Chapter II: Part 2

These measures did not bring any more gold and silver to the bank. The necessity of using bank-notes in payment of over three hundred francs gave them a certain forced employment, but did not procure them confidence. Notes were used for large payments, but coin was amassed secretly as a value more real and more assured. The creditors of the state ceased to carry their receipts to the Rue Quincampoix, because they already distrusted the shares; they could not decide to buy real estate, because the price had been quadrupled; they suffered the most painful anxiety, and in their turn embarrassed the holders of shares who needed the receipts to pay their instalments of one-tenth. The catastrophe approached, and nothing could avert it, unless some magic wand could give the company an income of four or five hundred millions a year, which was now only seventy or eighty millions.

Law, adding measures to measures, at last prohibited the circulation of gold, because this metal was, by its convenience, a rival of bank-notes infinitely more dangerous than silver. He then announced an approaching reduction in the value of coin, which he had raised by a decree in February, only to reduce it again in a short time. The mark, in silver, raised from sixty to eighty francs, was reduced to seventy on April 1st, and sixty-five on May 1st. But this measure was utterly insufficient to bring it to the bank.

The situation grew worse every day; the issue of notes to pay for the shares presented at the bank had risen to two billions six hundred ninety-six millions; their depreciation increased; and creditors of every description, being paid in paper which was at a discount of 60 per cent., complained bitterly of the theft authorized by law.

In this juncture there remained but one step to be taken. As the necessary sacrifice had not been made in the first place, and the shares abandoned to their fate in order to protect the notes, both must now be sacrificed, shares and notes together, in order to finish this wicked fiction. The falsehood of this nominal value, which obliged men to receive at par what was depreciated 30 or 40 per cent., could not be prolonged. The immediate reduction of the nominal value of the shares and bank-notes was the only resource. Sacrifices cannot be too hastily made when they are inevitable.

M. d'Argenson, although dismissed from the treasury, still remained keeper of the seals; he had risen in the esteem of the Regent as Law had declined, and he advised the reduction of the nominal value of the shares and notes as an urgent necessity. Law, who saw in this reduction an avowal of the fiction in the legal values, and a blow which must hasten the fall of the "System," opposed it with his whole strength. Nevertheless, M. d'Argenson prevailed. On May 21, 1720, a decree, which remains famous in the history of the "System," advertised the progressive reduction in the value of shares and notes. This reduction was to begin on the very day of the publication of the decree, and to continue from month to month until December 1st. At this last term the shares were to be estimated at five thousand francs, and a bank-note of ten thousand francs at five thousand; one of a thousand at five hundred, etc. The notes were thus reduced 50 per cent., and the shares only four-ninths per cent. Law, although opposed to the decree, consented to promulgate it.

Scarcely was it published when a fearful clamor was raised on all sides. The reduction was called a bankruptcy; the government was reproached with being the first to throw discredit upon the values which it had created, with having robbed its own creditors, a number of whom had just been paid in bank-notes, even as late as the preceding day--in a word, with assailing the fortunes of all the citizens. The crowd wished to sack Law's hotel and to tear him in pieces. Nothing that could have happened would have produced a greater clamor; but in times like those it was not only necessary not to fear these clamors: it was even a duty to defy them.

The reply to the complaints would have soon been evident to the intelligence of everybody. Without doubt the creditors of the state, and some private individuals, who had been paid in bank-notes, were half ruined by the reduction, but this was not the fault of the decree of May 21st--the real reduction was long before this; the decree only stated a loss already experienced, and the notes were worth still less than the decree declared. Because a number of creditors had been ruined by the falsity of nominal values, was it a reason to continue the fiction that it might extend the ruin? On the contrary, it was necessary to put an end to it, to save others from becoming victims. The official declaration of the fact, although it was known before, must produce a shock and hasten the discredit, but it was of little importance that it was hastened, since it was inevitable.

The public thought Law the author of this measure, advised exclusively by M. d'Argenson, and he became the sole object of hatred. The Parliament, making common cause with the public, thought it a good opportunity to take up arms. It did not perceive, in its blind hatred of the "System," that it was going to render a service to its author, and that to declare itself against the reduction of the bank-notes was to maintain that the values created by Law had a solid foundation. It assembled on May 27th to demand a revocation of the decree of the 21st. At the very moment when it was deliberating, the Regent sent one of his officers to prohibit all discussion, announcing the revocation of the decree.

The Regent had the weakness to yield to the public clamor. Had the decree been bad, its revocation would have been worse. To declare that the shares and notes were still worth what they purported to be availed nothing, for no one believed it, and their credit was not restored by it. A legal falsehood was reaffirmed, and, without rendering any service to those who were already ruined, the ruin of those who were obliged to receive the notes at their nominal value was insured. The decree of May 21st, wise if it had been sustained, became disastrous as soon as it was revoked. Its only effect was to hasten the general discredit, without the essential advantage of reëstablishing a real, legal value.

