A Gold Classics Library Selection

How Gold Is Created
In a supernova in the depths of space, long, long ago…

by Robert Kurlich

According to Dr. Neal deGrasse Tyson, author of Death by Black Hole and Other Cosmic Quandries, all gold on Earth started out in the center of a star; he says stars are “in the business of cosmic alchemy.”

Click here to read and hear more about the fascinating origin of gold

For another small article, see also NASA’s Picture of the day — On the Origin of Gold.

(R. Nemiroff & J, Bonnell) – “Where did the gold in your jewelry originate? No one is completely sure. The relative average abundance in our Solar System appears higher than can be made in the early universe, in stars, and even in typical supernova explosions. Some astronomers have recently suggested that neutron-rich heavy elements such as gold might be most easily made in rare neutron-rich explosions such as the collision of neutron stars. Since neutron star collisions are also suggested as the origin of short duration gamma-ray bursts, it is possible that you already own a souvenir from one of the most powerful explosions in the universe.”

A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)

ORDER DESK
1-800-869-5115
[email protected]

Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.

A Gold Classics Library Selection

Pompous Prognosticators
Optimism abounds as stock market crashes – 1928 to 1932

by Colin J. Seymour
May 2001 (Rev. August 29, 2001)

Chart locations are an approximate indication only. For relvance to 2001, scroll down to “Fast forward”

1. “We will not have any more crashes in our time.” – John Maynard Keynes in 1927 [NB: The authenticity of this one is a little suspect]

2. “I cannot help but raise a dissenting voice to statements that we are living in a fool’s paradise, and that prosperity in this country must necessarily diminish and recede in the near future.” – E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928

“There will be no interruption of our permanent prosperity.” – Myron E. Forbes, President, Pierce Arrow Motor Car Co., January 12, 1928

3. “No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment…and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding.” – Calvin Coolidge December 4, 1928

4. “There may be a recession in stock prices, but not anything in the nature of a crash.” – Irving Fisher, leading U.S. economist, New York Times, Sept. 5, 1929

5. “Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.” – Irving Fisher, Ph.D. in economics, Oct. 17, 1929

“This crash is not going to have much effect on business.” – Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929

“There will be no repetition of the break of yesterday… I have no fear of another comparable decline.” – Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929

“We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices.” – Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929

6. “This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan… that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years.” – R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929

“Buying of sound, seasoned issues now will not be regretted” – E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929

“Some pretty intelligent people are now buying stocks… Unless we are to have a panic — which no one seriously believes, stocks have hit bottom.” – R. W. McNeal, financial analyst in October 1929

7. “The decline is in paper values, not in tangible goods and services…America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin.” – Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929

“Hysteria has now disappeared from Wall Street.” – The Times of London, November 2, 1929

“The Wall Street crash doesn’t mean that there will be any general or serious business depression… For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game… Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before.” – Business Week, November 2, 1929

“…despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation…” – Harvard Economic Society (HES), November 2, 1929

8. “… a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall.” – HES, November 10, 1929

“The end of the decline of the Stock Market will probably not be long, only a few more days at most.”
– Irving Fisher, Professor of Economics at Yale University, November 14, 1929

“In most of the cities and towns of this country, this Wall Street panic will have no effect.”
– Paul Block (President of the Block newspaper chain), editorial, November 15, 1929

“Financial storm definitely passed.” – Bernard Baruch, cablegram to Winston Churchill, November 15, 1929

9. “I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.” – Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

“I am convinced that through these measures we have reestablished confidence.” – Herbert Hoover, December 1929

“[1930 will be] a splendid employment year.” – U.S. Dept. of Labor, New Year’s Forecast, December 1929

10. “For the immediate future, at least, the outlook (stocks) is bright.”
– Irving Fisher, Ph.D. in Economics, in early 1930

11. “…there are indications that the severest phase of the recession is over…” – Harvard Economic Society (HES) Jan 18, 1930

12. “There is nothing in the situation to be disturbed about.” – Secretary of the Treasury Andrew Mellon, Feb 1930

13. “The spring of 1930 marks the end of a period of grave concern…American business is steadily coming back to a normal level of prosperity.” – Julius Barnes, head of Hoover’s National Business Survey Conference, Mar 16, 1930

“… the outlook continues favorable…” – HES Mar 29, 1930

14. “… the outlook is favorable…” – HES Apr 19, 1930

15. “While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.” – Herbert Hoover, President of the United States, May 1, 1930

“…by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent…” – HES May 17, 1930

“Gentleman, you have come sixty days too late. The depression is over.” – Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930

16. “… irregular and conflicting movements of business should soon give way to a sustained recovery…” – HES June 28, 1930

17. “… the present depression has about spent its force…” – HES, Aug 30, 1930

18. “We are now near the end of the declining phase of the depression.” – HES Nov 15, 1930

19. “Stabilization at [present] levels is clearly possible.” – HES Oct 31, 1931

20. “All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.” – President F.D. Roosevelt, 1933

Fast forward… year 2001

Future of US economy “very bright”-Fed’s Broaddus

“Despite the current slowdown, however, intermediate and longer-term prospects for the U.S. economy are still very bright” – Federal Reserve Bank of Richmond President Alfred Broaddus, in a speech to the Virginia Housing Coalition, June 14, 2001.

Treasury Secretary Sees ‘Golden Age’- “[the country is] on the edge of a golden age of prosperity… I think we’re not doing badly for the kind of correction that we’re in right now… It’s easy to find gloom and doom, but consumers are hanging in there, their spending rates are still quite good… The contraction occurred … in the investment sector, where we had an overexpansion.” – Treasury Secretary Paul O’Neill, on ABC’s “This Week.”, Sunday June 24, 2001.

Economy Likely Up Over Next Year – Commerce Secretary Don Evans “Over maybe the next year, I certainly expect it (U.S. economic growth) to return to those kind of levels of (potential) growth” [between 3.0 percent to 3.5 percent] – US Commerce Secretary Don Evans to a Washington news conference, Wednesday August 29, 2001.

Aren’t these just a little disturbing after reading the prognostications from 1927-1933?

Colin Seymour – http://colinjs.com/finan/prognost.htm

References:

Many of the above quotations don’t have a reference to a source that you could look up in a library, such as a newspaper from the relevant era, or a learned journal, or a book complete with ISBN or Library of Congress numbers. We should therefore always be cautious in accepting the face value of such quotes. Nevertheless, I am sure most of these things were really said or something very close.

http://www.provide.net/~aelewis/gold/goldbear.htm
http://hv.greenspun.com/bboard/q-and-a-fetch-msg.tcl?msg_id=0016hr
http://sane.org.za/news_may99/money_matters.htm
http://www.srsr.org/toppage12.htm
http://www.sterling-asset.com/chrtmar99.htm
http://csf.colorado.edu/longwave/oct99/msg01538.html
“Only Yesterday” by Frederick Lewis Allen and “The Great Crash 1929” by John Kenneth Galbraith (mainly HES quotes) [thanks to Susan J. Barretta]

For Further Reading:

Black Thursday: October 24, 1929 [Newspaper headlines]

The 1929 crash [Newspaper headlines with charts]
Bang! went the doors of every bank in America
“… on March 6, 1933, Franklin Roosevelt, just sworn in for his first term as President, suddenly shut all 18,000 banks in America, aiming to overhaul them as fast as possible, and so reestablish people’s faith in government and America’s banking system…”

Depression, Radio and FDR
“Soon after his inaugural address, on March 12, 1933 Roosevelt held his first chat in an effort to quell the rising national panic over the banking crisis. By March 4th 5,000 banks had closed their doors and 36 States had suspended banking completely. Approximately $2.5 billion in individual savings were lost. Consequently, people were withdrawing their savings in droves, a situtation that only worsened the problem”

The Great Depression and the New Deal
“… when the banks reopened, the American public entrusted them with their money once more, which actually made the banks solvent. Merely by restoring public confidence in the banking system of America, Roosevelt saved it…”

Understanding How Glass-Steagall Act Impacts Investment Banking and the Role of Commercial Banks
“… by 1933 the U.S. was in one of the worst depressions of its history. A quarter of the formerly working population was unemployed. The nation’s banking system was chaotic. Over 11,000 banks had failed or had to merge, reducing the number by 40 per cent, from 25,000 to 14,000. The governors of several states had closed their states’ banks and in March President Roosevelt closed all the banks in the country…”

BANKING ACT OF 1935
“AN ACT To provide for the sound, effective, and uninterrupted operation of the banking system, and for other purposes”

Main Causes of the Great Depression [Gusmorino, Paul A., III., (May 13, 1996)]
The Great Depression 1920s-1941

Copyright © 2001 by Colin Seymour. All Rights Reserved. Reprinted by USAGOLD with permission of Mr. Seymour. No further reproduction without permission.

Reprinted with permission.

A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)

ORDER DESK
1-800-869-5115
[email protected]

Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.

A Gold Classics Library Selection

1997-1999 transcripts
2000-2002 transcripts
2003-2005 transcripts

The Alan Greenspan-Ron Paul Congressional Exchanges
(2000-2002)

Transcripts of the historic hearings before the U.S. House of Representatives’ Committee on Financial Services during question & answer sessions, 1997-2005

2000

2/17/2000

Dr. PAUL. Thank you, Mr. Chairman.

Good morning, Mr. Greenspan. I understand that you did not take my friendly advice last fall. I thought maybe you should look for other employment, but I see you have kept your job.

I am pleased to see you back, because at least you remember the days of sound money, and you have some respect for it. Even though you do describe it as nostalgia, you do remember the days of sound money. So I am pleased to have you here.

Of course, my concern for your welfare is that you might have to withstand some pummeling this coming year or two when the correction comes, because of all the inflation that we have undergone here in the last several years.

But I, too, like another Member of this committee, believe there is some unfairness in the system, that some benefit and others suffer. Of course, his solutions would be a lot different than mine, but I think a characteristic of paper money, of fiat money, is that some benefit and others lose.

A good example of this is how Wall Street benefits. Certainly Wall Street is doing very well. Just the other day, I had one of my shrimpers in my district call me and say he is tying up his boat. His oil prices have more than doubled and he cannot afford it, so for now he will have to close down shop. So he suffers more than the person on Wall Street. So it is an unfair system.

This unfairness is not unusual. This characteristic is well-known, that when you destroy and debase a currency, some people will suffer more than others. We have concentrated here a lot today on prices. You talk a lot about the price of labor. Yet, that is not the inflation, according to sound money economics.

The concern the sound money economist has is for the supply of money. If you increase the supply of money, you have inflation. Just because you are able to maintain a price level of a certain level, because of technology or for some other reason, this should not be reassurance, because we still can have our mal-investment, our excessive debt and borrowing. It might contribute even to the margin debt and these various things.

So I think we should concentrate, especially since we are dealing with monetary policy, more on monetary policy and what we are doing with the money.

It was suggested here that maybe you are running a policy that is too tight. Well, I would have to take exception to that, because it has been far from tight. I think that we have had tremendous growth in money. The last three months of last year might be historic highs for the increase of Federal Reserve credit. In the last three months, the Federal Reserve credit was increasing at a rate of 74 percent at an annual rate.

It is true, a lot of that has been withdrawn already, but this credit that was created at that time also influenced M3, and M3 during that period of time grew significantly, not quite as fast as the credit itself, but M3 was rising at a 17 percent annual rate.

Now, since that time, a lot of the credit has been withdrawn, but I have not seen any significant decrease in M3. I wanted to refer to this chart that the Federal Reserve prepared on M3 for the past three years. It sets the targets. For three years, you have never been once in the target range.

If I set my targets and performed like that as a physician, my patient would die. This would be big trouble in medicine, but here it does not seem to bother anybody. And if you extrapolate and look at the targets set in 1997 and carry that set of targets all the way out, you only missed M3 by $690 billion, just a small amount of extra money that came into circulation. But I think it is harmful. I know Wall Street likes it and the economy likes it when the bubble is getting bigger, but my concern is what is going to happen when this bubble bursts? I think it will, unless you can reassure me.

But the one specific question I have is will M3 shrink? Is that a goal of yours, to shrink M3, or is it only to withdraw some of that credit that you injected through the noncrisis of Y2K?

Mr. GREENSPAN. Let me suggest to you that the monetary aggregates as we measure them are getting increasingly complex and difficult to integrate into a set of forecasts.

The problem we have is not that money is unimportant, but how we define it. By definition, all prices are indeed the ratio of exchange of a good for money. And what we seek is what that is. Our problem is, we used M1 at one point as the proxy for money, and it turned out to be very difficult as an indicator of any financial state. We then went to M2 and had a similar problem. We have never done it with M3 per se, because it largely reflects the extent of the expansion of the banking industry, and when, in effect, banks expand, in and of itself it doesn’t tell you terribly much about what the real money is.

So our problem is not that we do not believe in sound money; we do. We very much believe that if you have a debased currency that you will have a debased economy. The difficulty is in defining what part of our liquidity structure is truly money. We have had trouble ferreting out proxies for that for a number of years. And the standard we employ is whether it gives us a good forward indicator of the direction of finance and the economy. Regrettably none of those that we have been able to develop, including MZM, have done that. That does not mean that we think that money is irrelevant; it means that we think that our measures of money have been inadequate and as a consequence of that we, as I have mentioned previously, have downgraded the use of the monetary aggregates for monetary policy purposes until we are able to find a more stable proxy for what we believe is the underlying money in the economy.

Dr. PAUL. So it is hard to manage something you can’t define.

Mr. GREENSPAN. It is not possible to manage something you cannot define.

7/25/2000

Dr. PAUL. Thank you, Mr. Chairman.

Mr. Greenspan, I have a couple of questions today. One is a general question. I want to get a comment from you dealing with the Austrian free market explanation of the business cycle. I will lead into that, as well as a question about the productivity statistics that are being challenged in a few places.

But first off, I would like to lead off with a quote that I think is important that we should not forget about our past history. ”Every new era in our history”-and we have had several-”has been based upon the exaggerated enthusiasm and the inflationary forces set in motion by some single new industry or industrial activity.” This was written by Businessweek in 1930, a couple of days after the crash.

Also, I would like to remind my colleagues about surpluses, and I know we look forward to all the surpluses. First, that portion of the national debt we pay the interest on is still going up. So there is a question about if we have true surpluses. But even if we did, I would like to remind my colleagues that we were, as a country and as money managers, reassured in the 1920’s that our surpluses in the 1920’s would serve us well, and it did not predict what was happening in the 1930’s.

Basically, the way I understand the Austrian free market explanation of a business cycle is once we embark on inflation, the creation of new money, we distort interest rates and we cause people to do dumb things. They overinvest, there is malinvestment, there is overcapacity and there has to be a correction, and the many good members or well-known members of the Austrian school, I am sure you are well aware of them, Mises, Hayek and Rothbord, as well as Henry Hazlitt, have written about this, and really did a pretty good job on predicting. It was the reason I was attracted to their writing, because certainly, Mises understood clearly that the Soviet system wouldn’t work.

In the 1920’s, the Austrian economic policy explained what would probably come in the 1930’s. None of the Austrian economists were surprised about the bursting of the bubble in Japan in 1989, and Japan, by the way, had surpluses. And of course, the best prediction of the Austrian economists was the breakdown of the Brettan Woods agreement, and that certainly told us something about what to expect in the 1970’s.

But the concerns from that school of thought would be that we still are inflating. Between 1995 and 1999, our M 3 money supply went up 41 percent. It increased during that period of time twice as fast as the GDP, contributing to this condition that we have. We have had benefits as a reserve currency of the world, which allows us to perpetuate the bubble, the financial bubble. Because of our huge current account deficit, we are now borrowing more than a billion dollars a day to finance, you know, our prosperity, and most economists, whether they are from the Austrian school or not, would accept the notion that this is unsustainable and something would have to happen.

Even recently I saw a statistic that showed total bank credit out of the realm of day-to-day activity in control of the Fed is increasing at the rate of 22 percent. We are now the biggest debtor in the world. We have $1.5 trillion foreign debt, and that now is 20 percent of the GDP, and these statistics concern many of the economists as a foreboding of things to come.

And my question dealing with this is, where do the Austrian economists go wrong? And where do you criticize them and say that we can’t accept anything that they say?

My second question deals with productivity. There are various groups that have said that our statistics are off. Estevao and Lach claim, and this was written up in the St. Louis Fed pamphlet, that the temps aren’t considered and that distorts the views. Stephen Roach at Morgan Stanley said we don’t take into consideration overtime. Robert Gordon of Northwestern University says that 99 percent of the productivity benefits were in the computer industry and had very little to do with the general economy, and therefore, we should not be anxious to reassure ourselves that the productive increases will protect us from future corrections that could be rather serious.

Mr. GREENSPAN. Well, I will be glad to give you a long academic discussion on the Austrian school and its implications with respect to modern views of how the economy works having actually attended a seminar of Ludwig Mises, when he was probably 90, and I was a very small fraction of that. So I was aware of a great deal of what those teachings were, and a lot of them still are right. There is no question that they have been absorbed into the general view of the academic profession in many different ways, and you can see a goodly part of the teachings of the Austrian school in many of the academic materials that come out in today’s various journals, even though they are rarely, if ever, discussed in those terms.

We have an extraordinary economy with which we have to deal both in the United States and the rest of the world. What we find over the generations is that the underlying forces which engender economic change themselves are changing all the time, human nature being the sole apparent constant throughout the whole process. I think it is safe to say that economists generally continuously struggle to understand which particular structure is essentially defining what makes the economy likely to move in one direction or another in the period immediately ahead, and I will venture to say that that view continuously changes from one decade to the next. We had views about inflation in the 1960’s, and in fact, the desirability of a little inflation, which we no longer hold any more, at least the vast majority no longer hold as being desirable.

The general elements which contribute to stability in a market economy change from period to period as we observe that certain hypotheses about how the system works do not square with reality. So all I can say is that the long tentacles, you might say, of the Austrian school have reached far into the future from when most of them practiced and have had a profound and, in my judgment, probably an irreversible effect on how most mainstream economists think in this country.

Dr. PAUL. You don’t have time to answer the one on productivity, but in some ways, I am sort of hoping you would say don’t worry about these Austrian economists, because if you worry too much about them, and these predictions they paint in the past came true, in some ways we should be concerned, and I would like you to reassure me that they are absolutely wrong.

Mr. GREENSPAN. Let me distinguish between analyses of the way economies work and forecasts people make as a consequence of those analyses. The remarkable thing about the behavior of economies is they rarely square with forecasts as much as one should hope they did. I know there is a big dispute on the issue of productivity data. I don’t want to get into that. We would be here for the rest of the month. I think the evidence, in my judgment, is increasingly persuasive that there has been an indeed underlying structural change in productivity in this country.

2001

2/28/2001

Mr. PAUL. Thank you.

Welcome, Mr. Chairman. In the last few weeks, you have received a fair amount of criticism and suggestions about what to do with interest rates and the economy, and I think that is going to continue, because I suspect that we are moving into what you call-you do not call it a ”recession,” but a ”retrenchment.” I guess that may be a new word.

But anyway, there will be a lot of suggestions as to what you should do, and I do not want to presume to make a suggestion, what interest rates should be, but I would like to address more the system that you have been asked to manage, because in many ways I think it is an unmanageable system, and yet it is key to what is happening in our economy. We have a system that you operate where you are continuously asked to lower interest rates.

I would like to remind my colleagues and everybody else that when you are asked to lower interest rates, you are asked in reality to expand the money supply, because you have to go out and buy something. You buy debt. So every time somebody says, ”lower the interest rates,” they say ”inflate the money supply.” I think that is important.

You had a little conversation before about the money supply, and conceded it is important, but you admit you don’t even know what a good proxy is, so it is very difficult to talk about the money supply. I am disappointed that we don’t concentrate on that, talk about it more, even to the point now that we are-that you no longer make projections. I think this is admission almost of defeat.

There is no requirement for you to say, well, we are going to expand the money supply at a precise rate, so we are past that point of a tradition that has existed for a long time. But I think it is an unmanageable system and it leads to bad ideas and bad consequences, because we concentrate on prices, which is a consequence of the inflation of the money supply. Therefore, if a PPI is satisfactory, we neglect the fact that the money supply is surging, and doing a lot of mischief. Therefore we say, ”Well, maybe if we just slow up the economy. If we slow up the economy, it is going to take care of the inflation.”

I think we are really missing the point. You did mention a couple of words in your testimony today that I thought were important acknowledging that there are problems in the economy that we have to address. You talked about ”excesses” and ”imbalances” and the need for ”retrenchment.”

I believe what is important is that we connect the excesses and the imbalances to the policy that you operate, because I think that is key. Instead of being reassured that the PPI is OK, if we would have looked at the excesses, maybe there would have been an indication that there was a problem in the overspeculation in the stock market.

But here we have a monetary system that creates a speculation where NASDAQ goes to 5,000, and then we have a lot of analysts telling us it is a good buy, yet you now are citing the analysts as saying there is going to be a lot of growth. I am not sure which analyst you are quoting, but I am not sure that would be all that reassuring. But I think we should really talk about the money supply and what we are doing.

In 1996, you expressed a concern about ”irrational exuberance in the stock market,” and I think that was very justified. But since that time, the money supply measured by M3 went up $2.25 trillion. The stock market, of course, has soared. I see the imbalances as a consequence of excessive credit. The system has defects in it.

You are expected to know what the proper interest rate is. I don’t think you can know it, or the Federal Reserve can know. I think only the market can dictate the proper interest rate. I don’t think you know what the proper money supply is. You admit you don’t even have a good proxy for measuring the money supply. Yet that is your job, and yet all we ever hear is people coming and saying, ”Mr. Greenspan, if you want to avert a downturn, if you want to save us, just print more money.” That is essentially what this system is doing.

Now, the one question I have, quickly, is your plan that you mentioned in the Senate about using other securities like State bonds and foreign bonds, and others in order for you to buy more debt to monetize. I think it is ironic with a $5.7 trillion national debt, we are running out of things to buy.

Mr. GREENSPAN. Just remember that of that $5.7 trillion, a very large part is held in trust funds of the United States Government, so that the net debt is really $3.5 trillion, of which the Federal Reserve owns more than $500 billion.

Mr. PAUL. Could it be an advantage to make some of that marketable, rather than going out and buying municipal bonds, foreign debtor-state bonds?

Mr. GREENSPAN. No, because-I don’t want to get into the accounting processes here, but if you are dealing with a unified budget accounting system, all of that debt is intragovernmental transfers and essentially is a wash. You have to have external securities to affect the economy.

What we were discussing in the remarks with respect to what the Federal Reserve is looking at is what type of securities we could use for so-called ”repurchase agreements” which are collateralized. In other words, when we engage in an open market operation through a repurchase agreement, what we have now is Federal Government securities as collateral. The question is, if we don’t have them, what other kinds of collateral would we use? We are therefore talking about, for example, State and local securities.

But the crucial issue there is that to the extent that we use securities which are more risky than the Federal Government’s, we basically just take more collateral to offset that. So we can maintain the same degree of risk. And what we are trying to evaluate is various different types of securities which we can employ solely for the purpose of protecting the transaction from default.

7/18/2001

Dr. PAUL. [Presiding.] You mention about the Keynesian approach to economics of a few decades ago, believing that they could eliminate the business cycle; and your conclusion is, really you can’t, because you can’t control human nature. And I agree that you can’t control human nature and I agree that human nature and subjectivity is very important.

But I would also argue that businessmen are human beings and enjoy human nature-they are rational humans, and they react in a rational way to interest rates and the signals they get from you and the Federal Reserve. And therefore, when interest rates are artificially kept low, they will do precisely what they have done; they generate to overcapacity. And, of course, in a recession, this has to be liquidated and we are now in that stage. It doesn’t surprise the hard money school that we are in this phase of liquidating this overcapacity, and it should be; but we
would also argue that the Fed may be doing exactly the wrong thing.

Everybody criticizes you. Nobody comes to you and says, ”Oh, Mr. Greenspan, you print too much money; you generate too much credit; your interest rates are too low.” But the argument from this other school is saying that, precisely the opposite.
It says that because, in the past, you manipulated interest rates, you have caused the boom, therefore, you have made it a certainty that we would have a recession. And literally, by quickly resuming the inflation, the debasement of the currency, that sometimes works and sometimes it doesn’t work and that we are now in a period where it isn’t working.

It didn’t work in Japan, and this is part of human nature too, or the way the businessman responds. One time he responds the way you want and the next time he does not. So, is there a possibility that you recognize that maybe interest rates were manipulated in the wrong direction, and maybe if we had to live with a fiat currency, it would have been better, since 1990, to take the average rate of the overnight rate and just make it 4.5 percent, just left it there, rather than doing this and causing all these gyrations?

I would like you to comment on this, these ideas about monetary policy, in the hopes that maybe we can avoid what we in the hard money school see as a very serious problem and one that could get a lot worse, where we do not revive our economy, just as Japan has not been able to revive theirs.

Mr. GREENSPAN. Mr. Chairman, so long as you have fiat currency, which is a statutory issue, a central bank properly functioning will endeavor to, in many cases, replicate what a gold standard would itself generate.

If you take the period in the United States where the gold standard was functioning as close as you can get to its ideal, which would be from probably 1879 probably through the turn of the century, you had a number of business cycles in that period. And in many respects, they had very much the same characteristics that
we just observed in the last couple of years: the euphoria that builds up when the outlook improves and people overextend themselves and the markets shut them down.

Well, what shut down the market was the very significant rise in real, long-term interest rates in 1999, and in that regard, that is the way a gold standard would have worked. So I would submit to you that the presumption that if you have a hard currency regime, you will somehow alter human nature any more than a fiat
currency one will, I will suggest that that does not happen.

I certainly agree with you that if we would just pump out liquidity indefinitely, the distortions that would occur in the system would be very difficult to pull back together. I submit that is not what we do, and indeed, I would argue that given the fact that we have a fiat currency and that is the law of the land, we do as good a job as one can do in the context of the issues that you raise.

2002

2/27/02

Mr. PAUL. Thank you, Mr. Chairman.

Welcome, Chairman Greenspan. I wanted to start by referring to a speech you gave in January at the American Numismatic Society where you spoke profoundly about monetary policy and said that central bankers have had relative success over the past decades, and it raises hopes that the fiat monetary system can be managed in a responsible way. So I think you’re still at the point of hoping that this system will work. I maintain that the jury is still out on whether or not fiat money will work over the long-term.

And then you followed it up by saying, in case it didn’t work, and I don’t know whether you had tongue-in-cheek or not about this, but you said that we might have to go back to sea shells and oxen as our medium of exchange.

And then you reassured everybody that the discount window would have an adequate supply of oxen. Chairman Oxley, if we get to this point, which I suspect we will someday, I ask you that we have hearings to debate the issue of what medium of exchange we have before the Fed starts using oxen as a medium of exchange.

Chairman OXLEY. Are you referring to the Chairman here?

Mr. PAUL. Yes, I hope that you will at least consider that. But I think it is an important point and I want to relate that to the Enron issue, because in many ways, I think the system that you have been asked to manage is similar to being asked to manage an Enron system. Because Congress is notoriously in favor of deficit spending, we’re currently expanding the national debt at $250 billion a year, and we have nearly a $6 trillion debt.

Now we create that debt by buying votes. We spend a lot of money. Then the Federal Reserve comes in and they buy that debt in order to maintain the interest rate that they think is the right interest rate. And they take that and use it as an asset. You put it in the bank. You call this debt that we created an asset, and you use it as collateral for our Federal Reserve notes. So that’s a pretty good scheme, and I think in the moral terms, as well as the economic terms, it’s very similar to how Enron operates. I’m not convinced the system works very well because a lot of people here praise you for the adequate amount of liquidity and that’s what inflation is: create more money, lower interest rates. Every time you ask for liquidity, and every time you ask for lower interest rates, you’re asking for inflation of the money supply. I think that what we fail to do is to ask about the cost. Do we ever concern ourselves about the people who have had two-thirds of their income removed because they happened to be savers and living off interest? We gouge them with inflation, the loss of purchasing power, and taxes. A lot of people in this country have suffered from this particular system.

Now the analogy I would like to draw is something you said in your testimony on page 13, and you have mentioned several times now that Enron may be a good lesson, and I think it is. And I’m not for more of this regulation by SEC. I think you’re correct that derivatives provide a market tool that is worthwhile, but you also said the Enron decline is an effective illustration of the vulnerability of a firm whose market value largely rests on capitalized reputation, with very little on no physical assets. That’s exactly what our monetary system is all about, and that’s why I believe the dollar is vulnerable. We in Congress do not have a responsibility to run Enron. Some other government has the responsibility to deal with fraud. We have a responsibility to the dollar, and I think that’s what we fail so often to address around here.

In addition, you said that Enron provides encouragement that the force of market discipline can be counted on over time to foster a much greater transparency. That’s exactly what the market does with money. If you look at the rapid and the sudden devaluations of the fiat currencies around the world, such as what happened to us in 1979 and 1980, that was the market coming in and forcing vulnerability and transparency on us. Now gold gives you a hint as to what’s happening. Gold has sent a mild message in this past year. In spite of the fact that central banks and others continually sell and loan out gold and push the price of gold down, there is a message there.

So I would ask you, can you see any corollary whatsoever on what you’re asked to do in running our monetary system to that which Enron was involved in?

Mr. GREENSPAN. I hope there are fundamental differences. First, dealing with essentially a fiat currency, what it is that we are doing is that the currency is granted value by fiat of the sovereign, as it is said in the textbooks. The issue there is that in years past, there has been considerable evidence that fiat currencies have been mismanaged in general, and that inflation has been too often the result. What I was mentioning in the speech that you were referring to is the fact there is some evidence that we’re learning that lesson, learning how to manage a fiat currency. I’ve always had some considerable skepticism about whether that in the long run can succeed, but I must say to you that the evidence of recent decades is that it has been succeeding. Whether that continues is a forecast which I can’t really project on.

The Enron situation is essentially one in which there was an endeavor to imply that earnings were much greater than they really were, that increasing debt was hidden. I can think of no reason to have done what they did with their off-balance sheet transactions other than to obscure the extent of the debt they had, and what essentially was squandered in that process was the reputational capital which they had succeeded in achieving over a period of time. And I don’t perceive that anything that we are doing as a Central Bank involves anything related to that. I hope that where we need to be transparent and indicate what we are doing we do so, and we do so except in those areas where it, as I mentioned to you previously, inhibits the ability to actually function as a Central Bank.

But as I say in summary, I hope your analogy is inappropriate.

Mr. PAUL. I guess we’ll all keep hoping.

7/17/2002

The gentleman from Texas, Dr. Paul.

Dr. PAUL. Thank you, Mr. Chairman. Welcome, Chairman Greenspan. I have listened carefully to your testimony, but I get the sense I may be listening to the chairman of the board of Central Economic Planning rather than the Chairman of a Board that has been entrusted with protecting the value of the dollar.

I have, for quite a few years now, expressed concern about the value of the dollar, which I think we neglect here in the Congress, here in the committee, and I do not think that the Federal Reserve has done a good job in protecting the value of the dollar. It seems that maybe others are coming around to this viewpoint, because I see that the head of the IMF Mr. Koehler, has expressed a concern and made a suggestion that all the central bankers of the world need to lay plans for the near future to possibly prop up the dollar. So others have this same concern.

You have in your testimony expressed concern about the greed factor on Wall Street, which obviously is there, and you implied that this has come out from the excessive capitalization, excessive valuations, which may be true. But I think where you have come up short is in failing to explain why we have financial bubbles. I think if you have fiat money and excessive credit, you create financial bubbles, and you also undermine the value of the dollar, and now we are facing that consequence.

We see the disintegration of some of these markets. At the same time, we have potential real depreciation of the value of our dollar. We have pursued rampant inflation of the money supply since you have been chairman of the Federal Reserve. We have literally created $4.7 trillion worth of new money in M-3. Even in this last year with this tremendous burst of inflation of the money supply, it has gone up, since last January, over $1 trillion. You can’t have anything but lower value of that unit of account if you keep printing and creating new money.

