The bank now proceeded on public credit, or, in other words, was entirely dependent on the will of the sovereign ; and, as the schemes of monarchs are seldom limited by moderation or reason, it embraced objects so vast and extensive, that all Europe looked with anxiety for the issue. It was proposed to vest the whole privileges, effects, and possessions-of fo reign trading companies, the great farms, the mint, the general receipt of the king's revenues, and the management and property of the bank, in one great company, which having in their hands all the trade, taxes, and royal revenues of the kingdom, might multiply the notes of the bank to any extent they pleased. Accordingly, a commercial company was established by letterspatent in August 1717, under name of the Company of the 'Vest, t6 which was granted the whole province of Lonisiania, through which the noble Mississippi flows ; and from this cir cumstance the operations of the company obtained the name of the Mississippi System. Of this com pany 200,000 shares were issued at the rate of 500 livres each, bearing interest at the rate of 4 per cent. after the first year, exclusive of the profits of the trade.
On the 4th September 1718, the farm of tobacco was made over to the Company of the West, who en gaged to pay 2,020,000 livres advanced rent to the king. On the 15th December following, they ac quired the charter and effects of the Senegal com pany; but the most important grant they obtained was in May 1719, when an edict was published, transferring to them the exclusive privilege of trading to the East Indies, China, and the South Seas, together with all the possessions and effects of the China and India companies,on condition ofpaying the lawful debts of these companies now dissolved. On this occasion, the Company of the West assumed the title of the Company of the Indies; and 50,000 new shares were ordered to be constituted at the rate of 550 livres each, to be employed in satisfying the creditors of the old companies, in building vessels, and in other preparations for carrying on their trade. And from the vain expectation of possessing a lucrative branch of commerce, the price of a share rose to 1000 livres.
On the 25th July 1719, the mint was made over to the company, for a consideration of .50,000,000 livres to be paid to the king ; and in order to raise that sum, 50,000 new shares, at the rate of 1000 livres each, were directed to be issued. On the 27th August following, the great farms were made over to the Company of-the Indies, on their agreeing to pay 3,500,000.1ivres in advance of rent for them; and-on ` the 31st of the same month, they obtained the general receipt of other branches of the king's revenue. The
company now promised an annual dividend of 200 livres on each share, in consequence of which, the price rose in the market to 5000 livres each. The company engaging to lend the king to pay off hii creditors 1500 millions of livres at 3 per cent. crea ted in September and October 300,000 new shares, rated at 5000 livres each, so that they had now .al together 600,000 shares ; but their annual income amounted to 131 millions, which arose as follows, viz. 48 millions interest from the king; 39 millions from the farms, the mint, and the receipt of taxes ; and 44 millions from their. trade. From so great a revenue they could well afford to pay more than 200 livres of annual dividend on each share. The infatuation, which at this time prevailed in France, raised the price of shares in the market to more than 10,000 lilacs each, and the original proprietors acquired im. mense fortunes. But the public had full confidence in the stability of the bank ; money was abundant ; the agriculture, manufactures, and commerce of the French flourished ; plenty displayed itself in the capital, the cities, and provinces ; and government were enabled to relieve the people from the burden of 87,000,000 of duties and taxes.
Notwithstanding the general confidence in the sta bility of the Bank and India company, yet there were individuals who held a different opinion ; and they eagerly converted their.paper into specie, which they either hoarded up or remitted abroad. This occa sioned a constant drain of gold and silver ; and specie became so scarce, that there was not a suffi ciency left in France for the ordinary purposes of circulation. A inn on the bank was now apprehend ed, and to avert the danger which threatened the whole system, several edicts were passed in January, February, and March 1720, restricting payments in specie to 'small sums; prohibiting the manufacture of plate without the royal licence ; and declaring, that all rents, taxes, and customs, should be paid in notes, the value of which was to remain always invariable, while the standard of the coin was kept in constant fluctuation. But the plan of restriction was carried to its greatest height, by the edict of the 27th February 1720, which prohibited individuals, and secular or. religious communities, from having in their possession more than 500 livres in specie, under pain of a heavy fine and confiscation of the sums found in their custody. These measures could not fail to have the effect, to throw an immense sum in specie into the coffers of the bank ; and it is said, that betwixt the 27th February and the 1st April 1720, not less than 300 millions of livres were paid in coin into the bank.