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With real-world examples and an emphasis on ethics throughout,
AN INVITATION TO SOCIAL RESEARCH: HOW IT'S DONE, Fifth
Edition combines balanced coverage of quantitative and
qualitative methods of social research with a unique �behind the
scenes� approach. Built on focal research pieces and excerpts
from real research projects, chapters present the insights,
perspectives, and challenges of actual researchers in the field.
The result is a comprehensive resource that guides readers step
by step through the many stages of social research-from selecting
a researchable question and designing a study to choosing the
best method of data analysis for a particular study-and prepares
them for the ethical issues and problems that they may face along
the way. Reflecting the latest practices from the field, the Fifth
Edition also integrates a greater emphasis on research focusing
on evidence-based programs and policy.

About the Author

Emily Stier Adler is Professor Emeritus of Sociology at Rhode Island
College, where she taught for thirty-eight years. She has been a research
consultant in a variety of settings and the director of Women's Studies at
the college. In addition to THE ELECT: RHODE ISLAND'S WOMEN
LEGISLATORS with co-author J. Stanley Lemons, her published work
includes numerous articles on marriage, teenage pregnancy, adolescence,
and political life. Her current research interest is the transition to retirement.
She received her Ph.D. in Sociology from Tufts University.

Roger Clark is Professor of Sociology at Rhode Island College, where he

has taught for twenty-nine years. To date he has published sixty-six
research articles and book chapters. He received his Ph.D. in Sociology
from Brown University.
Discovering Diverse Content Through
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“liked him so well as to pack up her alls, leave her husband, and run
away with him to Italy.”
The moral obliquity of the incident lends colour to the unsparing
attacks of his enemies, and certainly cannot be extenuated even
according to the loose standards of his day. The gravity of the
offence he could not be ignorant of, notwithstanding his youth. His
finer susceptibilities, however, had been impaired by the contagion
of vice, which led him to embark upon risks, especially of gallantry,
from mere impulsiveness, and regardless of consequence. What little
credit can be extended to Law in connection with this affair, he
derives from having remained faithful to her to the last, while the
death of her husband, shortly after, relieved him of possible
embarrassment during his subsequent visits and residence in Paris.
Unsuccessful in his appeal to the Court at St. Germains to secure
official employment, he resumed his old career of gambling, and
made the principal cities of the Continent the field of his operations
for the next three or four years. His movements at this time are
somewhat difficult to trace. No authentic record of his peregrinations
have come down to us. It is tolerably clear, however, that he resided
for short periods at Genoa, Rome, Venice and Amsterdam, and may
also have visited Florence and Naples. Gambling in his case was no
mere means of satisfying an uncontrollable passion. He did not
conduct it promiscuously. He based his speculations upon a system
which he had developed for his own guidance after the most careful
study of the laws of chance. Although success did not invariably
attend his play, the balance of probability was so frequently in his
favour that he was not only able to maintain his position as a
gentleman of worth, but to amass a considerable fortune in an
incredibly short period of time. No doubt the cool, calculating
Scotsman, apart from any merit his system of play may have
possessed, was more likely to rise from the tables with success than
those with whom he would choose to gamble. Not only would his
confidence and boldness irritate and excite his opponents, but the
reputation his skill had acquired for him would be in itself a
disturbing element to their minds, and render them unequal to his
superior play.
Notwithstanding his propensities in this direction, Law also
devoted his abilities and his keen powers of observation to another
and more creditable study. The subject of banking, the mysteries of
credit, and all the intricacies of financial problems appealed to his
strongly mathematical mind, and of the advantages afforded him,
whilst on the Continent, for an intimate acquaintance with the
various systems of his time he was not slow to avail himself. At this
period there were several banking companies in Europe, and of
these the banks of Venice, Genoa, and Amsterdam were the chief.
The first two owe their origin to the financial difficulties of the
Venetian and Genoese Republics, and had been in existence since
1157 and 1407 respectively. The Bank of Amsterdam, on the other
hand, was of more modern growth, having been established in 1609
in order to minimise the confusion continually arising from the
unsteady value of the currency by placing the coinage upon a fixed
and more permanent basis. Law, accordingly, utilised his stay in
these three cities to gaining an insight into their methods of
business. At Venice, we are told, he constantly went to the Rialto at
Change time, and no merchant upon commission was more
punctual. He observed the course of exchange all the world over;
the manner of discounting bills at the bank; the vast usefulness of
paper credit; how gladly people parted with their money for paper,
and how the profits accrued from this paper to the proprietors. At
Amsterdam, where he was employed as secretary to the British
Resident in Holland, “he made himself acquainted on the spot with
the famous bank of that city; with its capital, its produce, its
resources; with the demands individuals had upon it; with its
variations, its interests; with the mode of lowering or raising its
stock, in order to withdraw the capital, that it might be distributed
and circulated; with the order that bank observed in its accounts and
in its offices; and even with its expenditures and its form of
administration.”
 The varied information which Law in this way acquired during his
residence on the Continent, and especially in the great banking
centres, he did not store as a mere mass of bare interesting facts.
Whether the investigations he assiduously pursued were the
outcome of a design to develop a new system of banking, or
proceeded merely from the attraction of the subject, is matter of
doubt. But it is clear that he abstracted certain principles of finance
from the data he had gathered, and that these principles were
heterodox according to the opinions of his contemporaries. Our
judgment upon Law must be largely determined by our impression
as to whether these principles were logically deduced explanations
of the financial phenomena he observed, or whether they were the
fanciful ideas of his own imagination for the justification of which he
sifted his phenomena. It is extremely difficult to arrive at any
definite conclusion. His own published writings give no guiding clue,
and the records of his time confuse, rather than enlighten, by their
contradictory and varied explanations of his schemes. It is probable
that the principles upon which they were founded possessed an
element of both possibilities. His observations on the one hand
would seem to indicate to his mind some underlying law; and on the
other hand his mind, impressed with the beauty and simplicity of
some vast ambitious scheme of finance, would readily discover
support in its favour from the deductions he had made. At no time
did Law attempt to build up a system of financial philosophy, but he
must be given due praise for laying down propositions bearing upon
the subject of credit and of the use of paper money which have
stood the test of time and received recognition from political
economists of our own day. He must also be raised to a higher level
than a mere financial schemer. His proposals were more than
plausible. They had an element of practicability, in which he
demonstrated his own belief by his readiness to put them to test
under private direction before they were launched with sovereign
authority and under public control. Convinced so thoroughly as he
was with the soundness of his theories, and with the possibilities
they opened up, if adopted, of infusing new life and new energy into
the commercial world of his day, he regarded himself as a man with
an important mission.
His own country seemed to offer a suitable field for his financial
ability, and we find him back in Edinburgh in the closing year of the
seventeenth century, the legislative independence of Scotland
affording him all necessary safety against arrest for the murder of
which he had been guilty five years previously.
 CHAPTER II
Unsettled condition of Scottish politics in 1700.—Financial and
commercial insecurity of country.—Law’s solution of
difficulties.—Land Bank.—Supported by Court party.—
Rejected by Parliament.—Again resorts to gambling.—
Returns to Continent.—Expelled from Holland.—Visits
Paris.—Discusses finance with Duc d’Orleans.—Expelled
by Lieutenant General of Police.—Submits proposals to
Louis XIV. without success.—Again attempts to secure
adoption of proposals by France.—Financial condition of
France.—Earl of Stair’s friendship with Law.