Now, I would like to bring us back to sound money, and I would want to quote an eminent economist by the name of Alan Greenspan who gives me some credibility on what I am interested in. A time ago you said, ”in the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value without gold. This is the shabby secret of the welfare state that tirades against gold. Deficit spending is simply a scheme for the hidden confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.”

But gold always has always had to be undermined if fiat money is to work, and there has to be an illusion of trust for paper money to work. I think this has been happening for thousands of years. At one time the kings clipped coins, then they debased the metals, then we learned how to print money. Even as recently as the 1960s, for us to perpetuate a myth about our monetary system, we dumped two-thirds of our gold, 500 million ounces of gold, on to the market at $35 an ounce, in order to try to convince people to trust the money.

Even today, there is a fair amount of trading by central banks in gold, the dumping of hundreds of tons of gold, loaning of gold, for the sole purpose of making sure this indicator of gold does not discredit the paper money, and I think there is a definite concerted effort to do that.

My questions are twofold relating to gold. One, I have been trying desperately to find out the total amount of gold either dumped and sold on the markets by all the central banks of the world, or loaned by the central banks of the world. This is in hundreds and hundreds of tons. But those figures are not available to me. Maybe you can help me find this.

I think it would be important to know since all central banks still deal with and hold gold, whether they are dumping or loaning or buying, for that matter. But along this line, I have a bill that would say that our government, our Treasury, could not deal in gold and could not be involved in the gold market, unless the Congress knows about it.

That, to me, seems like such a reasonable approach and a reasonable request, but they say they don’t use it, so therefore, we don’t need the bill. If they are not trading in gold, what would be the harm in the Congress knowing about handling and dealing with this asset, gold?

Mr. GREENSPAN. Well, first of all, neither we nor the Treasury trades gold. My impression is that were we to do so, we would announce it. It is certainly the case that others do. There are data published monthly or quarterly which show the reported gold holdings in central banks throughout the world, so you do know who holds what.

The actual trading data, I don’t think is available, although the London Gold Exchange does show what its volume numbers are, and periodically individual central banks do indicate when they are planning to sell gold, but they all report what they own. So it may well be the case that you can’t find specific transactions, I think, but you can find the net results of those transactions, and they are published. But as far as the United States is concerned, we don’t do it.

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Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here. 

A Gold Classics Library Selection

1997-1999 transcripts
2000-2002 transcripts
2003-2005 transcripts

The Alan Greenspan-Ron Paul Congressional Exchanges
(1997-1999)

Transcripts of the historic hearings before the U.S. House of Representatives’ Committee on Financial Services during question & answer sessions, 1997-2005

Editor’s Note: With Alan Greenspan’s long tenure as chairman of the Federal Reserve seemingly coming to a close, we thought it appropriate to assemble this remarkable and extended dialogue with Representative Dr. Ron Paul for the benefit of our Gilded Opinion readers. Alan Greenspan, one of the most recognizable figures on the American financial scene, does not need a lengthy introduction, nor do I need to restate what so many have already said about his long influence on the markets and the economy as a whole.

Few know, though, of Alan Greenspan’s long connection with the gold market. Since the publication of the famous tract, “Gold and Economic Freedom,” in 1966, Mr. Greenspan has enjoyed a special, if controversial, status among gold owners and advocates — one to which Congressman Ron Paul refers frequently in the following exchanges. Dr. Ron Paul, the Texas Congressman, also occupies a special place with gold owners and advocates because of his outspoken and unwavering support of gold ownership as well as a gold-based monetary system.

In putting this page together, I was struck with Dr. Paul’s ability to cut through the political gamesmanship that necessarily comes with being chairman of the Fed to Alan Greenspan, the man and political/economic philosopher. What emerges is a powerful figure conflicted between the practical manager charged with operating within the current fiat monetary system and the philosopher-academic with a “nostalgia,” as he puts it, for the days of the gold standard. Without Dr. Paul’s incisive questioning, I doubt that this aspect of the Greenspan character would have found its way to the public venue and the historical record. Though the relationship appears adversarial at first blush, one also detects a certain amount of mutual respect and interest. Says Dr. Paul of the exchanges: “My questions are always on the same subject. If I don’t bring up the issue of hard money vs. fiat money, Greenspan himself does.”

It is our hope that the assemblage of this testimony which took place over a nearly nine year period will be useful to those looking for a deeper understanding of the monetary system under which we now operate and of Alan Greenspan’s views with respect to it. We also hope it will add spice to the biography of one of the more enigmatic figures to grace the American political stage at the turn of the 21st century.

In closing, I would like to pass along an anecdote reported by SmartMoney’s Donald Luskin in a 2002 interview of Ron Paul. Paul told Luskin the story of his owning an original copy of “Gold and Economic Freedom,” (which I reference above) and asking Greenspan to sign it. While doing so, Paul asked him if he still believed what he wrote in that essay some 40 years ago. That tract, written during Greenspan’s days as a devotee of Ayn Rand, is a strongly worded, no-holds-barred attack on fiat money and the central banks as an engine of the welfare state. It also endorses the gold standard as a deterrent to politicians’ penchant for running deficits and printing money. Greenspan — enigmatic as ever — responded that he “wouldn’t change a single word.” — Michael J. Kosares

3/5/1997

Mr. PAUL. Thank you, Mr. Chairman.

Mr. Chairman, I want to bring up the subject again about the CPI. We have talked a lot about the CPI and an effort to calculate our cost-of-living in this country, and specifically here, to measure how much we are going to increase the benefits that we are responsible for. But in reality, is not this attempt to measure a CPI or a cost-of-living nothing more than an indirect method or an effort to measure the depreciation of a currency? And that we are looking at prices, but we are also dealing with a currency problem.

When we debase or depreciate a currency we do get higher prices, but we also have malinvestment. We have distorted interest rates. We contribute to deficits. And also, we might not always be looking at the right prices. We have commodity prices, which is the usual conceded figure that everybody talks about as far as measuring inflation. But we might at times have inflated prices in the financial instruments.

So to say that inflation is under control and we are doing very well, I would suggest that we look at these other areas too, if indeed we recognize that we are talking about the depreciation of a currency.

One other thing that I would like to suggest, and it might be of interest to my colleagues, is that one of the characteristics of a currency of a country that depreciates its currency systematically is that the victims are not always equal. Some suffer more than others. Some benefit from inflation of the currency and the debasement of the currency. So indeed, I would expect the complaints that I hear. I would suggest that maybe this is related to monetary policy in a very serious manner.

The consensus now in Washington, all the important people have conceded that we should have a commission. But when we designate a commission, this usually means everybody knows what the results are. I mean, nobody complains that the CPI might under-calculate inflation or the cost-of-living for some individuals, which might be the case. So we have this commission.

But is it conceivable that this is nothing more than a vehicle to raise taxes? the New York Times just this week editorialized in favor of this because it raised taxes, and also it cuts benefits, and they are concerned about cutting benefits. But would it not be much more honest for Congress to deal with tax increases in an above-board fashion, especially if we think the CPI is not calculable? I think it is very difficult.

Also, I think that if it is a currency problem as well, we cannot concentrate only on prices. There have been some famous economists in our history who say, look to the people who talk about prices because they do not want to discuss the root cause of our problem, and that has to do with the inflation of the monetary system or the depreciation of the currency.

Mr. GREENSPAN. Dr. Paul, the concept of price increase is conceptually identical, but the inverse of the depreciation of the value of the currency. The best way to get a judgment of the value of the currency as such, if one could literally do it, is to separate the two components of long-term nominal interest rates into an inflation premium component and a real interest rate component. The former would be the true measure of the expected depreciation in the value of the currency.

We endeavor to capture that in these new index bonds that have been issued in which the Consumer Price Index, for good or ill, is used to approximate that. It does not exactly, and I think that is what I have been arguing with respect to the commission is to take the statistical bias out of the CPI and get a true cost-of-living index.

It is certainly the case that that is a measure of inflation. There are lots of different measures of inflation. I would argue that commodities, per se, steel, copper, aluminum, hides, whatever, used to be a very good indicator of overall inflation in the economy when we were heavily industrialized. Now they represent a very small part of the economy and services are far more relevant to the purchasing power of the currency than at any time, so that broader measures of price, in my judgment, are more relevant to determining what the true rate of inflation is.

Mr. PAUL. Can the inflated prices in the financial instruments not be a reflection of this same problem?

Mr. GREENSPAN. They are. This is a very important question and one which I was implicitly raising: do asset price changes affect the economy? And the answer is clearly, ”yes.” What you call it, whether it is inflation or not inflation, that is a nomenclature question. But the economics of it clearly means that if one is evaluating the stability of the system, you have to look at product prices, that is, prices of goods and services, and asset prices, meaning prices on items generally which have rates of return associated with them.

Mr. PAUL. Much has been said about your statements regarding the stock market and I wanted to address that for just 1 minute. In December when you stated this, of course, the market went down and this past week there was as sudden drop. The implication being that if you are unhappy with it, they assume that you will purposefully push up interest rates. But really since the first time you made that statement it seems that almost the opposite has occurred. M3 actually has accelerated, to my best estimate in the last 2 months it has gone up at a 10 percent rate. The base actually has perked up a little bit. Prior to this time it was rising at less than a 5 percent rate and now it is rising a little over 8 percent.

But then too we have another factor which is not easy to calculate, and that is what our friends in the foreign central banks do. During this short period of time they bought $23 billion worth of our debt. We do know that Secretary Rubin talks to them and that maybe there is an agreement that they help you out; they buy some of these Treasury bills so you do not have to buy quite so many.

Mr. GREENSPAN. There is no such agreement, Dr. Paul.

Mr. PAUL. You read about that though.

Mr. GREENSPAN. Sometimes what you read is not true.

Mr. PAUL. OK, we will get your comments on that. But anyway, they are accommodating us, whether it is policy or not. Their rate of increase on holding our bills are rising at over 20 percent, and even these 2 months at maybe 22 percent.

My suggestion here and the question is, instead of the sudden policy change where you may increase interest rates, it seems like to me that you may be working to maintain interest rates from not rising. Certainly, you would have a bigger job if we had a perfect balance of trade. I mean, they are accumulating a lot of our dollars and they are helping us out. So if we had a perfect balance of trade or if their policies change, all of a sudden would this not put a tremendous pressure on interest rates?

Mr. GREENSPAN. We have examined the issue to some extent on the question of what foreign holdings of U.S. Treasuries have done to U.S. interest rates. I think the best way of describing it is that you probably have got some small effect in the short run when very large changes in purchases occur. There is no evidence over a long run that interest rates are in any material way affected by purchases.

The reason, incidentally, is that they usually reflect shifts–in other words, some people buy, some people sell. Interest rates will only change if one party or the other is pressuring the market. There is no evidence which we can find which suggests that that is any consistent issue, so that the accumulation of U.S. Treasury assets, for example, is also reflected in the decumulation by other parties. We apparently cannot find any relationship which suggests to us that that particular process is significantly affecting—-

Mr. PAUL. For the past 2 years, the accumulation has been much greater.

Mr. GREENSPAN. That is correct, it has been.

Mr. PAUL. Thank you.

7/22/97

Dr. PAUL. Thank you, Mr. Chairman.

I think the Banking Committee must be making progress, because even others now bring up the subject of gold, so I guess conditions are changing. But I might just suggest that the price of gold between 1945 and 1971 being held at $35 an ounce was not much reassurance to many that the future did not bode poorly for inflation. So the price of gold being $325 or $350, ten times what it was a few years back, should not necessarily be reassurance about what the future holds. Unlike my colleague from the other side accusing you of searching for gloom, I might wonder whether or not we might be hiding from some of it? So I thought that the last thing I would suggest is that we lack monetary stimulus and all we need is a little more monetary stimulus, and all of a sudden we are going to take care of the problems. And by the way, the problems that are described are the problems that I am very much concerned about, but I come up with a different conclusion on why we are having those problems.

Earlier, I made the case in my opening statement that quite possibly we are using the wrong definitions and we are looking at the wrong things, and we continue to concentrate and to reassure ourselves that the Consumer Price Index is held in check, and therefore things are OK and there is no inflation. Real interest rates and the long bond remain rather high, so there is a little bit of inflationary expectation still built into the long-term bond. But the consumer prices might be inaccurate, as Sindlinger points out, and they may become less important right now because of the various technical things going on.

And also I made the suggestion that the money-supply calculations that we use today might not be as appropriate as they were in the past, because I do not think there is any doubt that we have all the reserves and all the credit and all the liquidity we need. I mean, it is out there. It might not be doing what we want it to do, but there is evidence that it is there. The marginal debt today was reported at $113 billion, just on our stocks. So there is no problem with getting the liquidity. My argument is that what if we looked at the prices of stocks as your indicator as you would look at the CRB? I mean, we would have a rapidly rising CRB-or any commodity index. It would be going up quite rapidly. For instance, in the past 3 months, we had a stock price rise of 25 percent. If it continued at that rate, we would increase the stock prices 100 percent in one year. If that was occurring in the commodities or Consumer Price Index, I know you would be doing something.

My question and suggestion is maybe we ought to be doing something now, because there is a lot of credit out there doing something else, causing malinvestment, causing deficits and debt to build up, and that there will be a correction. We have not repealed the business cycle. So we have to expect something from this.

I think there are some interesting figures about what has happened to the stock market. In 1989, Japan’s stock market had a greater value than our stock market does. Our market now is three times more valuable in terms of dollars than Japan. We have 48 percent of the value of all the stocks in the world, and we put out 27 percent of the output. So, there is a tremendous amount of marking up of prices, a tremendous amount of credit. So, instead of being lacking any credit, I think we have maybe an excess amount. I would like to know if you can reassure us that we have no concerns about this malinvestment, that we do not have excess credit and that these stock prices are not an indicator that might be similar to a Consumer Price Index?

Mr. KENNEDY. What?

Mr. GREENSPAN. Let me first say, Dr. Paul, it is certainly the case that if you look at the structure of long-term nominal Government interest rates, there is still a significant inflation premium left. In the 1950’s and the 1960’s, we had much lower nominal rates, and the reason was that the inflation premium was clearly quite significantly less. I think we will eventually get back there if we can maintain a stable noninflationary environment. I do not think we can remove the inflation premium immediately, because it takes a number of years for people to have confidence that they are dealing with a monetary policy which is not periodically inflationary.

To follow on the conversation I was having with Congressman Frank, the type of conversation we have at the Federal Open Market Committee is indeed the type of conversation that is coming from both of you. In other words, we are trying to look at all of these various forces and recognize where the stable relationships are and those which tell us about what is very likely to occur in the months, the quarters, and hopefully, in the years ahead.

It is a very intensive evaluation process, especially during a period when there seem to be changes in the longer-term structure which we do not yet know are significant or overwhelming. But we are experiencing changes which lead us to spend a considerable amount of time trying to evaluate what is going on. But we would be foolish to assume that all of history has somehow been wiped from the slate and that all of the old relationships, all of the problems that we have had in the past, have somehow in a period of a relatively few years, disappeared. The truth of the matter is that we suspect that there are things that are going on. We do not know yet how important they are. But we are keeping a very close evaluation of the types of events that are occurring, so that we can create what we believe to be the most appropriate monetary policy to keep this economic expansion going in a noninflationary way, because that is what is required to keep growth going.

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Dr. PAUL. So, you are saying the stock price index is of a lot less value than the commodity price index or the Consumer Price Index?

Mr. GREENSPAN. I would say our fundamental purpose is to keep inflation, meaning basically the underlying general price index, stable, because that is the most likely factor which will create financial stability overall. As I have said in previous commentary and discussions before this subcommittee, we of necessity look at the whole financial system, but it has always been our conclusion that the central focus is on the stability of product prices as the crucial determinant in the system, which if you solve that one, you are likely to solve the others as well.

Dr. PAUL. Thank you, Mr. Chairman. I have two brief points to make, then I have a couple of questions.

First, your comment about the deficit is very important in keeping interest rates high. It seems to me that the level of Government spending has to be even more important, because if you have a $2 trillion budget, and you tax that money out of the system, that is very detrimental, just as detrimental as if you borrowed out of the economy. So I think the level of spending is probably more important.

And as a follow-up to the question from the gentleman from Washington on the currency, we certainly do export a lot of our currencies. More than 60 percent ends up in foreign hands. And it serves a great benefit to us because it is like a free loan. It is not in our own country, it does not bid up prices, So we get to export our inflation. At the same time, they are willing to hold our debt; central banks are holding $600 billion worth of our debt. So again, we get to export our inflation, and the detriment is the consequence of what we are seeing in Southeast Asia.

But the real problem, though, is not the benefits that we receive temporarily, but the problem is when those dollars come home, like in 1979 and 1980, and then we have to deal with it because it is out of your hands, this money has been created. So I think we should not ignore that.

But my first question has to do with Mexico. It is bragged that we had this wonderful bailout of Mexico three years ago, and yet Mexico still has some of its same problems. They have tremendous bank loans occurring right now. The peso has weakened. Last month it went down 5 percent. Since the conditions are essentially the same, my question to you is when do you anticipate the next currency crisis in the Mexican peso?

And then another question that I would like to get in as well has to do with a follow-up with the gentleman from Massachusetts dealing with the inequity in the distribution of income. And in your statement you come across almost hostile or fearful that wages might go up. And I understand why you might be concerned about that, because you may eventually see the consequence of monetary inflation, and it will be reflected in higher wages. But where has the concern been about the escalation of value of stocks? People are expecting them to go up 30 percent a year. They are benefiting, but labor comes along and they want to get a little benefit. They want to raise their salaries 5 or 10 percent. Unlike the other side, I think the worst thing to do is interfere in the voluntary contract and mandate an increase in wages and give them minimum wage rates. That is not the answer.

But to understand the problem I think is very important. This is a natural consequence. They want to share as well, and this is a natural consequence of monetary inflation is that there is an equal distribution of income.

I would like you to address that and tell me if there is any merit to this argument and why you seem to have much greater concern about somebody making a few bucks more per hour versus the lack of concern of a stock market that is soaring at 30 percent increases per year.

Mr. GREENSPAN. Let me say that when I believe that there are trends within the financial system or in the economy generally which look to me and to my colleagues to be unsustainable and potentially destructive of the economic growth, we get concerned.

I am not aware of the fact that if I see things which I perceive to be running out of line, that I have not expressed myself. At least some people have asserted that I have expressed myself more often than I should. And I have commented on innumerable occasions, as I have, in fact, done today, that there are certain values in the system which by historical standards, are going to be difficult to sustain. And I am concerned about that, because it potentially is an issue which relates to the long-term values within the economy.

I have no concern whatever about the issue of wages going up. On the contrary, the more the better. It is only when they are real wages, whether they are wages which are tied to productivity or related to productivity gains. But wages which are moving up more than the rate of inflation, for example, I think are highly undesirable, and indeed to the extent that we do not get real wage increases, we do not get increases in standards of living. So I am strongly in favor of any increase in real wages and not strongly in favor at all of wages that go up and are wiped out by inflation.

Dr. PAUL. But the real wage is down compared to 1971. You have a little flip here or so, but since 1971 it is down.

Mr. GREENSPAN. Part of that issue, Congressman, is a statistical problem. I do not believe the real wage is truly down since 1971.

Dr. PAUL. But we cannot convince our workers of that. At least in my district they are not convinced by some statistic.

Mr. GREENSPAN. Let me put it this way: Productivity after the early 1970’s flattened out fairly dramatically, and that slowed real wage increases very dramatically as well. And to the extent that the sense in which earlier generations experienced significant increases in standards of living during the 1950’s and 1960’s and the early post-World War II period, of course productivity was advancing rapidly. That came to a dramatic end in the early 1970’s and persisted until very recently. And if people were concerned about that, they should be, and they should have been, and we should have been, as I think we were.

Dr. PAUL. Do you have a comment on when the next Mexico crisis is going to occur?

Mr. GREENSPAN. Yes. I am not concerned about a crisis in Mexico at this particular stage. I think they are doing reasonably well. The peso at this particular stage is floating appropriately. I do not see any immediate crisis at the moment. And while I do not deny that, as in any country, things can go askew, they have come out of the 1995 crisis frankly, somewhat better than I expected they would.

1998

7/22/1998

Dr. PAUL. Thank you, Mr. Chairman.

Mr. Greenspan, over a period of time, the dollar has been weak. If you look at it from 1971 until now, the curve is obviously downward. If you look at the last three years, the dollar has been relatively strong, and some people consider this a problem. Even our Government, our Fed and Treasury, just recently thought our dollar was too strong.

Of course, in free markets, the purchasing power of money is never tampered with, but under today’s conditions it was felt that it was too strong in relationship to the yen. Of course, we intervened and had some effect to the currency markets.

When do you suppose the time would be appropriate for the money managers to intervene in a much more aggressive manner, if the dollar continues to be very, very strong, and pressure is put on the Federal Reserve, political pressure, to say, ”We cannot sell our goods, we want some help”? Can you foresee that? And not a token amount of interference, intervention in the market, but a major intervention in the market to change the direction of the dollar, can you foresee that in the near future?

Mr. GREENSPAN. Congressman, let’s first emphasize that we do consult with the Treasury and ultimately the Secretary of the Treasury is the legally authorized determiner of the extent to which intervention occurs or doesn’t occur. The Secretary has indicated on numerous occasions that it is fundamental values which will determine the value of the dollar and other currencies, and over the long run, intervention doesn’t do very much one way or the other. I think that the evidence over the years has demonstrated that that particular statement is clearly sustainable.

I can’t anticipate what particular policies will be under hypothetical circumstances. It is an important question, there is no doubt. But overall, the presumption that somehow we, meaning the monetary authorities, the Fed and the Treasury, can somehow alter the value of a currency in a significant manner when fundamentals are going in the opposite direction is an illusion. We cannot.

Dr. PAUL. So in a way what we have done just recently was just wasted money, since we do know that intervention does not have much effect? Why do we bother on occasion–

Mr. GREENSPAN. First of all, we don’t waste money. We are taking a position in a currency, and very often over the years we turn out to actually have a profit in the process. When you intervene, you don’t spend the money. You are just taking an investment position or a speculative position.

Dr. PAUL. Unless that currency happens to go down, which it well could.

Mr. GREENSPAN. Yes. That is certainly the case, and if you do it in large volume, then the answer is there are speculative risks. We have taken very few of those.

The very few times which we intervened, and we have not intervened for years until this most recent event occured, was when we believed that the markets were unstable and that intervention might have an impact. You need both of those conditions to exist. It was the judgment of the Secretary of the Treasury, to which we agreed, that action taken would have the effect of breaking a pattern of a very quick run in the currency. I don’t think any of us believed it would have more than a temporary impact.

Dr. PAUL. A very quick question. You seem to welcome, and you have been quoted as welcoming, a downturn in the economy to compensate for the surge and modest growth in the economy. Is it not true that in a free market, with sound money, you never welcome a downturn in the economy? You never welcome the idea of decreased growth, and you don’t concern yourself about this? And yet, here we talk about when is the Fed going to intervene and turn down the economy?

It seems that there is a welcoming effect to the fact that the Southeast Asia has tampered-you know, price pressures. Couldn’t we make a case that the free market would operate a lot better than the market we use today?

Mr. GREENSPAN. I think you have to define what you mean by a ”free market.” If you have a fiat currency, which is what everyone has in the world–

Dr. PAUL. That is not free market.

Mr. GREENSPAN. That is not free market. Central banks, of necessity, determine what the money supply is. If you are on a gold standard or other mechanism in which the central banks do not have discretion, then the system works automatically.

The reason there is very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue.

Dr. PAUL. So I guess we have to accept the downturns?

Mr. GREENSPAN. No. We are not accepting downturns, nor do I think we look at it as desirable. What we do look at is an economy which is running at a pace which is unsustainable over the long run and will eventually run off the tracks and create significant disruption. So we do not look forward to a weakening in growth. All we are concerned about is a pattern of growth which is sustainable.

In other words, when we talk about our goal as maximum sustainable economic growth, the ”maximum” and the ”sustainable” are both crucial elements to that. We can get a maximum growth in the short run, which is not going to help anybody over a longer-term period. That we would consider to be an unacceptable or undesirable pattern of growth.

Dr. PAUL. Thank you.

1999

2/24/1999

Dr. PAUL. Thank you, Mr. Chairman.

Mr. Greenspan, a lot of economists look to the price of gold as an indicator and as a monetary tool. It has been reported that you might even look at the price of gold on occasion.

Last summer on a couple of occasions here when you were talking before the committees on securities and on derivatives you mentioned something that was interesting. You said that central banks stand ready to sell gold in increasing quantities should the price rise, which I thought was rather interesting.

Then I followed up with a letter to you to ask you whether or not our central bank might not be involved in something like that, in the gold market. And you did answer me and stated that since the 1930’s the Federal Reserve has had no authority to be involved with the gold markets.

I am quite confident that the Treasury has authority to be in gold markets, but you stated that the Federal Reserve did not. But this contradicts some reports that have been made by some Federal Reserve officials that said that the New York Fed was very much involved in the London gold pool from 1961 to 1971. But your answer implied that the Fed has never been involved since the 1930’s, which I think is interesting.

The reason why this could be of importance is that we do know that our Treasury was supporting a fixed price of gold at $35 an ounce in the 1960’s, so therefore the price of gold of $35 an ounce was totally useless in predicting what might happen and what did happen in the 1970’s. So if central banks stand ready to lease and sell gold in increasing amounts should the price rise, we are more or less, you know, in a time when the gold price is probably so-called fixed; and we do know that the evidence is there that central banks do loan gold, they sell gold. So could it be that the price of gold today is less valuable to the economists, who think that gold could help us, in thinking that maybe we are in a period of time comparable to what we had in the 1960’s?

Mr. GREENSPAN. I think the price of gold has, over the decades, been a generally usable indicator of what the level of inflation has been. Obviously, during the period of an active gold standard, which was really prior to World War I, the price level pretty much locked itself in to the gold price. In fact, by definition it did.

The issue of buying and selling gold as the price changes is indeed exactly what we used to do. We used to, at a certain thing called the gold points, which was the price of gold plus the transportation cost differentials, we, that is, the United States Treasury, stood ready to buy and sell gold at a spread, as indeed all other participants in the gold standard did. So in that regard that was exactly what was happening.

But, needless to say, since we have gone off the gold standard, and especially since 1973, there has been basically a general float of the dollar vis-a-vis gold, which means that the gold price is like another commodity’s price.

Nonetheless, like a lot of commodity prices, and perhaps better than most, it has been useful, in my judgment, in trying to get some sense of what inflationary pressures have evolved in this country.

Dr. PAUL. Even if the central banks, who are the major holders of gold, are willing to sell gold in order to manipulate the price or hold the price at a certain level? We are not on a gold standard, so what would the motivation be?

Mr. GREENSPAN. They are not doing it for purposes of fixing the gold price. They are looking for it to reduce their stock of gold when they have sold on the grounds that: one, it costs to store the gold; and, two, it didn’t obtain any interest. So they perceived it to be a poor asset to hold. But the purpose was not to manipulate the price of gold.

Dr. PAUL. Another quick question on another subject, on Argentina. You stated earlier that you have been studying this and will answer the question about whether Argentina can use the dollar as their currency. It has been reported that there was a consideration, and I surely hope this is not true, that the Federal Reserve could become the lender of last resort, and they would have access to the discount window.

Along that line, how does it work when a foreign country dollarizes and they expand their credit through fractional reserve banking? Does that put an obligation on us and can that interfere with the dollar’s value?

Mr. GREENSPAN. That is a good question, Congressman. The answer is no. We view monetary policy in the United States as for the United States. We have no interest in, nor does the Treasury, of being a lender of last resort outside the United States.

Dr. PAUL. Outside the IMF?

Mr. GREENSPAN. The issue of whether or not another country wishes to use the American dollar as its medium of exchange is theirs to make. They can do it unilaterally. Panama did. Liberia did. If they choose to do that, that is their sovereign right to do that. But we have no obligation in that regard.

Clearly, we do sense some obligation with respect to our Latin American colleagues for the same reason that we have had relationships with all of our trading partners. Their interests do concern us, and we would like them to be prosperous. To the extent that we are helpful in trade negotiations or other negotiations, that is fine. But lender of last resort, no.

7/22/1999

Dr. PAUL. Thank you, Mr. Chairman. I appreciate this opportunity.

First, I would like to say that I hope the Humphrey-Hawkins requirement continues; I think that is important. I do also note that frequently at these hearings we don’t talk much about monetary policy, which is the purpose of the meeting. We frequently talk about taxes and welfare spending.

I would like to concentrate more on the monetary policy and the value of the dollar. There are some economists who in the past, such as Mises, von Hayek, as well as Friedman have emphasized that inflation is a monetary phenomenon and not a CPI phenomenon, it is not a labor cost phenomenon. When we incessantly talk about this, whether it is the Federal Reserve, the Treasury, Congress, or the financial markets, we really distract from the source of the problem and the nature of our business cycle.

I certainly agree that technology has given us a free ride and has allowed us this leverage, but we have also been permitted a lot of inflation, that is, the increase in the supply of money and credit. Since 1987, we have had a tremendous increase in money. The monetary base has doubled; M3 has gone up $2.5 trillion. This money has gone into the economy, but we have reassured ourselves that the CPI has been stable so therefore everything is OK. Yet the CPI has gone up 44 percent since 1987.

Real growth in the GDP has not been tremendous. It is about 2.3 per year. But we have had a tremendous increase in capitalization of our stock market going from $3.5 trillion up to $14 trillion. That is where the money is going. This generates revenues to the Government. This has helped us with our budgetary problems.

At the same time, we ignore the fact that hard money people emphasize that not everybody benefits, and there has been a lot of concern expressed that people are left behind, farmers are left behind, the marginal workers are left behind. Some people suffer more from a higher CPI than others. These are all monetary phenomena that we tend to ignore.

But you have admitted here today and in the past that the business cycle is alive and well and that we shouldn’t ignore it-in your opening statement, you said that we should be especially alert to inflation risks. I think that we certainly should be. And you have expressed concern today and at other times about the current account deficit, and this is getting worse, not better. Our trade balances are off. But I would suggest maybe we have seen some early signs of serious problems because foreign central bank holdings now of our dollars have dwindled to a slight degree. In 1997, they were holding over $650 billion and they are slightly below $600 billion. At the same time, we have seen the income from our investments dwindle to a negative since 1997. So I think the problems are certainly there.

But I would like to talk a little bit more about, or ask you a question about, this balance of trade and the value of the dollar, because history shows that these dollars eventually will come back. And you have assumed that, that they will, but that essentially the problem that we got into in 1979 and 1980, there is no guarantee that that won’t happen again. That means that the markets will drive interest rates up, we will have domestic inflation, the value of the dollar will go down.

My question is, what will your monetary policy be under the circumstances? In 1979 and 1980, you were-not you, but the Fed-was forced to take interest rates as high as 21 percent to save the dollar. My suggestion is, it is not so much that we should anticipate a problem, but the problem is already created by all of the inflation in the past twelve years and that we have generated this financial bubble worldwide and we have to anticipate that. When this comes back, we are going to have a big problem. We will have to deal with it.

My big question is, why would you want to stay around for this? It seems like I would get out while the getting is good.

Mr. GREENSPAN. Dr. Paul, you are raising an issue which a significant number of people have been raising over the years and for which, frankly, we are not quite sure what the answers are. It is by no means clear, for example, that one can trace the increase in money supply, which presumably has not reflected itself in CPI, into stock values. A lot of people say it is happening and a lot of people assume that is what it is, but the evidence is not clear by any means.

Dr. PAUL. May I interrupt, please? Did you not write that that was the case with the 1920’s and that was the problem that led to our Depression?

Mr. GREENSPAN. No, I didn’t raise the issue that it was in effect the money supply, per se. What I was arguing many, many years ago, and I still think, is that in 1927 involving ourselves with an endeavor to balance the flow of gold in favor of Britain at that time, we did create a degree of monetary ease which was one of the possible creators of speculation in the market in 1928 and 1929. What is not evident in today’s environment is anything like that is going on.