We have just said that the bank was not obliged to pay notes of over one hundred francs. It paid them slowly, and employed all imaginable artifices to avoid the payment of them. Nevertheless, its coffers were almost exhausted, and it was necessary to authorize it to confine its disbursements to the payment of notes of ten francs only. The people rushed to the bank in crowds to realize their notes of ten francs, fearing that these would soon share the fate of those of one hundred. The pressure was so great that three persons were suffocated. The indignant mob, ready for any excess, already menaced the house of Law. He fled to the Palais Royal to seek an asylum near the Regent. The mob followed him, carrying the bodies of the three who had been suffocated. The carriage which had just conveyed him was broken to pieces, and it was feared that even the residence of the Regent would not be respected.

The gates of the court of the Palais Royal had been closed; the Duke of Orléans, with great presence of mind, ordered them to be opened. The crowd rushed into the court and suddenly stopped upon the steps of the palace. Leblanc, the chief of police, advanced to those who bore the corpses, and said, "My friends, go place these bodies in the Morgue, and then return to demand your payment." These words calmed the tumult; the bodies were carried away and the sedition was quelled.

Severities against the rich "Mississippians" were commenced in this same month of October. For a long time it had been suspected that the government, following an ancient usage, would deprive them, by means of _visas_ and _chambres-ardentes_, of what they had acquired by stock-jobbing. A list was made of those known to have speculated in shares. A special commission arbitrarily placed on this list the names of those whom public opinion designated as having enriched themselves by speculation in paper. They were ordered to deposit a certain number of shares at the offices of the company, and to purchase the required number if they had sold their own. The "realizers" were thus brought back by force to the company which they had deserted. Eight days were given to speculators of good faith to make, voluntarily, the prescribed deposit. To prevent flight from the country, it was prohibited, under pain of death, to travel without a passport.

These measures increased still more the decline of the shares. All those whose names were not upon the list of rich speculators, and who could not tell what became of the shares not yet deposited, hastened to dispose of all they retained.

The "System" wholly disappeared in November, 1720, one year after its greatest credit. All the notes were converted into annuities or preferred shares, and all the shares were deposited with the company. Then a general visa was ordered, consisting of an examination of the whole mass of shares, with the purpose of annulling the greater portion of those which belonged to the enriched stock-jobbers.

Law, foreseeing the renewed rage which the visa would excite, determined to leave France. The hatred against him had been so violent since the scene of July 17th that he had not dared to quit the Palais Royal. The following fact will give an idea of the fury excited against him: A hackman, having a quarrel with the coachman of a private carriage, cried out, "There is Law's carriage!" The crowd rushed upon the carriage, and nearly tore in pieces the coachman and his master before it could be undeceived.

Law demanded passports of the Duke of Orléans, who granted them immediately. The Duke of Bourbon, made rich by the "System," felt under obligations to Law, and offered money and the carriage of Madame de Prie, his mistress. Law refused the money and accepted the carriage. He repaired to Brussels, taking with him only eight hundred louis. Scarcely was he gone when his property, consisting of lands and shares, was sequestrated.

FOOTNOTES:

[27] A company headed by Anthony Crozat. It was chartered in 1712, and formed a commercial monopoly in Louisiana.--ED.

PRINCE EUGENE VANQUISHES THE TURKS

SIEGE AND BATTLE OF BELGRAD

A.D. 1717

PRINCE EUGENE OF SAVOY

This struggle marked the disastrous end of a determined effort of
the Ottoman empire to recover lost possessions. It also resulted in
giving all Hungary, with Belgrad and a part of Servia, permanently
to Austria. After their last great invasion of Austrian territory
and their crushing defeat by Sobieski and the Imperialists (1683),
the Turks suffered many losses of territory at the hands of various
European powers. In 1696 Peter the Great took from them Azov, an
important entrance to the Black Sea. By the treaty of the Pruth
(1711) this, with other Russian possessions, was again ceded to the
Turks.

The temporary success led them to seek further recoveries. Their aim
was chiefly directed against Austria and Venice, which had
aggrandized themselves at the expense of the Moslem power. Turkish
victories caused the Venetians to call in the aid of Austria. The
Austrian intervention not only saved Venice, but once more checked
the Turkish arms.

The Emperor Charles VI appointed as leader of the Austrian forces
Prince Eugene of Savoy, already distinguished through a long series
of wars as one of the greatest soldiers of his time, the companion
of Marlborough. In 1716 Eugene defeated the grand vizier at
Temesvar, and in the following year took Belgrad and destroyed the
Turkish army, as told in his own racy and cavalier style.

From all sides men flocked to serve under me. There were enough to form a squadron of princes and volunteers. Among the former a Prince of Hesse, two of Bavaria, a Bevern, a Culenbach, one of Wuertemberg, two of Ligne, one of Lichtenstein, of Anhalt-Dessau, the Count of Charolai, the Princes of Dombes, of Marsillac, of Pons, etc.