S COTLAND at the time of Law’s return was in a very

unsettled condition, politically and commercially.
The projected union of the two Kingdoms was
beginning to emerge from the sphere of discussion
into that of practical politics. The change was
recognised as likely to be attended with results of
the greatest consequence, but was not by any means
enthusiastically supported by public opinion. What, however, was
obviously impossible by means of conviction, was ultimately
accomplished by methods of bribery, and the Act of Union stands as
a striking instance of the great success of a policy universally
condemned, but carried by dishonourable means in spite of the
opposition of those who were chiefly concerned.

The minds of the people, however, in 1700 were more disturbed

by the feeling of financial insecurity that was gradually asserting
itself. The air had been for some years laden with all kinds of fanciful
schemes advanced by men who had the public ear, and who had
succeeded in calling up visions of easily won wealth in the
imaginations of a nation at that time, as now, characterised by
caution and business prudence to the degree of frugality. Banks,
colonisation schemes, and all sorts of extravagant and even
ridiculous proposals followed close upon one another in one
continuous stream, but almost invariably bringing ruin in their train.
The most notable, as it was the most disastrous of these, was the
Darien Scheme launched by William Paterson, founder of the Bank of
England. Patronised by all the nobility and people of money as well
as by numerous public bodies, and possessing all the superficial
elements of success, it produced a fever of financial excitement and
a mad race for the acquisition of holdings in its capital. Its collapse
caused widespread disaster, and was in reality a national calamity,
entirely destroying that confidence essential to industrial and
commercial stability.
Law found in the condition of his native country a congenial
subject for treatment according to the economic theories he had
developed during his stay on the Continent. In the beginning of
1701 he published his “Proposals and Reasons for Constituting a
Council of Trade in Scotland.” In it he advocated changes of a very
drastic and radical character, and while they were without question
too advanced and impracticable for his day, at least for adoption in
their entirety, they show that he was by no means a Utopian
theorist, but possessed the insight and foresight of a statesman. He
advocated the establishment, under statutory authority, of a Council
of Trade entrusted with the sole administration of the national
revenue, bringing under that denomination the king’s revenues, the
ecclesiastical lands, charitable endowments, and certain other new
impositions, such as a tax of one-fortieth on all grain grown in the
country, one-twentieth of all sums sued for by litigants, and a legacy
duty of one-fortieth. The Council of Trade would control the national
treasury and would direct the national expenditure. The uses to
which he suggested the moneys thus collected should be directed
were all devised in the interests of promotion of trade. After allowing
a sufficient sum for the Civil List, the Council were to discover proper
means of employing the poor and preventing idleness; establish
national granaries; improve the mines and develop the mineral
wealth of the country; restore the fisheries to their flourishing
condition of the reign of James I.; reduce the interest of money;
abolish monopolies; and encourage foreign trade, which was at a
very low ebb. Notwithstanding the vigour with which Law advocated
his proposals, and notwithstanding the brilliant hopes he held out by
their adoption, they received little or no countenance from public
opinion, and were regarded as wholly impracticable by Parliament.
During the five years that followed his first unsuccessful
incursion into the domain of practical politics, Law was engrossed in
the development of a new and more brilliant project. He gave it to
the world in 1705 in a volume which bore the title, “Money and
Trade considered, with a Proposal for Supplying the Nation with
Money.” It displayed a remarkable grasp of the theory of credit, and
evidenced the inborn financial genius of its author. Although its
proposals and the propositions upon which they were based can
hardly bear judgment according to the standards of present-day
political economy, it must be remembered that up to that time no
attempt had been made in the formulation of the principles of that
science. The difficulties he had to encounter were great, but the
manner in which he surmounted them was not only a tribute to his
clearness of mind, but showed a judicial capacity to a remarkable
extent in marshalling masses of disjointed facts.
He proposed the establishment of a Land Bank, with power to
issue to landlords notes secured upon their estates, and having a
forced currency at their face value. The extent of each issue was to
be determined in one of three ways: 1. As an ordinary heritable
loan, not exceeding the maximum of two-thirds of the value of the
property; 2. As a loan up to the full value of the property, but with a
fixed period of redemption; or 3. As an irredeemable purchase for
value. The adoption of his proposal would have had the effect, he
submitted, of relieving the commercial tension due to the
insufficiency of specie by supplying a medium of currency of a non-
fluctuating value. Though forced, the notes would not in any way
have been mere accommodation paper, but would always be for
value or security received. Confidence would thus have been
maintained, and the risk of panic amongst holders avoided.
Law had succeeded in interesting the Court party and a
considerable number of influential politicians in favour of his
suggested scheme. It appealed to them less upon its merits than
upon its probable effect of reducing the estates of the kingdom to
dependence upon the Government. The Duke of Argyll, supported by
his sons the Marquis of Lorne and Lord Archibald Campbell, and by
the Marquis of Tweeddale, submitted the proposal to the Scottish
Parliament. An opposition, however, led by the Lord Chancellor,
proved strong enough to reject it by a large majority, and passed a
resolution “that the establishing of any kind of paper credit, so as to
oblige it to pass, was an improper expedient for the nation.” It is
evident that the ground of the opposition, which was ostensibly the
chimerical nature of the scheme, but really the fear that the
Government of the country would be placed in the hands of the
Court by its adoption, was not the concealed intention of Law in its
formulation. The possibility of this consequence only emerged in the
course of discussion, and in the knowledge of the composition of
Parliament the opponents of the scheme were strongly justified in
regarding the possible result as a certain probability. From Law’s
point of view, however, the scheme only attempted what is
successfully followed by banking institutions of the present day, with
the difference that the latter have a reserve of gold against their
notes, whereas the former would have had the landed property of
the country.
Law’s hopes of being able to realise his ambitions in his native
land were now at an end. He saw no prospect of attaining that
position in the control of public affairs to which he aspired, and for
which he considered himself eminently fitted. He was, accordingly,
compelled to fall back upon his old gambling career, which had been
practically suspended since his return to Scotland. To such
advantage did he indulge his skill in this direction, that in the course
of a few months he found himself an extremely wealthy man,
amongst his gains being the estate of Sir Andrew Ramsay of a yearly
value of £1200 Scots, and an annuity of £1455 Scots secured upon
the estate of Pitreavie in Fife, purchased in 1711 by Sir Robert
Blackwood from the Earl of Rosebery.
The negotiations for the Union of the two kingdoms were now
fast approaching a successful conclusion. Law felt his safety in a
somewhat precarious condition, the death of Wilson still rendering
