Financial Core

EBOOK MEMOIRS OF EXTRAORDINARY POPULAR DELUSIONS AND THE MADNESS OF CROWDS *** [Illustration: THE MISSISSIPPI SCHEME: GARDENS OF THE HOTEL DE SOISSONS, 1720.] MEMOIRS OF EXTRAORDINARY POPULAR DELUSIONS. VOLUME I. [Illustration: THE BUBBLERS' ARMS--PROSPERITY.] LONDON: OFFICE OF THE NATIONAL ILLUSTRATED LIBRARY, 227 STRAND. 1852. MEMOIRS OF EXTRAORDINARY POPULAR DELUSIONS AND THE MADNESS OF CROWDS. BY CHARLES MACKAY, LL.D. AUTHOR OF "EGERIA," "THE SALAMANDRINE," ETC. ILLUSTRATED WITH NUMEROUS ENGRAVINGS. VOL. I. N'en déplaise à ces fous nommés sages de Grèce, En ce monde il n'est point de parfaite sagesse; Tous les hommes sont fous, et malgré tous leurs soîns Ne diffèrent entre eux que du plus ou du moins. BOILEAU. LONDON: OFFICE OF THE NATIONAL ILLUSTRATED LIBRARY, 227 STRAND. 1852. LONDON: PRINTED BY ROBSON, LEVEY, AND FRANKLYN, Great New Street, Fetter Lane. CONTENTS. THE MISSISSIPPI SCHEME.

Religious matters have been purposely excluded as incompatible with the limits prescribed to the present work; a mere list of them would alone be sufficient to occupy a volume. [Illustration: JOHN LAW.] MONEY MANIA.--THE MISSISSIPPI SCHEME. Some in clandestine companies combine; Erect new stocks to trade beyond the line; With air and empty names beguile the town, And raise new credits first, then cry 'em down; Divide the empty nothing into shares, And set the crowd together by the ears.--_Defoe_. The personal character and career of one man are so intimately connected with the great scheme of the years 1719 and 1720, that a history of the Mississippi madness can have no fitter introduction than a sketch of the life of its great author John Law. Historians are divided in opinion as to whether they should designate him a knave or a madman. Both epithets were unsparingly applied to him in his lifetime, and while the unhappy consequences of his projects were still deeply felt. Posterity, however, has found reason to doubt the justice of the accusation, and to confess that John Law was neither knave nor madman, but one more deceived than deceiving, more sinned against than sinning. He was thoroughly acquainted with the philosophy and true principles of credit.

Every person interested in the success of the project endeavoured to draw a knot of listeners around him, to whom he expatiated on the treasures of the South American seas. Exchange Alley was crowded with attentive groups. One rumour alone, asserted with the utmost confidence, had an immediate effect upon the stock. It was said that Earl Stanhope had received overtures in France from the Spanish government to exchange Gibraltar and Port Mahon for some places on the coast of Peru, for the security and enlargement of the trade in the South Seas. Instead of one annual ship trading to those ports, and allowing the king of Spain twenty-five per cent out of the profits, the company might build and charter as many ships as they pleased, and pay no per centage whatever to any foreign potentate. "Visions of ingots danced before their eyes," and stock rose rapidly. On the 12th of April, five days after the bill had become law, the directors opened their books for a subscription of a million, at the rate of 300l. for every 100l. capital. Such was the concourse of persons of all ranks, that this first subscription was found to amount to above two millions of original stock. It was to be paid at five payments, of 60l. each for every 100l. In a few days the stock advanced to three hundred and forty, and the subscriptions were sold for double the price of the first payment.

How this immense profit was to be obtained, he did not condescend to inform them at that time, but promised that in a month full particulars should be duly announced, and a call made for the remaining 98l. of the subscription. Next morning, at nine o'clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when he shut up at three o'clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2000l. He was philosopher enough to be contented with his venture, and set off the same evening for the Continent. He was never heard of again. Well might Swift exclaim, comparing Change Alley to a gulf in the South Sea: "Subscribers here by thousands float, And jostle one another down, Each paddling in his leaky boat, And here they fish for gold and drown. Now buried in the depths below, Now mounted up to heaven again, They reel and stagger to and fro, At their wit's end, like drunken men. Meantime, secure on Garraway cliffs, A savage race, by shipwrecks fed, Lie waiting for the foundered skiffs, And strip the bodies of the dead." Another fraud that was very successful was that of the "Globe _Permits_," as they were called.

There were nearly a hundred different projects, each more extravagant and deceptive than the other, To use the words of the _Political State_, they were "set on foot and promoted by crafty knaves, then pursued by multitudes of covetous fools, and at last appeared to be, in effect, what their vulgar appellation denoted them to be--bubbles and mere cheats." It was computed that near one million and a half sterling was won and lost by these unwarrantable practices, to the impoverishment of many a fool, and the enriching of many a rogue. [17] Coxe's _Walpole_, Correspondence between Mr. Secretary Craggs and Earl Stanhope. Some of these schemes were plausible enough, and, had they been undertaken at a time when the public mind was unexcited, might have been pursued with advantage to all concerned. But they were established merely with the view of raising the shares in the market. The projectors took the first opportunity of a rise to sell out, and next morning the scheme was at an end. Maitland, in his _History of London_, gravely informs us, that one of the projects which received great encouragement, was for the establishment of a company "to make deal boards out of saw-dust." This is no doubt intended as a joke; but there is abundance of evidence to shew that dozens of schemes, hardly a whit more reasonable, lived their little day, ruining hundreds ere they fell.