The Emperor made me a present of a magnificent diamond crucifix, and strongly assured me that all my victories came, and would come, from God; this was getting rid of gratitude toward me; and I set off for Futack, where I assembled my army toward the end of May, 1717.

It was necessary to possess myself of Belgrad, which for three centuries had been so many times taken and retaken. Luckily, I did not find there the cordelier, John de Capistran, who, with the crucifix in his hand, and in the hottest part of the fire during the whole day, defended the place so well: and Hunyady, who commanded there, against Mahomet II in 1456. Hunyady died of his wounds. The Emperor lost Belgrad; Mahomet lost an eye, and the cordelier was canonized.

Unfortunately the Grand Seignior had but too well replaced the wrong-headed grand vizier, who had been killed. It was the Pacha of Belgrad, who supplied the vacancy, called Hastchi Ali, who made the most judicious arrangements for the preservation of the place, and caused me a great deal of embarrassment. On June 10th I passed the Danube: my volunteer princes threw themselves into boats to arrive among the first, and to charge the spahis with some squadrons of Mercy, which had already passed below Panczova, to protect the disembarkation of some, and the bridge constructed for the others, with eighty-four boats. On the 19th I went, with a large escort, to reconnoitre the place where I wished to pitch my camp. Twelve hundred spahis rushed upon us with unequalled fury, and shouted "_Allah! Allah!_" I know not why one of their officers broke through a squadron which was in front, to find me at the head of the second, where I placed myself from prudential motives, having many orders to give. He missed me, and I was going to obtain satisfaction with my pistol when a dragoon at my side knocked him under his horse. On the same day we had a naval combat, which lasted two hours; and our saics having the advantage I remained master of the operations on the Danube. On the 20th I continued working on the lines of contravallation, under a dreadful fire from the place. Toward the end of June I advanced my camp so near Belgrad that the bullets were constantly flying over my head. A storm destroyed all my bridges: and, but for the courage of a Hessian officer, in a redoubt, I do not know how I should have been able to reëstablish the one upon the Save.

Wishing to take the place on the side next the water, I caused a fort at the mouth of the Donawitz to be attacked by Mercy, who fell from his horse, in an apoplectic fit. They carried him away, thinking him dead. He was afterward successfully cured; but, being informed of his accident I went to replace him, and the fort was taken. The Prince of Dombes narrowly escaped being killed at my side by a bullet which made my horse rear. Marcilly was killed in bravely defending a post which I had charged him to intrench. He demanded succor from Rudolph Heister, who refused him, and who was deservedly killed as a punishment for his cowardice, by a cannon-ball which reached him behind his chevaux-de-frise. I arrived, accidentally at first, with a large escort; I sent for a large detachment; I halted, and completely beat the janizaries, leaving, indeed, five hundred men killed upon the field, Taxis, Visconti, Suger, etc. The Pacha of Roumelia, the best officer of the Mussulmans, lost his life also.

On July 22d my batteries were finished. I bombarded, burned, and destroyed the place so much that they would have capitulated if they had not heard that the grand vizier had arrived at Missa, on the 30th, with two hundred fifty thousand men.

On August 1st we saw them on the heights which overlooked my camp, extending in a semicircle from Krotzka as far as Dedina. The Mussulmans formed the most beautiful amphitheatre imaginable, very agreeable to look at, excellent for a painter, but hateful to a general. Enclosed between this army and a fortress which had thirty thousand men in garrison, the Danube on the right, and the Save on the left, my resolution was formed. I intended to quit my lines and attack them, notwithstanding their advantage of ground: but the fever, which had already raged in my army, did not spare me. Behold me seriously ill, and in my bed, instead of being at the head of my troops, whom I wished to lead the road to honor.

I can easily conceive that this caused a little uneasiness at the court, in the city, and even in my army. It required boldness and good-fortune to extricate one's self from it. The general who might have succeeded me would, and indeed, almost must, have thought that he should be lost if he retreated, and be beaten if he did not retreat. Every day made our situation worse. The numerous artillery of the Turks had arrived on the heights of which I have spoken. We were so bombarded with it, as well as with that from the garrison, that I knew not where to put my tent, for, in going in and out, many of my domestics had been killed. In the small skirmishes which we often had with the spahis, my young volunteers did not fail to be among them, discharging their pistols, though cannon-balls intermingled also. And one day, D'Esrade, the governor of the Prince of Dombes, had his leg shot off by his side, and one of his pages was killed. All our princes, whom I have enumerated above, distinguished themselves, and loved me like their father.

I had caused the country in the rear of the grand vizier's army to be ravaged: but these people, as well as their horses and especially their camels, will live almost upon nothing. Scarcely an hour passed in which I did not lose a score of men by the dysentery, or by the cannon from the lines, which the infidels advanced more and more every night toward my intrenchments. I was less the besieger than the besieged. My affairs toward the city went on better. A bomb which fell into a magazine of powder completed its destruction and occasioned the loss of three thousand men.