him liable to arrest should he cross the Border, and the Union in all
probability likely to remove the element of safety from his residence
in Scotland. He petitioned the Crown for a pardon, but Wilson’s
brother, an influential banker of Lombard Street, protested against
its being granted, thus leaving no excuse upon which a pardon
might be extended, had the royal prerogative been inclined in his
favour.
The Continent furnished the only safe asylum, and thither Law
removed himself in 1707, or at the latest, early in 1708. He seems
first to have taken up residence at the Hague, and then at Brussels,
living in luxurious fashion, and impressing every one by his
extravagance and apparently inexhaustible resources. With a keen
eye for the weaknesses of a people, Law introduced the Dutch to the
exciting possibilities of the lottery system. So far was he received
into their good favour that not only was a State lottery established,
but every town of any consequence had a smaller lottery of its own.
The lottery was to be the great panacea for all financial
embarrassments, national and municipal. Law, however, was not a
disinterested participant in all these dazzling schemes. His
suggestions, if worth adoption, were worth remuneration, but
unfortunately he did not himself disclose the source of it, with
results which necessitated his removal from the country. “Mr.
Hornbeck, Great Pensionary of Holland, being also a nice calculator,
finding out that Mr. Law had calculated these lotteries entirely to his
own benefit, and to the prejudice of the people, having got about
200,000 guilders by them, Mr. Law was privately advised by the
States to leave their dominions.”
On his expulsion from Holland, Law abandoned himself to the
life of a rover amongst the various Continental cities, and to all the
attractions they offered. For six years he exercised with profitable
results his skill as a gambler, and quickly gained a notoriety
throughout Europe as a player of remarkable and unvarying success
in every game of chance. He seems first to have gone to Paris,
which afforded a rich and extensive field for gambling operations,
and his good fortune brought around him a cringing crowd of
followers, hoping to attract to themselves some of the glamour that
surrounded the person of their idol. In his train were to be found the
flower of the French nobility. He spent his time in the houses of the
aristocracy of the day, of whom he was at all times a favoured guest,
not less by his skilful play than by his pleasant, affable manner, and
brilliant conversation and wit. Faro was the game in which he most
delighted, and at the houses of Poisson, Duclos, and at the Hotel de
Gesvres, he held a sort of faro bank, and the entree to these houses
was considered a matter of the greatest favour. In the fashionable
crowd of excited gamesters Law was the only one who remained
absolutely cool whatever the fortunes of the game. His operations
were conducted upon a most extensive scale, and necessitated the
employment of considerable sums of money. It was no uncommon
circumstance for Law to carry with him 100,000 livres or more in
gold. So cumbrous did this become, that he conceived and carried
out the idea of utilising counters, which were valued at eighteen
louis each, and proved more convenient than the coin they
represented.
During this first visit of Law to Paris, which apparently lasted not
more than a year, Law succeeded in gaining the good favour of the
Duc de Chartres, afterwards, as Duc d’Orleans, Regent of France
during the minority of Louis XV., and of Chamillard, the Comptroller-
General. With these he had frequent conversations concerning the
embarrassed condition of the French Treasury, and discussed
proposals for its improvement. He captivated them by the apparent
soundness of his knowledge of finance, and by his brilliant theories
for the establishment of the National Exchequer on a stable
foundation. Every opportunity was embraced by Law for holding
these discussions, and although they had no immediate effect
beyond securing the adherence of two of the most powerful men in
the Government, they laid the foundation of his future greatness.
Unfortunately, however, for Law, the continuity of his acquaintance
with the man with whom he desired most to cultivate friendship was
rudely and unexpectedly suspended. D’Argenson, Lieutenant-General
of Police, was suspicious of Law and his methods. His reports to the
Government were unfavourable and framed with a view to Law’s
expulsion from Paris. This he ultimately succeeded in getting
authority to do, and Law was immediately served with a notice to
leave the capital within twenty-four hours on the ground “that he
knew how to play too well at the games he had introduced.”
For a considerable time Law remained away from Paris, visiting
the principal cities of Italy, Hungary, and Germany, and in all leaving
behind him the reputation of being one of the most remarkable men
of his age. He became a frequent and well-known visitor at all the
gambling resorts on the Continent. His progress from city to city
resembled the progress of a royal court, and rumour preceded him
to herald his coming. He was no common gambler. He was an
accomplished man of the world, exquisitely courteous, and with
interests that rose above the sordid pursuits from which he derived
his pecuniary prosperity. His political instincts were always allowed
free play, and by close observation he acquired the amplest
knowledge of the industrial and economic conditions of the various
countries he visited.
Law was now becoming anxious to secure an opportunity of
putting into practice the schemes he had mentally constructed for
the improvement of trade and commerce. The more he observed the
prevailing unhealthiness of industry, and the more he satisfied
himself as to the apparent causes of industrial depression, the more
did he feel that his scheme was the only royal remedy. He
accordingly returned to Paris shortly before the close of the reign of
Louis XIV., purposing to gain the support of that monarch for the
adoption of his system in France. Chamillard did not now occupy the
office of Comptroller-General, but Law through the influence of the
Abbé Thesul was received by Desmarets his successor, who not only
discussed in thorough detail the scheme laid before him by Law for
the rehabilitation of the financial condition of the country, but
became so enamoured of it that he decided upon submitting it to the
King himself. Louis XIV., however, was not a man of large mental
horizon. His decisions were often the outcome of the impulse of the
moment. Frequently they were determined by religious bias, even
where religious scruples were wholly foreign to the matter under
consideration. Law’s proposal seems to have been placed under the
latter category by Louis XIV. Report has it that the bigoted monarch
was more anxious to learn the faith to which the Scotsman belonged
than to know the merits of his scheme, and that on being informed
Law was not a Catholic, he brushed aside the matter and refused to
accept his services.
Disappointed, but not discouraged, Law was more determined
than ever to have his system put to practical test. If France did not
accept salvation at his hands, he doubted not some other country
would. He accordingly approached the King of Sardinia, one of the
needy sovereigns of the day. Law’s proposal to him was the
establishment of a land-bank, which he held out in glowing terms as
the certain foundation of great national prosperity, but the wily
monarch was not to be drawn, and with a touch of sarcasm
recommended Law again to urge his scheme upon France. “If I
know,” he said, “the disposition of the people of that kingdom, I am
sure they will relish your schemes; and, therefore, I would advise
you to go thither.”
The close of 1714 saw Law for the third time in Paris. Whether
his return to France was due to the suggestion of the King of
Sardinia, or to his having perceived a possibility of his system being
yet adopted by France, whose crippled financial condition was
becoming more serious as time went on, and demanded some
drastic remedy to relieve the intolerable burden upon the Treasury,