We cannot trace money supply to a speculative bubble. If a bubble, in fact, turns out to be the case, after the fact, we will have a considerable amount of evaluation of where it came from. But as I have said before this committee and, indeed, before the Congress on numerous occasions, we are uncertain as to the extent to which there is a bubble because, as I said in my prepared remarks, to presume there is a bubble of significant proportions at this particular stage and that the bubble isn’t significant doesn’t have any meaning; we have to be saying that we know far more than the millions of very sophisticated investors in the markets. And I have always been very reluctant to conclude that.

We do know that a significant part of the rise in prices reflects rising expected earnings, and a goodly part of that is a very major change in the view of where productivity is going. What we do not know is whether it is being overdone or to what extent it is being overdone.

I have always said I suspect it is, but firm, hard evidence in this area is very difficult to come by. It is easy to get concerned about it on the basis of all sorts of historical analogies, but when you get to the hard evidence, we do know that inflation is a monetary phenomenon, but what we have a very great difficulty in knowing is how to measure what that money is.

Remember, M2, M1, all of that are proxies for the money that people are talking about when they are referring to money being the creator of inflation. We have had great difficulty in filtering out of our database a set of relationships which we can call true money. It is not MZM, that is, money with zero maturity, it is not M2, it is not M1, it is not M3, because none of those work in a way which would essentially describe what basically Hayek and Friedman and others have been arguing, and I think quite correctly, on this issue.

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A Gold Classics Library Selection

1997-1999 transcripts
2000-2002 transcripts
2003-2005 transcripts

The Alan Greenspan-Ron Paul Congressional Exchanges
(2003-2005)

Transcripts of the historic hearings before the U.S. House of Representatives’ Committee on Financial Services during question & answer sessions, 1997-2005

2003

2/12/2003

Mr. PAUL. Thank you.

Welcome, Chairman Greenspan. I have a question relating to the speech that you gave at the Economic Club in New York in December, because you introduced your speech with three paragraphs dealing with gold and monetary policy. And you made some very pertinent points about gold, indicating that from the year 1800 to 1929, the price levels were essentially stable under gold. And after we got rid of the gold restraint on the monetary authorities, prices have essentially increased by over tenfold since that time. But you follow that by indicating that inflation, when it was out of control in 1979, monetary policy changed direction and they were able to take care of inflation, more or less conquer inflation, and that now you are more or less not concerned about inflation, that your concern really is about deflation.

And it was interesting that you brought up the subject of gold, of course, and there is a lot of speculation as to exactly why you did this and what this means. But my question deals with whether or not we should forget about inflation, whether or not this has been dead and buried. Federal Reserve credit for the last 3 months has gone up at the rate of over 28 percent. Inflation is a monetary event, so therefore we have monetary inflation. The median CPI is almost going up at twice the rate as the CPI, close to 4 percent. The Commodity Research Bureau Index is going up, in the last 15 months over 35 percent. Gold is up 36 percent over 18 months or 15 months. Oil is up 60 percent. So we have a lot of inflation. And we have medical care costs skyrocketing, housing costs going up, the cost of education going up, the cost of energy going up. And to assume that we shouldn’t be concerned about inflation, all we can do now is print money. I would suggest that this is what we have been doing for 3 years, the monetary authorities. You have lowered the discount rate 12 times, and there is still no signs of good economic growth. So when will you express a concern about an inflationary recession? Because that to me seems like our greatest threat, because that has existed before. We even had a taste of it in the 1970s. We called it stagflation.

So I would like you to comment on that as well as follow up on your comments on just why you might have brought up the subject of gold at the New York speech.

Mr. GREENSPAN. First of all, we have not lessened our concerns about inflation. Indeed, our general presumption is that we seek stable prices, and stable prices mean no inflation nor deflation.

The reason I raised the issue of gold is the fact that the general wisdom during the period subsequent to the 1930s was that as we moved to an essentially fiat money standard, that there was no anchor to the general price level. And indeed, what we subsequently observed is, as you point out, a very marked increase in general price levels, indeed, around the world as we removed ourselves from commodity standards, and specifically gold.

I had always thought that the fiat money system was chronically and inevitably an inflation vehicle, and indeed, said so repeatedly. I have been quite surprised, and I must say pleased, by the fact that central bankers have been able to effectively simulate many of the characteristics of the gold standard by constraining the degree of finance in a manner which effectively has brought down general price levels.

The individual price levels to which you allude are certainly correct. I might say the gold and the oil issue are clearly war-related and not fundamental, but we still are looking at the broadest measures of average inflation, and the best statistics that we have still indicate very low inflation with no evidence of an acceleration. That does not mean, however, that we believe that inflation is somehow inconceivable any time in the future. We will maintain a considerable vigilance on the issue of inflation, and are looking all the time for evidence of an emergence of inflation, which at this particular time we do not see. But that does not mean that we believe inflation is dead and that we need not be concerned about it. We will continue to monitor the financial system as best we can to make certain that we keep prices stable. They are stable now, and we hope to be able to continue that indefinitely into the future.

2004

7/21/2004

The CHAIRMAN. The gentleman from Texas, Mr. Paul.

Mr. PAUL. Thank you, Mr. Chairman.

Good morning, Chairman Greenspan. Yesterday’s testimony was received in the press as you painting a pretty rosy picture of the economy. You have already remarked a second time on one statement you made that I would like to comment on again, because I think my colleagues should pay close attention to it: And that is your statement that corporate investment in fixed capital and inventory has apparently continued to fall short. The protracted nature of this shortfall is unprecedented over the past 3 decades. The proportion of temporary hires relative to total employment continues to rise.

I think that is very, very significant and probably should be taken in the context of the rosy picture of the economy.

Also, at the end of your statement, you make a comment about inflation in the long run, which I entirely agree with. And that is, it is important to remind ourselves, you say, that inflation in the long run is a monetary phenomenon. However, you sort of duck the issue on the short run, that various factors affect inflation in the short run, and yet I think monetary policy is pretty important in the short run. And our temptation here and too often with central banks is to measure inflation only by Government measurement of CPI, where the free-market economists, from Ricardo to Mises to the current free-market economists, argue the case that, once a central bank interferes with interest rates and lowers them below the real rate, that investors and others do make mistakes, such as overinvestment and now investment over-capacity, excessive debt, and speculation. And, therefore, I think that we should concentrate more on the short run effects of monetary policy

Over the last several months, you had been hit by two groups. One half is saying that you are raising rates too fast, and the other half says you are way too slow. And of course it begs the question of whether or not you are really right on target. But from a free-market perspective, one would have to argue that you can’t know and you don’t know, and only the market can decide the proper money supply and only the market can decide the right interest rates. Otherwise, we invite these many problems that we face.

As the economy slowed in 2000, 2001, of course, there was an aggressive approach by inflating and lowering the interest rates to an unprecedented level of 1 percent. But lo and behold, when we look back at this, we find out that manufacturing really hasn’t recovered, savings hasn’t recovered, the housing bubble continues, the current account deficit is way out of whack, continuing to grow as our foreign debt grew, and consumer debt is rising as well as Government debt.

So it looks like this 1 percent really hasn’t done much good other than prevent the deflating of the bubble, which means that, yes, we have had a temporary victory, but we have delayed the inevitable, the pain and suffering that must always come after the distortion occurs from a period of time of inflating.

So my question to you is, how unique do you think this period of time is that we live in and the job that you have? To me, it is not surprising that half the people think you are too early and the other half think you are too late on raising rates. But since fiat money has never survived for long periods of time in all of history, is it possible that the funnel of tasks that you face today is a historic event, possibly the beginning of the end of the fiat system that replaced Brenton Woods 33 years ago? And since there is no evidence that fiat money works on the long run, is there any possibility that you would entertain that, quote, ”We may have to address the subject of overall monetary policy not only domestically but internationally in order to restore real growth”?

Mr. GREENSPAN. Well, Congressman, you are raising the more fundamental question as to being on a commodity standard or another standard. And this issue has been debated, as you know as well as I, extensively for a significant period of time.

Once you decide that a commodity standard such as the gold standard is, for whatever reasons, not acceptable in a society and you go to a fiat currency, then the question is automatically, unless you have Government endeavoring to determine the supply of the currency, it is very difficult to create what effectively the gold standard did.

I think you will find, as I have indicated to you before, that most effective central banks in this fiat money period tend to be successful largely because we tend to replicate which would probably have occurred under a commodity standard in general.

I have stated in the past that I have always thought that fiat currencies by their nature are inflationary. I was taken back by observing the fact that, from the early 1990s forward, Japan demonstrated that fact not to be a broad universal principle. And what I have begun to realize is that, because we tend to replicate a good deal of what a commodity standard would do, we are not getting the long-term inflationary consequences of fiat money. I will tell you, I am surprised by that fact. But it is, as best I can judge, a fact.

2005

7/20/2005

Mr. PAUL. If, indeed, this is your last appearance before our committee, Mr. Greenspan, I would have to say that, in the future, I’m sure I’ll find these hearings a lot less interesting.

But I do have a couple of parting questions for you. Keynes, when he wrote his general theory, made the point that he has tremendous faith in central bank credit creation because it would stimulate productivity.

But along with this, he also recognized that it would push prices and labor costs up. But he saw this as a convenience, not a disadvantage, because he realized that, in the corrective phase of the economic business cycle, that wages had to go down which people wouldn’t accept, a nominal decrease in wages, but if they were decreased in real terms, it would serve the economic benefit.

Likewise, I think this same principle can be applied to our debt. To me, this system that we have today is a convenient way to default on our debt to liquidate our debt after the inflationary scheme.

Even you, in the 1960s, described the paper system as a scheme for the confiscation of wealth.

And, in many ways, I think this is exactly what has happened. We have learned to adapt to deficit financing. But in many ways, the total debt is not that bad because it goes down in real terms.

As bad as it is, in real terms, it’s not nearly as high.

But, since we went on a total paper standard in 1971, we have increased our money supply essentially 12-fold. Debt in this country, federal debt, has gone up 19-fold but that is in nominal dollars, not in real dollars.

So my question is this: Is it not true that the paper system that we work with today is actually a scheme to default on our debt? And is it not true that, for this reason, that’s a good argument for people not eventually, at some day wanting to buy Treasury bills because they will be paid back with cheaper dollars?

And, indeed, in our lifetime, we certainly experienced this in the late 1970s that interest rates had to go up pretty high and that this paper system serves the interests of big government and deficit financing because it’s a sneaky way of paying for it.

At the same time, it hurts the people who are retired and put their money in savings.

And aligned with this question, I would like to ask something to dealing exactly with gold, is that: If paper money today it seems to be working rather well but if the paper system doesn’t work, when will the time come? What will the signs be that we should reconsider gold?

Even in 1981, when you came before the Gold Commission, people were frightened about what was happening and that’s not too many years ago. And you testified that it might not be a bad idea to back our government bonds with gold in order to bring down interest rates.

So what are the conditions that might exist for the central bankers of the world to reconsider gold?

We do know that they haven’t given up on gold. They haven’t gotten rid of their gold. They’re holding it there for some reason.

So what’s the purpose of the gold if it isn’t with the idea that some day they might need it? They don’t hold lead or pork bellies. They hold gold.

So what are the conditions that you might anticipate when the world may reconsider gold?

Mr. GREENSPAN. Well, you say central banks own gold or monetary authorities own gold. The United States is a large gold holder. And you have to ask yourself: Why do we hold gold?

And the answer is essentially, implicitly, the one that you’ve raised namely that, over the generations, when fiat monies arose and, indeed, created the type of problems which I think you correctly identify of the 1970s, although the implication that it was some scheme or conspiracy gives it a much more conscious focus than actually, as I recall, it was occurring. It was more inadvertence that created the basic problems.

But as I’ve testified here before to a similar question, central bankers began to realize in the late 1970s how deleterious a factor the inflation was.

And, indeed, since the late ’70s, central bankers generally have behaved as though we were on the gold standard.

And, indeed, the extent of liquidity contraction that has occurred as a consequence of the various different efforts on the part of monetary authorities is a clear indication that we recognize that excessive creation of liquidity creates inflation which, in turn, undermines economic growth.

So that the question is: Would there be any advantage, at this particular stage, in going back to the gold standard?

And the answer is: I don’t think so, because we’re acting as though we were there.

Would it have been a question at least open in 1981, as you put it? And the answer is yes.

Remember, the gold price was $800 an ounce. We were dealing with extraordinary imbalances, interest rates were up sharply, the system looked to be highly unstable and we needed to do something.

Now, we did something. The United States Paul Volcker, as you may recall, in 1979 came into office and put a very severe clamp on the expansion of credit, and that led to a long sequence of events here, which we are benefiting from up to this date.

So I think central banking, I believe, has learned the dangers of fiat money, and I think, as a consequence of that, we’ve behaved as though there are, indeed, real reserves underneath the system.

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A Gold Classics Library Selection

Uses and Abuses of Gresham’s Law in the History of Money

by Robert Mundell
Nobel Prize for Economics, 1999

Editor’s note: Dr. Robert Mundell, the highly influential Columbia University economist, is well-known for his advocacy of a gold component in monetary systems, including circulating gold coinage. But he also has written voluminously on a wide range of other topics. As early as 1961, Mundell proposed reducing tax rates and improving monetary discipline as the best means to achieve greater and more stable economic growth. His theories on this subject led to the Kennedy tax-cuts, which propelled the U.S. economy of the 1960s and later became the supply-side basis for much of Reaganomics. Mundell also wrote early on of the constant realignment problems which would attend a world monetary system of free-floating currencies. His prescient work on the desirability of regional currencies was, in fact, fundamental to the creation of the euro. When Mundell was awarded the 1999 Nobel Prize for economics, Princeton University economist Peter Kenen said, “Bob was modeling the world of the 1990s through the work he did in the 1960s.” Our thanks go to Dr. Mundell for his permission to reprint Uses and Abuses of Gresham’s Law in the History of Money in its entirety.

Uses and Abuses of Gresham’s Law in the History of Money – Paper prepared for publication in the Zagreb Journal of Economics, Volume 2, No. 2, 1998.

Introduction

The economist H. D. Macleod, writing in 1858, first brought attention to the law that he named after Sir Thomas Gresham:

No sooner had Queen Elizabeth ascended the throne, than she turned her attention to the state of the currency, being moved thereto by the illustrious Gresham, who has the great merit of being as far as we can discover, the first who discerned the great fundamental law of the currency, that good and bad money cannot circulate together. The fact had been repeatedly observed before, as we have seen, but no one, that we are aware, had discovered the necessary relation between the facts, before Sir Thomas Gresham.

This passage errs in two points: Gresham was not the first to make explicit the idea we now know as “Gresham’s Law,” and the assertion that “good and bad money cannot circulate together” is a glaring error. It is a far cry from Gresham’s Law. That Macleod was careless about his statement of the law he named after Gresham serves as a warning that the ideas involved are more subtle than at first appears.

1. Early Expressions

We can begin this discussion of Gresham’s law by outlining some of the highlights of its history. Twenty centuries before Sir Thomas Gresham was born, the elegaic poet, Theognis, born in Megara near Athens, writing in the late 6th and early 5th century BC, wrote some lines suggesting Gresham’s Law. Theognis has been described as “an eloquent and strongly biased witness of the struggle of the old aristocracy, for its traditional ideas and ideals which were partly adopted and partly destroyed by the rising lower classes.(1) In a book called Maxims written for his beloved Cyrnus, he informs us that “alloyed gold and silver is easily detected by a shrewd man.”(2) More to the point is an earlier comment: “Nor will anyone take in exchange worse when better is to be had.”(3)

From Theognis, we turn nearly a century later to Aristophanes (450-385 BC). In The Frogs he wrote: “the full-bodied coins that are the pride of Athens are never used while the mean brass coins pass hand to hand.”(4) The idea must have been widely known because the illustrious playwright was able to assume that his audience was aware that the law applied also to politicians (bad politicians drive out good!). It was hardly a novel idea at that time.(5)

What was the condition of the Athenian monetary system that led Aristophanes to this insight? The Frogs was written in 405 BC, in the closing years of the Peloponnesian Wars. From 413 BC onwards, the Spartans had occupied Decelea(6) north of Athens and cut off the supply of silver from the Laurium mines. In 407 BC, confronted with a dire threat to the Athenian fleet and an empty treasury, the Athenians had recourse to melting the gold in some of the statues in the Acropolis to make emergency coins. Eight statues of Nike,(7) the god of Victory, on the Acropolis had been clad with two talents of gold each, to be removed in case of emergency. The gold was thus struck into coin.(8) (One statue survived and the tools used to produce the coins were subsequently dedicated in the Treasury to Athena.) In the next year, copper coins were issued on the credit of the state as replacement for silver coinage, and it “is a modern inference that the emergency coinage was of copper plated by silver.”(9)

Aristophanes’ anticipation of Gresham’s law in The Frogs was by no means his only reference to monetary matters. A new use of small coins gave Aristophanes an occasion to raise a laugh: “It was customary to hold them in the mouth for safe-keeping, and in The Wasps (lines 790-1) Philocleon pops fish scales into his mouth, thinking they are coins. When he goes home with his jury pay under his tongue, his daughter (lines 608-9) manages to get it away from him in a welcoming kiss! Uelpides (The Birds, 503) swallows an obol by mistake.”(10) In The Peace, Aristophanes has the maker of sickles say that the advent of the brief peace in 421 BC had made the price of sickles soar, while the maker of helmet crests complains that the peace has ruined him.(11) In another instance, he makes fun of the Athenian “Coinage Decree” which attempted to establish the Attic standard on all its allied cities.(12)

There seemed to be recognition of the principle underlying Gresham’s Law during the Middle Ages. It was explicitly developed in Oresme’s De Moneta. Written in the middle of the 14th century, this was the most important work on the theory of money before Bodin’s and Grimaudet’s writings in the 1570s. Nicholas Oresme (1320-1382) was the Norman Bishop of Lisieux who made contributions to theology, mathematics and astronomy besides his work on money. His De Moneta laid stress on the rights of the public with respect to currency and the great evils associated with debasement and devaluation, a courageous performance in view of the fact that it was written during the reign of John the Good (1350-1364) who devalued eighty-six(13) times! Oresme had a clear statement of what we call Gresham’s Law. There is sufficient proof, however, that the idea was fairly well-known in the 14th century; its essence appeared in petitions addressed to the parliaments of Edward III and Richard II.

In the Renaissance, John Hales (d. 1571) is probably the first writer to elaborate on the proposition, assuming he was the author of A discourse on the Common Weal of this Realm of England. This rich work contains the following explicit statement of Gresham’s Law:

“Was there not made proclamations that the olde coyne, specially of golde, should not be current here above such a price: was not that the rediest way to dryve away our golde from us. Everything will go where it is most esteemed, and therefore our treasure went over in heapes.”(14)

At long last we arrive at Gresham! Thomas Gresham(15) was born in London in 1519 and lived through the reigns of four monarchs (not counting Queen Jane) until 1579. He was the second son of Richard Gresham, who already had an important business and banking house in Milk Street and had the distinction of being Lord Mayor of London in 1537. Thomas was educated at Gonville Hall, Cambridge, apprenticed to his uncle Sir John Gresham, also a merchant, and admitted to membership in the Mercers’ company in 1543. Upon his father’s death, he inherited the business and transferred the bank to Lombard Street, then the heart of London’s business world. His immense ability was apparent early and in 1551 or 1552 he became royal agent or king’s factor at Antwerp,(16) which he retained with few intervals under Edward the Saint, Bloody Mary and the Virgin Queen until 1574. His initial task was to raise large sums of money for the king, and to maintain a rate of exchange favorable to English currency, keeping watch on the money market and pledging his own credit when it was necessary. The information he provided to England about market conditions was invaluable and upon the ascension of the fiercely Catholic Mary he proved indispensable despite his Protestant convictions.

On Mary’s death, Gresham advised Elizabeth on how to restore the base money, to contract as little foreign debt as possible, and to keep up her credit especially with English merchants. He later taught her how to make use of these merchants when political troubles in the Netherlands curtailed her foreign resources; at his suggestion, the Merchant Adventurers and Staplers were forced by detention of their fleets to advance money to the state; but as they obtained interest at 12 percent instead of the legal maximum of 10 percent, and the interest no longer went abroad, the transaction proved advantageous to all parties and increased Gresham’s favour. In 1559 he was sent as ambassador to the Duchess of Parma, who was regent of the Netherlands and it was on that occasion that he was knighted.

Gresham had the wide interests fitting to “the greatest merchant in London.” He was a banker and goldsmith, with a shop in Lombard Street, as well as a mercer; but he was a considerable country gentleman besides, with estates, chiefly in Norfolk, where his father had considerable property. He also had several country houses besides his house in Bishopsgate which he built and bequeathed to London as Gresham College.(17) He twice entertained Queen Elizabeth as his guest.(18)

2. Faulty Renderings

Gresham’s Law has been frequently misinterpreted even by high authorities. In an article in the authoritative Palgrave’s Dictionary of Political Economy, Harris (1927) starts off well but ends with a bad mistake:

[Gresham’s Law] denotes that well-ascertained principle of currency which is forcibly though not quite adequately expressed in the dictum–“bad money drives out good.” It has also not infrequently been explained by the statement that where two media of exchange come into circulation together, the more valuable will tend to disappear. The principle in its broadest form may be stated as follows: –Where by legal enactment a government assigns the same nominal value to two or more forms of circulatory medium whose intrinsic values differ, payment will always, as far as possible, be made in that medium of which the cost of production is least, and the more valuable medium will tend to disappear from circulation; in the case where the combined amount in circulation is not sufficient to satisfy the demand for currency, the more valuable medium will simply run to a premium.”

Leaving aside the confusion between “intrinsic value” and “cost of production,” the main error here is the view that where both currencies are needed to circulate, “the more valuable will simply run to a premium.” This is merely a variant of Macleod’s mistake that “good and bad money cannot circulate together.”

In his History of Economic Analysis, Schumpeter made two rather derogatory assertions about the ‘law.’ The first is that “The so-called ‘law’ can be found in many earlier writings.” The second–and this is an odd statement–is that it does not matter: “Considering its trivial nature, the question of priority is, however, without interest.”

Schumpeter’s comment points up a paradox: the law is trivially easy to understand, but then why does everybody get it wrong?

It must be conceded that one aspect of Gresham’s Law seems trivial. People are motivated by the law of economy:(19) “Choose the most useful among goods with the same cost; and its “dual,” choose the cheapest from among goods that give the same benefit.” The application to money is straightforward: of two types of payment, pay with that which involves the least sacrifice. If one type of money is “good” and the other “bad,” pay with the bad and keep the good.

There is no end to illustrations of this aspect of the principle. To make a payment of, say, $100, you might choose from among any valid combination of denominations of 100s, 50s, 20s, and so on not excluding coinage. Portfolio preferences–no pun intended–would determine which notes and coins you want to keep rather than spend. A key element in the law is that all payments must be acceptable to the seller as payment, either by force of law or convenience. Coins, for example, might not be legal tender beyond a certain limit, but might nevertheless be acceptable to the buyer. On the other hand, a buyer might prefer to retain coins needed, say, for parking meters, telephones or laundromats.

Every thinking individual makes such choices all the time as a matter of course. The idea has virtually ubiquitous applications. In the economics of charity, a donor will choose the cheapest from among potential gifts that yield the same utility to the donee. The theorem has a dual. It is that from among gifts costing the same, the donor will choose that which will produce the most utility to the donee. All these ideas are straightforward applications of the theory of rational behavior.

It is in the sense that the motivation behind Gresham’s law is the theory of rational behavior that makes Schumpeter think the law is “trivial.” But another word is “fundamental!” Leaving aside the choice of words, the law of economy even in its application to payments is not Gresham’s Law. Gresham’s Law is a theorem about the composition of money in an economy, not a theory of motivation. Schumpeter’s error is in mixing up the motivating principle of microeconomics with one of its macroeconomic consequences.

3. Good Money Drives Out Bad?

The usual expression of the law, “bad money drives out good” is a mistake. Schumpeter refers to this common definition as “not quite correct.”(20) But as the statement stands, it is not just “not quite correct;” it is quite false. The opposite is true!

Standing by itself, the general statement, “good money drives out bad,” is the more correct empirical proposition. Historically, it has been good, strong currencies that have driven out bad, weak currencies. Over the span of several millennia, strong currencies have dominated and driven out weak in international competition. The Persian daric, the Greek tetradrachma, the Macedonian stater, and the Roman denarius did not become dominant currencies of the ancient world because they were “bad” or “weak.” The florins, ducats and sequins of the Italian city-states did not become the “dollars of the Middle Ages” because they were bad coins; they were among the best coins ever made. The pound sterling in the 19th century and the dollar in the 20th century did not become the dominant currencies of their time because they were weak. Consistency, stability and high quality have been the attributes of great currencies that have won the competition for use as international money.

The same proposition holds with respect to the use of materials for international money. The precious metals won out over other substances not because they were “cheap” or “bad” but because they were more efficient than other instruments in fulfilling the required functions of money. Among the precious metals, gold drove out others not because gold was bad but because it was more efficient from the standpoint of effecting transactions at the least cost. The dollar became the dominant international money in a world of paper currencies not because it was “bad” but because, among the alternatives, it best satisfied the characteristics of an international money.

If Gresham’s Law could be rendered coherently as “bad money drives out good” it would have no claim to our attention as a serious proposition of economics. On the contrary, it is a completely false generalization, and an invalid rendering of Gresham’s Law.

4. Cheap Drives Out Dear If They Exchange for the Same Price

A more correct (but not perfect!) rendering of Gresham’s Law is that “Bad money drives out good if they exchange for the same price.” If, for example, both monies are legal tender, and thus equally capable of paying a debt or making a purchase, the ‘bad” money will drive out the “good” money.

It is further necessary, of course, to define the sense in which one money is “bad” and the other “good.” The sense in which it is relevant to Gresham’s Law is that “good” money has one or more alternative uses that do not apply to the “bad” money. The essential condition for Gresham’s Law to operate is that there must be two (or more) kinds of money which are of equivalent value for some purposes and of different value for others.(21)

The most typical instance leading to the generalization was the circulation of a particular type of coin, say a silver drachma, in different conditions. Say one is new and the other, badly worn. If both coins are legal tender at their face value, they are equivalent from the standpoint of effecting an internal payment. But they have different values if they were melted down for their commodity values, and in international exchanges where the coins will be valued only (or mainly) for their silver contents. In short, in their roles as internal means of payment, they are equal in value, but otherwise the new coin is worth more than the old.

The fact that the two coins have different external values does not mean that they cannot circulate side by side in a state of equilibrium. As long as the worn coins are insufficient to satisfy the total demand for money, old and new coins can and will circulate together without any premium on the good coins being required or possible.

For Gresham’s Law to be activated, there must be a disequilibrium situation. Suppose the demand for money falls. This means that the supply of coins in circulation must fall to an equal extent. Which coins will disappear? Certainly not the worn coins that have a low opportunity cost as metal or sales value abroad. The best coins will disappear abroad or be hoarded, and the average quality of the coinage will deteriorate. The opposite would happen if the demand for money increased: the good coins would be dishoarded or imported and the average quality of the coinage would improve.

Under ordinary circumstances, the old and new coins can circulate side by side as long as the balance of payments is in equilibrium. But should the occasion arise that the country develops a deficit, the difference between the coins will be apparent: the worn coins will have only their value as money at home but the new coins will have their value abroad without discount and will therefore be used to settle the deficit. Automatic forces would thus restore equilibrium. But if the deficit is perpetuated by sterilization operations or otherwise, the good coins will eventually disappear and the coinage will be increasingly composed of “bad” coins, leading eventually to depreciation and inflation.

The tendency for good coins to disappear would become pronounced if the government introduced debased or lightweight coins. The “cheap” money would drive out the dear money. As we shall see later, this is exactly what happened when Athens introduced debased coins during the Peloponnesian War. As Aristophanes noted, all the best coins of Athens were anywhere but Athens!

Gresham’s Law does not, of course, apply only in an international economy. The same process would take place in an isolated economy, closed to the rest of the world. Suppose again there are new and worn drachmas in a closed economy, and that the demand for money falls. Which coins will be “exported” to the non-monetary sector? Of course the new coins. The old coins would be weighed and discounted for use in industry and jewelry or hoarded for future purposes.

Coins depreciate with wear and tear, clipping and counterfeiting. New coins are also periodically introduced. At any given time, the money supply is composed of new and worn, clipped and full-bodied coins, all of which, however, may be accepted at face value. In some situations coins separated in age by hundreds of years may circulate side by side. In vast numbers of hoards of coins found over the centuries issued in ancient Rome, coins from the Republic are included in the same hoards as those in the reign of Diocletian, a span of over three centuries. The coins are homogeneous with respect to their legal tender value at home but very heterogeneous as far as their metallic and international values are concerned.

It should be apparent from the foregoing that, contrary to MacLeod’s statement, good and bad money can and do circulate side by side. As long as the “bad” money is insufficient to fulfil the total money demand, some of the “good” money will have to remain behind to help. In the same way we see machinery of different ages and people of different abilities working side by side often with the same salaries. Nor is it true, as Palgrave’s Dictionary asserts, that the “good” money will command a premium.(22) No premium can or will be paid.

It is important to realize that the introduction of an overvalued coinage does not necessarily cause depreciation or inflation. The overvalued coinage will displace some of the high quality coins but as long as some of the latter remain in circulation, it will not change the total supply of money. The quality of the money supply is changed, but not the quantity. Depreciation and inflation set in, subject to a minor qualification,(23) only after the fully-valued coins have disappeared. The same holds for an issue of paper money. The new paper money will drive out an equivalent value of coins. But it will be the best coins that disappear first, and the average quality remaining will be lower.

The correct expression of Gresham’s Law law is: “cheap money drives out dear, if they exchange for the same price.” That proposition is neither trivial nor obvious.

5. The Replacement of Gold by Credit and Paper Money

Several propositions that imply or are the companions of Gresham’s Law were widely known and used correctly by economists long before the law acquired its name. One of those propositions relate to the relation between paper money or credit and the precious metals. David Hume, writing in 1752, went to great pains to demonstrate that the existence of paper credit would mean a correspondingly lower quantity of gold, and that an increase in paper credit would drive out an equal quantity of gold.

Starting off which what he assumes to be the current condition in Great Britain, he writes:

“Suppose that there are 12 millions of paper, which circulate in the kingdom as money. . . and suppose the real cash of the kingdom to be 18 millions: here is a state which is found by experience to be able to hold a stock [of money] of 30 millions. I say, if it be able to hold it, it must of necessity have acquired it in gold and silver, had we not obstructed the entrance of these metals by this new invention of paper. Whence would it have acquired that sum? From all the kingdoms of the world. But why? Because, if you remove these 12 millions, money in this state is below its level, compared with our neighbours; and we must immediately draw from all of them, till we be full and saturate, so to speak, and can hold no more. By our present politics, we are as careful to stuff the nation with this fine commodity of bank-bills and chequer notes, as if we were afraid of being overburthened with the precious metals.”(24)

Hume goes on to explain why some countries have more gold — in proportion to population and wealth — than others; it is because there is no credit to displace gold:

“It is not to be doubted, but the great plenty of bullion in France is in a great measure, owing to the want of paper credit. The French have no banks; merchant bills do not there circulate as with us; and usury, or lending on interest, is not directly permitted; so that many have large sums in their coffers: great quantities of plate are used in private houses; and all the churches are full of it. . .What a pity Lycurgus did not think of paper-credit, when he wanted to banish gold and silver from Sparta! It would have served his purpose better than the lumps of iron he made use of as money; and would also have prevented more effectually all commerce with strangers, as being of so much less real and intrinsic value.”(25)

Adam Smith would develop the same idea in The Wealth of Nations with the use of paper money and applaud its use in the nation:

“The substitution of paper in the room of gold and silver money, replaces a very expensive instrument of commerce with one much less costly, and sometimes equally convenient. Circulation comes to be carried on by a new wheel, which it costs less both to erect and to maintain than the old one. . .”(26)

Gresham’s Law can also be seen in its application to paper money and gold in recent centuries. Suppose the unit of account in a country (Britain) is the pound, and that its money initially consists entirely of gold sovereigns (valued at one pound). Suppose now the government introduces into circulation a legal-tender paper currency denominated in pounds to pay for, say, £1 million of its expenses. The addition to the money supply will create an excess supply of money, raising expenditure above income, and generating a balance-of-payments deficit that will have to be settled with gold sovereigns–given that the paper pounds are not acceptable abroad. Provided the national demand for money is unchanged, the £1 million of paper money will exactly displace 1 million gold sovereigns. The “bad” money in this case is the paper money because, unlike the “good” sovereigns, it cannot be used for making international payments.