At length I recovered from my illness; and, on August 15th, notwithstanding the ill-advice of persons who were not fond of battles, the matter was fixed. I calculated that listlessness and despair would produce success.

I did not sleep, as Alexander did before the battle of Arbela; but the Turks did, who were no Alexanders: opium and predestination will make philosophers of us. I gave brief and explicit instructions touching whatever might happen. I quitted my intrenchments one hour after midnight: the darkness first and then a fog rendered my first undertakings mere chance. Some of my battalions, on the right wing, fell, unintentionally, while marching, into a part of the Turkish intrenchments. A terrible confusion among them, who never have either advanced posts or spies; and, among us, a similar confusion, which it would be impossible to describe: they fired from the left to the centre, on both sides, without knowing where. The janizaries fled from their intrenchments: I had time to throw into them fascines and gabions, to make a passage for my cavalry who pursued them, I know not how: the fog dispersed and the Turks perceived a dreadful breach. But for my second line, which I ordered to march there immediately, to stop this breach, I should have been lost. I then wished to march in order: impossible! I was better served than I expected. La Colonie, at the head of his Bavarians, rushed forward and took a battery of eighteen pieces of cannon. I was obliged to do better than I wished. I sustained the Bavarians; and the Turks, after having fled to the heights, lost all the advantages of their ground. A large troop of their cavalry wished to charge mine, which were too much advanced; a whole regiment was cut in pieces; but two others, who arrived opportunely to their aid, decided the victory. It was then that I received a cut from a sabre; it was, I believe, my thirteenth wound, and probably my last. Everything was over at eleven o'clock in the morning. Viard, during the battle, retained the garrison of Belgrad, which capitulated the same day. I forgot that there was no Boufflers there: I played the generous man: I granted the honors of war to the garrison, who, not knowing what they meant, did not avail themselves of them. Men, women, and children, chariots and camels, issued forth all at once, pell-mell, by land and by water.

At Vienna the devotees cried out, "A miracle!" those who envied me cried out, "Good-fortune!" Charles VI was, I believe, among the former: and Guido Stahrenberg among the latter. I was well received, as might have been expected.

Here is my opinion respecting this victory, in which I have more cause for justification than for glory; my partisans have spoken too favorably of it, and my enemies too severely. They would have had much more reason to propose cutting off my head on this occasion than on that of Zenta, for there I risked nothing. I was certain of conquering: but here, not only I might have been beaten, but totally ruined and lost in a storm, for the enemy's artillery to the left, on the shores of the Danube, had destroyed my bridges. I was, indeed, superior in saics and in workmen and artillerymen to protect or repair them: I had a corps also at Semlin.

Could I anticipate the tardiness or disinclination of the authorities who engaged in this war, where there were so many vices of the interior in administration, and so much ignorance in the chiefs of the civil and commissariat departments? Hence it was that I was in want of everything necessary to commence the siege, and to take Belgrad before the arrival of the grand vizier, and which hindered me afterward from checking him on the heights. This, however, I should have done--but for my cursed fever--before his artillery arrived. And then that unlucky dysentery, which put my army into the hospital, or rather into the burying-ground, for each regiment had one behind its camp--could I anticipate that also? These were the two motives which induced me to attack, and to risk all or nothing, for I was as certainly lost one way as another. I threw up intrenchments against intrenchments: I knew a little more upon that subject than my comrade the grand vizier; and I had plenty of troops in health to guard them. I obliged him for want of provisions--for, as I have already said, I caused all the country in his rear to be ravaged--to decamp, and, consequently, Belgrad to surrender. Thus, if this manuscript should be read, give me neither praise, my dear reader, nor blame. After all, I extricated myself, perhaps, as Charles VI said, his confessor, and the pious souls who trust in God, and who wished me at the Devil, by the protection of the Virgin Mary, for the battle was fought on Assumption Day.

Europe was getting embroiled elsewhere. Some charitable souls advised the Emperor to send me to negotiate at London, reckoning that they might procure for another the easy glory of terminating the war.

I was not such a fool as to fall into this snare, and I set off for Hungary at the commencement of June, with a fine sword worth eighty thousand florins which the Emperor had presented to me.

BURSTING OF THE SOUTH SEA BUBBLE

A.D. 1720

LOUIS ADOLPHE THIERS

Never, perhaps, was there a time when rash monetary speculation
seized with a firmer grip upon people and governments than during
the early part of the eighteenth century. Concurrently with the
delusive "Mississippi Scheme" of John Law (1717), which resulted in
financial panic in France, a similarly disastrous enterprise was
carried on in England. This was the attempt to turn the South Sea
Company into a concern for enriching quickly both its private and
its governmental investors. The collapse of this scheme, in the same
year as that of Law's, caused even more serious and widespread ruin.

Thiers' relation of the origin and development of the South Sea
Company, of the forming and collapse of the "bubble," and of the
spread of the speculative mania which manifested itself in so many
other extravagant projects, makes a fitting counterpart to this
historian's narrative of the rise and fall of the contemporary
scheme in his own country.