we cannot judge. He probably considered that, with bankruptcy
hanging over the French nation like a grim spectre, necessity, if not
conviction, would induce the acceptance of his theories. The nation’s
indebtedness had now outgrown its resources. Every conceivable
device had been resorted to for the purpose of meeting the most
pressing obligations. Provision for the future was regardlessly
sacrificed to the needs of the moment, and ingenuity was devoted
only to keeping the evil day afar off. Every one feared the worst. No
one was able to grapple with the difficulty in a broad, statesmanlike
fashion, and to carry out a bold policy of national economy. The
Treasury had to face the payment of exorbitant rates of interest
upon loans, the full value of which had not been received. The
coinage was debased to an extent altogether out of proportion to its
face value. Lotteries were organised on an extensive scale as a
means of appealing to the gambling instincts of the community, and
as a method of applying indirect taxation without the hateful
element of compulsion. Billets d’état were foisted upon unwilling
creditors in almost unlimited amounts, and formed a paper currency
that had difficulty in changing hands at even 10 per cent. upon its
value of issue. To crown all, titles were sold as mere articles of
commerce, sinecures created with high-sounding designations that
roused the ridicule of the multitude, but helped to provide the King
with money, and monopolies granted to the highest bidder. Yet all
these devices failed their purpose, and the insatiable hunger of the
Treasury was still far from being appeased. Financial paralysis was
creeping over the nation, and threatened the gravest consequences.
Here was such a field as Law alone could fully appreciate.
Fortune at last seemed about to smile upon him. His star was about
to assume a meteoric brilliance, and to mount towards its zenith
with marvellous rapidity. Circumstances moulded themselves to his
successful progress; and with rare capacity Law took full advantage
of every opportunity. In order to remove as far as possible, social
obstacles to his easy access to Court, he took up residence in a fine
mansion, and lived as a man with unlimited means at his disposal.
He entertained, in the extravagant way that marked his previous
visits to Paris, all those whom he thought he could utilise for his own
advancement; and the death of Mr. Segnior enabled him to marry
the latter’s widow, with whom he had hitherto been living, thus
removing the taint of illicitness from his cohabitation with her, and
legitimatising his family.
Law’s objective was the good favour of the Duc d’Orleans. He
recognised the importance of obtaining the support of the man who
promised to occupy the Regency within a very short time, and who
would thus possess sufficient power to impose upon the Government
any scheme towards which he was favourably inclined. With great
prudence Law did not seem to be over-anxious in the prosecution of
his aim, lest he might induce suspicion as to his disinterestedness.
He, accordingly, devoted himself at first to the entertainment of the
Prince by bringing into play all his varied gifts, and by gratifying his
tastes for gambling and pleasure as far as he was able. “His good
address and skill at play, made him particularly taken notice of by
the Regent, who used to play with him at baggammon, a game the
Regent likes mightily, and Mr. Law plays very well at.” By this
process, Law succeeded in placing his intimacy with the Duc upon a
solid foundation, and in securing his influence when the opportune
moment arrived for its exercise.
Law’s fame as a potential financier of national grasp was at this
time exercising the minds of the British Government of the day. The
Earl of Stair had been newly appointed Ambassador to the Court of
France, and was so impressed with Law’s ability that he
recommended him to Lord Halifax and to Secretary Stanhope as a
man who might be useful in suggesting some means of liquidating
the debts of the British Treasury, which at that time were somewhat
complicated and assuming enormous proportions. On Feb. 12, 1715,
Stair wrote to Stanhope:—
“... There is a countryman of mine named Law of whom you
have no doubt often heard. He is a man of very good sense, and
who has a head fit for calculations of all kinds to an extent beyond
anybody.... Could not such a man be useful in devising some plan for
paying off the national debts? If you think so, it will be easy to make
him come. He desires the power of being useful to his country. I
wrote about him to Lord Halifax.... The King of Sicily presses him
extremely to go into Piedmont, to put their affairs upon the foot they
have already spoken of. I have seen the King’s letters to Law, which
are very obliging and pressing. I would not venture to speak thus to
you of this man had I not known him for a long time as a person of
as good sense as I ever knew in my life, of very solid good sense,
and very useful; and in the matters he takes himself up with,
certainly the cleverest man that is.”
Shortly before this date Stair had written to Halifax in similar
terms, and received the following reply of date February 14, 1715:
“I had the honour to know Mr. Law a little at the Hague, and
have by me some papers of his sent to Lord Godolphin out of
Scotland, by which I have a great esteem for his abilities, and am
extreme fond of having his assistance in the Revenue. I have spoke
to the King and some of his Ministers about him, but there appears
some difficulty in his case, and in the way of having him brought
over. If your Lordship can suggest anything to me that can ease this
matter, I should be very glad to receive it.”
The latter portion of this letter obviously refers to Law’s
conviction of murder by the English courts, which Law had failed to
obtain pardon for. On April 30, 1715, Stanhope replied to Stair in the
following terms:—
“Though I have not hitherto, in my returns to your Lordship’s
letters, taken notice of what you have writ to me once or twice
about Mr. Law, yet I did not fail to lay it before the King. I am now
to tell your Lordship that I find a disposition to comply with what
your Lordship proposes, though at the same time it has met, and
does meet, with opposition, and I believe it will be no hard matter
for him to guess from whence it proceeds.”
Lord Stair’s admiration of Law was very considerable, and so
intimate was their friendship that we find the first entry in Stair’s
Journal upon his arrival as British Ambassador in Paris in 1715 to be:
—“Wednesday, January the 23rd, at night, arrived at Paris; saw
nobody that night but Mr. Law.” Lord Stair’s strong recommendations
of Law to the British Government were based upon his fixed belief
that his services would be of incalculable value. Law, himself,
however, was not by any means anxious that they should be
accepted. He saw greater scope in France for his financial schemes,
and therefore, while permitting these friendly negotiations to
proceed, he was somewhat indifferent as to their result.
He did not abate, on the other hand, his assiduous cultivation of
the Duc d’Orleans; nor did he fail to please Desmarets, who, as
Comptroller-General was in such a position as likely to become a
powerful support in carrying out his plans. His relations with the
Comptroller-General were also strengthened by the representations
made to him by the Regent to encourage Law as a man whose
advice at that critical period might prove of the utmost value. By his
diplomatic conduct Law succeeded in having his proposal for the
establishment of a land-bank brought under discussion by the
Council of Ministers. The result, however, was again unfavourable,
the ground of rejection of the scheme, according to Stair’s Journal,
being that there was no foundation for such a bank in a country
where everything depended on the King’s pleasure.
 CHAPTER III
Accession of Louis XV.—National debt of France.—
Debasement of coinage.—Arraignment of tax collectors.—
Council of Finances consider Law’s proposals
unfavourably.—Petition for permission to establish private
bank granted.—Constitution of the Bank.—Its Success.—
The “Pitt” diamond and its purchase.

