Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance Page 20

  Over the following weeks, as he waited impatiently for news from France, he settled into city life. The State of Europe reported that Law “partakes of all the pleasures this carnival affords” and recorded the closing entertainments for its readers:

  On the 20 instant [of February 1721] the great square of St. Mark was crowded with spectators of a grand bull feast, where many of those creatures were encountered and killed by dexterous cavaliers, as usual; several shows were acted, representing the Labours of Hercules; and a person flew down by a rope from the top of St. Mark’s steeple, to the great contentment of the spectators; the Doge himself was present at these diversions, seated in his gallery; adorned with crimson velvet; and to conclude the sports of the carnival a noble fireworks was played off, and several devices and figures artificially prepared with diverse kinds of burning matter continued blazing very agreeably for a good while.

  The entertainments made Law miss Katherine and his daughter even more. He wrote poignantly to Kate, “We often think of you, your brother and I, and wish that you were here with Madame, to enjoy the diversions of the carnival. I hope to see you again soon, until then your main duty must be to please Madame, and to soften the pain that she has in my affairs.” He had rented a palazzo, conveniently close to the Ridotto, from the Austrian ambassador, Count Colloredo, went every night to the opera, and began to enjoy his life of seclusion. “I find myself well, being alone without valet, horse and carriage, to be able to walk everywhere on foot without being noticed in any way, so that I would prefer a private life with moderate means, to all the employments and honours that the King of France could give me.”

  Money had still not arrived, and he relied on friends such as Lassay, who lent him £30,000, and on gambling to provide enough money to live on and pay off the endless creditors, most of them losers in Mississippi shares, who came knocking. Law’s financial debacle in France made him deeply unpopular in certain circles: “The chief bankers at Venice have represented to the Senate the great losses they have sustained are chiefly owing to the councils of that gentleman,” the State of Europe reported.

  He was mortified at being unable to honor his commitments and struggled to come to terms with the sudden change in his fortunes. “What has happened is very extraordinary, but doesn’t surprise me. Last year I was the richest man there ever was and today I have nothing, not even enough to subsist—and what embarrasses me most, I owe and have nothing with which to pay.” The old gaming skills, based on his knowledge of probability, were quickly honed, but the opportunity for spectacular gain seems to have been lacking. Perhaps, given his impecunious circumstances, he was no longer allowed to play banker. A friend from Paris described him as playing “from morning to night. He is always happy when gambling and each day proposes different games.” After one especially profitable foray he was said to have made 20,000 livres at cards. But on several other occasions he was less fortunate and there are references in his letters to losses that he could ill afford. Favorite moneymaking ploys included staking 10,000 to 1 that a gambler could not throw sixes six times in a row—the odds against such a sequence are 46,656 to 1 (6 to the power of 6). Another game he loved was to offer a thousand pistoles to anyone who could throw six sixes with six dice, if the opponent paid him two pistoles whenever he threw four or five sixes. The odds against this are nearly 5,000 to 1.

  Away from the gaming tables, he wrote increasingly urgent letters to the regent and Bourbon, imploring them to honor the agreement to send the 500,000 livres he had brought with him to France. All his other possessions, including shares, which he estimated still to be worth 100 million livres, and his properties, he willingly made over to the company to pay his debts and help those who had lost most during the system’s downfall. “I can only believe that you will agree to what I have the honour of proposing to ensure the security of my children. In the case of Your Highness refusing me this justice, I will be reduced to abandoning all I have to my creditors, who will grant me a modest pension of as much as pleases them.”

  When it arrived, the news from Paris was alarming. In the wake of Law’s departure, de la Houssaye had reported to a council meeting convened to discuss the economic situation that 2.7 billion livres in bank accounts, notes, and other forms of debt guaranteed by the Crown were still outstanding. Much of this sum had been issued without authority and there was no hope, in view of the already depleted coin reserves, of repaying it.

  Scrambling to distance themselves publicly from Law, the regent and Bourbon each tried to blame the other for sanctioning his escape, and the meeting degenerated into an undignified squabble. Bourbon demanded to know how Orléans, who had been aware of the figures, could have let Law leave the country. The regent replied shiftily, “You know that I wanted to have him sent to the Bastille; it was you who stopped me, and sent him his passports to leave.” The duc agreed that he had sent the passports, but only because the regent had issued them and he did not think it in the regent’s interest to allow a man who had served him so well to be imprisoned. Had he known about the unauthorized issue of notes, though, he would have acted differently. By now thoroughly embarrassed, Orléans could only argue feebly that he had permitted Law’s escape because he felt his presence harmful to public credit.