The South Sea Company was originated by the celebrated Harley, Earl of Oxford, in the year 1711, with the view of restoring public credit, which had suffered by the dismissal of the Whig ministry, and of providing for the discharge of the army and navy debentures and other parts of the floating debt, amounting to nearly ten millions sterling. A company of merchants, at that time without a name, took his debt upon themselves, and the government agreed to secure them for a certain period the interest of 6 per cent. To provide for this interest, amounting to six hundred thousand pounds per annum, the duties upon wines, vinegar, India goods, wrought silks, tobacco, whale-fins, and some other articles were rendered permanent. The monopoly of the trade to the South Seas was granted, and the company, being incorporated by act of Parliament, assumed the title by which it has ever since been known. The minister took great credit to himself for his share in this transaction, and the scheme was always called by his flatterers "the Earl of Oxford's masterpiece."

Even at this early period of its history the most visionary ideas were formed by the company and the public of the immense riches of the eastern coast of South America. Everybody had heard of the gold and silver mines of Peru and Mexico; everyone believed them to be inexhaustible, and that it was only necessary to send the manufactures of England to the coast to be repaid a hundred-fold in gold and silver ingots by the natives. A report industriously spread, that Spain was willing to concede four ports on the coasts of Chile and Peru for the purposes of traffic, increased the general confidence, and for many years the South Sea Company's stock was in high favor.

Philip V of Spain, however, never had any intention of admitting the English to a free trade in the ports of Spanish America. Negotiations were set on foot, but their only result was the _assiento_ contract, or the privilege of supplying the colonies with negroes for thirty years, and of sending once a year a vessel, limited both as to tonnage and value of cargo, to trade with Mexico, Peru, or Chile. The latter permission was only granted upon the hard condition that the King of Spain should enjoy one-fourth of the profits, and a tax of 5 per cent. on the remainder. This was a great disappointment to the Earl of Oxford and his party, who were reminded, much oftener than they found agreeable, of the

"_Parturiunt montes, nascitur ridiculus mus._"

But the public confidence in the South Sea Company was not shaken. The Earl of Oxford declared that Spain would permit two ships, in addition to the annual ship, to carry out merchandise during the first year; and a list was published in which all the ports and harbors of these coasts were pompously set forth as open to the trade of Great Britain. The first voyage of the annual ship was not made till the year 1717, and in the following year the trade was suppressed by the rupture with Spain.

The name of the South Sea Company was thus continually before the public. Though their trade with the South American states produced little or no augmentation of their revenues, they continued to flourish as a monetary corporation. Their stock was in high request, and the directors, buoyed up with success, began to think of new means for extending their influence. The Mississippi scheme of John Law, which so dazzled and captivated the French people, inspired them with an idea that they could carry on the same game in England. The anticipated failure of his plans did not divert them from their intention. Wise in their own conceit, they imagined they could avoid his faults, carry on their schemes forever, and stretch the cord of credit to its extremest tension without causing it to snap asunder.

It was while Law's plan was at its greatest height of popularity, while people were crowding in thousands to the Rue Quincampoix, and ruining themselves with frantic eagerness, that the South Sea directors laid before Parliament their famous plan for paying off the national debt. Visions of boundless wealth floated before the fascinated eyes of the people in the two most celebrated countries of Europe. The English commenced their career of extravagance somewhat later than the French; but as soon as the delirium seized them they were determined not to be outdone.

Upon January 22, 1720, the House of Commons resolved itself into a committee of the whole house to take into consideration that part of the King's speech at the opening of the session which related to the public debts, and the proposal of the South Sea Company toward the redemption and sinking of the same. The proposal set forth at great length, and under several heads, the debts of the state, amounting to thirty million nine hundred eighty-one thousand seven hundred twelve pounds, which the company was anxious to take upon itself, upon consideration of 5 per cent. per annum, secured to it until midsummer, 1727; after which time the whole was to become redeemable at the pleasure of the legislature, and the interest to be reduced to 4 per cent. It was resolved, on February 2d, that the proposals were most advantageous to the country. They were accordingly received, and leave was given to bring in a bill to that effect.

Exchange Alley was in a fever of excitement. The company's stock, which had been at 130 the previous day, gradually rose to 300, and continued to rise with the most astonishing rapidity during the whole time that the bill in its several stages was under discussion. Sir Robert Walpole was almost the only statesman in the House who spoke out boldly against it. He warned them, in eloquent and solemn language, of the evils that would ensue. It countenanced, he said, "the dangerous practice of stock-jobbing, and would divert the genius of the nation from trade and industry. It would hold out a dangerous lure to decoy the unwary to their ruin, by making them part with the earnings of their labor for a prospect of imaginary wealth. The great principle of the project was an evil of first-rate magnitude; it was to raise artificially the value of the stock by exciting and keeping up a general infatuation, and by promising dividends out of funds which could never be adequate to the purpose."

