Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance (19 page)

Mississippi shareholders shuddered at news of the bank’s impending closure, and Law’s newly ascendant rivals were swift to exact vengeance against those who had earlier triumphed. Profit as a result of speculation was now deemed suspect. The sea change was heralded in mid-October with a menacing new ruling that warned of an investigation to root out anyone who had not “acted in good faith,” or who enjoyed an opulence that was “odious to the public and contrary to the good of the State.” Especially offensive to the new lawmakers were less privileged investors who had prospered—the “thousand beggars” to whom Marais had referred. The balance would now be redressed: the victors would be victimized.

So that the profiteers could be identified, investors were ordered to bring their shares to the offices of the now-defunct bank to register them; any unregistered certificates would be worthless. If no evidence of misdealing was discovered, shares would be returned after a week. Those deemed guilty of illicit moneymaking would be penalized by confiscation of large portions of their property. The process was little more than an arbitrary witch hunt.

While nemesis was thus zealously pursued, the Bourse, scathingly condemned as “a riotous assembly,” was shut down. When news of the impending closure broke, Marais visited the market. The reaction, he recalled, was one of bewilderment and utter devastation. “Faces changed. It seemed a defeat, as if a battle had been lost.” Along with thousands of others he took his shares to the bank and was alarmed at the lengthy and apparently chaotic tangle of red tape. After endless form filling and rubber stamping, he wrote, “You take away only a small unsigned slip, on which is your name, the number of your shares and the page in the register. . . . There was much outcry at this procedure, which was not mentioned in the decree, but finally all the shareholders had to go through it; it was suffocating in there and no one knows what will happen.”

Many were so fearful of investigation that they packed their bags with as much portable wealth as they could cram in and made immediate preparations to leave. At least four senior members of Law’s staff absconded, doubtless fearing that they would be subjected to extra-rigorous scrutiny. Vernezobre, one of the head clerks of the bank, fled to Holland, taking several millions belonging to him and others. Angelini, Law’s Italian secretary, appeared in mourning and informed Law that his father had died and begged leave to go to Italy to collect his inheritance. He never returned, spending his remaining years living in comfort on the income from money he had invested in buying property in the Roman
campagna.

Though precipitous, this descent did not mark the end of the Mississippi Company. The anti-Law cabal that had striven for months to demolish Law’s conglomerate clamored to cherry-pick its prime assets. The lucrative rights to revenues from the mint and taxes were their first targets. Meanwhile the company, in common with every other business in the land, was short of cash. To repay various loans and continue to trade, money was urgently required and further drastic action was deemed necessary. At the end of November a new order ruled that every shareholder would be required compulsorily to lend the company 150 livres per share, two-thirds of this amount to be paid in coin, one-third in paper, which was still in limited circulation, despite legislation, because of the shortage of coin. The shares of anyone failing to pay the levy would be annulled. Again, this was news of the worst kind for investors. “It is believed that very many will not be able to pay the sums charged on them by this
arrêt,
having their whole subsistence in actions; and that many who are able to pay, will choose rather to sacrifice their actions,” wrote Pulteney gloomily.

Swamped by suspicion and blame, Law remained isolated and melancholy in his home, with only Katherine to alleviate his distress. Even she, however, could not distract him from the fact that now that the bank had closed and the Mississippi Company was foundering, his position was no longer tenable. He tendered his resignation and asked for permission to leave the country. The regent, playing for time, ignored him. Once again Law was a man condemned, waiting for sentence to be pronounced.

With Katherine’s help he passed his time in trying to regulate his personal financial affairs. During the past weeks these had become hopelessly entwined with those of the company. Law was still a soft touch, and whenever an investor confronted him with a hard-luck story, he invariably offered to help. Many of the financial problems that haunted him in years to come arose from the personal bills he issued at this time to impoverished investors to reimburse them for their losses.

Outwardly he could still, where necessary, summon something of his old élan. When told of his enemies’ rapprochement with the regent, he responded, “The Regent only follows this course to amuse himself, he takes pleasure from it.” Marais watched when Law ventured out to oversee the registration of shares. He arrived at the Company’s offices on November 21 amid the crowds who were depositing their shares. The front seemed convincing: “He was called a thief, a charlatan, a rascal. He carried his head as high as possible, and everyone wanted him to hang it low.” But ten days later, in early December, his spirit was crushed again. There were signs that the Parlement’s return loomed closer and that, as Law had feared, their agreement to cooperate was based on the understanding that he would be hunted down. Yielding to pressure from those who wanted to see Law punished, the regent continued to ignore his repeated, and increasingly urgent, requests to be allowed to leave the country. By December 10 it was murmured that Law had been arrested, or dismissed and banished to his estate at Effiat. Marais, keeping closer watch, knew that he had still not been given permission to leave the capital but saw the strain becoming clearly visible: “He is in a state of great despondency and dismay. A tremendous storm is brewing, and we will soon see the results. Everyone is getting ready to torture him, and even in the bank there is much scandalous talk against him and the Regent.”