Gresham’s Law has other applications. We have considered Hume’s and Smith’s examples of credit or paper money driving out specie. But the same analysis applies to debased or light-weight coins driving out full-bodied coins. Examples abound in the ancient literature of the consequences of coinage debasement. From the very beginning of coinage, generally assumed, on the authority of Herodotus, to originate with 7th century Lydia, coinage was overvalued. The earliest coins were made of electrum, a natural alloy of about 70 percent gold and 30 percent silver. But hoards of the earliest coins found in the Temple of Artemis at Ephesus in 1904 contained “artificial” electrum coins with much lower gold contents. The weights of the stater coins (or its fractions) were uniform but the gold contents were as low as 30 percent. The Lydians and Greeks had not only learned how to use ancient Egyptian techniques of metallurgy, but also how to overvalue coins by using less of the more expensive metal and exploit the monetary prerogative as a fiscal device.

6. The Theory of the Breaking Point

The ancients recognized the attraction and succumbed to the fiscal temptations of replacing ‘intrinsic’ money with overvalued currency. But they did not know when to stop. How far could the precious metals be replaced without running the risk of inconvertibility, depreciation and inflation? What is the relation between the seigniorage benefit and the money supply or GDP?

John Stuart Mill had studied carefully the works of Hume and Smith and gave the following answer:

“Suppose that, in a country of which the currency is wholly metallic, a paper currency is suddenly issued, to the amount of half the metallic circulation. . .[There] will be nothing changed except that a paper currency has been substituted for half the metallic currency which existed before. Suppose, now, a second emission of paper; the same series of effects will be renewed; and son on, until the whole of the metallic money has disappeared. . .

Up to this point, the effects of a paper currency are substantially the same, whether it is convertible into specie or not. It is when the metals have been completely superseded and driven from circulation, that the difference between convertible and inconvertible paper becomes operative. When the gold or silver has all gone from circulation, and an equal quantity of paper has taken its place, suppose that a still further issue is superadded. . .The issuers may add to it indefinitely, lowering its value and raising prices in proportion; they may, in other words, depreciate the currency without limit.”(27)

Mill concludes that:

“The substitution of paper for metallic currency is a national gain: any further increase of paper beyond this is a form of robbery.”(28)

According to Mill, the “breaking point” at which the benign process of replacing ‘intrinsic’ currency for paper or overvalued coin is reached when the “cheap” or “bad” money has driven out all the “dear” or “good” money. To put the point arithmetically, suppose M is the total demand for money at existing prices and incomes. The money can be in either of two forms, gold or foreign exchange, R, or domestic paper money, D. Then M = R + D. If, with Mill, we start off with a purely metallic circulation, then D = 0 and R = M. Now suppose D is increased by half of M. Then R will be lowered by an equal amount. The process of substitution reaches its theoretical end point when R = 0 and D = M. After this point a further increase in D will increase M and lead to inflation along the lines of the quantity theory of money.

In practice, however, the limit is reached long before. As the public sees the process going on, it starts to anticipate the direction in which the government is proceeding and will sooner rather than later start to hoard the good money. The possibility of speculation therefore sharply reduces the extent to which the “good” money can be replaced. In the arithmetic example, we may suppose that confidence requires that a fraction, say , of the money supply is kept in the form of gold or foreign exchange. Then R = M, so that M = R+ D = M + D, and so D/M = 1-, which sets the feasible and safe limit of the substitution. If for example, equals one-third, the limit of the substitution would be two-thirds of the money supply. To translate this into a relation to GDP, we can assume that the money supply must be in equilibrium proportionate to money income, Y, so that M = kY, where k is the desired ratio of money to GDP. It follows that D/Y = (1 – )k. Further qualifications are needed to take account of banking systems.(29)

The opportunity for currency overvaluation and the exploitation of the monetary system as a fiscal device is not open to all countries. A sine qua non is the power to monopolize the coinage and to mandate its use as legal tender, two characteristics that require a strong central state. However, as already noted, the ancients were not very aware of the limits to the policy. A good example is Dionysius of Syracuse, who may have been influenced by Plato.

Syracuse was a Greek colony founded in 734 BC–in legend by Archias, from Corinth. After its government proceeded through the usual phases of feudal oligarchy, and monarchy, it succumbed, during the later stages of the Peloponnesian War, to a tyranny in the wake of invasions first by the Athenians and then Carthage. The new leader was Dionysius I, who ruled from 405 to 367 BC, “the strongest and longest tyranny of any recorded by history,” says Diodorus.(30) What interest us is his coinage policy and his relationship with Plato, the philosopher who championed overvaluation and exchange control in his ideal Republic.(31)

In 388 or 387 BC Plato made the first of his three visits to Syracuse. Whether the idea derived from Plato, or from frequent earlier trials with overvalued money in the Greek states, Dionysius issued tin coins around this time overvalued four times.(32) The idea would be consistent with Plato — at least the later Plato — who held in The Laws that domestic money should be non-exportable, restricted in supply, and exchangeable with “Hellenic” money at what amounts to an exchange control authority. Dionysius’ first issue must have been accepted because he tried it again, on the second occasion by overvaluing silver coins twice. Nevertheless, although he compelled these coins to be accepted under penalty of death,(33) the penalty was insufficient to keep these coins in circulation at their nominal value and they soon fell to their commodity value. Whether the story told by Plutarch, that Dionysius got rid of Plato by sending him to the slave market at Corinth, where several philosophers were present by a happy chance so they could buy his freedom, is true or not, Plato’s intervention into the practical game of power politics proved to be a dismal failure.(34)

7. Richard’s Ransom

About fifteen centuries later, in AD 1192, King Richard “Coeur-de-Lion,” returning from the third Crusade, was shipwrecked on the Dalmatian Coast, taken prisoner by the Duke of Austria, and handed over to his liege-lord, Henry Hauhenstaufen, the German — or Holy Roman — Emperor. His ransom was 100,000 marks, or two-thirds that number of pounds. The sum was almost exactly that which Richard had inherited on the death of his father, Henry (Plantagenet) II, in 1189. Richard had exhausted this legacy and much more in financing his expedition to the Holy Land. The ransom was about the same as one year’s government revenue from England and Normandy. How did Richard’s mother, Eleanor of Aquitaine, go about raising the money for the ransom?

Queen Eleanor might have contemplated using the monetary system to collect the ransom, collecting the current silver coins (which qualified as ransom money) with overvalued billon coins. The latter would have served perfectly well as a medium of exchange and the capital levy and punitive taxes could have been avoided, all parties being made better off. At the time of Richard, the English monetary system was composed of gold coins issued by the Basileus (God-Emperor) at Constantinople, called bezants or byzants, solidi, nomisma or aurei; a silver coinage of pennies, exactly one-twelfth the value of the Byzantine sicilicus; and a base coinage of local circulation, issued by the nobles and ecclesiastics. The system of accounting, which, through the Carolingian and Roman system, goes back to ancient Persia,(35) was 1 pound sterling = 20 shillings = 240 pence = 960 farthings = 5760 mites.(36)

Would there have been enough gold or silver in Richard’s empire to pay the ransom? We can try some guesses. In 1194, Richard’s territories and fiefdoms comprised not just England, but Normandy, Aquitaine, Poitou, Brittany, Maine, Tourraine and Anjou. The population of this huge empire cannot have been less, or much less, than five million. If we assume that the per capita money supply was 1 shilling, the total sum of money in the empire would have been £250,000 sterling (375,000 marks). If the money supply was a fifth of GDP, the empire GDP would be £1,250,000, with per capita GDP of 5 shillings. The ransom would have been not much more than 5 percent of GDP and 27 percent of the empire’s money supply. To be on the safe side, we should probably assume that not more than half the money supply was composed of gold and silver coins, and about half of this would have to be replaced or confiscated.

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What was a shilling, or a pound, worth? We can start by considering its silver and gold content. At the time of King Richard (1189-1199) the Tower or Saxon pound was 240 pennies of 22.5 grains each, so the pound (in the sense of the sum of 240 pennies because no “pounds” were minted) weighed 5,400 grains. The silver pennies were 11/12 fine so each penny contained 20.625, and the pound, twelve times that or 4,950 grains of fine silver. Gold was twelve times more expensive than silver so a pound was equivalent to 408.3 grains or 26.5 grams of gold, a little less than an ounce. Richard’s ransom was therefore the equivalent of about 67,000 ounces of gold (worth about $20,000,000 today).(37)

According to the preceding argument, Eleanor could have acquired the needed silver by replacing the high-valued silver and gold coins with light or billon coins having a face value of £67,000. The money supply would be unchanged but its composition would be drastically altered. Instead of £250,000 divided equally £125,000 of ‘intrinsic’ gold and silver coins and £125,000 of base coins, after the exchange it would be composed of only £58,000 of ‘intrinsic’ coins, £125,000 of base coins, and £67,000 of new “ransom” coins. Is there any evidence that Eleanor had recourse to this solution?

Unfortunately, the data are not clear. From the details of the collection process(38) it appears that the sums were contributed mainly in coin. A number of writers assert that the “plate was molten and made into money” and paid in “marks weight of Cologne,” but there are reasons to doubt this conclusion.(39)

If the monetary resource was utilized, it was certainly not the only expedient since Eleanor certainly utilized the usual means of raising money:

“The levy was pressed in every quarter with no distinction between layman and clerk, burgher and rustic. . . The barons were taxed a fourth of a year’s income, and lesser persons by a descending scale. The churches and abbeys measured up by weight their treasure “Accumulated since olden time,” gold and silver vessels, candelabra, the very crosses on their altars. Reliquaries were shorn of their cabochons, basins scraped of their jewels. The Cistercians, those humble brethren of Saint Bernard, possessing no corruptible treasure of this world, sheared their flocks and gave a year’s crop of wool. . . As the sluggish tithes flowed in, they were sealed with the queen’s own seal and kept for safety in the cathedral of Saint Paul. . . the collections dragged. . . A second levy was made, and there was a third. . .But the labor progressed at a snail’s pace.”(41)

It was said that the Germans,

“those children of perdition, were levying a treasure that would not be drawn from the royal exchequer, but from the patrimony of Christ, the pitiful substance of the poor, the tears of widows, the pittance of monks and nuns, the dowries of maidens, the substance of scholars, the spoils of the church.”(42)

There was apparently at the time of the ransom a great deal of “albata” money, composed of a lot of tin and a little silver, or simply tin coins blanched in silver. It is possible that these coins could have been issued to collect the silver to finance the ransom, but it is more likely that the existence of the large quantity of debased coins was one reason why the experiment could not be tried. If ‘intrinsic’ currency had already been replaced by billon, the opportunity to exploit it further no longer existed.(43)

8. The Great Recoinage

One of the most interesting and controversial episodes in English monetary history arose as a result of a faulty diagnosis of a situation that required an understanding of Gresham’s Law. This episode has been dubbed in the literature “The Great Recoinage.” It arose as a result of the deteriorated state of the coinage in Britain in the last decade of the 17th century and the devoted attention paid to it by the eloquent historian Lord Macaulay.

In the 1690s, old and the new sorts of coins circulated side by side. There even remained a few coins dating from before Elizabeth’s reign, having escaped her recoinage. There were even some debased iron and copper coins silvered over of Henry VIII and earlier. The confusions it created became the subject of the literary writings of Dryden, Blackmoor and Cibber. In the latter’s comedy, The Fool of Fashion, the hero declares naughtily that

Virtue is as much debased as our money, and faith, Dei gratia, is as hard to find in a girl of sixteen as round the brim of an old shilling.

In his History of England, Macaulay ridicules the actions taken to correct the situation since the “Glorious Revolution” of 1688:

Since the Revolution, the state of the currency had been repeatedly discussed in Parliament. In 1689 a committee of the Commons had been appointed to investigate the subject, but had made no report. In 1690 another committee had reported that immense quantities of silver were carried out of the country… Schemes were formed for encouraging the importation and discouraging the exportation of the precious metals. One foolish bill after another was brought in and dropped. At length, in the beginning of the year 1695, the question assumed so serious an aspect that the Houses applied themselves to it in earnest. The only practical result of their deliberations, however, was a new penal law, which, it was hoped, would prevent the clipping of the hammered coin and the melting and exporting of the milled coin. It was enacted that every person who informed against a clipper should be entitled to a reward of forty pounds, that every clipper who informed against two clippers should be entitled to a pardon, and that whoever should be found in possession of silver filings or parings should be burned in the cheek with a red-hot iron. Certain officers were employed to search for bullion. If bullion were found in a house or on board of a ship, the burden of proving that it had never been part of the money of the realm was thrown on the owner. If he failed in making out a satisfactory account of every ingot he was liable to severe penalties. This Act was, as might have been expected, altogether ineffective. During the following summer and autumn, the coin went on dwindling, and the cry of distress from every county in the realm became louder and more piercing.

Macaulay was referring to an Act passed in 1695 which provided that anyone who bought, sold or knowingly possessed any coin clippings should forfeit them, be liable to a fine of £500, and be branded on the right cheek with a capital R. The laws against clipping included capital punishment and were actually enforced: instances of condemnation to death followed by execution occurred by the dozens; seven men were hanged and a woman burnt in a single morning for a crime of this kind.(44)

William Lowndes, the newly-appointed Secretary of the Treasury,(45) had been requested to undertake an investigation into the state of the currency. He prepared a paper, entitled A Report containing an Essay for the Amendment of the Silver Coins, on September 12, 1695, that was circulated to members of both Houses of Parliament.(46) While repudiating any debasement of the currency, he suggested, as a necessary measure for placing it on a satisfactory basis, that all denominations of the silver coin should be raised 24 percent.(47)

Opposition to devaluation came from Whig quarters, led by two astute men of affairs and two of the most famous intellectuals of any time:

But happily for England, there were among her rulers some who clearly perceived that it was not by halters and branding-irons that her decaying industry and commerce could be restored to health. The state of the currency had, during some time, occupied the serious attention of eminent men closely connected by public and private ties. Two of them were politicians who had never, in the midst of official and parliamentary business, ceased to love and honor philosophy; and two were philosophers, in whom habits of abstruse meditation had not impaired the homely good sense with which even genius in mischievous in politics. Never had there been an occasion which more urgently required both practical and speculative abilities; and never had the world seen the highest practical and the highest speculative abilities united in an alliance so close, so harmonious, and so honorable as that which bound Somers and Montague to Locke and Newton.(49)

Macaulay is in error on a number of points, but his account is nevertheless of great interest because his became the conventional wisdom in the nineteenth century.(51) He understood nothing about the functions of money as a unit of account and the characteristics that make money accepted ad talum. He is also in error in attributing to Newton the same opinion as Locke; although he later changed in mind, moving to Locke’s position, Newton, as Warden of the Mint initially supported devaluation. Macaulay is also in error in supposing that Locke’s solution would solve the problem or put an end to the cruel penalties on exporters of bullion or coin.

New coins were minted to correct the problem but, of course, they were the first to be exported. In 1694, “King Billy’s War” was underway and William III needed money to outfit the Channel fleet. In exchange for a loan of £1.2 million, he issued a charter for the Bank of England, which advanced him the money. Not realizing the impact these new notes would have on the coinage, the government effected a recoinage at great expense to the treasury. But no sooner had the new coins been produced than they were exported. Ignorance of Gresham’s Law at that time extended to the highest quarters and included not just Montagu, Chancellor of the Exchequer (later Earl of Halifax), Lord John Somers, the chief minister to William III and leader of the so-called “Junto,” but also the two greatest intellectuals of the age, Isaac Newton and John Locke. The recoinage had fallen victim to Gresham’s Law.

9. Gresham’s Law Under Bimetallism

An understanding of Gresham’s Law was crucial to the formulation of a correct monetary policy, and it turned out to be especially important under bimetallism. Bimetallism was a system in which one of more countries fix the prices of two of the precious metals in terms of the national currency unit, thus fixing the bimetallic ratio. In the following discussion, I shall assume that the two metals are gold and silver, but the theory applies equally to other metals.

Consider the operation of Gresham’s law under bimetallism. Its principles can be studied best in the context of a small country facing a bimetallic price ratio in the rest of the world over which they had no influence. This was not far from the actual situation facing many countries between the end of the Middle Ages until 1873, when bimetallism gave way to the gold standard. To fix ideas suppose the bimetallic price ratio is 15.12:1, and that there is free coinage in the sense that people can bring either of the metals to the mint to be coined.

Suppose now that a new small country arrives on the scene and it sets its bimetallic ratio at 15:1. At this ratio the mint price of gold is lower and the mint price of silver is higher than the world price. In this situation, silver will be brought to the mint to be coined, but no one will bring gold to the mint when its price is lower there than it is abroad.

There would be perpetual disequilibrium if the market price ratios at home and abroad remained different. Equilibrium can exist only when the market price of gold at home has risen to the international level of 15.12:1, which is possible only when all the gold has left the country and the circulation is entirely silver. By overvaluing silver, the country, while nominally bimetallic, has put itself onto a de facto silver standard. Overvaluing a metal makes it “bad money” and brings Gresham’s Law into play.

The opposite situation applies if the countries overvalues gold. Suppose the bimetallic ratio is set at 16:1 while, as before, it is 15.12:1 in the rest of the world. In this case the underpriced silver will be exported, gold will be imported and equilibrium will prevail only when the entire circulation is made of gold. By overvaluing gold, the countries moves onto a de facto gold standard. Again Gresham’s Law worked when the bad money, in this case overvalued gold, drove out silver.

These examples are not abstract possibilities. They apply precisely to the United States after Alexander Hamilton created the bimetallic system by the Act of April 2, 1792. The dollar (which had been adopted as the monetary unit by the Congress of Confederation in 1786) was defined as 24.75 grains of pure gold and 371.25 grains of pure silver, implying a bimetallic ratio of 371.25/24.75 = 15. At this time the dominant monetary power was France which had in 1785, under Calonne, the able Treasurer-General of Louis XVI, established a bimetallic ratio of 15.12:1. It was by no means clear when the French Revolution began in 1789 what the bimetallic ratio would be in the future; Hamilton had to decide at a time when the international situation was unstable. As it turned out, he guessed wrong. When Napoleon (now Emperor) wanted to reestablish French credit in 1803 he set France back onto bimetallism at the Calonne ratio of 15.12:1. This made silver overvalued and gold undervalued in the United States. As a result the United States was de facto on a silver standard for the first four decades of its history.

In the early decades of the fledgling republic, complaints were heard over and over that gold coins were not available. Discussion continued in Congress until finally, on July 31, 1834, the long-sought reform measure was passed. Astonishingly, at a single blow, the gold dollar was reduced to 23.2 grains, and soon after, the Act of July 18, 1837, to 23.22 grains, the standard being changed at the same time from 11/12 fine to 9/10 fine. This made the bimetallic ratio 16:1. Now gold was overvalued, silver fled and gold rushed in, putting the United States de facto on the gold standard.(52) Silver dollars became extinct and emergency measures came to be required to retain within the country a sufficient amount of small change: the amount of silver in the subsidiary coinage from the half-dollar downward was reduced.(53) Overvaluing gold put the United States (de facto) on the gold standard.

The standard of a country could also be affected by a change in supply conditions in the precious metals industries. This happened to France in the 1850s. As we have seen France was theoretically on a bimetallic standard at a ratio of 15.12:1 from 1803 until 1870, but in fact most of its currency in circulation was silver. But in the middle of the century there came large gold discoveries: Russia in the 1840s, and the United States and California in the 1850s. This lowered the market price of gold below the French buying price with the result that France exchanged its silver for a gold currency. Gresham’s law applies here also because the new supply conditions made gold the overvalued metal in France.

An equally famous example concerned Britain’s movement toward the gold standard in the 18th century. The recoinage of the late 1690s had been a failure. Before the recoinage was complete, drawing on a report that was signed by Locke among others, the House of Commons established(54) a ratio of 15.12:1 at a time when the ratio in Holland (which at that time was the center for the precious metals markets) was 15:1; this was accomplished by rating the gold guinea at 21.12 instead of 22s. As a result about a 5 percent profit could be made by importing gold and having them minted into guineas, with the result that gold came to Britain and most of the newly-coined silver was exported.

By 1717 the situation had worsened and there was considerable agitation to prevent further losses of the silver coinage. To deal with the problem, much use was made of the brilliant report on the bimetallic ratios in different countries by Newton, Master of the Mint. It was concluded that the correction of the situation required a lowering of the value of gold relative to silver, with the result that the guinea was henceforth to be rated at 21 shillings. However, this reduction in the price of gold was not enough to erase the discrepancy between the English and Dutch ratios. With the guinea at 21s. the ratio was still 15.21:1 whereas in Holland and France, with increasing supplies entering Europe from Brazil, it was 15:1 or under. For this reason the practice of culling and exporting the heaviest silver pieces continued. A few decades later, by the accession of George III in 1760, the crown (silver) pieces had almost entirely disappeared and after 1774, when silver was partially demonetized, Britain had stumbled onto a de facto gold standard.

The models established above have assumed a small country faced a given bimetallic ratio in the rest of the world. This assumption, while simplifying the exposition, is by no means necessary. More generally the bimetallic ratio is determined by the interaction of the demands and supplies of the two metals in all the countries in the system. Bimetallism usually requires that at least one large country fix the ratio. Only a large country could “command” the ratio for any length of time; two or more large countries could ensure that it lasts even if their legal ratios were slightly different. Suppose that a large country fixes the ratio at 15.12:1 while other countries choose the same or different ratios. If the 15.12:1 ratio is consistent with market conditions, the large country will be on a bimetallic standard. Those countries that have fixed the ratio below that rate will have overpriced silver and put themselves on a silver standard; whereas those that have chosen a higher ratio will be on a gold standard. In a world of bimetallism, pluralism is the rule rather than the exception with so

10. Overvalued Money and the Institution of Legal Tender

One important distinction between types of money is whether it is legal tender or not. Gresham’s Law can come into play if two types of money are equivalent except in their role as legal tender. Very soon after coinage was discovered, rulers learned that the demand for money was different from the demand for the metal contained in the coins. Coinage began in steps that started when the state first put a stamp on a piece of metal signifying its purity, weight, and/or its value. It is possible that, initially, the value stated on the coin (its face value) was equal to the value of the metal it contained (its value by weight). But in the absence of a mechanism for ensuring that a coin had the same value qua metal that it had qua money — free coinage was one mechanism — the face value of the coin would become different from the coin’s value as metal. A coin was said to be accepted ad talum (by count) if it was accepted at its face value; and it was said to be accepted ad pensum (by weight) when it was accepted for its value in metal.

When a currency must be accepted at its face value for payment of debt — whatever its commodity value — it is said to be legal tender. What is the meaning of this term? It should be noted first that it is a legal term. The institution of legal tender is a “term of avoidance” of the courtroom, in which a defendant might admit to borrowing money from his accuser, but plead “legal tender,” namely, that at some previous time he physically had offered his creditor money which the law deemed acceptable for debt payments and had been refused. The court might not aid in the recovery of money once it had been turned down. The term legal tender is now used for a currency that cannot legally be refused in payment of debt. Other things equal, the attribute of legal tender would make one money “good” relative to another money.

There is a question issue whether the concept of legal tender is a term of private or public law. In his Money in the Law (1950), Nussbaum writes: “The question of the extent to which a creditor is under a duty to take “legal tender” in payment is undoubtedly one of private law. The endowment of coins or notes with the character of legal tender is, however, an act of sovereignty, hence of public law.”(55) In other words the sovereign determines that which constitutes legal tender but its enforcement in the courts is a matter of private law.

The concept of legal tender suggests a distinction between two types of money: refusable money and non-refusable money, the latter of course being legal tender. In a typical country in the modern world, for example, currency is non-refusable money, cheques are refusable money, and coins are non-refusable money only up to a limit.

In recent centuries coins and notes may or may not have been non-refusable money. Bank of England notes (the Bank was created in 1694) had high reputation throughout the 18th century but were not made legal tender until 1812, when the government passed a law requiring sheriffs enforcing an order of the court to accept payment for the judgment creditor in bank notes. The notes, however, could not be pressed upon a creditor out of court, and if the creditor were willing to wait until the resumption of cash payments (which occurred only in 1821) he would be entitled to gold.(56) In 1833 the notes were made legal tender for as long as the bank maintained their convertibility, a formula that was allowed to persist throughout World War I. In 1928 the notes became unconditional legal tender and convertibility was abolished in 1931.(57)

The guinea, first coined in 1664, although a “current coin of the kingdom,” was not made legal tender until 1717. The notes of John Law’s Bank Générale, founded in 1716, were not legal tender but after the bank was transformed into a “Royal Bank” in 1718 the notes became legal tender.(58) The notes of the Banque de France, founded in 1800, became legal tender (apart from the emergency period of 1848-50) only in 1870. The notes of the Preussische Staatsbank, founded in 1775, were never legal tender and when it was replaced by the German Reichsbank in 1875, the notes of the latter were refusable until 1910.(59) Federal Reserve notes were not made legal tender until 1933.

In earlier times, it was generally true that the proclamation of a new coin implied its legal tender status at the face value. When a new coin was issued with the same name (e.g., penny, ecu, florin) but a lower weight or purity implying devaluation or debasement the question of justice arises between creditors and debtors. Should a debt be paid in the legal tender at the time of contract or at the time of repayment? This subject has given rise to endless controversy. Its relevance was made very apparent in the 1930s when Federal Reserve notes were made legal tender and the US dollar was devalued. The main issue was whether a gold clause in a contract would be legally binding (it was not).

Long ago the ancients had to deal with analogous questions. Argentum is a Latin word for both money and silver. Was a debt payable in argentum payable in silver or in legal tender? Cicer thought it was the latter:

“in our law we carry out the reasoning of Cicero, who held that argentum (in French, argent, or silver) meant money, and not metal. . . It follows that the efficacy of money is due to the value imposed on it by law, a fact deducible from its Greek name nomos and its Roman name nummus, both of which mean the Law, or that which is created by the law. It is the law that gives existence and efficacy to money and not the material of which the coins are made. Thus, says Paulus, to the Crown only (the Crown or the State being the living impersonation of the Law) belongs the right to confer denominational value upon money. Such value has often exceeded the value of the material two or three, or more, times, as was manifested in the leather issues of Frederick Barbarossa, the tin issues of Dionysius of Syracuse, the gun metal issues of the Sultan Othman (AD 1259-1326) during the wars against Persia, and in our own copper coins.”(60)

That “argentum” meant money rather than just silver is amply proved by the following examples:

“argentariæ tabernæ, banker’s shops (Livy); argentaria inopia, want of money (Plautus); argentarius, tresurer (Plautus); argentei sc. Nummi, or money (Pliny, xvi, 3); ubi argenti venas aurique sequuntur (Lucretius, vi, 808); cum argentum esset expositum in ædibus (Cicero); emunxi argento senes (Terrence); concisumargentum in titulos faciesue minutas (juvenal, xiv, 291; tenue argentum venæque secundæ (ibid., ix, 31).”(61)

The power of legal tender confers on its owner (the sovereign or government) a fiscal resource of the first magnitude. In the ancient world, as suggested in above quotation from Grimaudet, this power was used to overvalue money and reap the benefits of seigniorage, sometimes but not only in great emergencies.

11. The Evidence from Hoards

The study of hoards is one of the most interesting if recent applications of Gresham’s Law. Ever since coinage was created, coins have been collected and sometimes buried as hoards, which resurface for the enlightenment and controversy of later generations of archaeologists, numismatists, historians and economists. Sometimes the finds have been merely spectacular(62) whereas otherwise — like the great discovery of electrum coins in the Temple of Artemis at Ephesus — they have yielded priceless historical information.

Hoards found in the ground have typically been those that have been buried in the past with the intention, but not the realization, of future recovery. Three questions deserve to be asked: (1) Why are hoards created in the first place? (2) Why are they buried? (3) What determines their composition? We can answer these questions in turn.

(1). Collections of coins may exist for a number of reasons, including numismatic interests; Augustus Caesar, for example, was an avid collector. Nevertheless, the main function of hoards is as a store of value, a form of saving, which reflects a desire to preserve wealth for future use. Moreover, hoards are typically a form of liquid wealth, ready cash that is available for use in contingencies. Hoarding always reflects a desire to sacrifice current consumption for the prospect of future consumption.

(2) Hoards are buried because of a real or imagined threat to security. The best proof is that hoarding intensity — measured by the frequency of hoards found — increases during civil wars. In Roman history, for example, hoards increased dramatically during the Second Punic War, c. 218-206 BC, and then again during the Social War, the Civil War and the Spartacus revolt, c. 90-71 BC, and once again during the Civil Wars, c. 50-31 BC. A similar pattern existed in Britain where hoarding frequency soared during its Civil War period c. AD 1625-49. It is probable that this pattern will be confirmed in similar cases.

(3) The composition of hoards is determined partly by Gresham’s Law. Assume that the money supply of a country consists of both overvalued and undervalued coins. Let us now suppose that hoarding intensity increases. By Gresham’s Law it is the undervalued coins that will disappear and the overvalued coins will remain.(64) The profit motive will ensure that the best coins end up in hoards.

An effective application of Gresham’s Law to the study of hoards was made by Sture Bolin in a pioneering work on the Roman monetary system.(65) Drawing on work spanning more than two decades, Bolin published in 1958 a comprehensive study of 150 coin hoards from the period AD 69 to approximately AD 250, found in widely separated parts of the Roman Empire and containing over 82,000 denarii from the Republic and Empire up to the year 193. It is of course well known that the denarii was progressively debased over this period, and this fact should have affected the proportion of old to new (depreciated) coins in the collections. Among his striking findings was the vast number of coins from the Republic in the hoards collected in Germany, the Balkans and Britain, confirming what Gresham’s Law would predict, that the outer parts of the empire preferred the relatively undervalued denarii.(66)

The composition of hoards sometimes offers clues about circulation. Other things equal, a large preponderance of coins as, say, the reign of Hadrian or Vespasian would suggest a large production. On the other hand, a low frequency of a ruler’s coins does not necessarily imply low production; if it were overvalued, it would not be a suitable candidate for hoards. The worst coins circulate, the best coins end up in hoards.

Given the frequency of hoards discovered, which number in the thousands, empirical analysis can be brought to bear, yielding rigorous statistical inferences that can be used to test the presence of absence of Gresham’s Law.

12. Conclusions

Gresham’s Law, properly understood, can be a powerful tool in the hands of historians for the study of monetary history. The catchy phrase, “bad money drives out good,” is not a correct statement of Gresham’s Law nor is it a correct empirical assertion. Throughout history, the opposite has been the case. The laws of competition and efficiency ensure that “good money drives out bad.” The great international currencies — shekels, darics, drachmas, staters, solidi, dinars, ducats, deniers, livres, pounds, dollars — have always been “good” not “bad” money.

Gresham’s Law comes into play only if the “good” and “bad” exchange for the same price. “Good money drives out bad if they exchange for the same price” is an acceptable expression of Gresham’s Law. But a better statement of it is that “Cheap money drives out dear, if they exchange for the same price.” Put in this way, Gresham’s Law becomes a theorem of the general law of economy, a consequence of the theory of rational economic behavior.

A common application of Gresham’s Law arises when coins deteriorate after long usage. At any moment of time a stock of coins in circulation will consist of coins of different ages. The oldest coins in circulation may be much older than the newest coins, the former possibly in a considerably deteriorated condition. It is not true, however, that these coins cannot circulate side by side. Nor is it true that good coins will disappear on their own accord. If the demand for money is equal to the supply of money, no coins will be driven out. Gresham’s Law is not a statement about static conditions; it is a statement about dynamic process.(67)

Bad coins will drive out good only if a change occurs to bring about an excess supply of money. An excess supply of money could result because of a decline in the demand for money. If this occurred in a closed economy, prices would start to rise and the value of the best coins as metal would be higher than their value as money, with the result that the best coins would be withdrawn from circulation until the excess supply of money had been eliminated. If, on the other hand, the economy were open to trade with the rest of the world, the good coins would be sent abroad until the money supply were reduced to its equilibrium level.

