THE HISTORIC NEW ORLEANS COLLECTION E INSID French Collections . 6 Acquisitions . 16 The Shop . 19 Volume XXVIII Number 4 Fall 2011 RLY RLY E E QUART QUART THE THE Major Acquisition of Manuscripts Documenting the Legacy of John Law The Rise and Fall of John Law in Louisiana n the late summer of 2010 The Collection acquired an exceptional collec- ambler, swindler, stat- King’s Bench prison in the 1690s) pre- Louis’s death left France in the tion of some 232 documents concerning Scottish economist John Law’s istician, genius have all ceded him. hands of his five-year-old great-grandson, Iinfamous System, which encompassed far-reaching economic programs been used to describe The following year Law sought an whose reign would be overseen by the for the establishment of a national bank and a global trading company. Law’s one of ancien régime France’s most audience with Louis XIV in France, where regent, Philippe, duc d’Orléans, until he enterprise, first known as the Company of the West, then as the Company of Gnotable and notorious figures: John Law. a severe specie shortage, repeated military reached the age of majority at 13. The the Indies, undertook the establishment of New Orleans in 1718. Compris- Born in Scotland in 1671, Law spent engagements, and a mounting state debt regent inherited a financial crisis of epic 2A—to come ing imprints, posters, and manuscripts, the John Law Collection (MSS 606) much of his early adulthood frequent- combined to put Europe’s most popu- proportions. France’s treasury was bank- allows researchers to trace, step by step, the development of Law’s financial ing the gaming tables of Amsterdam, lous nation on increasingly precarious rupt. State debt topped 2 billion livres, system and the ramifications of its collapse for Louisiana. One of the rare Genoa, Paris, and Venice, where he used financial footing. In “Mémoire touchant not including annual interest payments documents included in the acquisition is the only known surviving manu- his mathematical genius to amass a sub- les monoies et le commerce” Law pro- to its creditors of 90 million livres, and script copy of the “Lettres patentes portant privilège en faveur du Sr. Law...” stantial fortune. Personal gain was not posed the creation of a French national the treasury had borrowed against future (May 2, 1716), which permitted Law to establish the Banque Générale, Law’s only motivation, however. Time bank that would issue paper money, tax revenues through 1718. The entire France’s first national bank. The precious parchment document is signed by spent in Europe’s financial capitals also increase available credit, and promote financial system was on the verge of both six-year-old Louis XV and the regent, Philippe, duc d’Orléans. Also of afforded him access to the worlds of trade (objectives known collectively as collapse, a situation that left the regent interest is a simple, anonymous, tongue-in-cheek manuscript genealogy trac- high finance and economic theory. Law’s “System”), but he failed to get predisposed to consider Law’s proffered ing Law’s lineage to Beelzebub. Such items bear testimony to the eventual In 1714 Law took up permanent the proposal past the king’s controller- solutions. emotional and financial trauma that Law’s experiment caused in France. To residence with his common-law wife, general. In 1707 two more submissions Law’s ascent in the months and First French-language edition of Law’s Money and Trade Considered, La Haye: Jean contextualize the importance of this collection, this issue of the Quarterly Katherine (Knowles) Seigneur, in a lav- were rejected. Not until Law took up years following the death of Louis XIV Neaulme, 1720 (2010.0158.7), acquisition features essays providing overviews of John Law’s rise and fall (pages 2–5) ishly furnished house on Paris’s exclu- permanent residence in Paris were any was meteoric. Within two months his made possible in part by the Clarisse Claiborne and The Historic New Orleans Collection’s notable assemblage of materials sive Place Louis-le-Grand (now Place of his proposals entertained in earnest proposal to create a national bank was Grima Fund and the Boyd Cruise Fund documenting French Louisiana (pages 6–8). Vendôme). He likely chose the newly by the king and his ministers. But just heard before the finance council. The —Alfred E. Lemmon constructed square because the resi- as Law faced the unfamiliar prospect of following summer, the bank became dences lining it were home to some of seeing his financial plans adopted, Louis a reality. In August 1717 Law’s newly more stable alternative. In exchange, the the most influential financiers in Paris, XIV died, on September 1, 1715. formed trading company, the Company Company charged 4 percent interest on “Lettres patentes portant privilège en faveur du including Antoine Crozat, whose com- of the West (Compagnie