The bill was two months in its progress through the House of Commons. During this time every exertion was made by the directors and their friends, and more especially by the chairman, the noted Sir John Blunt, to raise the price of the stock. The most extravagant rumors were in circulation. Treaties between England and Spain were spoken of whereby the latter was to grant a free trade to all her colonies; and the rich produce of the mines of Potosi-la-Paz was to be brought to England until silver should become almost as plentiful as iron. For cotton and woollen goods, which could be supplied to them in abundance, the dwellers in Mexico were to empty their golden mines. The company of merchants trading to the South Seas would be the richest the world ever saw, and every hundred pounds invested in it would produce hundreds per annum to the stockholder. At last the stock was raised by these means to near 400, but, after fluctuating a good deal, settled at 330, at which price it remained when the bill passed the Commons by a majority of 172 against 55.

Contrary to all expectation South Sea stock fell when the bill received the royal assent. On April 7th the shares were quoted at 310, and on the following day at 290. Already the directors had tasted the profits of their scheme, and it was not likely that they should quietly allow the stock to find its natural level without an effort to raise it. Immediately their busy emissaries were set to work. Every person interested in the success of the project endeavored to draw a knot of listeners round him, to whom he expatiated on the treasures of the South American seas. Exchange Alley was crowded with attentive groups. One rumor 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 25 per cent. out of the profits, the company might build and charter as many ships as it pleased, and pay no percentage whatever to any foreign potentate.

"Visions of ingots danced before their eyes," and stock rose rapidly. On April 12th, five days after the bill had become law, the directors opened their books for a subscription of a million, at the rate of three hundred pounds for every one hundred pounds 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 in five payments, of sixty pounds each for every one hundred pounds. In a few days the stock advanced to 340, and the subscriptions were sold for double the price of the first payment. To raise the stock still higher it was declared in a general court of directors, on April 21st, that the midsummer dividend should be 10 per cent., and that all subscriptions should be entitled to the same. These resolutions answering the end designed, the directors, to improve the infatuation of the moneyed men, opened their books for a second subscription of a million, at 4 per cent. Such was the frantic eagerness of people of every class to speculate in these funds that in the course of a few hours no less than a million and a half was subscribed at that rate.

In the mean time innumerable joint-stock companies started up everywhere. They soon received the name of "bubbles," the most appropriate that imagination could devise. The populace are often most happy in the nicknames they employ. None could be more apt than that of "bubbles." Some of them lasted for a week or a fortnight, and were no more heard of, while others could not even live out that short span of existence. Every evening produced new schemes and every morning new projects. The highest of the aristocracy were as eager in this hot pursuit of gain as the most plodding jobber in Cornhill. The Prince of Wales became governor of one company, and is said to have cleared forty thousand pounds by his speculations. The Duke of Bridgewater started a scheme for the improvement of London and Westminster, and the Duke of Chandos another. 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.

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 a 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 sawdust." This is, no doubt, intended as a joke; but there is abundance of evidence to show that dozens of schemes, hardly a whit more reasonable, lived their little day, ruining hundreds ere they fell. One of them was for a wheel for perpetual motion--capital one million; another was "for encouraging the breed of horses in England, and improving of glebe and church lands, and repairing and rebuilding parsonage and vicarage houses." Why the clergy, who were so mainly interested in the latter clause, should have taken so much interest in the first, is only to be explained on the supposition that the scheme was projected by a knot of the fox-hunting parsons, once so common in England. The shares of this company were rapidly subscribed for.

But the most absurd and preposterous of all, and which showed, more completely than any other, the utter madness of the people, was one started by an unknown adventurer, entitled "_A Company for carrying on an Undertaking of Great Advantage, but Nobody to know What It Is_." Were not the facts stated by scores of credible witnesses, it would be impossible to believe that any person could have been duped by such a project. The man of genius who essayed this bold and successful inroad upon public credulity merely stated in his prospectus that the required capital was half a million, in five thousand shares of one hundred pounds each, deposit two pounds per share. Each subscriber paying his deposit would be entitled to one hundred pounds per annum per share. 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 ninety-eight pounds 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 two thousand pounds. 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.

It is time, however, to return to the great South Sea gulf, that swallowed the fortunes of so many thousands of the avaricious and the credulous. On May 29th the stock had risen as high as 500, and about two-thirds of the government annuitants had exchanged the securities of the state for those of the South Sea Company. During the whole of the month of May the stock continued to rise, and on the 28th it was quoted at 550. In four days after this it took a prodigious leap, rising suddenly from 550 to 890. It was now the general opinion that the stock could rise no higher, and many persons took that opportunity of selling out, with a view of realizing their profits. Many noblemen and persons in the train of the King, and about to accompany him to Hanover, were also anxious to sell out. So many sellers and so few buyers appeared in the alley on June 3d that the stock fell at once from 890 to 640. The directors were alarmed and gave their agents orders to buy. Their efforts succeeded. Toward evening confidence was restored, and the stock advanced to 750. It continued at this price with some slight fluctuation, until the company closed its books on June 22d.