An excess supply of money could also arise because the government increases its supply. If the government issues new full-valued coins, they will be exported or withdrawn in hoards and the composition of the money supply will be unchanged. If, on the other hand, the government issues lighter or debased coins — like Dionysius, Nero, John the Good, or Henry VIII — the best of the coins already in circulation will be exported or otherwise withdrawn from circulation and the average quality of the coins in circulation will deteriorate.

The introduction of paper money is a more extreme case of debased or lightened coins in the sense that the value of the material of which money is made is almost nil. Paper notes or new bank credit would displace part of the coinage, and it would as always be the best part of the coinage. As we saw above that is exactly what occurred in the late 1690s in Britain when the issue of paper notes by the newly-created Bank of England displaced an equal quantity of the best coins. The authorities at that time could not understand why the best coins were being exported despite the cruel punishments of branding, hanging and burning at the stake. It shows also that the genius of Locke and Newton was no substitute for an idea whose time had not yet come.

Gresham’s Law has powerful explanatory power in the world of free-coinage bimetallism that dominated the international monetary system for most of the two centuries between the 1660s and the 1870s. Given a world market price of gold in terms of silver — the bimetallic ratio — a country puts itself predominantly onto gold if it overvalues gold, and onto silver if it overvalues silver. Thus, when the United States established bimetallism at the Hamiltonian ratio of 15:1, it undervalued gold and overvalued silver relative to the international ratio around 15.12:1; thus the U.S. was de facto on a silver standard after 1792. But when the ratio was altered in 1834 to 16:1, it overvalued gold and the U.S. moved de facto to a gold standard. Similar stories can be told of other countries, most spectacular perhaps being the case of Britain when Newton’s recommendations in 1717 overvalued gold relative to the European continent, at a time when Brazilian gold supplies were increasing, nudging Britain toward the gold standard.

Gresham’s Law depends on two kinds of money being equivalent for some purposes but not for others. Two coins or notes might be equivalent in all respects except that one is legal tender and the other is not. In most countries, for example, central bank notes are legal tender whereas bank deposits are not, while coins usually have a limit on their legal tender feature. The power of a state to determine that which constitutes legal tender is an important aspect of monetary sovereignty. It is also a privilege that has been subject to great abuse by inflation-prone governments.

The study of coin hoards, in conjunction with an understanding of Gresham’s Law, can yield important historical information.The existence of buried hoards often points to an era of insecurity. The frequencies of particular coins in hoards gives clues to monetary circulation in different times. Insofar as hoards are most likely to consist of “good” coins that have been driven out of circulation by “bad” coins, it is also possible to draw inferences about the monetary policies at the time the coins disappeared. A large concentration of heavy coins dated within a few years of one another would be prima facie evidence of an issue of overvalued coins.

Our discussion has been confined to the literal subject matter of Gresham’s Law, i.e., its applications to the money sphere. It is of course a completely general law that holds whenever the isomorphism that constitutes its theoretical content applies. As Aristophanes knew as well as we, bad politicians drive out good, cheap conversation drives out dear, bad theory drives out good; cheap gifts drive out dear, bad food drives out good, and so on indefinitely. In each case the qualification must be made that from one standpoint (e.g., acceptability) good and bad have the same value.

It is, perhaps, fitting to close on an extension of Gresham’s Law to the theory of money itself. The motivating force underlying Gresham’s Law is economy: we settle a debt or transaction with the cheapest means of payment. But that is what money is! In the world of exchange, debts are settled in the cheapest medium possible. In the world of the gold standard, debts are not settled in wheat or oxen or fish, but gold, because gold is the cheapest means of settlement. Gold is the “bad” money that is “driven out” because it has the lowest costs of transport per unit of value. Silver, gold, paper, cheque money, and electronic transfers in succession become the means of settlement –the bad money that is driven out — because they have been increasingly cheaper forms of payment. Thus it is that Gresham’s Law can lead to insights into the very heart of monetary theory.

For the past twenty five years, Robert Mundell has been Professor of Economics at Columbia University in New York. He studied at the University of British Columbia and the London School of Economics before receiving his Ph.D. from MIT. He taught at Stanford University and the Bologna (Italy) Center of the School of Advanced International Studies of the Johns Hopkins University before joining, in 1961, the staff of the International Monetary Fund. From 1966 to 1971 he was a Professor of Economics at the University of Chicago and Editor of the Journal of Political Economy; he was also summer Professor of International Economics at the Graduate Institute of International Studies in Geneva, Switzerland. In 1974 he came to Columbia University. He has written extensively on the history of the international monetary system and played a significant role in the founding of the euro. In 1983 he received the Jacques Rueff Medal and Prize in the French Senate; in 1997 he became a Distinguished Fellow of the American Economic Association; in 1998, he was made a fellow of the American Academy of Arts and Science; and in 1999, he received the Nobel Memorial Prize in Economic Science.

Image by Economicforum [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)], from Wikimedia Commons

Reprinted with permission.

[Please scroll for bibliography.]

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A Gold Classics Library Selection

Extraordinary Popular Delusions And The Madness Of Crowds

Part Three:  Alchemy – Inferior Alchymists of the Seventeenth Century

by Charles Mackay

Introduction
The Mississippi Scheme
The South Sea Bubble
The Tulipomania
The Alchemists, part 1
The Alchemists, part 2
The Alchemists, part 3

Besides the pretenders to the philosopher’s stone whose lives have been already narrated, this and the preceding century produced a great number of writers, who inundated literature with their books upon the subject. In fact, most of the learned men of that age had some faith in it. Van Helmont, Borrichius, Kirchen, Boerhaave, and a score of others, though not professed alchymists, were fond of the science, and countenanced its professors. Helvetius, the grandfather of the celebrated philosopher of the same name, asserts that he saw an inferior metal turned into gold by a stranger, at the Hague, in 1666. He says that, sitting one day in his study, a man, who was dressed as a respectable burgher of North Holland, and very modest and simple in his appearance, called upon him, with the intention of dispelling his doubts relative to the philosopher’s stone. He asked Helvetius if he thought he should know that rare gem if he saw it. To which Helvetius replied, that he certainly should not. The burgher immediately drew from his pocket a small ivory box, containing three pieces of metal, of the colour of brimstone, and extremely heavy; and assured Helvetius, that of them he could make as much as twenty tons of gold. Helvetius informs us, that he examined them very attentively; and seeing that they were very brittle, he took the opportunity to scrape off a very small portion with his thumb-nail. He then returned them to the stranger, with an entreaty that he would perform the process of transmutation before him. The stranger replied, that he was not allowed to do so, and went away. After his departure, Helvetius procured a crucible and a portion of lead, into which, when in a state of fusion, he threw the stolen grain from the philosopher’s stone. He was disappointed to find that the grain evaporated altogether, leaving the lead in its original state.

Some weeks afterwards, when he had almost forgotten the subject, he received another visit from the stranger. He again entreated him to explain the processes by which he pretended to transmute lead. The stranger at last consented, and informed him, that one grain was sufficient; but that it was necessary to envelope it in a ball of wax before throwing it on the molten metal; otherwise its extreme volatility would cause it to go off in vapour. They tried the experiment, and succeeded to their heart’s content. Helvetius repeated the experiment alone, and converted six ounces of lead into very pure gold.

The fame of this event spread all over the Hague, and all the notable persons of the town flocked to the study of Helvetius to convince themselves of the fact. Helvetius performed the experiment again, in the presence of the Prince of Orange, and several times afterwards, until he exhausted the whole of the powder he had received from the stranger, from whom, it is necessary to state, he never received another visit; nor did he ever discover his name or condition. In the following year Helvetius published his “Golden Calf,” [“Vitulus Aureus quem Mundus adorat et orat, in quo tractatur de naturae miraculo transmutandi metalla.”–Hagae, 1667.] in which he detailed the above circumstances.

About the same time, the celebrated Father Kircher published his “Subterranean World,” in which he called the alchymists a congregation of knaves and impostors, and their science a delusion. He admitted that he had himself been a diligent labourer in the field, and had only come to this conclusion after mature consideration and repeated fruitless experiments. All the alchymists were in arms immediately, to refute this formidable antagonist. One Solomon de Blauenstein was the first to grapple with him, and attempted to convict him of wilful misrepresentation, by recalling to his memory the transmutations by Sendivogius, before the Emperor Frederic III. and the Elector of Mayence; all performed within a recent period. Zwelfer and Glauber also entered into the dispute, and attributed the enmity of Father Kircher to spite and jealousy against adepts who had been more successful than himself.

It was also pretended that Gustavus Adolphus transmuted a quantity of quicksilver into pure gold. The learned Borrichius relates, that he saw coins which had been struck of this gold; and Lenglet du Fresnoy deposes to the same circumstance. In the Travels of Monconis the story is told in the following manner:– “A merchant of Lubeck, who carried on but little trade, but who knew how to change lead into very good gold, gave the King of Sweden a lingot which he had made, weighing, at least, one hundred pounds. The King immediately caused it to be coined into ducats; and because he knew positively that its origin was such as had been stated to him, he had his own arms graven upon the one side, and emblematical figures of Mercury and Venus on the other. “I,” continued Monconis, “have one of these ducats in my possession; and was credibly informed, that, after the death of the Lubeck merchant, who had never appeared very rich, a sum of no less than one million seven hundred thousand crowns was found in his coffers.” [Voyages de Monconis, tome ii. p. 379.]

Such stories as these, confidently related by men high in station, tended to keep up the infatuation of the alchymists in every country of Europe. It is astonishing to see the number of works which were written upon the subject during the seventeenth century alone, and the number of clever men who sacrificed themselves to the delusion. Gabriel de Castaigne, a monk of the order of St. Francis, attracted so much notice in the reign of Louis XIII, that that monarch secured him in his household, and made him his Grand Almoner. He pretended to find the elixir of life; and Louis expected, by his means, to have enjoyed the crown for a century. Van Helmont also pretended to have once performed with success the process of transmuting quicksilver; and was, in consequence, invited by the Emperor Rudolph II. to fix his residence at the court of Vienna. Glauber, the inventor of the salts which still bear his name, and who practised as a physician at Amsterdam about the middle of the seventeenth century, established a public school in that city for the study of alchymy, and gave lectures himself upon the science. John Joachim Becher, of Spire, acquired great reputation at the same period; and was convinced that much gold might be made out of flint stones by a peculiar process, and the aid of that grand and incomprehensible substance, the philosopher’s stone. He made a proposition to the Emperor Leopold of Austria, to aid him in these experiments; but the hope of success was too remote, and the present expense too great to tempt that monarch; and he therefore gave Becher much of his praise, but none of his money. Becher afterwards tried the States-General of Holland, with no better success.

With regard to the innumerable tricks by which impostors persuaded the world that they had succeeded in making gold, and of which so many stories were current about this period, a very satisfactory report was read by M. Geoffroy, the elder, at the sitting of the Royal Academy of Sciences, at Paris, on the 15th of April, 1722. As it relates principally to the alchymic cheats of the sixteenth and seventeenth centuries, the following abridgment of it may not be out of place in this portion of our history:– The instances of successful transmutation were so numerous, and apparently so well authenticated, that nothing short of so able an exposure as that of M. Geoffroy could disabuse the public mind. The trick to which they oftenest had recourse, was to use a double-bottomed crucible, the under surface being of iron or copper, and the upper one of wax, painted to resemble the same metal. Between the two they placed as much gold or silver dust as was necessary for their purpose. They then put in their lead, quicksilver, or other ingredients, and placed their pot upon the fire. Of course, when the experiment was concluded, they never failed to find a lump of gold at the bottom. The same result was produced in many other ways. Some of them used a hollow wand, filled with gold or silver dust, and stopped at the ends with wax or butter. With this they stirred the boiling metal in their crucibles, taking care to accompany the operation with many ceremonies, to divert attention from the real purpose of the manoeuvre. They also drilled holes in lumps of lead, into which they poured molten gold, and carefully closed the aperture with the original metal. Sometimes they washed a piece of gold with quicksilver. When in this state they found no difficulty in palming it off upon the uninitiated as an inferior metal, and very easily transmuted it into fine sonorous gold again, with the aid of a little aquafortis.

Others imposed by means of nails, half iron and half gold or silver. They pretended that they really transmuted the precious half from iron, by dipping it in a strong alcohol. M. Geoffroy produced several of these nails to the Academy of Sciences, and showed how nicely the two parts were soldered together. The golden or silver half was painted black to resemble iron, and the colour immediately disappeared when the nail was dipped into aquafortis. A nail of this description was, for a long time, in the cabinet of the Grand Duke of Tuscany. Such also, said M. Geoffroy, was the knife presented by a monk to Queen Elizabeth of England; the blade of which was half gold and half steel. Nothing at one time was more common than to see coins, half gold and half silver, which had been operated upon by alchymists, for the same purposes of trickery. In fact, says M. Geoffroy, in concluding his long report, there is every reason to believe that all the famous histories which have been handed down to us, about the transmutation of metals into gold or silver, by means of the powder of projection, or philosophical elixirs, are founded upon some successful deception of the kind above narrated. These pretended philosophers invariably disappeared after the first or second experiment, or their powders or elixirs have failed to produce their effect, either because attention being excited they have found no opportunity to renew the trick without being discovered, or because they have not had sufficient gold dust for more than one trial.

The disinterestedness of these would-be philosopher looked, at first sight, extremely imposing. Instances were not rare, in which they generously abandoned all the profits of their transmutations – even the honour of the discovery! But this apparent disinterestedness was one of the most cunning of their manoeuvres. It served to keep up the popular expectation; it showed the possibility of discovering the philosopher’s stone, and provided the means of future advantages, which they were never slow to lay hold of — such as entrances into royal households, maintenance at the public expense, and gifts from ambitious potentates, too greedy after the gold they so easily promised.

It now only remains to trace the progress of the delusion from the commencement of the eighteenth century until the present day. It will be seen, that until a very recent period, there were but slight signs of a return to reason.

JEAN DELISLE.

In the year 1705, there was much talk in France of a blacksmith, named Delisle, who had discovered the philosopher’s stone, and who went about the country turning lead into gold. He was a native of Provence, from which place his fame soon spread to the capital. His early life is involved in obscurity; but Longlet du Fresnoy has industriously collected some particulars of his later career, which possess considerable interest. He was a man without any education, and had been servant in his youth to an alchymist, from whom he learned many of the tricks of the fraternity. The name of his master has never been discovered; but it is pretended that he rendered himself in some manner obnoxious to the government of Louis XIV, and was obliged, in consequence, to take refuge in Switzerland. Delisle accompanied him as far as Savoy, and there, it is said, set upon him in a solitary mountain-pass, and murdered and robbed him. He then disguised himself as a pilgrim, and returned to France. At a lonely inn, by the road-side, where he stopped for the night, he became acquainted with a woman, named Aluys; and so sudden a passion was enkindled betwixt them, that she consented to leave all, follow him, and share his good or evil fortune wherever he went. They lived together for five or six years in Provence, without exciting any attention, apparently possessed of a decent independence. At last, in 1706, it was given out that he was the possessor of the philosopher’s stone; and people, from far and near, came flocking to his residence, at the Chateau de la Palu, at Sylanez, near Barjaumont, to witness the wealth he could make out of pumps and fire shovels. The following account of his operations is given in a letter addressed by M. de Cerisy, the Prior of Chateauneuf, in the Diocese of Riez, in Provence, to the Vicar of St. Jacques du Hautpas, at Paris, and dated the 18th of November 1706:–

“I have something to relate to you, my dear cousin, which will be interesting to you and your friends. The philosopher’s stone, which so many persons have looked upon as a chimera, is at last found. It is a man named Delisle, of the parish of Sylanez, and residing within a quarter of a league of me, that has discovered this great secret. He turns lead into gold, and iron into silver, by merely heating these metals red hot, and pouring upon them, in that state, some oil and powder he is possessed of; so that it would not be impossible for any man to make a million a day, if he had sufficient of this wondrous mixture. Some of the pale gold which he had made in this manner, he sent to the jewellers of Lyons, to have their opinion on its quality. He also sold twenty pounds weight of it to a merchant of Digne, named Taxis. All the jewellers say they never saw such fine gold in their lives. He makes nails, part gold, part iron, and part silver. He promised to give me one of them, in a long conversation which I had with him the other day, by order of the Bishop of Sends, who saw his operations with his own eyes, and detailed all the circumstances to me.

“The Baron and Baroness de Rheinwald showed me a lingot of gold made out of pewter before their eyes by M. Delisle. My brother-in-law Sauveur, who has wasted fifty years of his life in this great study, brought me the other day a nail which he had seen changed into gold by Delisle, and fully convinced me that all his previous experiments were founded on an erroneous principle. This excellent workman received, a short time ago, a very kind letter from the superintendent of the royal household, which I read. He offered to use all his influence with the ministers to prevent any attempts upon his liberty, which has twice been attacked by the agents of government. It is believed that the oil he makes use of, is gold or silver reduced to that state. He leaves it for a long time exposed to the rays of the sun. He told me that it generally took him six months to make all his preparations. I told him that, apparently, the King wanted to see him. He replied that he could not exercise his art in every place, as a certain climate and temperature were absolutely necessary to his success. The truth is, that this man appears to have no ambition. He only keeps two horses and two men-servants. Besides, he loves his liberty, has no politeness, and speaks very bad French; but his judgment seems to be solid. He was formerly no more than a blacksmith, but excelled in that trade without having been taught it. All the great lords and seigneurs from far and near come to visit him, and pay such court to him, that it seems more like idolatry than anything else. Happy would France be if this man would discover his secret to the King, to whom the superintendent has already sent some lingots! But the happiness is too great to be hoped for; for I fear that the workman and his secret will expire together. There is no doubt that this discovery will make a great noise in the kingdom, unless the character of the man, which I have just depicted to you, prevent it. At all events, posterity will hear of him.”

In another letter to the same person, dated the 27th of January 1707, M. de Cerisy says, “My dear cousin, I spoke to you in my last letter of the famous alchymist of Provence, M. Delisle. A good deal of that was only hearsay, but now I am enabled to speak from my own experience. I have in my possession a nail, half iron and half silver, which I made myself. That great and admirable workman also bestowed a still greater privilege upon me — he allowed me to turn a piece of lead which I had brought with me into pure gold, by means of his wonderful oil and powder. All the country have their eyes upon this gentleman: some deny loudly, others are incredulous; but those who have seen acknowledge the truth. I have read the passport that has been sent to him from Court, with orders that he should present himself at Paris early in the spring. He told me that he would go willingly, and that it was himself who fixed the spring for his departure; as he wanted to collect his materials, in order that, immediately on his introduction to the King, he might make an experiment worthy of his Majesty, by converting a large quantity of lead into the finest gold. I sincerely hope that he will not allow his secret to die with him, but that he will communicate it to the King. As I had the honour to dine with him on Thursday last, the 20th of this month, being seated at his side, I told him in a whisper that he could, if he liked, humble all the enemies of France. He did not deny it, but began to smile. In fact, this man is the miracle of art. Sometimes he employs the oil and powder mixed, sometimes the powder only, but in so small a quantity that, when the lingot which I made was rubbed all over with it, it did not show at all.”

This soft-headed priest was by no means the only person in the neighbourhood who lost his wits in hopes of the boundless wealth held out by this clever impostor. Another priest, named De Lions, a chanter in the cathedral of Grenoble, writing on the 30th January 1707, says, — “M. Mesnard, the curate of Montier, has written to me, stating that there is a man, about thirty-five years of age, named Delisle, who turns lead and iron into gold and silver; and that this transmutation is so veritable and so true, that the goldsmiths affirm that his gold and silver are the purest and finest they ever saw. For five years, this man was looked upon as a madman or a cheat; but the public mind is now disabused with respect to him. He now resides with M. de la Palu, at the chateau of the same name. M. de la Palu is not very easy in his circumstances, and wants money to portion his daughters, who have remained single till middle age, no man being willing to take them without a dowry. M. Delisle has promised to make them the richest girls in the province before he goes to Court, having been sent for by the King. He has asked for a little time before his departure, in order that he may collect powder enough to make several quintals of gold before the eyes of his Majesty, to whom he intends to present them. The principal matter of his wonderful powder is composed of simples, principally the herbs Lunaria major and minor. There is a good deal of the first planted by him in the gardens of La Palu; and he gets the other from the mountains, that stretch about two leagues from Montier. What I tell you now is not a mere story invented for your diversion: M. Mesnard can bring forward many witnesses to its truth; among others, the Bishop of Senes, who saw these surprising operations performed; and M. de Cerisy, whom you know well. Delisle transmutes his metals in public. He rubs the lead or iron with his powder, and puts it over burning charcoal. In a short time it changes colour; the lead becomes yellow, and is found to be converted into excellent gold: the iron becomes white, and is found to be pure silver. Delisle is altogether an illiterate person. M. de St. Auban endeavoured to teach him to read and write, but he profited very little by his lessons. He is unpolite, fantastic, and a dreamer, and acts by fits and starts.”

Delisle, it would appear, was afraid of venturing to Paris. He knew that his sleight of hand would be too narrowly watched in the royal presence; and upon some pretence or other, he delayed the journey for more than two years. Desmarets, the Minister of Finance to Louis XIV, thinking the “philosopher” dreaded foul play, twice sent him a safe conduct under the King’s seal; but Delisle still refused. Upon this, Desmarets wrote to the Bishop of Sends for his real opinion as to these famous transmutations. The following was the answer of that prelate:–

“Copy of a report addressed to M. Desmarets, Comptroller-General of the Finances to His Majesty Louis XIV, by the Bishop of Senes, dated March 1709.

“SIR,

“A twelvemonth ago, or a little more, I expressed to you my joy at hearing of your elevation to the ministry; I have now the honour to write you my opinion of the Sieur Delisle, who has been working at the transmutation of metals in my diocese. I have, during the last two years, spoken of him several times to the Count de Pontchartrain, because he asked me; but I have not written to you, sir, or to M. de Chamillart, because you neither of you requested my opinion upon the subject. Now, however, that you have given me to understand that you wish to know my sentiments on the matter, I will unfold myself to you in all sincerity, for the interests of the King and the glory of your ministry.

“There are two things about the Sieur Delisle which, in my opinion, should be examined without prejudice: the one relates to his secret; the other, to his person; that is to say, whether his transmutations are real, and whether his conduct has been regular. As regards the secret of the philosopher’s stone, I deemed it impossible, for a long time; and for more than three years, I was more mistrustful of the pretensions of this Sieur Delisle than of any other person. During this period I afforded him no countenance; I even aided a person, who was highly recommended to me by an influential family of this province, to prosecute Delisle for some offence or other which it was alleged he had committed. But this person, in his anger against him, having told me that he had himself been several times the bearer of gold and silver to the goldsmiths of Nice, Aix, and Avignon, which had been transmuted by Delisle from lead and iron, I began to waver a little in my opinions respecting him. I afterwards met Delisle at the house of one of my friends. To please me, the family asked Delisle to operate before me, to which he immediately consented. I offered him some iron nails, which he changed into silver in the chimney-place before six or seven credible witnesses. I took the nails thus transmuted, and sent them by my almoner to Irabert, the jeweller of Aix, who, having subjected them to the necessary trial, returned them to me, saying they were very good silver. Still, however, I was not quite satisfied. M. de Pontchartrain having hinted to me, two years previously, that I should do a thing agreeable to his Majesty if I examined into this business of Delisle, I resolved to do so now. I therefore summoned the alchymist to come to me at Castellane. He came; and I had him escorted by eight or ten vigilant men, to whom I had given notice to watch his hands strictly. Before all of us he changed two pieces of lead into gold and silver. I sent them both to M. de Pontchartrain; and he afterwards informed me by a letter, now lying before me, that he had shown them to the most experienced goldsmiths of Paris, who unanimously pronounced them to be gold and silver of the very purest quality, and without alloy. My former bad opinion of Delisle was now indeed shaken. It was much more so when he performed transmutation five or six times before me at Senes, and made me perform it myself before him without his putting his hand to anything. You have seen, sir, the letter of my nephew, the Pere Berard, of the Oratoire at Paris, on the experiment that he performed at Castellane, and the truth of which I hereby attest. Another nephew of mine, the Sieur Bourget, who was here three weeks ago, performed the same experiment in my presence, and will detail all the circumstances to you personally at Paris. A hundred persons in my diocese have been witnesses of these things. I confess to you, sir, that, after the testimony of so many spectators and so many goldsmiths, and after the repeatedly successful experiments that I saw performed, all my prejudices vanished. My reason was convinced by my eyes; and the phantoms of impossibility which I had conjured up were dissipated by the work of my own hands.

“It now only remains for me to speak to you on the subject of his person and conduct. Three suspicions have been excited against him: the first, That he was implicated in some criminal proceeding at Cisteron, and that he falsified the coin of the realm; the second, That the King sent him two safe-conducts without effect; and the third, That he still delays going to court to operate before the King. You may see, sir, that I do not hide or avoid anything. As regards the business at Cisteron, the Sieur Delisle has repeatedly assured me that there was nothing against him which could reasonably draw him within the pale of justice, and that he had never carried on any calling injurious to the King’s service. It was true that, six or seven years ago, he had been to Cisteron to gather herbs necessary for his powder, and that he had lodged at the house of one Pelouse, whom he thought an honest man. Pelouse was accused of clipping Louis d’ors; and as he had lodged with him, he was suspected of being his accomplice. This mere suspicion, without any proof whatever, had caused him to be condemned for contumacy; a common case enough with judges, who always proceed with much rigour against those who are absent. During my own sojourn at Aix, it was well known that a man, named Andre Aluys, had spread about reports injurious to the character of Delisle, because he hoped thereby to avoid paying him a sum of forty Louis that he owed him. But permit me, sir, to go further, and to add that, even if there were well-founded supicions against Delisle, we should look with some little indulgence on the faults of a man who possesses a secret so useful to the state. As regards the two safe-conducts sent him by the King, I think I can answer certainly that it was through no fault of his that he paid so little attention to them. His year, strictly speaking, consists only of the four summer months; and when by any means he is prevented from making the proper use of them, he loses a whole year. Thus the first safe-conduct became useless by the irruption of the Duke of Savoy in 1707; and the second had hardly been obtained, at the end of June 1708, when the said Delisle was insulted by a party of armed men, pretending to act under the authority of the Count de Grignan, to whom he wrote several letters of complaint, without receiving any answer, or promise that his safety would be attended to. What I have now told you, sir, removes the third objection, and is the reason why, at the present time, he cannot go to Paris to the King, in fulfilment of his promises made two years ago. Two, or even three, summers have been lost to him, owing to the continual inquietude he has laboured under. He has, in consequence, been unable to work, and has not collected a sufficient quantity of his oil and powder, or brought what he has got to the necessary degree of perfection. For this reason also he could not give the Sieur de Bourget the portion he promised him for your inspection. If the other day he changed some lead into gold with a few grains of his powder, they were assuredly all he had; for he told me that such was the fact long before he knew my nephew was coming. Even if he had preserved this small quantity to operate before the King, I am sure that, on second thoughts, he would never have adventured with so little; because the slightest obstacles in the metals (their being too hard or too soft, which is only discovered in operating) would have caused him to be looked upon as an impostor, if, in case his first powder had proved ineffectual, he had not been possessed of more to renew the experiment and surmount the difficulty.

“Permit me, sir, in conclusion, to repeat that such an artist as this should not be driven to the last extremity, nor forced to seek an asylum offered to him in other countries, but which he has despised, as much from his own inclinations as from the advice I have given him. You risk nothing in giving him a little time, and in hurrying him you may lose a great deal. The genuineness of his gold can no longer be doubted, after the testimony of so many jewellers of Aix, Lyons, and Paris in its favour. As it is not his fault that the previous safe-conducts sent to him have been of no service, it will be necessary to send him another; for the success of which I will be answerable, if you will confide the matter to me, and trust to my zeal for the service of his Majesty, to whom I pray you to communicate this letter, that I may be spared the just reproaches he might one day heap upon me if he remained ignorant of the facts I have now written to you. Assure him, if you please, that, if you send me such a safe-conduct, I will oblige the Sieur Delisle to depose with me such precious pledges of his fidelity, as shall enable me to be responsible myself to the King. These are my sentiments, and I submit them to your superior knowledge; and have the honour to remain, with much respect, &c.

“* JOHN, Bishop of Senes.”

“To M. Desmarets, Minister of State, and “Comptroller-General of the Finances, at Paris.”

That Delisle was no ordinary impostor, but a man of consummate cunning and address, is very evident from this letter. The Bishop was fairly taken in by his clever legerdemain, and when once his first distrust was conquered, appeared as anxious to deceive himself as even Delisle could have wished. His faith was so abundant that he made the case of his protege his own, and would not suffer the breath of suspicion to be directed against him. Both Louis and his minister appear to have been dazzled by the brilliant hopes he had excited, and a third pass, or safe-conduct, was immediately sent to the alchymist, with a command from the King that he should forthwith present himself at Versailles, and make public trial of his oil and powder. But this did not suit the plans of Delisle: in the provinces he was regarded as a man of no small importance; the servile flattery that awaited him wherever he went was so grateful to his mind that he could not willingly relinquish it and run upon certain detection at the court of the Monarch. Upon one pretext or another he delayed his journey, notwithstanding the earnest solicitations of his good friend the Bishop. The latter had given his word to the minister, and pledged his honour that he would induce Delisle to go, and he began to be alarmed when he found he could not subdue the obstinacy of that individual. For more than two years he continued to remonstrate with him, and was always met by some excuse, that there was not sufficient powder, or that it had not been long enough exposed to the rays of the sun. At last his patience was exhausted; and fearful that he might suffer in the royal estimation by longer delay, he wrote to the King for a lettre de cachet, in virtue of which the alchymist was seized at the castle of La Palu, in the month of June 1711, and carried off to be imprisoned in the Bastille.

The gendarmes were aware that their prisoner was supposed to be the lucky possessor of the philosopher’s stone, and on the road they conspired to rob and murder him. One of them pretended to be touched with pity for the misfortunes of the philosopher, and offered to give him an opportunity of escape whenever he could divert the attention of his companions. Delisle was profuse in his thanks, little dreaming of the snare that was laid for him. His treacherous friend gave notice of the success of the stratagem so far; and it was agreed that Delisle should be allowed to struggle with and overthrow one of them while the rest were at some distance. They were then to pursue him and shoot him through the heart; and after robbing the corpse of the philosopher’s stone, convey it to Paris on a cart, and tell M. Desmarets that the prisoner had attempted to escape, and would have succeeded, if they had not fired after him and shot him through the body. At a convenient place the scheme was executed. At a given signal from the friendly gendarme Delisle fled, while another gendarme took aim and shot him through the thigh. Some peasants arriving at the instant, they were prevented from killing him as they intended; and he was transported to Paris, maimed and bleeding. He was thrown into a dungeon in the Bastille, and obstinately tore away the bandages which the surgeons applied to his wound. He never afterwards rose from his bed.

The Bishop of Senes visited him in prison, and promised him his liberty if he would transmute a certain quantity of lead into gold before the King. The unhappy man had no longer the means of carrying on the deception; he had no gold, and no double-bottomed crucible or hollow wand to conceal it in, even if he had. He would not, however, confess that he was an impostor; but merely said he did not know how to make the powder of projection, but had received a quantity from an Italian philosopher, and had used it all in his various transmutations in Provence. He lingered for seven or eight months in the Bastille, and died from the effects of his wound, in the forty-first year of his age.

ALBERT ALUYS.