With tensions escalating hourly, Law again asked for an audience with the regent, only to be told that he was too ill to see him, an excuse he read as meaning that dismissal and arrest were imminent. A day later the movement to bring down Law gathered still deadlier momentum: “There is no doubt that this time he will succumb, the party is well made,” said Marais, numbering not only the usual confection of the Parlement, financiers, and courtiers against Law, but also Madame de Parabère, the regent’s estranged mistress, who had said she would return to his bed only if Law was ousted. According to Marais, the regent, unable to resist such a challenge, was running after her “like a child.” Faced with such massed opposition, even Law’s most staunch supporter, the Duc de Bourbon, conceded that Law would have to go. The only remaining question was how he should be disposed of and, more crucially, whether his life could be saved.

Pressed by the duc, Orléans acknowledged at last that he would have to move, and quickly. Law was finally granted his audience and suggested that Councillor Le Pelletier de la Houssaye should be promoted to the position of controller general of finance, to help steer the country out of the economic doldrums. The regent was unconvinced, reportedly telling the council, “He did not see among the French anyone who had enough intelligence and insight to succeed him [Law] in the position with a better chance of success.” De la Houssaye agreed, reluctantly, to take office but not while Law remained in Paris, and recommended that he be sent to the Bastille. Orléans ignored this suggestion and instructed Law to prepare to leave. The British diplomat Sutton noted the sudden flurry of activity: “He [Law] goes to see those with whom he has business, he receives people at his home with as much if not more freedom than before. He works on settling his accounts, he gives all the explanations asked of him.”

When the new production of Lully’s opera
Thésée
opened on December 12, there was general astonishment as the assembled
beau monde
realized that the Duc de la Force’s party included John Law, Katherine, and their children (the children, one writer conceded, were “fairly handsomely made”). As far as observers were concerned, to appear so brazenly in public at such a moment of crisis exemplified “English impudence playing his game.” Law the suave, cocksure gambler had apparently returned.

In fact, this was Law’s farewell to Paris. Earlier that day he had had a final audience with the regent. The meeting had been highly charged. “I confess,” Law said, “I have committed many faults. I committed them because I am a man, and all men are liable to error; but I declare to you most solemnly that none of them proceeded from wicked or dishonest motives.” He left Paris with his son John on December 14, heading for his country estate Guermande, near Brie, one of the string of magnificent properties he had acquired but had rarely had time to visit. He planned to wait here for a few days until passports arrived allowing him to leave the country. Katherine and Kate stayed on in Paris, to settle outstanding debts, but he expected them to follow soon. Two days later the Parlement was recalled and the hounding of Law and his family began in earnest.

T
HE
P
RODIGAL’ S
R
ETURN

The Regent desires that I retire to Rome, that has made up my mind. The enemies of the system take offence at seeing me prepared to return to France, and try to trouble me even outside the kingdom.

It costs me nothing to please them, I have always hated work, a well-meant intention to do good to a nation, and be useful to a prince who gave me his confidence; these ideas made me proud and supported me in a disagreeable business, I have come back to myself.

From a letter to the Duc de Bourbon from Law,

December 1720

A
T
G
UERMANDE
, L
AW’S INITIAL SENSE OF RELIEF AT
leaving Paris was shadowed with sorrow and disquiet. His attachment to the regent was unaltered. A letter sent shortly after he left underlines his affection: “It is difficult to decide between the desire that I have to retire from public life to avoid the jealousies of those who Your Royal Highness has charged with finances, and the desire I will always have to contribute to your glory. . . . I had lost all vanity before deciding to ask Your Royal Highness’s permission to retire but I shall always retain my affection for the state, and my attachment for Your RH. Thus when you believe that my opinions could be useful, I will give them freely.”

Law’s royal friends seemed to respond with equal sadness at his departure. Bourbon sent an emotional letter of farewell. “I cannot sufficiently express my grief on your departure. I hope that you do not doubt it and that you rest assured that I will never abandon you. I will never allow any attack on your freedom or your property. I have the Regent’s word on this and I will never allow him to go back on it.” Law was both flattered and relieved by the outpouring—Bourbon and the regent’s support represented his only defense against those straining to see him arrested. “My enemies act with passion but in working against me they work against the interests of the King and people—but I count on the goodness and the protection of the Regent and your lordship—be united, sir. On your union depends the good of the state and my safety in retirement,” he replied.

