from the Spaniards on the Continent, being necessary for securing our navigation into the river, it lying almost at the mouth of it; the bay, which makes the mouth of the river Mississippi, is wider than from Orfordness to the North Foreland, and fuller of banks and shoals; so that it is very difficult for ships of any burthen to get into it, without very skilful pilots, of which there are none as yet; it hath three large openings, and one can hardly judge which is the mouth, though they all three come out of it, except by Mons. D’Ibberville’s Fort, which one hardly sees, till you are just upon it. After you have got into the river, it is still very shoal, though broad, till you get up to Monsieur D’Ibberville’s second Fort, at both of which we are to begin our factories and carry them higher, as our people increases. Our Fort lies in about 28 degrees of latitude; the country is prodigiously sandy; and, I must say, they might as well have sent us to the deserts of Libia, or Barco, to have settled a colony, as thither; we met with no inhabitants near the sea-side, nor indeed for a great many leagues up the river; if you believe some people from Canada, that came to us, their navigation down this river was from 42 degrees to 28, directly south and north; the mountains, water-falls, on the way from Canada, and lakes are incredible; one lake, called Illinois, is so large, that they sailed 40 leagues over it. The different nations up the country, running along the back of the English plantations, I leave to others to describe, that is no part of my business; but the Iroquois, who we were told in France were the inhabitants, are not within a thousand miles of it, nor any other inhabitants. I saw for many hundred miles but here and there some straggling Indians, natives of Florida, and poor, innocent, harmless people. I went up the river in a canoe for some hundred of miles, without seeing the country mend, and after three months stay embarked again for France.”