This pretender to the philosopher’s stone, was the son, by a former husband, of the woman Aluys, with whom Delisle became acquainted at the commencement of his career, in the cabaret by the road side, and whom he afterwards married. Delisle performed the part of a father towards him, and thought he could show no stronger proof of his regard, than by giving him the necessary instructions to carry on the deception which had raised himself to such a pitch of greatness. The young Aluys was an apt scholar, and soon mastered all the jargon of the alchymists. He discoursed learnedly upon projections, cimentations, sublimations, the elixir of life, and the universal alkahest; and on the death of Delisle gave out that the secret of that great adept had been communicated to him, and to him only. His mother aided in the fraud, with the hope they might both fasten themselves, in the true alchymical fashion, upon some rich dupe, who would entertain them magnificently while the operation was in progress. The fate of Delisle was no inducement for them to stop in France. The Provencals, it is true, entertained as high an opinion as ever of his skill, and were well inclined to believe the tales of the young adept on whom his mantle had fallen; but the dungeons of the Bastille were yawning for their prey, and Aluys and his mother decamped with all convenient expedition. They travelled about the Continent for several years, sponging upon credulous rich men, and now and then performing successful transmutations by the aid of double-bottomed crucibles and the like. In the year 1726, Aluys, without his mother, who appears to have died in the interval, was at Vienna, where he introduced himself to the Duke de Richelieu, at that time ambassador from the court of France. He completely deceived this nobleman; he turned lead into gold (apparently) on several occasions, and even made the ambassador himself turn an iron nail into a silver one. The Duke afterwards boasted to Lenglet du Fresnoy of his achievements as an alchymist, and regretted that be had not been able to discover the secret of the precious powder by which he performed them.

Aluys soon found that, although he might make a dupe of the Duke de Richelieu, he could not get any money from him. On the contrary, the Duke expected all his pokers and fire shovels to be made silver, and all his pewter utensils gold; and thought the honour of his acquaintance was reward sufficient for a roturier, who could not want wealth since he possessed so invaluable a secret. Aluys seeing that so much was expected of him, bade adieu to his Excellency, and proceeded to Bohemia, accompanied by a pupil, and by a young girl who had fallen in love with him in Vienna. Some noblemen in Bohemia received him kindly, and entertained him at their houses for months at a time. It was his usual practice to pretend that he possessed only a few grains of his powder, with which he would operate in any house where he intended to fix his quarters for the season. He would make the proprietor a present of the piece of gold thus transmuted, and promise him millions, if he could only be provided with leisure to gather his lunaria major and minor on their mountain tops, and board, lodging, and loose cash for himself, his wife, and his pupil in the interval.

He exhausted in this manner the patience of some dozen of people, when, thinking that there was less danger for him in France, under the young king Louis XV, than under his old and morose predecessor, he returned to Provence. On his arrival at Aix, he presented himself before M. le Bret, the President of the province, a gentleman who was much attached to the pursuits of alchymy, and had great hopes of being himself able to find the philosopher’s stone. M. le Bret, contrary to his expectation, received him very coolly, in consequence of some rumours that were spread abroad respecting him; and told him to call upon him on the morrow. Aluys did not like the tone of the voice, or the expression of the eye of the learned President, as that functionary looked down upon him. Suspecting that all was not right, he left Aix secretly the same evening, and proceeded to Marseilles. But the police were on the watch for him; and he had not been there four-and-twenty hours, before he was arrested on a charge of coining, and thrown into prison.

As the proofs against him were too convincing to leave him much hope of an acquittal, he planned an escape from durance. It so happened that the gaoler had a pretty daughter, and Aluys soon discovered that she was tender-hearted. He deavoured to gain her in his favour, and succeeded. The damsel, unaware that he was a married man, conceived and encouraged a passion for him, and generously provided him with the means of escape. After he had been nearly a year in prison he succeeded in getting free, leaving the poor girl behind, to learn that be was already married, and to lament in solitude that she had given her heart to an ungrateful vagabond.

When he left Marseilles, he had not a shoe to his foot, or a decent garment to his back, but was provided with some money and clothes by his wife in a neighbouring town. They then found their way to Brussels, and by dint of excessive impudence, brought themselves into notice. He took a house, fitted up a splendid laboratory, and gave out that he knew the secret of transmutation. In vain did M. Percel, the brother-in-law of Lenglet du Fresnoy, who resided in that city, expose his pretensions, and hold him up to contempt as an ignorant impostor: the world believed him not. They took the alchymist at his word, and besieged his doors, to see and wonder at the clever legerdemain by which he turned iron nails into gold and silver. A rich greffier paid him a large sum of money that he might be instructed in the art, and Aluys gave him several lessons on the most common principles of chemistry. The greffier studied hard for a twelvemonth, and then discovered that his master was a quack. He demanded his money back again; but Aluys was not inclined to give it him, and the affair was brought before the civil tribunal of the province. In the mean time, however, the greffier died suddenly; poisoned, according to the popular rumour, by his debtor, to avoid repayment. So great an outcry arose in the city, that Aluys, who may have been innocent of the crime, was nevertheless afraid to remain and brave it. He withdrew secretly in the night, and retired to Paris. Here all trace of him is lost. He was never heard of again; but Lenglet du Fresnoy conjectures, that he ended his days in some obscure dungeon, into which he was cast for coining, or other malpracticcs.

THE COUNT DE ST. GERMAIN.

This adventurer was of a higher grade than the last, and played a distinguished part at the court of Louis XV. He pretended to have discovered the elixir of life, by means of which he could make any one live for centuries; and allowed it to be believed that his own age was upwards of two thousand years. He entertained many of the opinions of the Rosicrucians; boasted of his intercourse with sylphs and salamanders; and of his power of drawing diamonds from the earth, and pearls from the sea, by the force of his incantations. He did not lay claim to the merit of having discovered the philosopher’s stone; but devoted so much of his time to the operations of alchymy, that it was very generally believed, that, if such a thing as the philosopher’s stone had ever existed, or could be called into existence, he was the man to succeed in finding it.

It has never yet been discovered what was his real name, or in what country he was born. Some believed, from the Jewish cast of his handsome countenance, that he was the “wandering Jew;” others asserted, that he was the issue of an Arabian princess, and that his father was a salamander; while others, more reasonable, affirmed him to be the son of a Portuguese Jew, established at Bourdeaux. He first carried on his imposture in Germany, where he made considerable sums by selling an elixir to arrest the progress of old age. The Marechal de Belle-Isle purchased a dose of it; and was so captivated with the wit, learning, and good manners of the charlatan, and so convinced of the justice of his most preposterous pretensions, that he induced him to fix his residence in Paris. Under the Marshal’s patronage, he first appeared in the gay circles of that capital. Every one was delighted with the mysterious stranger; who, at this period of his life, appears to have been about seventy years of age, but did not look more than forty-five. His easy assurance imposed upon most people. His reading was extensive, and his memory extraordinarily tenacious of the slightest circumstances. His pretension to have lived for so many centuries naturally exposed him to some puzzling questions, as to the appearance, life, and conversation of the great men of former days; but he was never at a loss for an answer. Many who questioned him for the purpose of scoffing at him, refrained in perplexity, quite bewildered by his presence of mind, his ready replies, and his astonishing accuracy on every point mentioned in history. To increase the mystery by which he was surrounded, he permitted no person to know how he lived. He dressed in a style of the greatest magnificence; sported valuable diamonds in his hat, on his fingers, and in his shoe-buckles; and sometimes made the most costly presents to the ladies of the court. It was suspected by many that he was a spy, in the pay of the English ministry; but there never was a tittle of evidence to support the charge. The King looked upon him with marked favour, was often closeted with him for hours together, and would not suffer anybody to speak disparagingly of him. Voltaire constantly turned him into ridicule; and, in one of his letters to the King of Prussia, mentions him as “un comte pour fire;” and states, that he pretended to have dined with the holy fathers, at the Council of Trent!

In the “Memoirs of Madame du Hausset,” chamber-woman to Madame du Pompadour, there are some amusing anecdotes of this personage. Very soon after his arrival in Paris, he had the entree of her dressing-room; a favour only granted to the most powerful lords at the court of her royal lover. Madame was fond of conversing with him; and, in her presence, he thought fit to lower his pretensions very considerably: but he often allowed her to believe that he had lived two or three hundred years, at least. “One day,” says Madame du Hausset, “Madame said to him, in my presence, ‘What was the personal appearance of Francis I? He was a King I should have liked.’ ‘He was, indeed, very captivating,’ replied St. Germain; and he proceeded to describe his face and person, as that of a man whom he had accurately observed. ‘It is a pity he was too ardent. I could have given him some good advice, which would have saved him from all his misfortunes: but he would not have followed it; for it seems as if a fatality attended princes, forcing them to shut their ears to the wisest counsel.’ ‘Was his court very brilliant?’ inquired Madame du Pompadour. ‘Very,’ replied the Count; ‘but those of his grandsons surpassed it. In the time of Mary Stuart and Margaret of Valois, it was a land of enchantment — a temple sacred to pleasures of every kind.’ Madame said, laughing, ‘You seem to have seen all this.’ ‘I have an excellent memory,’ said he, ‘and have read the history of France with great care. I sometimes amuse myself, not by making, but by letting, it be believed that I lived in old times.’

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“‘But you do not tell us your age,’ said Madame du Pompadour to him on another occasion; ‘and yet you pretend you are very old. The Countess de Gergy, who was, I believe, ambassadress at Vienna some fifty years ago, says she saw you there, exactly the same as you now appear.’

“‘It is true, Madam,’ replied St. Germain; ‘I knew Madame de Gergy many years ago.’

“‘But, according to her account, you must be more than a hundred years old?’

“‘That is not impossible,’ said he, laughing; ‘but it is much more possible that the good lady is in her dotage.’

“‘You gave her an elixir, surprising for the effects it produced; for she says, that during a length of time, she only appeared to be eighty-four; the age at which she took it. Why don’t you give it to the King ?’

“‘0 Madam !’ he exclaimed, ‘the physicians would have me broken on the wheel, were I to think of drugging his Majesty.'”

When the world begins to believe extraordinary things of an individual, there is no telling where its extravagance will stop. People, when once they have taken the start, vie with each other who shall believe most. At this period all Paris resounded with the wonderful adventures of the Count de St. Germain; and a company of waggish young men tried the following experiment upon its credulity:- A clever mimic, who, on account of the amusement he afforded, was admitted into good society, was taken by them, dressed as the Count de St. Germain, into several houses in the Rue du Marais. He imitated the Count’s peculiarities admirably, and found his auditors open-mouthed to believe any absurdity he chose to utter. NO fiction was too monstrous for their all-devouring credulity. He spoke of the Saviour of the world in terms of the greatest familiarity; said he had supped with him at the marriage in Canaan of Galilee, where the water was miraculously turned into wine. In fact, he said he was an intimate friend of his, and had often warned him to be less romantic and imprudent, or he would finish his career miserably. This infamous blasphemy, strange to say, found believers; and, ere three days had elapsed, it was currently reported that St. Germain was born soon after the deluge, and that he would never die!

St. Germain himself was too much a man of the world to assert anything so monstrous; but he took no pains to contradict the story. In all his conversations with persons of rank and education, he advanced his claims modestly, and as if by mere inadvertency; and seldom pretended to a longevity beyond three hundred years; except when he found he was in company with persons who would believe anything. He often spoke of Henry VIII, as if he had known him intimately; and of the Emperor Charles V, as if that monarch had delighted in his society. He would describe conversations which took place with such an apparent truthfulness, and be so exceedingly minute and particular as to the dress and appearance of the individuals, and even the weather at the time, and the furniture of the room, that three persons out of four were generally inclined to credit him. He had constant applications from rich old women for an elixir to make them young again; and, it would appear, gained large sums in this manner. To those whom he was pleased to call his friends, he said, his mode of living and plan of diet were far superior to any elixir; and that anybody might attain a patriarchal age, by refraining from drinking at meals, and very sparingly at any other time. The Baron de Gleichen followed this system, and took great quantities of senna leaves, expecting to live for two hundred years. He died, however, at seventy-three. The Duchess de Choiseul was desirous of following the same system; but the Duke her husband, in much wrath, forbade her to follow any system prescribed by a man who had so equivocal a reputation as M. de St. Germain.

Madame du Hausset says, she saw St. Germain, and conversed with him several times. He appeared to her to be about fifty years of age, was of the middle size, and had fine expressive features. His dress was always simple, but displayed much taste. He usually wore diamond rings of great value; and his watch and snuff-box were ornamented with a profusion of precious stones. One day, at Madame du Pompadour’s apartments, where the principal courtiers were assembled, St. Germain made his appearance in diamond knee and shoe buckles, of so fine a water, that Madame said, she did not think the King had any equal to them. He was entreated to pass into the antechamber, and undo them; which he did, and brought them to Madame, for closer inspection. M. de Gontant, who was present, said their value could not be less than two hundred thousand livres, or upwards of eight thousand pounds sterling. The Baron de Gleichen, in his “Memoirs,” relates, that the Count one day showed him so many diamonds, that he thought he saw before him all the treasures of Aladdin’s lamp; and adds, that he had had great experience in precious stones, and was convinced that all those possessed by the Count were genuine. On another occasion, St. Germain showed Madame du Pompadour a small box, containing topazes, emeralds, and diamonds, worth half a million of livres. He affected to despise all this wealth, to make the world more easily believe that he could, like the Rosicrucians, draw precious stones out of the earth by the magic of his song. He gave away a great number of these jewels to the ladies of the court; and Madame du Pompadour was so charmed with his generosity, that she gave him a richly-enamelled snuff-box, as a token of her regard; on the lid of which was beautifully painted a portrait of Socrates, or some other Greek sage, to whom she compared him. He was not only lavish to the mistresses, but to the maids. Madame du Hausset says, — “The Count came to see Madame du Pompadour, who was very ill, and lay on the sofa. He showed her diamonds enough to furnish a king’s treasury. Madame sent for me to see all those beautiful things. I looked at them with an air of the utmost astonishment; but I made signs to her, that I thought them all false. The Count felt for something in a pocket-book about twice as large as a spectacle-case; and, at length, drew out two or three little paper packets, which he unfolded, and exhibited a superb ruby. He threw on the table, with a contumptuous air, a little cross of green and white stones. I looked at it, and said it was not to be despised. I then put it on, and admired it greatly. The Count begged me to accept it. I refused. He urged me to take it. At length, he pressed so warmly, that Madame, seeing it could not be worth more than a thousand livres, made me a sign to accept it. I took the cross, much pleased with the Count’s politeness.”

How the adventurer obtained his wealth remains a secret. He could not have made it all by the sale of his elixir vitae in Germany; though, no doubt, some portion of it was derived from that source. Voltaire positively says, he was in the pay of foreign governments; and in his letter to the King of Prussia, dated the 5th of April 1758, says, that he was initiated in all the secrets of Choiseul, Kaunitz, and Pitt. Of what use he could be to any of those ministers, and to Choiseul especially, is a mystery of mysteries.

There appears no doubt that he possessed the secret of removing spots from diamonds; and, in all probability, he gained considerable sums by buying, at inferior prices, such as had flaws in them, and afterwards disposing of them at a profit of cent. per cent. Madame du Hausset relates the following anecdote on this particular:– “The King,” says she, “ordered a middling-sized diamond, which had a flaw in it, to be brought to him. After having it weighed, his Majesty said to the Count, ‘The value of this diamond, as it is, and with the flaw in it, is six thousand livres; without the flaw, it would be worth, at least, ten thousand. Will you undertake to make me a gainer of four thousand livres?’ St. Germain examined it very attentively, and said, ‘It is possible; it may be done. I will bring it you again in a month.’ At the time appointed, the Count brought back the diamond, without a spot, and gave it to the King. It was wrapped in a cloth of amianthos, which he took off. The King had it weighed immediately, and found it very little diminished. His Majesty then sent it to his jeweller, by M. de Gonrant, without telling him of anything that had passed. The jeweller gave nine thousand six hundred livres for it. The King, however, sent for the diamond back again, and said he would keep it as a curiosity. He could not overcome his surprise; and said M. de St. Germain must be worth millions; especially if he possessed the secret of making large diamonds out of small ones. The Count neither said that he could, or could not; but positively asserted, that he knew how to make pearls grow, and give them the finest water. The King paid him great attention, and so did Madame du Pompadour. M. du Quesnoy once said, that St. Germain was a quack; but the King reprimanded him. In fact, his Majesty appears infatuated by him; and sometimes talks of him as if his descent were illustrious.”

St. Germain had a most amusing vagabond for a servant, to whom he would often appeal for corrobation, when relating some wonderful event that happened centuries before. The fellow, who was not without ability, generally corroborated him in a most satisfactory manner. Upon one occasion, his master was telling a party of ladies and gentlemen, at dinner, some conversation he had had in Palestine, with King Richard I. of England, whom he described as a very particular friend of his. Signs of astonishment and incredulity were visible on the faces of the company; upon which St. Germain very coolly turned to his servant, who stood behind his chair, and asked him if he had not spoken truth? “I really cannot say,” replied the man, without moving a muscle; “you forget, sir, I have only been five hundred years in your service!” “Ah! true,” said his master; “I remember now; it was a little before your time!” Occasionally, when with men whom he could not so easily dupe, he gave utterance to the contempt with which he could scarcely avoid regarding such gaping credulity. “These fools of Parisians,” said he, to the Baron de Gleichen, “believe me to be more than five hundred years old; and, since they will have it so, I confirm them in their idea. Not but that I really am much older than I appear.”

Many other stories are related of this strange impostor; but enough have been quoted to show his character and pretensions. It appears that he endeavoured to find the philosopher’s stone; but never boasted of possessing it. The Prince of Hesse Cassel, whom he had known years before, in Germany, wrote urgent letters to him, entreating him to quit Paris, and reside with him. St. Germain at last consented. Nothing further is known of his career. There were no gossipping memoir-writers at the court of Hesse Cassel to chronicle his sayings and doings. He died at Sleswig, under the roof of his friend the Prince, in the year 1784.

CAGLIOSTRO.

This famous charlatan, the friend and successor of St. Germain, ran a career still more extraordinary. He was the arch-quack of his age, the last of the great pretenders to the philosopher’s stone and the water of life, and during his brief season of prosperity one of the most conspicuous characters of Europe.

His real name was Joseph Balsamo. He was born at Palermo about the year 1743, of humble parentage. He had the misfortune to lose his father during his infancy, and his education was left in consequence to some relatives of his mother, the latter being too poor to afford him any instruction beyond mere reading and writing. He was sent in his fifteenth year to a monastery, to be taught the elements of chemistry and physic; but his temper was so impetuous, his indolence so invincible, and his vicious habits so deeply rooted, that he made no progress. After remaining some years, he left it with the character of an uninformed and dissipated young man, with good natural talents but a bad disposition. When he became of age, he abandoned himself to a life of riot and debauchery, and entered himself, in fact, into that celebrated fraternity, known in France and Italy as the “Knights of Industry,” and in England as the “Swell Mob.” He was far from being an idle or unwilling member of the corps. The first way in which he distinguished himself was by forging orders of admission to the theatres. He afterwards robbed his uncle, and counterfeited a will. For acts like these, he paid frequent compulsory visits to the prisons of Palermo. Somehow or other he acquired the character of a sorcerer – of a man who had failed in discovering the secrets of alchymy, and had sold his soul to the devil for the gold which he was not able to make by means of transmutation. He took no pains to disabuse the popular mind on this particular, but rather encouraged the belief than otherwise. He at last made use of it to cheat a silversmith, named Marano, of about sixty ounces of gold, and was in consequence obliged to leave Palermo. He persuaded this man that he could show him a treasure hidden in a cave, for which service he was to receive the sixty ounces of gold, while the silversmith was to have all the treasure for the mere trouble of digging it up. They went together at midnight to an excavation in the vicinity of Palermo, where Balsamo drew a magic circle, and invoked the devil to show his treasures. Suddenly there appeared half a dozen fellows, the accomplices of the swindler, dressed to represent devils, with horns on their heads, claws to their fingers, and vomiting apparently red and blue flame. They were armed with pitchforks, with which they belaboured poor Marano till he was almost dead, and robbed him of his sixty ounces of gold and all the valuables he carried about his person. They then made off, accompanied by Balsamo, leaving the unlucky silversmith to recover or die at his leisure. Nature chose the former course; and soon after daylight he was restored to his senses, smarting in body from his blows and in spirit for the deception of which he had been the victim. His first impulse was to denounce Balsamo to the magistrates of the town; but on further reflection he was afraid of the ridicule that a full exposure of all the circumstances would draw upon him: he therefore took the truly Italian resolution of being revenged on Balsamo by murdering him at the first convenient opportunity. Having given utterance to this threat in the hearing of a friend of Balsamo, it was reported to the latter, who immediately packed up his valuables and quitted Europe.

He chose Medina, in Arabia, for his future dwelling-place, and there became acquainted with a Greek named Altotas, a man exceedingly well versed in all the languages of the East, and an indefatigable student of alchymy. He possessed an invaluable collection of Arabian manuscripts on his favourite science, and studied them with such unremitting industry that he found he had not sufficient time to attend to his crucibles and furnaces without neglecting his books. He was looking about for an assistant when Balsamo opportunely presented himself, and made so favourable an impression that he was at once engaged in that capacity. But the relation of master and servant did not long subsist between them; Balsamo was too ambitious and too clever to play a secondary part, and within fifteen days of their first acquaintance they were bound together as friends and partners. Altotas, in the course of a long life devoted to alchymy, had stumbled upon some valuable discoveries in chemistry, one of which was an ingredient for improving the manufacture of flax, and imparting to goods of that material a gloss and softness almost equal to silk. Balsamo gave him the good advice to leave the philosopher’s stone for the present undiscovered, and make gold out of their flax. The advice was taken, and they proceeded together to Alexandria to trade, with a large stock of that article. They stayed forty days in Alexandria, and gained a considerable sum by their venture. They afterwards visited other cities in Egypt, and were equally successful. They also visited Turkey, where they sold drugs and amulets. On their return to Europe, they were driven by stress of weather into Malta, and were hospitably received by Pinto, the Grand Master of the Knights, and a famous alchymist. They worked in his laboratory for some months, and tried hard to change a pewter-platter into a silver one. Balsamo, having less faith than his companions, was sooner wearied; and obtaining from his host many letters of introduction to Rome and Naples, he left him and Altotas to find the philosopher’s stone and transmute the pewter-platter without him.

He had long since dropped the name of Balsamo on account of the many ugly associations that clung to it; and during his travels had assumed at least half a score others, with titles annexed to them. He called himself sometimes the Chevalier de Fischio, the Marquis de Melissa, the Baron de Belmonte, de Pelligrini, d’Anna, de Fenix, de Harat, but most commonly the Count de Cagliostro. Under the latter title he entered Rome, and never afterwards changed it. In this city he gave himself out as the restorer of the Rosicrucian philosophy; said he could transmute all metals into gold; that he could render himself invisible, cure all diseases, and administer an elixir against old age and decay. His letters from the Grand Master Pinto procured him an introduction into the best families. He made money rapidly by the sale of his elixir vitae; and, like other quacks, performed many remarkable cures by inspiring his patients with the most complete faith and reliance upon his powers; an advantage which the most impudent charlatans often possess over the regular practitioner.

While thus in a fair way of making his fortune he became acquainted with the beautiful Lorenza Feliciana, a young lady of noble birth, but without fortune. Cagliostro soon discovered that she possessed accomplishments that were invaluable. Besides her ravishing beauty, she had the readiest wit, the most engaging manners, the most fertile imagination, and the least principle of any of the maidens of Rome. She was just the wife for Cagliostro, who proposed himself to her, and was accepted. After their marriage, he instructed his fair Lorenza in all the secrets of his calling – taught her pretty lips to invoke angels, and genii, sylphs, salamanders, and undines, and, when need required, devils and evil spirits. Lorenza was an apt scholar: she soon learned all the jargon of the alchymists and all the spells of the enchanters; and thus accomplished the hopeful pair set out on their travels, to levy contributions on the superstitious and the credulous.

They first went to Sleswig on a visit to the Count de St. Germain, their great predecessor in the art of making dupes, and were received by him in the most magnificent manner. They no doubt fortified their minds for the career they had chosen, by the sage discourse of that worshipful gentleman; for immediately after they left him, they began their operations. They travelled for three or four years in Russia, Poland, and Germany, transmuting metals, telling fortunes, raising spirits, and selling the elixir vitae wherever they went; but there is no record of their doings from whence to draw a more particular detail. It was not until they made their appearance in England in 1776, that the names of the Count and Countess di Cagliostro began to acquire a European reputation. They arrived in London in the July of that year, possessed of property in plate, jewels, and specie to the amount of about three thousand pounds. They hired apartments in Whitcombe-street, and lived for some months quietly. In the same house there lodged a Portuguese woman named Blavary, who, being in necessitous circumstances, was engaged by the Count as interpreter. She was constantly admitted into his laboratory, where he spent much of his time in search of the philosopher’s stone. She spread abroad the fame of her entertainer in return for his hospitality, and laboured hard to impress everybody with as full a belief in his extraordinary powers as she felt herself. But as a female interpreter of the rank and appearance of Madame Blavary did not exactly correspond with the Count’s notions either of dignity or decorum, he hired a person named Vitellini, a teacher of languages, to act in that capacity. Vitellini was a desperate gambler; a man who had tried almost every resource to repair his ruined fortunes, including among the rest the search for the philosopher’s stone. Immediately that he saw the Count’s operations, he was convinced that the great secret was his, and that the golden gates of the palace of fortune were open to let him in. With still more enthusiasm than Madame Blavary, he held forth to his acquaintance, and in all public places, that the Count was an extraordinary man, a true adept, whose fortune was immense, and who could transmute into pure and solid gold, as much lead, iron, and copper as he pleased. The consequence was, that the house of Cagliostro was besieged by crowds of the idle, the credulous, and the avaricious, all eager to obtain a sight of the “philosopher,” or to share in the boundless wealth which he could call into existence.

Unfortunately for Cagliostro, he had fallen into evil hands; instead of duping the people of England as he might have done, he became himself the victim of a gang of swindlers, who, with the fullest reliance on his occult powers, only sought to make money of him. Vitellini introduced to him a ruined gambler like himself, named Scot, whom he represented as a Scottish nobleman, attracted to London solely by his desire to see and converse with the extraordinary man whose fame had spread to the distant mountains of the north. Cagliostro received him with great kindness and cordiality; and “Lord” Scot thereupon introduced a woman named Fry, as Lady Scot, who was to act as chaperone to the Countess di Cagliostro, and make her acquainted with all the noble families of Britain. Thus things went swimmingly. “His lordship,” whose effects had not arrived from Scotland, and who had no banker in London, borrowed two hundred pounds of the Count; they were lent without scruple, so flattered was Cagliostro by the attentions they paid him, the respect, nay, veneration they pretended to feel for him, and the complete deference with which they listened to every word that fell from his lips.

Superstitious, like all desperate gamesters, Scot had often tried magical and cabalistic numbers, in the hope of discovering lucky numbers in the lottery, or at the roulette tables. He had in his possession a cabalistic manuscript, containing various arithmetical combinations of the kind, which he submitted to Cagliostro, with an urgent request that he would select a number. Cagliostro took the manuscript and studied it; but, as he himself informs us, with no confidence in its truth. He however predicted twenty as the successful number for the 6th of November following. Scot ventured a small sum upon this number, out of the two hundred pounds he had borrowed, and won. Cagliostro, incited by this success, prognosticated number twenty-five for the next drawing. Scot tried again, and won a hundred guineas. The numbers fifty-five and fifty-seven were announced with equal success for the 18th of the same month, to the no small astonishment and delight of Cagliostro, who thereupon resolved to try fortune for himself, and not for others. To all the entreaties of Scot and his lady that he would predict more numbers for them, he turned a deaf ear, even while he still thought him a lord and a man of honour. But when he discovered that he was a mere swindler, and the pretended Lady Scot an artful woman of the town, he closed his door upon them and on all their gang.

Having complete faith in the supernatural powers of the Count, they were in the deepest distress at having lost his countenance. They tried by every means their ingenuity could suggest, to propitiate him again; they implored, they threatened, and endeavoured to bribe him. But all was vain. Cagliostro would neither see nor correspond with them. In the mean time they lived extravagantly; and in the hope of future, exhausted all their present gains. They were reduced to the last extremity, when Miss Fry obtained access to the Countess, and received a guinea from her on the representation that she was starving. Miss Fry, not contented with this, begged her to intercede with her husband, that for the last time he would point out a lucky number in the lottery. The Countess promised to exert her influence, and Cagliostro thus entreated, named the number eight, at the same time reiterating his determination to have no more to do with any of them. By an extraordinary hazard, which filled Cagliostro with surprise and pleasure, number eight was the greatest prize in the lottery. Miss Fry and her associates cleared fifteen hundred guineas by the adventure; and became more than ever convinced of the occult powers of Cagliostro, and strengthened in their determination never to quit him until they had made their fortunes. Out of the proceeds, Miss Fry bought a handsome necklace at a pawnbrokers for ninety guineas. She then ordered a richly chased gold box, having two compartments, to be made at a jeweller’s, and putting the necklace in the one, filled the other with a fine aromatic snuff. She then sought another interview with Madame di Cagliostro, and urged her to accept the box as a small token of her esteem and gratitude, without mentioning the valuable necklace that was concealed in it. Madame di Cagliostro accepted the present, and was from that hour exposed to the most incessant persecution from all the confederates, Blavary, Vitellini, and the pretended Lord and Lady Scot. They flattered themselves they had regained their lost footing in the house, and came day after day to know lucky numbers in the lottery; sometimes forcing themselves up the stairs, and into the Count’s laboratory, in spite of the efforts of the servants to prevent them. Cagliostro, exasperated at their pertinacity, threatened to call in the assistance of the magistrates; and taking Miss Fry by the shoulders, pushed her into the street.

From that time may be dated the misfortunes of Cagliostro. Miss Fry, at the instigation of her paramour, determined on vengeance. Her first act was to swear a debt of two hundred pounds against Cagliostro, and to cause him to be arrested for that sum. While he was in custody in a sponging house, Scot, accompanied by a low attorney, broke into his laboratory, and carried off a small box, containing, as they believed, the powder of transmutation, and a number of cabalistic manuscripts and treatises upon alchymy. They also brought an action against him for the recovery of the necklace; and Miss Fry accused both him and his Countess of sorcery and witchcraft, and of foretelling numbers in the lottery by the aid of the devil. This latter charge was actually heard before Mr. Justice Miller. The action of trover for the necklace was tried before the Lord Chief Justice of the Common Pleas, who recommended the parties to submit to arbitration. In the mean time Cagliostro remained in prison for several weeks, till having procured bail, he was liberated. He was soon after waited upon by an attorney named Reynolds, also deep in the plot, who offered to compromise all the actions upon certain conditions. Scot, who had accompanied him, concealed himself behind the door, and suddenly rushing out, presented a pistol at the heart of Cagliostro, swearing he would shoot him instantly, if he would not tell him truly the art of predicting lucky numbers, and of transmuting metals. Reynolds pretending to be very angry, disarmed his accomplice, and entreated the Count to satisfy them by fair means, and disclose his secrets, promising that if he would do so, they would discharge all the actions, and offer him no further molestation. Cagliostro replied, that threats and entreaties were alike useless; that he knew no secrets; and that the powder of transmutation of which they had robbed him, was of no value to anybody but himself. He offered, however, if they would discharge the actions, and return the powder and the manuscripts, he would forgive them all the money they had swindled him out of. These conditions were refused; and Scot and Reynolds departed, swearing vengeance against him.

Cagliostro appears to have been quite ignorant of the forms of law in England, and to have been without a friend to advise him as to the best course he should pursue. While he was conversing with his Countess on the difficulties that beset them, one of his bail called, and invited him to ride in a hackney coach to the house of a person who would see him righted. Cagliostro consented, and was driven to the King’s Bench prison, where his friend left him. He did not discover for several hours that he was a prisoner, or in fact understand the process of being surrendered by one’s bail.

He regained his liberty in a few weeks; and the arbitrators between him and Miss Fry, made their award against him. He was ordered to pay the two hundred pounds she had sworn against him, and to restore the necklace and gold box which had been presented to the Countess. Cagliostro was so disgusted, that he determined to quit England. His pretensions, besides, had been unmercifully exposed by a Frenchman, named Morande, the Editor of the Courier de l’Europe, published in London. To add to his distress, he was recognised in Westminster Hall, as Joseph Balsamo, the swindler of Palermo. Such a complication of disgrace was not to be borne. He and his Countess packed up their small effects, and left England with no more than fifty pounds, out of the three thousand they had brought with them.