In reality there was more to Bourbon’s fretting than met the eye. Both he and the regent were keen to protect Law from his adversaries because Law alone knew exactly how much money had been printed and where it had all gone. If he were arrested and tortured into confession, they would be incriminated. Ensuring Law’s safe exile, and preferably his disappearance from France, was thus as much in their interests as his. As Guermande was within easy reach of the capital, Law, also conscious of the danger, pressed Bourbon for his passport. His departure would be in the national interest, he argued: “Perhaps my distance will soften them [his enemies], and time will make them realize the purity of my intentions.”

On the morning of his first day in exile the inquisitive English diplomat Crawford arrived unannounced. The English, always riveted by Law’s dazzling career, were gripped by his sudden decline in fortune, and the press was full of tales of the fall of “that blazing meteor, which, for two years, had kept so many spectators at a gaze . . . a minister far above all that the past age has known, that the present can conceive, or that the future will believe.” Crawford found Law in reasonable spirits, in the company of Lord Mar, a Jacobite friend who in earlier, happier days had persuaded him to lend money to the Pretender and other impecunious exiled Stuart supporters. Law’s links with the Jacobites were now proving an embarrassment to him, implying subversive designs toward England that might damage his reputation on both sides of the Channel: since the signing of the Triple Alliance in 1716, France had undertaken to recognize the Hanoverian George I as England’s rightful ruler. Law hastily refuted the imputations. “I have learned today that I have been accused of having aided the Pretender and been in liaison with Spain. I helped some poor people who needed bread. Among them were some who in earlier times rendered service to me: the Duke of Ormond saved my life,” he wrote hastily to the regent.

Crawford was as captivated as the rest of the English establishment by Law, and hankered to find out as much as he could about his downfall. On the pretext of discussing an outstanding debt, he invited himself to stay for a few days. Law welcomed his visit—talking was therapeutic and, more important, allowed him to ensure that the British authorities heard his version of events firsthand.

In lengthy conversations over the next two days he mulled over his career in France. He was still full of swagger, unapologetic for his actions, intensely proud that the regent had already told him that “he did not need to distance himself too far, and that he could count on his friendship and on his protection against enemies.” He poured scorn on the cabals and conspiracies that had toppled him and defiantly maintained that, thanks to his actions, France was “the best and most flourishing state in the world, and that this is how they are still.” When Crawford grilled him about future plans Law hinted that he did not see himself staying in France much longer. He said he had asked the regent’s permission to have returned to him the 500,000 livres he had originally brought with him from Holland and to settle in Rome.

Soon after Crawford had gone back to Paris to scrawl a detailed account of all he had learned, the Marquis de Lassay and Bourbon’s secretary, de la Faye, arrived, bringing with them, on the orders of the Duc de Bourbon, the passports Law had requested and a substantial sum of money he had not expected. Law was thankful for the passports but refused the money, saying he already had enough for his journey and the immediate future. Later he recalled that he had with him 800 louis d’or, dispatched by one of his staff at the bank because “I didn’t have the value of ten pistoles in my house.” This, together with a diamond or two, were the only valuables he would take. He expected that, as Bourbon and the regent had pledged, the rest of his money would be sent once his accounts were settled. There seemed no reason to doubt their integrity. It was a misjudgment he would regret for the rest of his life.

Preparations for leaving France were made hurriedly. With enemies clamoring for his arrest he had to travel incognito and it was impossible therefore to use his own liveried coaches. Bourbon placed two carriages at his disposal—one of his own, the other belonging to his mistress, the seductive and vivacious Madame de Prie, a woman said to have had “as many graces in spirit as in her face.”

The party left Guermande on the evening of December 17. Law was accompanied by his son, three valets, and several of the duc’s guards, who wore long gray coats over their livery to avoid being recognized. He had two passports, one in the name of du Jardin, the other in his real name, and several letters from friends, including one from the duc pledging his safe passage. The escape route, planned by Bourbon so that fresh horses were waiting where necessary, passed north of Paris toward St. Quentin and Valenciennes and across the border with Flanders to Mons and Brussels.

When news broke the next day that Law had vanished, Parisian gossips aired many imaginative theories as to his whereabouts. Some said he had secretly met the regent at St. Denis, others that he had entered Paris and spent an evening at the Palais Royal or gone into hiding at Chantilly.

In fact, despite the painstaking precautions, the plan had gone awry. The party had been stopped at the border in Valenciennes by the bullying local official who, unfortunately for Law, happened to be the eldest son of Law’s old adversary the Marquis d’Argenson. The
intendant’s
initial confusion at the false passports gave way to relish when he realized the true identity of the passengers. To exact revenge for his father’s fall, he “refused absolutely” to allow Law to pass and pretended that the passports could have been fraudulently acquired. Having confiscated Law’s money and the duc’s letter, he held them while word was sent to Paris. “I made Law very frightened, I arrested him and held him for twenty-four hours, only releasing him when I received formal orders from the court,” he reminisced. In fact, Law recounted later that he was released before the courier returned, but only after “much arguing” and on the understanding that d’Argenson would keep his passport, the letters, and the gold. The gold was never returned. When he asked for it, d’Argenson is said to have pointed out that exporting gold was illegal—according to a regulation introduced by Law.