It would be needless and uninteresting to detail the various arts employed by the directors to keep up the price of stock. It will be sufficient to state that it finally rose to 1000 per cent. It was quoted at this price in the commencement of August. The bubble was then full-blown and began to quiver and shake preparatory to its bursting.

Many of the government annuitants expressed dissatisfaction against the directors. They accused them of partiality in making out the lists for shares in each subscription. Further uneasiness was occasioned by its being generally known that Sir John Blunt, the chairman, and some others had sold out. During the whole of the month of August the stock fell, and on September 2d it was quoted at 700 only.

Day after day it continued to fall, until it was as low as 400. In a letter dated September 13th, from Mr. Broderick, M.P., to Lord Chancellor Middleton, and published in Coxe's _Walpole_, the former says: "Various are the conjectures why the South Sea directors have suffered the cloud to break so early. I made no doubt but they would do so when they found it to their advantage. They have stretched credit so far beyond what it would bear that specie proves insufficient to support it. Their most considerable men have drawn out, securing themselves by the losses of the deluded, thoughtless numbers, whose understandings have been overruled by avarice and the hope of making mountains out of mole-hills. Thousands of families will be reduced to beggary. The consternation is inexpressible--the rage beyond description, and the case altogether so desperate that I do not see any plan or scheme so much as thought of for averting the blow; so that I cannot pretend to guess what is next to be done." Ten days afterward, the stock still falling, he writes: "The company have yet come to no determination, for they are in such a wood that they know not which way to turn. By several gentlemen lately come to town, I perceive the very name of a South Sea man grown abominable in every country. A great many goldsmiths are already run off, and more will; daily I question whether one-third, nay, one-fourth, of them can stand it."

At a general court of the Bank of England, held soon afterward, the governor informed them of the several meetings that had been held on the affairs of the South Sea Company, adding that the directors had not yet thought fit to come to any decision upon the matter. A resolution was then proposed, and carried without a dissentient voice, empowering the directors to agree with those of the South Sea to circulate their bonds to what sum and upon what terms and for what time they might think proper. Thus both parties were at liberty to act as they might judge best for the public interest.

Books were opened at the bank for subscription of three millions for the support of public credit, on the usual terms of 15 pounds per cent. deposit, 3 pounds per cent. premium, and 5 pounds per cent. interest. So great was the concourse of people in the early part of the morning, all eagerly bringing their money, that it was thought the subscription would be filled that day; but before noon the tide turned. In spite of all that could be done to prevent it, the South Sea Company's stock fell rapidly. Its bonds were in such discredit that a run commenced upon the most eminent goldsmiths and bankers, some of whom, having lent out great sums upon South Sea stock, were obliged to shut up their shops and abscond. The Sword-blade Company, which had hitherto been the chief casher of the South Sea Company, stopped payment. This, being looked upon as but the beginning of evil, occasioned a great run upon the bank, which was now obliged to pay out money much faster than it had received it upon the subscription in the morning. The day succeeding was a holiday (September 29th), and the bank had a little breathing-time. It bore up against the storm; but its former rival, the South Sea Company, was wrecked upon it. Its stock fell to 150, and gradually, after various fluctuations, to 135.

The bank, finding it was not able to restore public confidence and stem the tide of ruin, without running the risk of being swept away, with those it intended to save, declined to carry out the agreement into which it had partially entered. "And thus," to use the words of the _Parliamentary History_, "were seen, in the space of eight months, the rise, progress, and fall of that mighty fabric, which, being wound up by mysterious springs to a wonderful height, had fixed the eyes and expectations of all Europe, but whose foundations, being fraud, illusion, credulity, and infatuation, fell to the ground as soon as the artful management of its directors was discovered."

BACH LAYS THE FOUNDATION OF MODERN MUSIC

A.D. 1723

HENRY TIPPER

Our first recognized triumph in the marvellous modern development of
music, the first great masterpiece which taught the world the beauty
of which the art is capable, was Bach's _Das Wohltemperirte
Clavier_. The production marks, therefore, "the first great climax
of musical art."

Like the other arts and sciences, the story of music is that of a
slow building up. Music "divinest of arts, exactest of
sciences"--for music is both an art and a science--has developed
from the crude two-or three-note scale melody, without semitones, to
the elaborate, ornate lucubrations of the modern oratorio, opera, or
symphony. From the beginning the "half-sister of Poetry" has been
the handmaid of Religion. The ancients ascribed miraculous
properties to music. Of the actual system of the Egyptians our
information is very scant; but we learn from the monuments depicting
the number and variety of their instruments that they had advanced
from childish practice to orchestration and harmony. According to
Plato, "In their possession are songs having the power to exalt and
ennoble mankind." The harp is undoubtedly of Egyptian origin.

In Israel plastic art was discouraged; the natural emotion of the
people was, therefore, expressed in poetry and music. Miriam, the
daughter of Jephthah, Deborah, and later the Virgin, whose grand
chant, the _Magnificat_, is ever being upraised from Christendom's
heart, portray the deep emotional temperament of this great
religious race.