  In view of the dire financial situation, the council agreed that the investigation into the bank, Law’s private affairs, and speculators who had made large gains should be hugely expanded, with a view to reducing the Crown’s outstanding debt. Law’s long-standing adversaries, the Pâris brothers, were recalled from exile to supervise. Crozat, another eminent private banker, from whom Law had snatched the colonization rights to Mississippi, was appointed to look into Law’s private affairs. Eight hundred investigators were set to work in the old offices of the bank, at a cost of 9 million livres. Anyone holding shares, annuities, or banknotes was ordered to deposit them and explain how they had acquired such sums. As before, if they were deemed to have acted illegally they were liable to severe fines and confiscation of much of their property. The scale of the impact of Law’s schemes became clear when a total of more than half a million people—equivalent to two-thirds of the then entire population of London—came forward with claims for losses as a result of his shares and banknotes. Nearly two hundred investors were penalized to the tune of almost 200 million livres—the widow Chaumont received the heaviest fine of 8 million livres, but remained rich because she had cannily put so much money into tangible assets. Other less fortunate, or less shrewd, investors found their gains dramatically reduced. “Those who have lost are already ruined, and now they wish to ruin those who gained,” wrote one journalist, as the pruning was uncomfortably achieved. In England the State of Europe commented that “other ministers are now undoing what has been done by that projector [Law],” and went on to remark, “The French court after so many trials and expedients to no purpose may be convinced that a public bank is one of those plants which cannot grow in all soils, and that people will never entrust with the keeping of their cash a company which may be dissolved by any sudden blast of an arbitrary wind.” In fact, as Law had pointed out, the State had benefited greatly from his system. Rising inflation, falling share prices, and the reduction in the value of paper had bankrupted state creditors but reduced Crown debt by two-thirds.

  The Mississippi Company was also targeted by the investigators. The privilege of administering the tax system and mint was withdrawn, and the company retained only its maritime interests. Through a painful process of confiscations and contractions, shares were decreased in number from 135,000 to 56,000. In this depleted state the company survived its founder’s downfall, and in one sense fulfilled his fervent hope, remaining in business until the end of the eighteenth century.

  Amid the financial confusion Law, the convenient whipping boy, was accused of massive misappropriation and of leaving vast unsettled debts. According to one report, a week before his departure he had helped himself to 20,000 livres from the bank. A later document se
nt to the Duc de Bourbon showed that in fact Law’s account was several millions in credit.

  Conscious of ill will mounting against him, and unable to defend himself, Law became more and more concerned for Katherine’s safety. In mid-April, when traveling conditions had improved, he instructed her to arrange for the dispatch of their horses, carriages, and furnishings by boat, settle outstanding debts—according to the regent’s mother, she owed 10,000 livres to the butcher alone—and prepare to leave: “I want your company and to live as we used to before I engaged in public business. . . . Though I determine you at present to come to Venice and though I like the place very well, I don’t propose that we shall always stay here.” He was desperately worried at the thought of her making the hazardous journey across Europe without him, and sent detailed instructions of the route she should take and the documents she would need. Certificates of health would have to be stamped in every town they passed because of the travel restrictions caused by the plague; she should avoid crossing through the Tyrol in case she was held for quarantine; and she should travel incognito: “Keep your journey private, there are malicious people . . . and though I received no insult on the road, yet I think you should shun being known, it may be thought that you have money or things of value with you.”

  Katherine’s preparations to leave must have been under way when the investigators swooped and she, unwittingly, became a pawn in their lust to hurt Law. Her request for passports was refused. All Law’s assets, including the Hôtel de Langlée, where Katherine was living at the time, and a dozen or so other properties belonging to him, were confiscated. She was reduced to taking lodgings in a modest inn in St. Germain, with only a valet and chambermaid to attend her. Then, on May 8, William Law, suspected of planning an escape, was arrested and incarcerated in the Fort l’Évèque. Perhaps to spare him further worry, Katherine failed to tell Law what had happened, and he was still unaware of the situation—a letter from Paris to Venice could take weeks to arrive—when he wrote disappointedly to her, “I find you have no inclination to come to Italy, I agree that England or Holland would be better. . . . You may go to Holland.”

  When news of the situation in Paris eventually filtered through, he was outraged, even though she still had not told him the full truth of her own reduced circumstances. “Mme. Law writes that they find me a debtor of 7 million to the bank, and of five or six million to the company, and that the King has seized my effects, that my brother is in prison, and his effects seized, without being told the reason. You know that I paid no attention to my own interests, that I didn’t know the exact state of my affairs; my time was entirely taken up with public service.” He was paying an unimaginable price for his idealism and failure to attend to his own affairs. Plainly if he were to exact justice, he realized, he had only two choices left: to return to France, or to move to England and put pressure on Bourbon and Orléans through his connections at the English court.

  He pursued both avenues: he dispatched new reports for ways to improve French finances to Paris in the hope that they would clear the way for his return, and made overtures to friends in London. According to the English diplomat Crawford, the schemes were warmly received in Paris. “Mr. Law . . .has sent a new project for the re-establishment of finances to the Regent, which was very well liked, they infer from hence that gentleman will soon return into France.” But the regent, though quietly keen to bring him back, was fearful of a public outcry if he did so. Still in the grip of Law’s enemies, he refused to intervene. The stalemate persisted.