He arrived in Brussels exhausted, shaken, but relieved to have escaped. Still anxious to remain incognito, he registered in the Hôtel du Grand Miroir in the name of Monsieur du Jardin. But with the whole of Europe on the lookout, the identity of the party was impossible to keep secret. “I had hoped to be able to pass through here without being known, and I sent the name of du Jardin to the gate; but to no avail, they already knew I was arriving, and I have just received visits from the principal people here—a fact which makes me determined to make the shortest possible stay here,” he wrote wearily to Bourbon.

Brussels rolled out the red carpet. He spent the first morning in conference with the French ambassador, the Marquis de Prie, husband of Bourbon’s glamorous mistress, and attended a banquet that evening at which the elite of Brussels was present; the next night he went to the theater, and on entering the auditorium was honored with a standing ovation. “This conduct,” the English diplomat Sutton remarked ominously, “attracts attention.”

In Paris, meanwhile, scandalmongers worked overtime to spread rumors of “an astonishing quantity of wagons filled with gold and silver” that had also been sent across the border to Flanders. Numerous theories were suggested as to what the money was for: buying political support; part of the marriage settlement between an archduchess and the Duc de Chartres; a private fund with which the regent would retire when the king reached his majority. On one thing everyone agreed: “It is certain that Law is part of the agreement with the Regent and as his negotiator he wants for nothing.” In England similar accusations appeared in the press. The
State of Europe
reported, “The general opinion is still that he goes for Rome, where he has remitted part of the booty he has plundered in France, and bought a magnificent palace. He has carried his son with him and left his wife and daughter in France. Letters from Paris told us thereupon that he designed to be divorced in hopes to be made a cardinal. I don’t know whether the red cap is so easily purchased, but there are certain marriages which can be easily dissolved.”

The accusations of misappropriation of French money lingered for years and caused Law great heartache. His letters to Bourbon, Orléans, and Lassay are filled with countless explanations and protestations of innocence: “What could have given rise to this rumour were the dispatches of silver that were made by order and for the service of the state or the India Company. . . . The dispatches were registered in ledgers in Paris and at the frontier. . . . I declare to Your Royal Highness that I have never sent any carriage in secret, nor any remittance apart from those that were publicly made,” he told the Duc de Bourbon. “As far as diamonds are concerned, I had four that together were worth £4,000 and before the ban on exporting diamonds I gave them to my brother to send for sale in England with his, but he gave me one back because it was not of good quality. This was the sole and only diamond, the treasure that I took with me on leaving France.”

The furor he aroused in Brussels made Law uncomfortable, and he decided to move on as quickly as he could. The intention had always been that he would travel south and settle in Italy, in either Venice or Rome. But since his money had been confiscated at the border he spent the next two days raising two hundred pistoles, presumably either through loans or by gaming, before continuing on the journey south, with new passports quickly organized by de Prie. Crossing the Alps in the middle of winter was fraught with peril. Another intrepid traveler, George Berkeley, who made the crossing in the new year of 1714, could have warned him of the terrors: “We were carried in open chairs by men used to scale these rocks and precipices, which in this season are more slippery and dangerous than at other times, and at the best are high, craggy and steep enough to cause the heart of the most valiant man to melt within him. My life often depended on a single step. No one will think that I exaggerate, who considers what it is to pass the Alps on New Year’s Day.”

Added to the hazards of appalling weather and treacherous roads were the perils of infamy and the pain of separation from Katherine. Law continued to use his false passport, but he was frequently recognized, and in several cities disaffected investors in Mississippi shares and those who had held on to French banknotes held him personally responsible for their losses, and pestered him for compensation. According to one biographer, in Cologne the Elector would not allow further horses to be supplied unless Law agreed to exchange his banknotes for coins. Law had none to give and was eventually forced to hand over a personal guarantee that they would be reimbursed.

If anything, the affection Law and Katherine felt for each other had strengthened through the months of worry, and the uncertainty of their predicament and enforced separation was painful to both. From the tenderness he expressed in a letter written en route to Italy, it seems that while Katherine had been greatly distressed by his departure, Law was confident of her ability to endure and make decisions for herself:

I am sensible that you suffer extremely by the resolution I have taken of going to Italy, there was no choice in my situation, Holland is not proper. Your son and I are well, though much fatigued by the bad weather, and bad roads. I desire to have you and Kate with me, yet I can’t well advise you to set out in this season; you will be better able to judge what you are to do, than I can. But I fear you will pass your time disagreeably in France, and I would rather suffer in my affaires; than want your company.