L OUIS XIV. died on 1st September, 1715, and was

succeeded by his great-grandson Louis XV., then
a mere boy of five years old. The Duc d’Orleans
was called to the Regency, and wielded the power
of an absolute monarch. He brought to his office
the singular gifts of a statesman, and man of
affairs, modified by the vices and indifference of a debauchée. The
Duc de Saint-Simon speaks of the “range of his mind, of the
greatness of his genius, and of his views, of his singular penetration,
of the sagacity and address of his policy, of the fertility of his
expedients and of his resources, of the dexterity of his conduct
under all changes of circumstances and events, of his clearness in
considering objects and combining things; of his superiority over his
ministers, and over those that various powers sent to him; of the
exquisite discernment he displayed in investigating affairs; of his
learned ability in immediately replying to everything when he
wished.” No doubt this high estimate is the eulogium of a courtier,
and requires to be discounted to some extent, but, on the whole,
with little modification it may be considered a fair representation of
the abilities of the man who was about to place Law in practical
command of the government of France.

One of the first, as it also was one of the most important and
pressing, matters to which the Regent’s attention was demanded,
was the financial condition of the country. The adoption of drastic
measures was imperative. The national debt amounted to 3500
millions of livres, and while the revenue produced 145 millions, the
expenditure of the Government absorbed 142 millions, leaving 3
millions with which to liquidate interest upon the national debt, or 1-
10th per cent. A deficit of 150 to 200 millions was thus accumulating
each year, and every resource which ingenuity could conceive having
long ago been exhausted, the situation was daily becoming more
difficult. The Regent, shortly after his accession, called a meeting of
the Council for the purpose of devising a means of relieving the
intolerable strain. National bankruptcy was suggested by a few of its
members, notably the Duc de Saint-Simon. The Regent would give
no ear to such a course, and waved the suggestion aside as alike
dishonourable and disastrous to all possibility of good government.
No one, however, seemed capable of offering any plan of permanent
value. The schemes proposed were merely expedients promising
temporary relief, and no other policy but one of despair being
apparent at the moment, the Regent was eager for their immediate
execution.
A commission or visa was appointed to investigate the nature of
the national debt, and, by classifying the claims, to bring order out
of chaos. By methods, in many instances more rigorous than just,
the national debt was reduced by 1500 millions, and interest was
made uniform at the rate of four per cent. Of the 2000 millions at
which the debt now stood, 1750 millions were funded, and the
balance of 250 millions was converted into a general floating debt
represented by billets d’état. A substantial reduction was thus made
in the amount of interest payable by the Treasury; but, without an
increase of permanent revenue, which, if it were to be accomplished
by the imposition of fresh taxation, neither the Regent nor his
Councillors would face, or without a reduction in expenditure to an
extent which would have rendered the public service inefficient, the
solution of the financial difficulty was as distant as ever. Recourse
was accordingly had to two measures, which served the purpose of
the moment. The first was the old expedient of debasing the
coinage. With the ostensible object of having a new currency with
the new king’s effigy, the old coinage was recalled. The fresh issue,
however, was depreciated in the process to the extent of about 30
per cent., and the Government profited by the transaction sufficient
to liquidate one year’s interest of the National Debt. The second
device for replenishing the Exchequer was the establishment of a
Chamber of Justice, a kind of inquisition for the investigation of the
conduct of the tax-collectors. These men by their unscrupulous
dealings, had come to be regarded as the evil genii of the French
peasantry. Like vampires, they had for years been sucking the very
life-blood of the nation. No redress was open to their victims, and
resistance only had the effect of increasing the burdens laid upon
their shoulders. The institution of the Chamber of Justice was
accordingly received with unbounded joy. Every tax-farmer was
arraigned before this tribunal. The most searching investigation was
made, not only into his own dealings, but also into the dealings of
the hordes of satellites whom he employed to bleed his unfortunate
victims. Where information was withheld, or even where it was
suspected that the information given was tainted with inaccuracy,
encouragement was given to informers by holding out promises of
20 per cent. of any fines that might be levied. Such a system, of
course, was bound to bring evils in its train as great as those it was
intended to remove. A reign of terror set in amongst the farmers-
general. No sympathy was extended to them by their judges. All
confidence in their honesty had long ago been destroyed. They were
already prejudged. No effort on their part could by any possibility
ward off the weight of accusation against them. Prison
accommodation was soon taxed beyond its capacity. Those who
were fortunate enough to escape this Jeddart justice by bribery, by
payment of enormous fines, or by quietly submitting to wholesale
confiscation, left the country as a measure of personal safety. The
records of the period teem with the decisions of the Chamber of
Justice and their consequences. Most of the cases reflect a degree of
moral obliquity on the part of the judges not less than on the part of
the accused. We are told of one instance where a contractor had
been taxed, in proportion to his wealth and guilt, at the sum of
twelve millions livres. A courtier, possessing considerable influence
with the Government, offered to procure a remission of the fine for a