They first proceeded to Brussels, where fortune was more auspicious. They sold considerable quantities of the elixir of life, performed many cures, and recruited their finances. They then took their course through Germany to Russia, and always with the same success. Gold flowed into their coffers faster than they could count it. They quite forgot all the woes they had endured in England, and learned to be more circumspect in the choice of their acquaintance.

In the year 1780, they made their appearance in Strasbourg. Their fame had reached that city before them. They took a magnificent hotel, and invited all the principal persons of the place to their table. Their wealth appeared to be boundless, and their hospitality equal to it. Both the Count and Countess acted as physicians, and gave money, advice, and medicine to all the necessitous and suffering of the town. Many of the cures they performed, astonished those regular practitioners who did not make sufficient allowance for the wonderful influence of imagination in certain cases. The Countess, who at this time was not more than five-and-twenty, and all radiant with grace, beauty, and cheerfulness, spoke openly of her eldest son as a fine young man of eight-and-twenty, who had been for some years a captain in the Dutch service. The trick succeeded to admiration. All the ugly old women in Strasbourg, and for miles around, thronged the saloon of the Countess to purchase the liquid which was to make them as blooming as their daughters; the young women came in equal abundance that they might preserve their charms, and when twice as old as Ninon de L’Enclos, be more captivating than she; while men were not wanting fools enough to imagine, that they might keep off the inevitable stroke of the grim foe, by a few drops of the same incomparable elixir. The Countess, sooth to say, looked like an incarnation of immortal loveliness, a very goddess of youth and beauty; and it is possible that the crowds of young men and old, who at all convenient seasons haunted the perfumed chambers of this enchantress, were attracted less by their belief in her occult powers than from admiration of her languishing bright eyes and sparkling conversation. But amid all the incense that was offered at her shrine, Madame di Cagliostro was ever faithful to her spouse. She encouraged hopes, it is true, but she never realised them; she excited admiration, yet kept it within bounds; and made men her slaves, without ever granting a favour of which the vainest might boast.

In this city they made the acquaintance of many eminent persons, and among others, of the Cardinal Prince de Rohan, who was destined afterwards to exercise so untoward an influence over their fate. The Cardinal, who seems to have had great faith in him as a philosopher, persuaded him to visit Paris in his company, which he did, but remained only thirteen days. He preferred the society of Strasbourg, and returned thither, with the intention of fixing his residence far from the capital. But he soon found that the first excitement of his arrival had passed away. People began to reason with themselves, and to be ashamed of their own admiration. The populace, among whom he had lavished his charity with a bountiful hand, accused him of being the Antichrist, the Wandering Jew, the man of fourteen hundred years of age, a demon in human shape, sent to lure the ignorant to their destruction; while the more opulent and better informed called him a spy in the pay of foreign governments, an agent of the police, a swindler, and a man of evil life. The outcry grew at last so strong, that he deemed it prudent to try his fortune elsewhere.

He went first to Naples, but that city was too near Palermo; he dreaded recognition from some of his early friends, and after a short stay, returned to France. He chose Bordeaux as his next dwelling-place, and created as great a sensation there as he had done in Strasbourg. He announced himself as the founder of a new school of medicine and philosophy, boasted of his ability to cure all diseases, and invited the poor and suffering to visit him, and he would relieve the distress of the one class, and cure the ailings of the other. All day long the street opposite his magnificent hotel was crowded by the populace; the halt and the blind, women with sick babes in their arms, and persons suffering under every species of human infirmity flocked to this wonderful doctor. The relief he afforded in money more than counterbalanced the failure of his nostrums; and the affluence of people from all the surrounding country became so great, that the jurats of the city granted him a military guard, to be stationed day and night before his door, to keep order. The anticipations of Cagliostro were realised. The rich were struck with admiration of his charity and benevolence, and impressed with a full conviction of his marvellous powers. The sale of the elixir went on admirably. His saloons were thronged with wealthy dupes who came to purchase immortality. Beauty, that would endure for centuries, was the attraction for the fair sex; health and strength for the same period were the baits held out to the other. His charming Countess in the meantime brought grist to the mill, by telling fortunes and casting nativities, or granting attendant sylphs to any ladies who would pay sufficiently for their services. What was still better, as tending to keep up the credit of her husband, she gave the most magnificent parties in Bordeaux.

But as at Strasbourg the popular delusion lasted for a few months only, and burned itself out; Cagliostro forgot, in the intoxication of success, that there was a limit to quackery, which once passed, inspired distrust. When he pretended to call spirits from the tomb, people became incredulous. He was accused of being an enemy to religion – of denying Christ, and of being the Wandering Jew. He despised these rumours as long as they were confined to a few; but when they spread over the town — when he received no more fees — when his parties were abandoned, and his acquaintance turned away when they met him in the street, he thought it high time to shift his quarters.

He was by this time wearied of the provinces, and turned his thoughts to the capital. On his arrival, he announced himself as the restorer of Egyptian Freemasonry and the founder of a new philosophy. He immediately made his way into the best society by means of his friend the Cardinal de Rohan. His success as a magician was quite extraordinary: the most considerable persons of the time visited him. He boasted of being able, like the Rosicrucians, to converse with the elementary spirits; to invoke the mighty dead from the grave, to transmute metals, and to discover occult things, by means of the special protection of God towards him. Like Dr. Dee, he summoned the angels to reveal the future; and they appeared, and conversed with him in crystals and under glass bells. [See the Abbe Fiard, and “Anecdotes of the Reign of Louis XVI.” p. 400.] “There was hardly,” says the Biographie des Contemporains, “a fine lady in Paris who would not sup with the shade of Lucretius in the apartments of Cagliostro — a military officer who would not discuss the art of war with Cesar, Hannibal, or Alexander; or an advocate or counsellor who would not argue legal points with the ghost of Cicero.” These interviews with the departed were very expensive; for, as Cagliostro said, the dead would not rise for nothing. The Countess, as usual, exercised all her ingenuity to support her husband’s credit. She was a great favourite with her own sex; to many a delighted and wondering auditory of whom she detailed the marvellous powers of Cagliostro. She said he could render himself invisible, traverse the world with the rapidity of thought, and be in several places at the same time. [“Biographie des Contemporains,” article “Cagliostro.” See also “Histoire de la Magie en France,” par M. Jules Garinet, p. 284.]

He had not been long at Paris before he became involved in the celebrated affair of the Queen’s necklace. His friend, the Cardinal de Rohan, enamoured of the charms of Marie Antoinette, was in sore distress at her coldness, and the displeasure she had so often manifested against him. There was at that time a lady, named La Motte, in the service of the Queen, of whom the Cardinal was foolish enough to make a confidant. Madame de la Motte, in return, endeavoured to make a tool of the Cardinal, and succeeded but too well in her projects. In her capacity of chamber-woman, or lady of honour to the Queen, she was present at an interview between her Majesty and M. Boehmer, a wealthy jeweller of Paris, when the latter offered for sale a magnificent diamond necklace, valued at 1,600,000 francs, or about 64,000 pounds sterling. The Queen admired it greatly, but dismissed the jeweller, with the expression of her regret that she was too poor to purchase it. Madame de la Motte formed a plan to get this costly ornament into her own possession, and determined to make the Cardinal de Rohan the instrument by which to effect it. She therefore sought an interview with him, and pretending to sympathise in his grief for the Queen’s displeasure, told him she knew a way by which he might be restored to favour. She then mentioned the necklace, and the sorrow of the Queen that she could not afford to buy it. The Cardinal, who was as wealthy as he was foolish, immediately offered to purchase the necklace, and make a present of it to the Queen. Madame de la Motte told him by no means to do so, as he would thereby offend her Majesty. His plan would be to induce the jeweller to give her Majesty credit, and accept her promissory note for the amount at a certain date, to be hereafter agreed upon. The Cardinal readily agreed to the proposal, and instructed the jeweller to draw up an agreement, and he would procure the Queen’s signature. He placed this in the hands of Madame de la Motte, who returned it shortly afterwards, with the words, “Bon, bon – approuve — Marie Antoinette,” written in the margin. She told him at the same time that the Queen was highly pleased with his conduct in the matter, and would appoint a meeting with him in the gardens of Versailles, when she would present him with a flower, as a token of her regard. The Cardinal showed the forged document to the jeweller, obtained the necklace, and delivered it into the hands of Madame de la Motte. So far all was well. Her next object was to satisfy the Cardinal, who awaited impatiently the promised interview with his royal mistress. There was at that time in Paris a young woman named D’Oliva, noted for her resemblance to the Queen; and Madame de la Motte, on the promise of a handsome reward, found no difficulty in persuading her to personate Marie Antoinette, and meet the Cardinal de Rohan at the evening twilight in the gardens of Versailles. The meeting took place accordingly. The Cardinal was deceived by the uncertain light, the great resemblance of the counterfeit, and his own hopes; and having received the flower from Mademoiselle D’Oliva, went home with a lighter heart than had beat in his bosom for many a day. [The enemies of the unfortunate Queen of France, when the progress of the Revolution embittered their animosity against her. maintained that she was really a party in this transaction; that she, and not Mademoiselle D’Oliva, met the Cardinal and rewarded him with the flower; and that the story above related was merely concocted between her, La Motte, and others to cheat the jeweller of his 1,600,000 francs.]

In the course of time the forgery of the Queen’s signature was discovered. Boehmer the jeweller immediately named the Cardinal de Rohan and Madame de la Motte as the persons with whom he had negotiated, and they were both arrested and thrown into the Bastille. La Motte was subjected to a rigorous examination, and the disclosures she made implicating Cagliostro, he was seized, along with his wife, and also sent to the Bastille, A story involving so much scandal necessarily excited great curiosity. Nothing was to be heard of in Paris but the Queen’s necklace, with surmises of the guilt or innocence of the several parties implicated. The husband of Madame de la Motte escaped to England, and in the opinion of many took the necklace with him, and there disposed of it to different jewellers in small quantities at a time. But Madame de la Motte insisted that she had entrusted it to Cagliostro, who had seized and taken it to pieces, to “swell the treasures of his immense unequalled fortune.” She spoke of him as “an empiric, a mean alchymist, a dreamer on the philosopher’s stone, a false prophet, a profaner of the true worship, the self-dubbed Count Cagliostro!” She further said that he originally conceived the project of ruining the Cardinal de Rohan; that he persuaded her, by the exercise of some magic influence over her mind, to aid and abet the scheme; and that he was a robber, a swindler, and a sorcerer!

After all the accused parties had remained for upwards of six months in the Bastille, the trial commenced. The depositions of the witnesses having been heard, Cagliostro, as the principal culprit, was first called upon for his defence. He was listened to with the most breathless attention. He put himself into a theatrical attitude, and thus began:– “I am oppressed! — I am accused! — I am calumniated! Have I deserved this fate? I descend into my conscience, and I there find the peace that men refuse me! I have travelled a great deal — I am known over all Europe, and a great part of Asia and Africa. I have everywhere shown myself the friend of my fellow-creatures. My knowledge, my time, my fortune have ever been employed in the relief of distress! I have studied and practised medicine, but I have never degraded that most noble and most consoling of arts by mercenary speculations of any kind. Though always giving, and never receiving, I have preserved my independence. I have even carried my delicacy so far as to refuse the favours of kings. I have given gratuitously my remedies and my advice to the rich: the poor have received from me both remedies and money. I have never contracted any debts, and my manners are pure and uncorrupted.” After much more self-laudation of the same kind, he went on to complain of the great hardships he had endured in being separated for so many months from his innocent and loving wife, who, as he was given to understand, had been detained in the Bastille, and perhaps chained in an unwholesome dungeon. He denied unequivocally that he had the necklace, or that he had ever seen it; and to silence the rumours and accusations against him, which his own secrecy with regard to the events of his life had perhaps originated, he expressed himself ready to satisfy the curiosity of the public, and to give a plain and full account of his career. He then told a romantic and incredible tale, which imposed upon no one. He said he neither knew the place of his birth nor the name of his parents, but that he spent his infancy in Medina in Arabia, and was brought up under the name of Acharat. He lived in the palace of the Great Muphti in that city, and always had three servants to wait upon him, besides his preceptor, named Althotas. This Althotas was very fond of him, and told him that his father and mother, who were Christians and nobles, died when he was three months old, and left him in the care of the Muphti. He could never, he said, ascertain their names, for whenever he asked Althotas the question, he was told that it would be dangerous for him to know. Some incautious expressions dropped by his preceptor gave him reason to think they were from Malta. At the age of twelve he began his travels, and learned the various languages of the East. He remained three years in Mecca, where the Cherif, or governor, showed him so much kindness, and spoke to him so tenderly and affectionately, that he sometimes thought that personage was his father. He quitted this good man with tears in his eyes, and never saw him afterwards; but he was convinced that he was, even at that moment, indebted to his care for all the advantages he enjoyed. Whenever he arrived in any city, either of Europe or Asia, he found an account opened for him at the principal bankers’ or merchants’. He could draw upon them to the amount of thousands and hundreds of thousands; and no questions were ever asked beyond his name. He had only to mention the word Acharat, and all his wants were supplied. He firmly believed that the Cherif of Mecca was the friend to whom all was owing. This was the secret of his wealth, and he had no occasion to resort to swindling for a livelihood. It was not worth his while to steal a diamond necklace when he had wealth enough to purchase as many as he pleased, and more magnificent ones than had ever been worn by a Queen of France. As to the other charges brought against him by Madame de la Motte, he had but a short answer to give. She had called him an empiric. He was not unfamiliar with the word. If it meant a man who, without being a physician, had some knowledge of medicine, and took no fees — who cured both rich and poor, and took no money from either, he confessed that he was such a man, that he was an empiric. She had also called him a mean alchymist. Whether he were an alchymist or not, the epithet mean could only be applied to those who begged and cringed, and he had never done either. As regarded his being a dreamer about the philosopher’s stone, whatever his opinions upon that subject might be, he had been silent, and had never troubled the public with his dreams. Then, as to his being a false prophet, he had not always been so; for he had prophesied to the Cardinal de Rohan that Madame de la Motte would prove a dangerous woman, and the result had verified the prediction. He denied that he was a profaner of the true worship, or that he had ever striven to bring religion into contempt; on the contrary, he respected every man’s religion, and never meddled with it. He also denied that he was a Rosicrucian, or that he had ever pretended to be three hundred years of age, or to have had one man in his service for a hundred and fifty years. In conclusion, he said every statement that Madame de la Motte had made regarding him was false, and that she was mentiris impudentissime, which two words he begged her counsel to translate for her, as it was not polite to tell her so in French.

Such was the substance of his extraordinary answer to the charges against him; an answer which convinced those who were before doubtful that he was one of the most impudent impostors that had ever run the career of deception. Counsel were then heard on behalf of the Cardinal de Rohan and Madame de la Motte. It appearing clearly that the Cardinal was himself the dupe of a vile conspiracy; and there being no evidence against Cagliostro, they were both acquitted. Madame de la Motte was found guilty, and sentenced to be publicly whipped, and branded with a hot iron on the back.

Cagliostro and his wife were then discharged from custody. On applying to the officers of the Bastille for the papers and effects which had been seized at his lodgings, he found that many of them had been abstracted. He thereupon brought an action against them for the recovery of his MSS. and a small portion of the powder of transmutation. Before the affair could be decided, he received orders to quit Paris within four-and-twenty hours. Fearing that if he were once more inclosed in the dungeons of the Bastille he should never see daylight again, he took his departure immediately and proceeded to England. On his arrival in London he made the acquaintance of the notorious Lord George Gordon, who espoused his cause warmly, and inserted a letter in the public papers, animadverting upon the conduct of the Queen of France in the affair of the necklace, and asserting that she was really the guilty party. For this letter Lord George was exposed to a prosecution at the instance of the French Ambassador – found guilty of libel, and sentenced to fine and a long imprisonment.

Cagliostro and the Countess afterwards travelled in Italy, where they were arrested by the Papal Government in 1789, and condemned to death. The charges against him were, that he was a freemason, a heretic, and a sorcerer. This unjustifiable sentence was afterwards commuted into one of perpetual imprisonment in the Castle of St. Angelo. His wife was allowed to escape severer punishment by immuring herself in a nunnery. Cagliostro did not long survive. The loss of liberty preyed upon his mind — accumulated misfortunes had injured his health and broken his spirit, and he died early in 1790. His fate may have been no better than he deserved, but it is impossible not to feel that his sentence for the crimes assigned was utterly disgraceful to the government that pronounced it.

PRESENT STATE OF ALCHEMY.

We have now finished the list of the persons who have most distinguished themselves in this foolish and unprofitable pursuit. Among them are men of all ranks, characters, and conditions; the truthseeking, but erring philosopher; the ambitious prince and the needy noble, who have believed in it; as well as the designing charlatan, who has not believed in it, but has merely made the pretension to it the means of cheating his fellows, and living upon their credulity. One or more of all these classes will be found in the foregoing pages. It will be seen, from the record of their lives, that the delusion, humiliating as it was to human intellect, was not altogether without its uses. Men, in striving to gain too much, do not always overreach themselves: if they cannot arrive at the inaccessible mountain-top, they may, perhaps, get half way towards it, and pick up some scraps of wisdom and knowledge on the road. The useful science of chemistry is not a little indebted to its spurious brother of alchymy. Many valuable discoveries have been made in that search for the impossible, which might otherwise have been hidden for centuries yet to come. Roger Bacon, in searching for the philosopher’s stone, discovered gunpowder, a still more extraordinary substance. Van Helmont, in the same pursuit, discovered the properties of gas; Geber made discoveries in chemistry which were equally important; and Paracelsus, amidst his perpetual visions of the transmutation of metals, found that mercury was a remedy for one of the most odious and excruciating of all the diseases that afflict humanity.

In our day, no mention is made in Europe of any new devotees of the science. The belief in witchcraft, which is scarcely more absurd, still lingers in the popular mind: but none are so credulous as to believe that any elixir could make man live for centuries, or turn all our iron and pewter into gold. Alchymy, in Europe, may be said to be wholly exploded; but in the East it still flourishes in as great repute as ever. Recent travellers make constant mention of it, especially in China, Hindostan, Persia, Tartary, Egypt, and Arabia.

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A Gold Classics Library Selection

Extraordinary Popular Delusions And The Madness Of Crowds

Part Two:  Alchemy – Inferior adepts of the Fourteenth and Fifteenth Centuries

by Charles Mackay

Introduction
The Mississippi Scheme
The South Sea Bubble
The Tulipomania
The Alchemists, part 1
The Alchemists, part 2
The Alchemists, part 3

Many other pretenders to the secrets of the philosopher’s stone appeared in every country in Europe, during the fourteenth and fifteenth centuries. The possibility of transmutation was so generally admitted, that every chemist was more or less an alchymist. Germany, Holland, Italy, Spain, Poland, France, and England produced thousands of obscure adepts, who supported themselves, in the pursuit of their chimera, by the more profitable resources of astrology and divination. The monarchs of Europe were no less persuaded than their subjects of the possibility of discovering the philosopher’s stone. Henry VI. and Edward IV. of England encouraged alchymy. In Germany, the Emperors Maximilian, Rodolph, and Frederic II. devoted much of their attention to it; and every inferior potentate within their dominions imitated their example. It was a common practice in Germany, among the nobles and petty sovereigns, to invite an alchymist to take up his residence among them, that they might confine him in a dungeon till he made gold enough to pay millions for his ransom. Many poor wretches suffered perpetual imprisonment in consequence. A similar fate appears to have been intended by Edward II. for Raymond Lulli, who, upon the pretence that he was thereby honoured, was accommodated with apartments in the Tower of London. He found out in time the trick that was about to be played him, and managed to make his escape, some of his biographers say, by jumping into the Thames, and swimming to a vessel that lay waiting to ceive him. In the sixteenth century, the same system was pursued, as will be shown more fully in the life of Seton the Cosmopolite, in the succeeding chapter.

The following is a catalogue of the chief authors upon alchymy, who flourished during this epoch, and whose lives and adventures are either unknown or are unworthy of more detailed notice. John Dowston, an Englishman, lived in 1315, and wrote two treatises on the philosopher’s stone. Richard, or, as some call him, Robert, also an Englishman, lived in 1330, and wrote a work entitled “Correctorium Alchymiae,” which was much esteemed till the time of Paracelsus. In the same year lived Peter of Lombardy, who wrote what he called a “Complete Treatise upon the Hermetic Science,” an abridgement of which was afterwards published by Lacini, a monk of Calabria. In 1330 the most famous alchymist of Paris was one Odomare, whose work “De Practica Magistri” was, for a long time, a hand-book among the brethren of the science. John de Rupecissa, a French monk of the order of St. Francis, flourished in 1357, and pretended to be a prophet as well as an alchymist. Some of his prophecies were so disagreeable to Pope Innocent VI, that the Pontiff determined to put a stop to them, by locking up the prophet in the dungeons of the Vatican. It is generally believed that he died there, though there is no evidence of the fact. His chief works are the “Book of Light,” the “Five Essences,” the “Heaven of Philosophers,” and his grand work “De Confectione Lapidis.” He was not thought a shining light among the adepts. Ortholani was another pretender, of whom nothing is known, but that he exercised the arts of alchymy and astrology at Paris, shortly before the time of Nicholas Flamel. His work on the practice of alchymy was written in that city in 1358. Isaac of Holland wrote, it is supposed, about this time; and his son also devoted himself to the science. Nothing worth repeating is known of their lives. Boerhaave speaks with commendation of many passages in their works, and Paracelsus esteemed them highly: the chief are “De Triplici Ordine Elixiris et Lapidis Theoria,” printed at Berne in 1608; and “Mineralia Opera, seu de Lapide Philosophico,” printed at Middleburg in 1600. They also wrote eight other works upon the same subject. Koffstky, a Pole, wrote an alchymical treatise, entitled “The Tincture of Minerals,” about the year 1488. In this list of authors a royal name must not be forgotten. Charles VI. of France, one of the most credulous princes of the day, whose court absolutely swarmed with alchymists, conjurers, astrologers, and quacks of every description, made several attempts to discover the philosopher’s stone, and thought he knew so much about it, that he determined to enlighten the world with a treatise. It is called the “Royal Work of Charles VI. of France, and the Treasure of Philosophy.” It is said to be the original from which Nicholas Flamel took the idea of his “Desir Desire.” Lenglet du Fresnoy says it is very allegorical, and utterly incomprehensible. For a more complete list of the hermetic philosophers of the fourteenth and fifteenth centuries, the reader is referred to the third volume of Lenglet’s History already quoted.

PROGRESS OF THE INFATUATION DURING THE SIXTEENTH AND SEVENTEENTH CENTURIES AND — PRESENT STATE OF THE SCIENCE.

During the sixteenth and seventeenth centuries, the search for the philosopher’s stone was continued by thousands of the enthusiastic and the credulous; but a great change was introduced during this period. The eminent men who devoted themselves to the study, totally changed its aspect, and referred to the possession of their wondrous stone and elixir, not only the conversion of the base into the precious metals, but the solution of all the difficulties of other sciences. They pretended that by its means man would be brought into closer communion with his Maker; that disease and sorrow would be banished from the world; and that “the millions of spiritual beings who walk the earth unseen” would be rendered visible, and become the friends, companions, and instructors of mankind. In the seventeenth century more especially, these poetical and fantastic doctrines excited the notice of Europe; and from Germany, where they had been first disseminated by Rosencreutz, spread into France and England, and ran away with the sound judgment of many clever, but too enthusiastic, searchers for the truth. Paracelsus, Dee, and many others of less note, were captivated by the grace and beauty of the new mythology, which was arising to adorn the literature of Europe. Most of the alchymists of the sixteenth century, although ignorant of the Rosicrucians as a sect, were, in some degree, tinctured with their fanciful tenets: but before we speak more fully of these poetical visionaries, it will be necessary to resume the history of the hermetic folly where we left off in the former chapter, and trace the gradual change that stole over the dreams of the adepts. It will be seen that the infatuation increased rather than diminished as the world grew older.

AUGURELLO.

Among the alchymists who were born in the fifteenth, and distinguished themselves in the sixteenth century, the first, in point of date, is John Aurelio Augurello. He was born at Rimini in 1441, and became Professor of the belles lettres at Venice and Trevisa. He was early convinced of the truth of the hermetic science, and used to pray to God that he might be happy enough to discover the philosopher’s stone. He was continually surrounded by the paraphernalia of chemistry, and expended all his wealth in the purchase of drugs and metals. He was also a poet, but of less merit than pretensions. His “Chrysopeia,” in which lie pretended to teach the art of making gold, he dedicated to Pope Leo X, in the hope that the Pontiff would reward him handsomely for the compliment; but the Pope was too good a judge of poetry to be pleased with the worse than mediocrity of his poem, and too good a philosopher to approve of the strange doctrines which it inculcated: he was, therefore, far from gratified at the dedication. It is said, that when Augurello applied to him for a reward, the Pope, with great ceremony and much apparent kindness and cordiality, drew an empty purse from his pocket, and presented it to the alchymist, saying, that since he was able to make gold, the most appropriate present that could be made him, was a purse to put it in. This scurvy reward was all that the poor alchymist ever got either for his poetry or his alchymy. He died in a state of extreme poverty, in the eighty-third year of his age.

CORNELIUS AGRIPPA.

This alchymist has left a more distinguished reputation. The most extraordinary tales were told and believed of his powers. He could turn iron into gold by his mere word. All the spirits of the air, and demons of the earth, were under his command, and bound to obey him in everything. He could. raise from the dead the forms of the great men of other days, and make them appear “in their habit as they lived,” to the gaze of the curious who had courage enough to abide their presence.

He was born at Cologne in 1486, and began, at an early age, the study of chemistry and philosophy. By some means or other which have never been very clearly explained, he managed to impress his contemporaries with a great idea of his wonderful attainments. At the early age of twenty, so great was his reputation as an alchymist, that the principal adepts of Paris wrote to Cologne, inviting him to settle in France, and aid them with his experience in discovering the philosopher’s stone. Honours poured upon him in thick succession; and he was highly esteemed by all the learned men of his time. Melancthon speaks of him with respect and commendation. Erasmus also bears testimony in his favour; and the general voice of his age proclaimed him a light of literature and an ornament to philosophy. Some men, by dint of excessive egotism, manage to persuade their contemporaries that they are very great men indeed: they publish their acquirements so loudly in people’s ears, and keep up their own praises so incessantly, that the world’s applause is actually taken by storm. Such seems to have been the case with Agrippa. He called himself a sublime theologian, an excellent jurisconsult, an able physician, a great philosopher, and a successful alchymist. The world, at last, took him at his word; and thought that a man who talked so big, must have some merit to recommend him — that it was, indeed, a great trumpet which sounded so obstreperous a blast. He was made secretary to the Emperor Maximilian, who conferred upon him the title of Chevalier, and gave him the honorary command of a regiment. He afterwards became Professor of Hebrew and the belles lettres, at the University of Dole, in France; but quarrelling with the Franciscan monks upon some knotty point of divinity, he was obliged to quit the town. He took refuge in London, where he taught Hebrew and cast nativities, for about a year. From London he proceeded to Pavia, and gave lectures upon the writings, real or supposed, of Hermes Trismegistus; and might have lived there in peace and honour, had he not again quarrelled with the clergy. By their means his position became so disagreeable, that he was glad to accept an offer made him by the magistracy of Metz, to become their Syndic and Advocate-General. Here, again, his love of disputation made him enemies: the theological wiseacres of that city asserted, that St. Anne had three husbands, in which opinion they were confirmed by the popular belief of the day. Agrippa needlessly ran foul of this opinion, or prejudice as he called it, and thereby lost much of his influence. Another dispute, more creditable to his character, occurred soon after, and sank him for ever in the estimation of the Metzians. Humanely taking the part of a young girl who was accused of witchcraft, his enemies asserted, that he was himself a sorcerer, and raised such a storm over his head, that he was forced to fly the city. After this, he became physician to Louisa de Savoy, mother of King Francis I. This lady was curious to know the future, and required her physician to cast her nativity. Agrippa replied, that he would not encourage such idle curiosity. The result was, he lost her confidence, and was forthwith dismissed. If it had been through his belief in the worthlessness of astrology, that he had made his answer, we might admire his honest and fearless independence; but, when it is known that, at the very same time, he was in the constant habit of divination and fortunetelling; and that he was predicting splendid success, in all his undertakings, to the Constable of Bourbon, we can only wonder at his thus estranging a powerful friend through mere petulance and perversity.

He was, about this time, invited both by Henry VIII. of England, and Margaret of Austria, Governess of the Low Countries, to fix his residence in their dominions. He chose the service of the latter, by whose influence he was made historiographer to the Emperor Charles V. Unfortunately for Agrippa, he never had stability enough to remain long in one position, and offended his patrons by his restlessness and presumption. After the death of Margaret, he was imprisoned at Brussels, on a charge of sorcery. He was released after a year; and, quitting the country, experienced many vicissitudes. He died in great poverty in 1534, aged forty-eight years.

While in the service of Margaret of Austria, he resided principally at Louvain, in which city he wrote his famous work on the Vanity and Nothingness of human Knowledge. He also wrote, to please his Royal Mistress, a treatise upon the Superiority of the Female Sex, which be dedicated to her, in token of his gratitude for the favours she had heaped upon him. The reputation he left behind him in these provinces was anything but favourable. A great number of the marvellous tales that are told of him, relate to this period of his life. It was said, that the gold which he paid to the traders with whom he dealt, always looked remarkably bright, but invariably turned into pieces of slate and stone in the course of four-and-twenty hours. Of this spurious gold he was believed to have made large quantities by the aid of the devil, who, it would appear from this, had but a very superficial knowledge of alchymy, and much less than the Marechal de Rays gave him credit for. The Jesuit Delrio, in his book on Magic and Sorcery, relates a still more extraordinary story of him. One day, Agrippa left his house, at Louvain; and, intending to be absent for some time, gave the key of his study to his wife, with strict orders that no one should enter it during his absence. The lady herself, strange as it may appear, had no curiosity to pry into her husband’s secrets, and never once thought of entering the forbidden room: but a young student, who had been accommodated with an attic in the philosopher’s house, burned with a fierce desire to examine the study; hoping, perchance, that he might purloin some book or implement which would instruct him in the art of transmuting metals. The youth, being handsome, eloquent, and, above all, highly complimentary to the charms of the lady, she was persuaded, without much difficulty, to lend him the key, but gave him strict orders not to remove anything. The student promised implicit obedience, and entered Agrippa’s study. The first object that caught his attention, was a large grimoire, or book of spells, which lay open on the philosopher’s desk. He sat himself down immediately, and began to read. At the first word he uttered, he fancied he heard a knock at the door. He listened; but all was silent. Thinking that his imagination had deceived him, he read on, when immediately a louder knock was heard, which so terrified him, that he started to his feet. He tried to say, “come in;” but his tongue refused its office, and he could not articulate a sound. He fixed his eyes upon the door, which, slowly opening, disclosed a stranger of majestic form, but scowling features, who demanded sternly, why he was summoned? “I did not summon you,” said the trembling student. “You did!” said the stranger, advancing, angrily; “and the demons are not to be invoked in vain.” The student could make no reply; and the demon, enraged that one of the uninitiated should have summoned him out of mere presumption, seized him by the throat and strangled him. When Agrippa returned, a few days afterwards, he found his house beset with devils. Some of them were sitting on the chimneypots, kicking up their legs in the air; while others were playing at leapfrog, on the very edge of the parapet. His study was so filled with them that he found it difficult to make his way to his desk. When, at last, he had elbowed his way through them, he found his book open, and the student lying dead upon the floor. He saw immediately how the mischief had been done; and, dismissing all the inferior imps, asked the principal demon how he could have been so rash as to kill the young man. The demon replied, that he had been needlessly invoked by an insulting youth, and could do no less than kill him for his presumption. Agrippa reprimanded him severely, and ordered him immediately to reanimate the dead body, and walk about with it in the market-place for the whole of the afternoon. The demon did so: the student revived; and, putting his arm through that of his unearthly murderer, walked very lovingly with him, in sight of all the people. At sunset, the body fell down again, cold and lifeless as before, and was carried by the crowd to the hospital, it being the general opinion that he had expired in a fit of apoplexy. His conductor immediately disappeared. When the body was examined, marks of strangulation were found on the neck, and prints of the long claws of the demon on various parts of it. These appearances, together with a story, which soon obtained currency, that the companion of the young man had vanished in a cloud of flame and smoke, opened people’s eyes to the truth. The magistrates of Louvain instituted inquiries; and the result was, that Agrippa was obliged to quit the town.