The artistic standard of the music of the Greeks was far behind that
of their observation and intelligence in other matters. Their
theories on the combinations, of which they never made use, and
analysis of their scales show much ingenuity, but their accounts are
so vague that one cannot get any clear idea of what these were
really like. When art is mature, people do not tell of city walls
being overthrown, of savage animals being tamed--as run the stories
of Orpheus and Amphion. One Greek there was, Pythagoras, who
discerned the association between the distant music of the spheres
with the seven notes of the scale. "He discovered the numerical
relation of one tone to another."[28] It was about the time of
Pythagoras that a scheme of tetrachords which did not overlap was
adopted.

In Persia and Arabia was obtained a perfect system of intonation.
The Chinese system is minutely exact in theory, bombastic in fancy.
The Hindus sedulously avoided applying mathematics to their scales.
The development of the scale is shown in the construction of the
ancient Greek scale, the modern Japanese, and the aboriginal
Australian scale, and the phonographed tunes of some of the Red
Indians of North America. Here a reference must be made to the scale
of the Scotch bagpipe, a highly artificial product, without
historical materials available to assist in unravelling its
development. It comprises a whole diatonic series of notes, and
modes may be selected therefrom.

But it is to Rome that we owe the seed of our modern methods of
treatment. The Netherland school had been highly developed there by
a long line of distinguished masters, who paved the way for the
gifted Palestrina, who exalted polyphony to a secure eminence equal
to that attained by the arts of painting and architecture. He
brought forth a perception of the needs which music suffered, adding
an earnestness and science to a profound quality of simpleness and
grace. It was between 1561 and 1571 that his genius mellowed and his
style took on those characteristics upon which was based the future
music of the Catholic Church. It was while he was Maestro at the
Vatican that he submitted to the Church the famed _Missa Papæ
Marcelli_, which determined the future of church music.

The culmination of art in music is strikingly shown in the subjoined
article from the pen of that great authority, Mr. H. Tipper.

The first tonal prophet and poet of the modern era, the era in which reason made tremendous protest against mere dogma, and the best religious instincts of human nature called imperatively for emancipation and for nearer individual contact with God, is Johann Sebastian Bach. We look dazzled at the brilliant victories of the Italian Renaissance, and amid tumultuous beauty run riot with imagination we hear the voice of Savonarola at the close of the period uttering his lamentations. The great Italian reformer saw and felt that in his own day and in his own country the glory and beauty of the movement had vanished in sensuality; that hardness of heart and indifference to primary human needs had diverted the waters of the Renaissance from their main fertilizing channel.

The deep need of the epoch was social, not mental, sociality in its widest sense: the right of the individual; his inherent majesty, which the accident of birth should not be able to impair--this and this only was the natural outcome of the new birth which came to humanity; this and this only was the sequel which German profundity and integrity, not Italian brilliancy and carelessness, placed before the mind of Europe.

The Reformation, then, this Protestantism, is distinctive of the new era. It was a protest, not only religious, as the word is usually applied, but scientific. It is the basis in the modern Western world of those laws of criticism which have submitted, or will submit, everything to searching analytical investigation, and as in the case of the natural world, so in the moral and ethical, men, by the light of revealed truth, or by those higher instincts of nobility which emanate from the Eternal Love, seek to apply to the reformation of society those principles of love, justice, and recompense which each would wish applied individually to self.

As an inspirer of thought and man of action, the world has seen few such men as Luther. His genius, as it were, discovered and laid bare the inexhaustible treasures of the German language; his sympathy and genial humanity sent a thrill of song, poetical and tonal, throughout the fatherland. He was the great awakener of German emotion. To Luther, a man who cared not for song was without the pale of humanity. But his enthusiasm was practical. In the church, as we have seen, he gathered from all sources whatever was of the best, and gave it to the people. In the schools he advocated the cause of song. In the streets the people needed not advocacy. Wherever two or three gathered together, song was in the midst of them, and it is not too much to say that the Lutheran hymn was the saviour of German poetry and a font of German song. In the seventeenth century there was in Germany little poetry worthy of the name save that inspired by the devotional character of Luther's genius. His heir and successor in the realm of tone was Sebastian Bach.

True, two centuries had elapsed between the death of the great reformer in morals and the birth of the great reformer in tone; but the work of the latter could not have been without the former. The chorale was introduced by Luther; it was perfected by Bach. To what other influence than the Lutheran can we attribute the growth of Bach? Are there any other resources of German art and thought which can account for the advent of the great musician? In art Duerer stood by the side of Luther. In him again we find a man. Thought, thought! help me to express my native thought. Teach me to express in my art the reality of Nature, its wonderful beauty, thrice beautiful to me an artist; the pathos of life, its realism, far apparently from the ideal, yet most precious to me as a man. This was the aim of Duerer, and he seems a man after the Lutheran mould.