bribe of one hundred thousand crowns. “You are too late, my friend,”
replied the contractor, “I have already made a bargain with your wife
for fifty thousand.” In the course of a few weeks almost the whole of
the fraternity had run the gauntlet of the Chamber of Justice. They
had been stript of their power, their influence and their possessions.
The country had been effectively cleared of their presence, but to
comparatively small advantage. The total fines and confiscations
amounted to one hundred and eighty million livres, of which the
Government received only one half, and its parasites the other. As a
consequence, its career was brought to a close, and with it the
ingenious financial devices of the Council of Ministers.
Law was an amused spectator of the puerile efforts of the
Regent and his advisers to restore financial stability to their country.
He regarded them no less with scorn, and probably rejoiced in the
futility of their efforts, in the hope that each successive step they
took would bring the realisation of his own ambition within
measurable distance. The position he occupied, however, was one of
difficulty, and demanded a display of considerable tact and
judgment. He had educated the Regent up to the point of implicit
confidence in his scheme, but there still remained a dead weight of
opposition in the Council, and without the support of both the
ground was very uncertain.
No time was lost by Law in an attempt to bring his proposals to
a head. He repeatedly interviewed the Regent within the first few
weeks after the death of Louis XIV., and submitted definite schemes
for relieving the situation. He urged that by the adoption of a system
of paper credit, not necessarily for supplanting, but for
supplementing, the coinage in currency, not only would the trade of
the country increase in volume, but the national debt would be
effectively dealt with. He based his argument upon the principle that
the quantity of money in circulation in a country determines its
industrial activity. Recognising that money, whether it be specie or
paper, is not itself the wealth of a country, but only the measure of
its wealth, and that in whatever form it exists it must represent
either the whole or part of that actual wealth, he conceived the idea
of issuing the notes against the landed property of France, and the
ordinary State revenues. He pointed out, as examples in support of
his proposals, the immense benefits which had flowed from the
adoption of a similar system by England, Holland, Venice, and
Genoa. The Regent, convinced before by Law’s arguments, was now
determined to put them into operation. He convened the Council of
Finances, and invited to its deliberations the principal bankers and
merchants of Paris and of the provinces. The sederunt took place on
24th October, 1715, only eight weeks after the King’s death, but the
Regent had personally interviewed beforehand several of the
members to secure their support for Law. To this assembly Law
unfolded the general outline of his proposals. “He was listened to as
long as he liked to talk. Some, who saw that the Regent was almost
decided, acquiesced; but the majority opposed.” The precise ground
of opposition is nowhere recorded, but probably the fear, expressed
at the former Council in July, had not been dissipated, that the
system would lend itself to abuse at the hands of an absolute
monarch, and might bring in its train greater evils than those it was
intended to remedy. The letters patent of 2nd May, 1716, granting
private banking privileges to Law, refers to the decision of this
assembly, but being couched in the language of official ambiguity,
gives no clue to the reasons which actuated the rejection of the
scheme. “Mr. Law having some time since proposed a scheme for
erecting a bank, which should consist of our own money, and be
administered in our own name, and under our authority, the project
was examined in our Council of Finances, when several bankers,
merchants and deputies from our trading cities being convened and
required to give their advice, they were unanimous in the opinion
that nothing could be more advantageous to our kingdom, which,
through its situation and fertility, added to the industry of its
inhabitants, stood in need of nothing more than a solid credit for
acquiring the most extensive and flourishing commerce. They
thought, however, that this present conjunction was not favourable
for the undertaking; and this reason, added to some particular
clauses of the project, determined us to refuse it.”
Law was thus foiled again, but weakness of purpose was far
from being a feature of his character. Irrefragable determination
steeled him against all rebuffs. He saw more than ever that France
was his last and only opportunity. He saw that the plastic minds of
most of the ministers were susceptible to the pressure of the
Regent’s influence if applied with sufficient strength. This was not
difficult of operation. The Regent’s influence was at Law’s command,
and he made unsparing use of it. With prudent calculation, however,
of the future, should his plans fail in their object by some mishap, he
modified his scheme to the extent of petitioning for permission to
establish a private instead of a national bank. In order, too, that the
members of the Council and those who would be called to the
deliberations in connection with his proposal should have some more
definite and complete knowledge of his theories than could be
conveyed in conversation, or in course of an address at the Council
table, Law translated his book on Money and Trade, published in
Edinburgh in 1705, supplementing what he had written there by
separate papers giving his maturer ideas.
Early in 1716 every preparation had been made, and all
contingencies provided against. The Regent called again the
Assembly of the previous October. The scheme was solemnly
discussed. Opposition dwindled to a mere shadow. The scheme was
passed, and remitted to the Regency Council for final ratification.
This last stage in the process is well described by the Duc de Saint-
Simon, whose opposition not even the Regent could overcome.