d’Occident), the billets d’état, a lower rate than what Sr. Law et sa Compagnie pany maintained exclusive rights to took over Crozat’s Louisiana charter the Crown paid to most of its creditors. d’establir une banque trade in Louisiana. with hopes of establishing a French By the summer of 1719 Law’s com- generalle,” May 2, 1716 By the time Law settled in Paris, version of the Chesapeake in the Mis- pany had absorbed the Company of the (2010.0158.1), acquisition he was already on his way to establish- sissippi Valley. A year later the regent East Indies and the Royal China and made possible in part by the ing himself as one of the period’s most awarded Law’s company a nine-year Africa Companies. It also acquired the Clarisse Claiborne Grima Fund and the Boyd Cruise influential economic theorists. In 1705 monopoly of all tobacco trade within Senegal Company, a slave-trading entity Fund he had published Money and Trade Con- the French empire. whose resources and contacts Law hoped sidered with a Proposal for Supplying To raise capital and fund the acqui- to exploit in order to bring laborers to the Nation with Money, a treatise Law sition of smaller companies, the Com- Louisiana. The resulting conglomerate, hoped would cure the economic ills of pany issued a series of shares. Proceeds the Company of the Indies (Compag- his native Scotland. Law’s proposal cen- from each issuance were intended to cre- nie des Indes), had the most far-ranging tered on the creation of a land bank, ate greater solvency. This money-raising geographic scope in the history of Euro- which would by design alleviate the scheme was authorized by the state, pean trading companies. To finance country’s specie shortage through the which benefited from the arrangement the expansion Law released more share issuance of paper money backed by the by the elimination of some of its float- issuances and eliminated the stipula- value of land. Though Law published ing debt. The initial 1717 offering could tion that shares be purchased with billets the treatise anonymously, his author- only be purchased with billets d’état— d’état. At the same time the bank issued ship was well known by the time it was the paper notes of credit issued by the 50 million livres of banknotes to ensure considered—and rejected—by the Scot- Crown, their valuation prone to violent that there was enough cash in circula- tish Parliament in the summer of 1705. Edict establishing the Company of the West, fluctuations. The intent was to decrease tion to cover new share purchases, and Paris: Imprimerie Royale, 1717 (2010.0158.12), His reputation as a gambler and worse the number of unstable in circula- Law pledged to personally underwrite acquisition made possible in part by the Clarisse billets (sentenced to death for killing a man in Claiborne Grima Fund and the Boyd Cruise tion, while promoting the sale of shares the new share issue. Loosened subscrip- a duel, he had escaped from London’s Fund in what Law and the Crown viewed as a tion requirements, an increased money 2 Volume XXVIII, Number 4 — Fall 2011 The Historic New Orleans Collection Quarterly 3 grew; public confidence in his System collapsed, despite Law’s efforts to stabi- the nation’s economic apparatus was s; wavered. As company stock plummeted, lize the credit markets and restore public in shambles, and thousands were left For Louisiana the ramifications of shareholders rushed to cash in shares, confidence. holding worthless paper notes. Law Law’s fall from favor were mixed. Satir- and the mint printed more banknotes to Law’s fall from favor over the course spent the last years of his life in Venice, ical images and derisory texts depicting meet demand, causing widespread infla- of 1720 was as striking for its speed as his hounded by shareholders and credi- the colony as a debauched, thoroughly tion. On November 27 the bank closed rise had been some five years earlier. By tors, before dying of pneumonia on desperate place circulated throughout its doors. By December the System had late December 1720 he had fled France, March 21, 1729. Europe, causing an already anemic 100-livre banknote issued by the Banque Royale, which in December 1718 replaced the Banque Générale, August 1, 1719 (2001-47-L) supply, and Law’s personal investment bolstered public confidence. The public’s appetite for company shares in the fall of 1719 seemed insa- tiable. Between September 26 and Octo- John Law from Het Groote Tafereel ber 4, 1719, Law released four additional der Dwaasheid, Amsterdam, 1720−21 issuances. Trade along rue Quincampoix (2010.0158.9), acquisition made possible in part spilled over from the Company’s share- by the Clarisse Claiborne Grima Fund and the sales office into the street, where the fren- Boyd Cruise Fund zied throng of investors and speculators was so thick that the city had to issue a flow of immigrants to nearly dry up.