  In London, Law’s approaches to Lord Ilay and Lord Londonderry were greeted with only marginally less ambivalence. Four years earlier, through Londonderry’s intervention, Law had been granted a pardon by George I and a discharge from the Wilsons. As a pledge of loyalty to France, he had given the royal pardon to the regent—another impetuous gesture of steadfastness that was now a cause of regret—and had left the Wilsons’ discharge in Paris. Now, realizing that the developments of the past year had changed the way in which Britain viewed him, Law hoped uneasily that “His Majesty will have no scruple to order a second expedition of it [the pardon].” But he was worried enough about his reception to flex his political muscle and stress menacingly how damaging a refusal to let him return might be. “It would be very much contrary to the interest of my country to refuse me the retreat I desire there. . . . I have received offers from very powerful Princes, which would tempt one that had either the passion of ambition or revenge. England may retrieve her credit, if no other state pretend to rival her in it; but if I should fail to work with a prince that has means, authority, and resolution, I can change the face of the affairs of Europe.”

  Since leaving France, Law had certainly received offers of employment from Denmark and Russia, which so far he had turned down. But his threat was far from idle: if England refused him entry and Orléans continued to deny him funds to settle his debts, he would have no choice but to “look for a protector to avoid a prison sentence, which might endure all my life.” The threat of debtor’s prison was ever present, and presumably the experience of Newgate in his youth heightened his terror of returning. Significantly, a stipulation of his request to return was that his creditors in Britain should allow him a few months’ grace to arrange his affairs before pressing for payment. The total loss to Londonderry from a drastic wager made in Paris, which anticipated that East India stock would fall, was nearly £600,000, and his inability to repay it had forced Middleton, his banker, to close his business at around the same time that Law left Paris.

  Londonderry and Ilay contacted Lord Carteret, who conferred with the king, but when by late summer there was still no clear decision and his creditors were clamoring ever more menacingly, Law decided, with typical impulsiveness, to risk it. Later he wrote, “I had no invitation from the King nor from his ministers but the situation of my affairs made me take the course of going there with these uncertainties.”

  Leaving Venice at the end of August, and carefully avoiding Holland and parts of Germany where he knew angry creditors might apprehend him, Law took a circuitous route through Bohemia to Hanover, then northward to Copenhagen. He had intended to spend some time in the Danish court—the diplomat Guldenstein was an old friend who, since Law’s departure from France, had repeatedly offered him a role in government. Law had refused on the grounds that his plan was to live quietly: “Having worked in the most beautiful theatre in Europe under the most enlightened Prince, having taken my project to the point where it could make a nation happy, and having little to support me against the cabals of court and the factions of the state I will take no more engagements.”

  The English Baltic squadron was anchored at Elsinore and preparing to sail home before winter, so there was no time to see Guldenstein at the Danish court. Admiral John Norris, commander of the fleet, allowed Law to board his vessel Sandwich for the return passage. The ship set sail on October 6, arriving a fortnight later at the naval base of the Nore in the Thames estuary. It was the first time Law had set foot on English soil for twenty-six years.

  His friends Ilay and Londonderry were waiting for him and escorted him to London, where, as he had feared, there were mixed feelings about the prodigal’s return. On arrival he wrote to Katherine, “I don’t expect to be well received at court; for which reason I think not to go, having nothing to ask.” Apart from the South Sea catastrophe, for which he was widely blamed, it was also feared “his stay in London could only help people with evil intentions to whip up jealousies”—that France would frown on England for offering Law sanctuary. The controversy was sufficiently fierce to be raised twice in the House of Lords, Earl Coningsby complaining that Law “had done so much mischief in a neighbouring kingdom; and [who] being so immensely rich as he was reported to be, might do a great deal more hurt here, by tampering with many who were grown desperate by being involved in the calamity occasioned by the fatal imitation of his pernicious projects.” Above all, stated Coningsby, Law should be shunned for renouncin
g “not only his natural affection to his country, and his allegiance to his lawful sovereign by being naturalized in France, and openly countenancing the Pretender’s friends; but which was worst of all, and weighed most with him, that he had also renounced his God by turning into a Roman Catholic.” Carteret stood up for Law. He was here having received the benefit of the king’s clemency, he was no longer a fugitive from British justice, having been granted his pardon in 1717, and it was the right of every subject to return to his native land.

  By November the ferment had begun to settle as Law’s influential supporters gained ground and persuaded the establishment that, far from endangering the relationship with France, Law might actually help it. The diplomat Sutton noted, “The retreat of Mr. Law to England does not seem to displease the court. . . . Law will do nothing to trouble the good intelligence and harmony between the two courts.” By the end of the month this argument had prevailed, and Law was permitted to return to the bar of the King’s Bench to plead pardon, attended by the Duke of Argyll, the Earl of Ilay, and several other influential friends. The London Journal of December 2 contained the following report of the momentous event: “On Tuesday November 28 (the last day of term) the famous Mr. Law appeared at the King’s Bench Bar, and pleaded his pardon for the Murder of Beau Wilson on his knees.”

  Thus officially pardoned, Law took lodgings in Conduit Street. He still longed to see Katherine and hoped that his move might help: “I can’t think the Regent will detain you when he knows I’m first here. I think His Royal Highness and those who serve him honestly should be pleased that I am here, where I may be useful to him; knowing his intentions to live in friendship with the King.”