M. le Duc d’Orléans took the trouble to speak in private to

each member of the council, and gently to make them
understand that he wished the bank to meet with no
opposition. He spoke his mind to me thoroughly; therefore a
reply was necessary. I said to him that I did not hide my
ignorance or my disgust for all finance matters; that
nevertheless, what he had just explained to me appeared
good in itself, that without any new tax, without expense, and
without wronging or embarrassing anybody, money should
double itself at once by means of the notes of this bank, and
become transferable with the greatest facility. But along with
this advantage I found two inconveniences, the first, how to
govern the bank with sufficient foresight and wisdom, so as
not to issue more notes than could be paid whenever
presented: the second, that what is excellent in a republic, or
in a monarchy where the finance is entirely popular, as in
England, is of pernicious use in an absolute monarchy such as
France, where the necessities of a war badly undertaken and
ill sustained, the avidity of a first minister, favourite or
mistress, the luxury, the wild expenses, the prodigality of a
King, might soon exhaust a bank, and ruin all the holders of
notes, that is to say overthrow the realm. M. le Duc d’Orléans
agreed to this; but at the same time maintained that a King
would have so much interest in never meddling or allowing
minister, mistress, or favourite to meddle with the bank, that
this capital inconvenience was never to be feared. Upon that
we for a long time disputed without convincing each other, so
that when, some few days afterwards, he proposed the bank
to the regency council, I gave my opinion as I have just
explained it, but with more force and at length: and my
conclusion was to reject the bank, as a bait the most fatal, in
an absolute country, while in a free country it would be a very
good and very wise establishment.
Few dared to be of this opinion: the bank passed. M. le
Duc d’Orléans cast upon me some little reproaches but
gentle, for having spoken at such length. I based my excuses
upon my belief that by duty, honour, and conscience, I ought
 to speak according to my persuasion, after having well
thought over the matter, and explained myself sufficiently to
make my opinion well understood, and the reason I had for
forming it. Immediately after, the edict was registered without
difficulty at the Parliament. This assembly sometimes knew
how to please the Regent with good grace in order to turn
the cold shoulder to him afterwards with more efficacy.

Letters patent were issued on 2nd and 28th May, 1716,

incorporating the Bank, and three days after the latter date, these
letters were registered in the Parliamentary journals. The Bank was
formed under the name of the General Bank of Law & Company, the
principal partners being Law himself and his brother William. The
capital was fixed at six million livres, a sum approximately equal to
£300,000, divided into 1200 shares of 5000 livres each. The price of
the shares allotted to subscribers was payable in four equal
instalments of which only one required to be in cash, the balance
being in billets d’état. The management of the Bank and its general
policy was placed in the hands of the shareholders themselves, the
extent of their voting interest being determined by the number of
their individual shares, each five shares conferring one vote. A bi-
yearly audit was to be made of the Bank’s financial position, and
shareholders were to be convened at least twice a year. The
business of the Bank was similar in its nature to ordinary banking
business of the present day, and wise provision was made against
engaging in commercial undertakings. In short, the regulations were
modelled upon the soundest principles of finance. The one great
feature of the Bank, however, and a feature that displayed Law’s
remarkable foresight, because its establishment was only the first
step in the development of his vast designs whose ultimate
accomplishment depended upon present success, consisted in the
character of the note issue. All notes were drawn at sight to bearer,
and were promises to pay in coin of the weight and standard of the
day of issue. Here rested the foundation of the Bank’s phenomenal
success. The coinage had in previous years been subject to sudden
and arbitrary changes of relative value, and consequently its
purchasing power was always of a speculative character. But, further,
as the Government alone secured the profit upon depreciation of the
coinage, each alteration brought with it dislocation of commercial
transactions and indirectly affected the volume of trade of the
country. Law’s notes in a very short time established themselves in
the confidence of all classes. Their value was permanent and
unaffected by any fluctuations in the coinage. Credit business was
rendered possible where before it had been folly. Industry in general
experienced the stimulus of financial stability, and underwent
remarkable expansion. The notes, and not the current coinage,
became the medium of exchange, and soon acquired a value in
excess of the specie they nominally represented. To these
advantages Law was careful to add ease of immediate conversion.
Although the capital payable in cash only amounted to £75,000, yet
the large deposits, and the extensive floating business of the Bank,
together with the high estimate in which the notes were held,
combined to make the risk of inability to convert the notes a very
remote contingency.
In view of all these substantial advantages, the success of Law’s
scheme came in a measure as a matter of course. Business of the
most profitable nature flowed into the Bank. By enabling commercial
men to trade upon their securities at a low rate of interest, not only
did he usurp the functions of the usurer, functions which the bad
policy of the Government had placed in his hands, but the
ramifications of the Bank spread throughout the whole country, and
made its beneficent influences felt in a striking degree. Law himself
very shortly became the supreme protector of industrial prosperity.
His statesmanlike instincts led him to revive many branches of trade
which had degenerated, and to induce the establishment of others
for which he saw the resources of France were eminently suited. In
order to facilitate the business of the Bank he opened in the
principal centres branch establishments which acted both as feeders
and as outlets for the central institution. No one was more surprised
than the Regent himself at the extraordinary measure of success
which had attended Law’s scheme. Law accordingly occupied more
than ever a high position in the Regent’s estimation. He was
regarded as the financial saviour of France, a heaven-sent legislator
before whom the hereditary advisers of the Crown were small and
paltry. Law was sufficiently astute to press the advantage he had
gained, and judging from the conduct of the Duc D’Orleans at this
time, he evidently had the latter under his control. Saint-Simon tells
us of the forced interviews he was compelled by the Regent to grant
to Law in order that he might be tutored into approval, if not
appreciation, of the new state of affairs. The wily courtier was
impervious, however, to the blandishments of his tutor. He only
deferred to the wish of the Regent, and merely gave a courteous
acquiescence to the arguments and statements that were showered
upon him. The object of these interviews obviously was to capture
the confidence of Saint-Simon who had been sufficiently courageous
on previous occasions to thwart Law’s designs in face of the Regent’s
wishes, and who might prove an awkward element in accomplishing
the development of his plans for the future. There was, however, a
subsidiary purpose, and Saint-Simon was not slow to recognise it. “I
soon knew,” says Saint-Simon, “that if Law had desired these regular
visits at my house, it was not because he expected to make me a
skilful financier, but because, like a man of sense—and he had a
good deal—he wished to draw near a servitor of the Regent who had
the best post in his confidence, and who long since had been in a
position to speak to him of everything and of everybody with the
greatest freedom and the most complete liberty, to try by this
frequent intercourse to gain my friendship, inform himself by me of
the intrinsic qualities of those of whom he only saw the outside, and
by degrees to come to the Council; through me, to represent the
annoyances he experienced, the people with whom he had to do,
and, lastly to profit by my dislike to the Duc de Noailles, who, whilst
embracing him every day, was dying of jealousy and vexation, and
raised in his path, underhand, all the obstacles and embarrassments
possible, and would have liked to stifle him. The Bank being in
action and flourishing, I believed it my duty to sustain it. I lent
myself, therefore, to the instructions Law proposed, and soon we
spoke to each other with a confidence I never have had reason to
repent.”
Notwithstanding the pressure of work upon Law’s shoulders at
this period when the enormous amount of details consequent upon
the establishment of the Bank required his unremitting attention, he
yet found ample time for indulging in those trifling matters which
bulk so largely in the estimation of a courtier, and, especially if they
entail extravagant expenditure, often cloud his limited horizon to the
exclusion of affairs of greater importance.
The Duc de Saint-Simon, with a fine eye and a keen judgment
for the dainty trifles of this world, had set his mind upon the
purchase for the King of a priceless diamond which had come into
the market early in 1717. This gem, variously known as the “Pitt” or
“Regent” diamond, possessed a rather questionable history. It had
been discovered in 1701 in the Parteal mines of the Great Mogul by
a slave, who immediately decamped with his precious find to the
coast. Here he negotiated a sale with an English captain, who sold it
to the Governor of Fort St. George, an office held at that time by
Thomas Pitt, grandfather of the first Earl of Chatham. A model of it
was made and shown to Law, who had been approached with a view
to using his influence with the Regent for its purchase. The price,
however, was a stumbling-block, and Law at once requested the
assistance of the Duc de Saint-Simon. The Duc, who was always
superior to any trifling financial difficulty, thought “that it was not
consistent with the greatness of a King of France to be repelled from
the purchase of an inestimable jewel, unique of its kind in the world,
by the mere consideration of price, and the greater the number of
potentates who had not dared to think of it, the greater ought to be
his care not to let it escape him.” Saint-Simon’s record of his
interview with the Regent is an excellent example of the arguments
the extravagant spendthrift makes use of to salve his conscience
when any whim is to be satisfied. The Regent “feared blame for
making so considerable a purchase, while the most pressing
necessities could only be provided for with much trouble, and so
many people were of necessity kept in distress. I praised this
sentiment, but I said that he ought not to regard the greatest King
of Europe as he would a private gentleman, who would be very
reprehensible if he threw away 100,000 livres upon a fine diamond,
while he owed many debts which he could not pay; that he must
consider the honour of the crown, and not lose the occasion of
obtaining a priceless diamond which would efface the lustre of all
others in Europe! that it was a glory for his Regency which would
last for ever; that, whatever might be the state of the finances, the
saving obtained by a refusal of this jewel would not much relieve
them, for it would be scarcely perceptible; in fact, I did not quit M. le
Duc d’Orléans until he had promised that the diamond should be
bought. M. le Duc d’Orléans was agreeably deceived by the applause
that the public gave to an acquisition so beautiful and so unique.... I
much applauded myself for having induced the Regent to make so
illustrious a purchase.” Through Law the price was fixed at two
millions, or, approximately, £150,000. So reduced, however, was the
exchequer that payment was impossible at the time, and thus an
additional debt was added to an already over-burdened Treasury.
The purchase of the gewgaw was a simple matter, and Saint-Simon
was eminently capable for this portion of the negotiations. The
payment was more difficult, and was postponed to be dealt with by
Law himself.