Other authors besides Delrio relate similar stories of this philosopher. The world in those days was always willing enough to believe in tales of magic and sorcery; and when, as in Agrippa’s case, the alleged magician gave himself out for such, and claimed credit for the wonders he worked, it is not surprising that the age should have allowed his pretensions. It was dangerous boasting, which sometimes led to the stake or the gallows, and therefore was thought to be not without foundation. Paulus Jovius, in his “Eulogia Doctorum Virorum,” says, that the devil, in the shape of a large black dog, attended Agrippa wherever he went. Thomas Nash, in his adventures of Jack Wilton, relates, that at the request of Lord Surrey, Erasmus, and some other learned men, Agrippa called up from the grave many of the great philosophers of antiquity; among others, Tully, whom he caused to re-deliver his celebrated oration for Roscius. He also showed Lord Surrey, when in Germany, an exact resemblance in a glass of his mistress the fair Geraldine. She was represented on her couch weeping for the absence of her lover. Lord Surrey made a note of the exact time at which he saw this vision, and ascertained afterwards that his mistress was actually so employed at the very minute. To Thomas Lord Cromwell, Agrippa represented King Henry VIII. hunting in Windsor Park, with the principal lords of his court; and to please the Emperor Charles V. he summoned King David and King Solomon from the tomb.

Naude, in his “Apology for the Great Men who have been falsely suspected of Magic,” takes a great deal of pains to clear Agrippa from the imputations cast upon him by Delrio, Paulus Jovius, and other such ignorant and prejudiced scribblers. Such stories demanded refutation in the days of Naude, but they may now be safely left to decay in their own absurdity. That they should have attached, however, to the memory of a man, who claimed the power of making iron obey him when he told it to become gold, and who wrote such a work as that upon magic, which goes by his name, is not at all surprising.

PARACELSUS.

This philosopher, called by Naude, “the zenith and rising sun of all the alchymists,” was born at Einsiedeln, near Zurich, in the year 1493. His true name was Hohenheim; to which, as he himself informs us, were prefixed the baptismal names of Aureolus Theophrastus Bombastes Paracelsus. The last of these he chose for his common designation while he was yet a boy; and rendered it, before he died, one of the most famous in the annals of his time. His father, who was a physician, educated his son for the same pursuit. The latter was an apt scholar, and made great progress. By chance the work of Isaac Hollandus fell into his hands, and from that time he became smitten with the mania of the philosopher’s stone. All his thoughts henceforth were devoted to metallurgy; and he travelled into Sweden that he might visit the mines of that country, and examine the ores while they yet lay in the bowels of the earth. He also visited Trithemius at the monastery of Spannheim, and obtained instructions from him in the science of alchymy. Continuing his travels, he proceeded through Prussia and Austria into Turkey, Egypt, and Tatary, and thence returning to Constantinople, learned, as he boasted, the art of transmutation, and became possessed of the elixir vitae. He then established himself as a physician in his native Switzerland at Zurich, and commenced writing works upon alchymy and medicine, which immediately fixed the attention of Europe. Their great obscurity was no impediment to their fame; for the less the author was understood, the more the demonologists, fanatics, and philosopher’s-stone-hunters seemed to appreciate him. His fame as a physician kept pace with that which he enjoyed as an alchymist, owing to his having effected some happy cures by means of mercury and opium; drugs unceremoniously condemned by his professional brethren. In the year 1526, he was chosen Professor of Physics and Natural Philosophy in the University of Basle, where his lectures attracted vast numbers of students. He denounced the writings of all former physicians as tending to mislead; and publicly burned the works of Galen and Avicenna, as quacks and impostors. He exclaimed, in presence of the admiring and half-bewildered crowd, who assembled to witness the ceremony, that there was more knowledge in his shoestrings than in the writings of these physicians. Continuing in the same strain, he said all the universities in the world were full of ignorant quacks; but that he, Paracelsus, over flowed with wisdom. “You will all follow my new system,” said he, with furious gesticulations, “Avicenna, Galen, Rhazis, Montagnana, Meme — you will all follow me, ye professors of Paris, Montpellier, Germany, Cologne, and Vienna! and all ye that dwell on the Rhine and the Danube — ye that inhabit the isles of the sea; and ye also, Italians, Dalmatians, Athenians, Arabians, Jews — ye will all follow my doctrines, for I am the monarch of medicine!”

But he did not long enjoy the esteem of the good citizens of Basle. It is said that he indulged in wine so freely, as not unfrequently to be seen in the streets in a state of intoxication. This was ruinous for a physician, and his good fame decreased rapidly. His ill fame increased in still greater proportion, especially when he assumed the airs of a sorcerer. He boasted of the legions of spirits at his command; and of one especially, which he kept imprisoned in the hilt of his sword. Wetterus, who lived twenty-seven months in his service, relates that he often threatened to invoke a whole army of demons, and show him the great authority which he could exercise over them. He let it be believed, that the spirit in his sword had custody of the elixir of life, by means of which he could make any one live to be as old as the antediluvians. He also boasted that he had a spirit at his command, called “Azoth,” whom he kept imprisoned in a jewel; and in many of the old portraits he is represented with a jewel, inscribed with the word “Azoth,” in his hand.

If a sober prophet has little honour in his own country, a drunken one has still less. Paracelsus found it at last convenient to quit Basle, and establish himself at Strasbourg. The immediate cause of this change of residence was as follows: — A citizen lay at the point of death, and was given over by all the physicians of the town. As a last resource Paracelsus was called in, to whom the sick man promised a magnificent recompence, if by his means he were cured. Paracelsus gave him two small pills, which the man took and rapidly recovered. When he was quite well, Paracelsus sent for his fee; but the citizen had no great opinion of the value of a cure which had been so speedily effected. He had no notion of paying a handful of gold for two pills, although they had saved his life, and he refused to pay more than the usual fee for a single visit. Paracelsus brought an action against him, and lost it. This result so exasperated him, that he left Basle in high dudgeon. He resumed his wandering life, and travelled in Germany and Hungary, supporting himself as he went on the credulity and infatuation of all classes of society. He cast nativities — told fortunes — aided those who had money to throw away upon the experiment, to find the philosopher’s stone — prescribed remedies for cows and pigs, and aided in the recovery of stolen goods. After residing successively at Nuremburg, Augsburg, Vienna, and Mindelheim, he retired in the year 1541 to Saltzbourg, and died in a state of abject poverty in the hospital of that town.

If this strange charlatan found hundreds of admirers during his life, he found thousands after his death. A sect of Paracelsists sprang up in France and Germany, to perpetuate the extravagant doctrines of their founder upon all the sciences, and upon alchymy in particular. The chief leaders were Bodenstein and Dorneus. The following is a summary of his doctrine, founded upon supposed existence of the philosopher’s stone; it is worth preserving from its very absurdity, and altogether unparalleled in the history of philosophy:– First of all, he maintained that the contemplation of the perfection of the Deity sufficed to procure all wisdom and knowledge; that the Bible was the key to the theory of all diseases, and that it was necessary to search into the Apocalypse to know the signification of magic medicine. The man who blindly obeyed the will of God, and who succeeded in identifying himself with the celestial intelligences, possessed the philosopher’s stone — he could cure all diseases, and prolong life to as many centuries as he pleased; it being by the very same means that Adam and the antediluvian patriarchs prolonged theirs. Life was an emanation from the stars — the sun governed the heart, and the moon the brain. Jupiter governed the liver, Saturn the gall, Mercury the lungs, Mars the bile, and Venus the loins. In the stomach of every human being there dwelt a demon, or intelligence, that was a sort of alchymist in his way, and mixed, in their due proportions, in his crucible, the various aliments that were sent into that grand laboratory the belly.[See the article “Paracelsus,” by the learned Renaudin, in the “Biographie Universelle.”] He was proud of the title of magician, and boasted that he kept up a regular correspondence with Galen from hell; and that he often summoned Avicenna from the same regions to dispute with him on the false notions he had promulgated respecting alchymy, and especially regarding potable gold and the elixir of life. He imagined that gold could cure ossification of the heart, and, in fact, all diseases, if it were gold which had been transmuted from an inferior metal by means of the philosopher’s stone, and if it were applied under certain conjunctions of the planets. The mere list of the works in which he advances these frantic imaginings, which he called a doctrine, would occupy several pages.

GEORGE AGRICOLA.

This alchymist was born in the province of Misnia, in 1494. His real name was Bauer, meaning a husbandman, which, in accordance with the common fashion of his age, he Latinized into Agricola. From his early youth, he delighted in the visions of the hermetic science. Ere he was sixteen, he longed for the great elixir which was to make him live for seven hundred years, and for the stone which was to procure him wealth to cheer him in his multiplicity of days. He published a small treatise upon the subject at Cologne, in 1531, which obtained him the patronage of the celebrated Maurice, Duke of Saxony. After practising for some years as a physician at Joachimsthal, in Bohemia, he was employed by Maurice as superintendent of the silver mines of Chemnitz. He led a happy life among the miners, making various experiments in alchymy while deep in the bowels of the earth. He acquired a great knowledge of metals, and gradually got rid of his extravagant notions about the philosopher’s stone. The miners had no faith in alchymy; and they converted him to their way of thinking, not only in that but in other respects. From their legends, he became firmly convinced that the bowels of the earth were inhabited by good and evil spirits, and that firedamp and other explosions sprang from no other causes than the mischievous propensities of the latter. He died in the year 1555, leaving behind him the reputation of a very able and intelligent man.

DENIS ZACHAIRE.

Autobiography, written by a wise man who was once a fool, is not only the most instructive, but the most delightful of reading. Denis Zachaire, an alchymist of the sixteenth century, has performed this task, and left a record of his folly and infatuation in pursuit of the philosopher’s stone, which well repays perusal. He was born in the year 1510, of an ancient family in Guienne, and was early sent to the university of Bordeaux, under the care of a tutor to direct his studies. Unfortunately, his tutor was a searcher for the grand elixir, and soon rendered his pupil as mad as himself upon the subject. With this introduction, we will allow Denis Zachaire to speak for himself, and continue his narrative in his own words :–” I received from home,” says he, “the sum of two hundred crowns for the expenses of myself and master; but before the end of the year, all our money went away in the smoke of our furnaces. My master, at the same time, died of a fever, brought on by the parching heat of our laboratory, from which he seldom or never stirred, and which was scarcely less hot than the arsenal of Venice. His death was the more unfortunate for me, as my parents took the opportunity of reducing my allowance, and sending me only sufficient for my board and lodging, instead of the sum I required to continue my operations in alchymy.

“To meet this difficulty and get out of leading-strings, I returned home at the age of twenty-five, and mortgaged part of my property for four hundred crowns. This sum was necessary to perform an operation of the science, which had been communicated to me by an Italian at Toulouse, and who, as he said, had proved its efficacy. I retained this man in my service, that we might see the end of the experiment. I then, by means of strong distillations, tried to calcinate gold and silver; but all my labour was in vain. The weight of the gold I drew out of my furnace was diminished by one-half since I put it in, and my four hundred crowns were very soon reduced to two hundred and thirty. I gave twenty of these to my Italian, in order that he might travel to Milan, where the author of the receipt resided, and ask him the explanation of some passages which we thought obscure. I remained at Toulouse all the winter, in the hope of his return; but I might have remained there till this day if I had waited for him, for I never saw his face again.

“In the succeeding summer there was a great plague, which forced me to quit the town. I did not, however, lose sight of my work. I went to Cahors, where I remained six months, and made the acquaintance of an old man, who was commonly known to the people as ‘the Philosopher;’ a name which, in country places, is often bestowed upon people whose only merit is, that they are less ignorant than their neighbours. I showed him my collection of alchymical receipts, and asked his opinion upon them. He picked out ten or twelve of them, merely saying that they were better than the others. When the plague ceased, I returned to Toulouse, and recommenced my experiments in search of the stone. I worked to such effect that my four hundred crowns were reduced to one hundred and seventy.

“That I might continue my work on a safer method, I made acquaintance, in 1537, with a certain Abbe, who resided in the neighbourhood. He was smitten with the same mania as myself, and told me that one of his friends, who had followed to Rome in the retinue of the Cardinal d’Armagnac, had sent him from that city a new receipt, which could not fail to transmute iron and copper, but which would cost two hundred crowns. I provided half this money, and the Abbe the rest; and we began to operate at our joint expense. As we required spirits of wine for our experiment, I bought a tun of excellent vin de Gaillac. I extracted the spirit, and rectified it several times. We took a quantity of this, into which we put four marks of silver, and one of gold, that had been undergoing the process of calcination for a month. We put this mixture cleverly into a sort of horn-shaped vessel, with another to serve as a retort; and placed the whole apparatus upon our furnace, to produce congelation. This experiment lasted a year; but, not to remain idle, we amused ourselves with many other less important operations. We drew quite as much profit from these as from our great work.

The whole of the year 1537 passed over without producing any change whatever: in fact, we might have waited till doomsday for the congelation of our spirits of wine. However, we made a projection with it upon some heated quicksilver; but all was in vain. Judge of our chagrin, especially of that of the Abbe, who had already boasted to all the monks of his monastery, that they had only to bring the large pump which stood in a corner of the cloister, and he would convert it into gold; but this ill luck did not prevent us from persevering. I once more mortgaged my paternal lands for four hundred crowns, the whole of which I determined to devote to a renewal of my search for the great secret. The Abbe contributed the same sum; and, with these eight hundred crowns, I proceeded to Paris, a city more abounding with alchymists than any other in the world, resolved never to leave it until I had either found the philosopher’s stone, or spent all my money. This journey gave the greatest offence to all my relations and friends, who, imagining that I was fitted to be a great lawyer, were anxious that I should establish myself in that profession. For the sake of quietness, I pretended, at last, that such was my object.

“After travelling for fifteen days, I arrived in Paris, on the 9th of January 1539. I remained for a month, almost unknown; but I had no sooner begun to frequent the amateurs of the science, and visited the shops of the furnace-makers, than I had the acquaintance of more than a hundred operative alchymists, each of whom had a different theory and a different mode of working. Some of them preferred cementation; others sought the universal alkahest, or dissolvent; and some of them boasted the great efficacy of the essence of emery. Some of them endeavoured to extract mercury from other metals to fix it afterwards; and, in order that each of us should be thoroughly acquainted with the proceedings of the others, we agreed to meet somewhere every night, and report progress. We met sometimes at the house of one, and sometimes in the garret of another; not only on week days, but on Sundays, and the great festivals of the Church. ‘Ah!’ one used to say, ‘if I had the means of recommencing this experiment, I should do something.’ ‘ Yes,’ said another, ‘if my crucible had not cracked, I should have succeeded before now :’ while a third exclaimed, with a sigh, ‘If I had but had a round copper vessel of sufficient strength, I would have fixed mercury with silver.’ There was not one among them who had not some excuse for his failure; but I was deaf to all their speeches. I did not want to part with my money to any of them, remembering how often I had been the dupe of such promises.

“A Greek at last presented himself; and with him I worked a long time uselessly upon nails, made of cinabar, or vermilion. I was also acquainted with a foreign gentleman newly arrived in Paris, and often accompanied him to the shops of the goldsmiths, to sell pieces of gold and silver, the produce, as he said, of his experiments. I stuck closely to him for a long time, in the hope that he would impart his secret. He refused for a long time, but acceded, at last, on my earnest entreaty, and I found that it was nothing more than an ingenious trick. I did not fail to inform my friend, the Abbe, whom I had left at Toulouse, of all my adventures; and sent him, among other matters, a relation of the trick by which this gentleman pretended to turn lead into gold. The Abbe still imagined that I should succeed at last, and advised me to remain another year in Paris, where I had made so good a beginning. I remained there three years; but, notwithstanding all my efforts, I had no more success than I had had elsewhere.

“I had just got to the end of my money, when I received a letter from the Abbe, telling me to leave everything, and join him immediately at Toulouse. I went accordingly, and found that he had received letters from the King of Navarre (grandfather of Henry IV). This Prince was a great lover of philosophy, full of curiosity, and had written to the Abbe, that I should visit him at Pau; and that he would give me three or four thousand crowns, if I would communicate the secret I had learned from the foreign gentleman. The Abbe’s ears were so tickled with the four thousand crowns, that he let me have no peace, night or day, until he had fairly seen me on the road to Pau. I arrived at that place in the month of May 1542. I worked away, and succeeded, according to the receipt I had obtained. When I had finished, to the satisfaction of the King, he gave me the reward that I expected. Although he was willing enough to do me further service, he was dissuaded from it by the lords of his court; even by many of those who had been most anxious that I should come. He sent me then about my business, with many thanks; saying, that if there was anything in his kingdom which he could give me — such as the produce of confiscations, or the like — he should be most happy. I thought I might stay long enough for these prospective confiscations, and never get them at last; and I therefore determined to go back to my friend, the Abbe.

“I learned, that on the road between Pau and Toulouse, there resided a monk, who was very skilful in all matters of natural philosophy. On my return, I paid him a visit. He pitied me very much, and advised me, with much warmth and kindness of expression, not to amuse myself any longer with such experiments as these, which were all false and sophistical; but that I should read the good books of the old philosophers, where I might not only find the true matter of the science of alchymy, but learn also the exact order of operations which ought to be followed. I very much approved of this wise advice; but, before I acted upon it, I went back to my Abbe, of Toulouse, to give him an account of the eight hundred crowns, which we had had in common; and, at the same time, share with him such reward as I had received from the King of Navarre. If he was little satisfied with the relation of my adventures since our first separation, he appeared still less satisfied when I told him I had formed a resolution to renounce the search for the philosopher’s stone. The reason was, that he thought me a good artist. Of our eight hundred crowns, there remained but one hundred and seventy-six. When I quitted the Abbe, I went to my own house, with the intention of remaining there, till I had read all the old philosophers, and of then proceeding to Paris.

“I arrived in Paris on the day after All Saints, of the year 1546, and devoted another year to the assiduous study of great authors. Among others, the ‘Turba Philosophorum’ of the ‘Good Trevisan,’ ‘ The Remonstance of Nature to the wandering Alchymist,’ by Jean de Meung; and several others of the best books: but, as I had no right’ principles, I did not well know what course to follow.

“At last I left my solitude; not to see my former acquaintances, the adepts and operators, but to frequent the society of true philosophers. Among them I fell into still greater uncertainties; being, in fact, completely bewildered by the variety of operations which they showed me. Spurred on, nevertheless, by a sort of frenzy or inspiration, I threw myself into the works of Raymond Lulli and of Arnold de Villeneuve. The reading of these, and the reflections I made upon them, occupied me for another year, when I finally determined on the course I should adopt. I was obliged to wait, however, until I had mortgaged another very considerable portion of my patrimony. This business was not settled until the beginning of Lent, 1549, when I commenced my operations. I laid in a stock of all that was necessary, and began to work the day after Easter. It was not, however, without some disquietude and opposition from my friends who came about me; one asking me what I was going to do, and whether I had not already spent money enough upon such follies. Another assured me that, if I bought so much charcoal, I should strengthen the suspicion already existing, that I was a coiner of base money. Another advised me to purchase some place in the magistracy, as I was already a Doctor of Laws. My relations spoke in terms still more annoying to me, and even threatened that, if I continued to make such a fool of myself, they would send a posse of police-officers into my house, and break all my furnaces and crucibles into atoms. I was wearied almost to death by this continued persecution; but I found comfort in my work and in the progress of my experiment, to which I was very attentive, and which went on bravely from day to day. About this time, there was a dreadful plague in Paris, which interrupted all intercourse between man and man, and left me as much to myself as I could desire. I soon had the satisfaction to remark the progress and succession of the three colours which, according to the philosophers, always prognosticate the approaching perfection of the work. I observed them distinctly, one after the other; and next year, being Easter Sunday, 1550, I made the great trial. Some common quicksilver, which I put into a small crucible on the fire, was, in less than an hour, converted into very good gold. You may judge how great was my joy, but I took care not to boast of it. I returned thanks to God for the favour he had shown me, and prayed that I might only be permitted to make such use of it as would redound to his glory.

“On the following day, I went towards Toulouse to find the Abbe, in accordance with a mutual promise that we should communicate our discoveries to each other. On my way, I called in to see the sage monk who had assisted me with his counsels; but I had the sorrow to learn that they were both dead. After this, I would not return to my own home, but retired to another place, to await one of my relations whom I had left in charge of my estate. I gave him orders to sell all that belonged to me, as well movable as immovable — to pay my debts with the proceeds, and divide all the rest among those in any way related to me who might stand in need of it, in order that they might enjoy some share of the good fortune which had befallen me. There was a great deal of talk in the neighbourhood about my precipitate retreat; the wisest of my acquaintance imagining that, broken down and ruined by my mad expenses, I sold my little remaining property that I might go and hide my shame in distant countries.

“My relative already spoken of rejoined me on the 1st of July, after having performed all the business I had intrusted him with. We took our departure together, to seek a land of liberty. We first retired to Lausanne, in Switzerland, when, after remaining there for some time, we resolved to pass the remainder of our days in some of the most celebrated cities of Germany, living quietly and without splendour.”

Thus ends the story of Denis Zachaire, as written by himself. He has not been so candid at its conclusion as at its commencement, and has left the world in doubt as to his real motives for pretending that he had discovered the philosopher’s stone. It seems probable that the sentence he puts into the months of his wisest acquaintances was the true reason of his retreat; that he was, in fact, reduced to poverty, and hid his shame in foreign countries. Nothing further is known of his life, and his real name has never yet been discovered. He wrote a work on alchymy, entitled “The true Natural Philosophy of Metals.”

DR. DEE and EDWARD KELLY.

John Dee and Edward Kelly claim to be mentioned together, having been so long associated in the same pursuits, and undergone so many strange vicissitudes in each other’s society. Dee was altogether a wonderful man, and had he lived in an age when folly and superstition were less rife, he would, with the same powers which he enjoyed, have left behind him a bright and enduring reputation. He was born in London, in the year 1527, and very early manifested a love for study. At the age of fifteen he was sent to Cambridge, and delighted so much in his books, that he passed regularly eighteen hours every day among them. Of the other six, he devoted four to sleep and two for refreshment. Such intense application did not injure his health, and could not fail to make him one of the first scholars of his time. Unfortunately, however, he quitted the mathematics and the pursuits of true philosophy to indulge in the unprofitable reveries of the occult sciences. He studied alchymy, astrology, and magic, and thereby rendered himself obnoxious to the authorities at Cambridge. To avoid persecution, he was at last obliged to retire to the university of Louvain; the rumours of sorcery that were current respecting him rendering his longer stay in England not altogether without danger. He found at Louvain many kindred spirits who had known Cornelius Agrippa while he resided among them, and by whom he was constantly entertained with the wondrous deeds of that great master of the hermetic mysteries. From their conversation he received much encouragement to continue the search for the philosopher’s stone, which soon began to occupy nearly all his thoughts.

He did not long remain on the Continent, but returned to England in 1551, being at that time in the twenty-fourth year of his age. By the influence of his friend, Sir John Cheek, he was kindly received at the court of King Edward VI, and rewarded (it is difficult to say for what) with a pension of one hundred crowns. He continued for several years to practise in London as an astrologer; casting nativities, telling fortunes, and pointing out lucky and unlucky days. During the reign of Queen Mary he got into trouble, being suspected of heresy, and charged with attempting Mary’s life by means of enchantments. He was tried for the latter offence, and acquitted; but was retained in prison on the former charge, and left to the tender mercies of Bishop Bonner. He had a very narrow escape from being burned in Smithfield, but he, somehow or other, contrived to persuade that fierce bigot that his orthodoxy was unimpeachable, and was set at liberty in 1555.

On the accession of Elizabeth, a brighter day dawned upon him. During her retirement at Woodstock, her servants appear to have consulted him as to the time of Mary’s death, which Circumstance, no doubt, first gave rise to the serious charge for which he was brought to trial. They now came to consult him more openly as to the fortunes of their mistress; and Robert Dudley, the celebrated Earl of Leicester, was sent by command of the Queen herself to know the most auspicious day for her coronation. So great was the favour he enjoyed that, some years afterwards, Elizabeth condescended to pay him a visit at his house in Mortlake, to view his museum of curiosities, and, when he was ill, sent her own physician to attend upon him.

Astrology was the means whereby he lived, and he continued to practise it with great assiduity; but his heart was in alchymy. The philosopher’s stone and the elixir of life haunted his daily thoughts and his nightly dreams. The Talmudic mysteries, which he had also deeply studied, impressed him with the belief, that he might hold converse with spirits and angels, and learn from them all the mysteries of the universe. Holding the same idea as the then obscure sect of the Rosicrucians, some of whom he had perhaps encountered in his travels in Germany, he imagined that, by means of the philosopher’s stone, he could summon these kindly spirits at his will. By dint of continually brooding upon the subject, his imagination became so diseased, that he at last persuaded himself that an angel appeared to him, and promised to be his friend and companion as long as he lived. He relates that, one day, in November 1582, while he was engaged in fervent prayer, the window of his museum looking towards the west suddenly glowed with a dazzling light, in the midst of which, in all his glory, stood the great angel Uriel. Awe and wonder rendered him speechless; but the angel smiling graciously upon him, gave him a crystal, of a convex form, and told him that, whenever he wished to hold converse with the beings of another sphere, he had only to gaze intently upon it, and they would appear in the crystal and unveil to him all the secrets of futurity. [The “crystal” alluded to appears to have been a black stone, or piece of polished coal. The following account of it is given in the Supplement to Granger’s “Biographical History.” — “The black stone into which Dee used to call his spirits was in the collection of the Earls of Peterborough, from whence it came to Lady Elizabeth Germaine. It was next the property of the late Duke of Argyle, and is now Mr. Walpole’s. It appears upon examination to be nothing more than a polished piece of cannel coal; but this is what Butler means when he says, ‘Kelly did all his feats upon The devil’s looking-glass — a stone.'”] This saying, the angel disappeared. Dee found from experience of the crystal that it was necessary that all the faculties of the soul should be concentrated upon it, otherwise the spirits did not appear. He also found that he could never recollect the conversations he had with the angels. He therefore determined to communicate the secret to another person, who might converse with the spirits while he (Dee) sat in another part of the room, and took down in writing the revelations which they made.

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He had at this time in his service, as his assistant, one Edward Kelly, who, like himself, was crazy upon the subject of the philosopher’s stone. There was this difference, however, between them, that, while Dee was more of an enthusiast than an impostor, Kelly was more of an impostor than an enthusiast. In early life he was a notary, and had the misfortune to lose both his ears for forgery. This mutilation, degrading enough in any man, was destructive to a philosopher; Kelly, therefore, lest his wisdom should suffer in the world’s opinion, wore a black skull-cap, which, fitting close to his head, and descending over both his cheeks, not only concealed his loss, but gave him a very solemn and oracular appearance. So well did he keep his secret, that even Dee, with whom he lived so many years, appears never to have discovered it. Kelly, with this character, was just the man to carry on any piece of roguery for his own advantage, or to nurture the delusions of his master for the same purpose. No sooner did Dee inform him of the visit he had received from the glorious Uriel, than Kelly expressed such a fervour of belief that Dee’s heart glowed with delight. He set about consulting his crystal forthwith, and on the 2nd of December 1581, the spirits appeared, and held a very extraordinary discourse with Kelly, which Dee took down in writing. The curious reader may see this farrago of nonsense among the Harleian MSS. in the British Museum. The later consultations were published in a folio volume, in 1659, by Dr. Meric Casaubon, under the title of “A True and Faithful Relation of what passed between Dr. John Dee and some Spirits; tending, had it succeeded, to a general Alteration of most States and Kingdoms in the World.” [Lilly, the astrologer, in his Life written by himself, frequently tells of prophecies delivered by the angels in a manner similar to the angels of Dr. Dee. He says, “The prophecies were not given vocally by the angels, but by inspection of the crystal in types and figures, or by apparition the circular way; where, at some distance, the angels appear, representing by forms, shapes, and creatures what is demanded. It is very rare, yea, even in our days,” quoth that wiseacre, “for any operator or master to hear the angels speak articulately: when they do speak, it is like the Irish, much in the throat!”]

The fame of these wondrous colloquies soon spread over the country, and even reached the Continent. Dee, at the same time, pretended to be in possession of the elixir vitae, which he stated he had found among the ruins of Glastonbury Abbey, in Somersetshire. People flocked from far and near to his house at Mortlake to have their nativities cast, in preference to visiting astrologers of less renown. They also longed to see a man who, according to his own account, would never die. Altogether, he carried on a very profitable trade, but spent so much in drugs and metals to work out some peculiar process of transmutation, that he never became rich.

About this time there came into England a wealthy polish nobleman, named Albert Laski, Count Palatine of Siradz. His object was principally, he said, to visit the court of Queen Elizabeth, the fame of whose glory and magnificence had reached him in distant Poland. Elizabeth received this flattering stranger with the most splendid hospitality, and appointed her favourite Leicester to show him all that was worth seeing in England. He visited all the curiosities of London and Westminster, and from thence proceeded to Oxford and Cambridge, that he might converse with some of the great scholars whose writings shed lustre upon the land of their birth. He was very much disappointed at not finding Dr. Dee among them, and told the Earl of Leicester that he would not have gone to Oxford if he had known that Dee was not there. The Earl promised to introduce him to the great alchymist on their return to London, and the Pole was satisfied. A few days afterwards, the Earl and Laski being in the antechamber of the Queen, awaiting an audience of her Majesty, Dr. Dee arrived on the same errand, and was introduced to the Pole. [Albert Laski, son of Jaroslav, was Palatine of Siradz, and afterwards of Sendomir, and chiefly contributed to the election of Henry of Valois, the Third of France, to the throne of Poland, and was one of the delegates who went to France in order to announce to the new monarch his elevation to the sovereignty of Poland. After the deposition of Henry, Albert Laski voted for Maximilian of Austria. In 1585 he visited England, when Queen Elizabeth received him with great distinction. The honours which were shown him during his visit to Oxford, by the especial command of the Queen, were equal to those rendered to sovereign princes. His extraordinary prodigality rendered his enormous wealth insufficient to defray his expenses, and he therefore became a zealous adept in alchymy, and took from England to Poland with him two known alchymists. — Count Valerian Krasinski’s “Historical Sketch of the Reformation in Poland.”] An interesting conversation ensued, which ended by the stranger inviting himself to dine with the astrologer at his house at Mortlake. Dee returned home in some tribulation, for he found he had not money enough, without pawning his plate, to entertain Count Laski and his retinue in a manner becoming their dignity. In this emergency he sent off an express to the Earl of Leicester, stating frankly the embarrassment he laboured under, and praying his good offices in representing the matter to her Majesty. Elizabeth immediately sent him a present of twenty pounds.

On the appointed day, Count Laski came, attended by a numerous retinue, and expressed such open and warm admiration of the wonderful attainments of his host, that Dee turned over, in his own mind, how he could bind irretrievably to his interests a man who seemed so well inclined to become his friend. Long acquaintance with Kelly had imbued him with all the roguery of that personage; and he resolved to make the Pole pay dearly for his dinner. He found out, before many days, that he possessed great estates in his own country, as well as great influence; but that an extravagant disposition had reduced him to temporary embarrassment. He also discovered, that he was a firm believer in the philosopher’s stone and the water of life. He was, therefore, just the man upon whom an adventurer might fasten himself. Kelly thought so too; and both of them set to work, to weave a web, in the meshes of which they might firmly entangle the rich and credulous stranger. They went very cautiously about it; first throwing out obscure hints of the stone and the elixir; and, finally, of the spirits, by means of whom they could turn over the pages of the Book of Futurity, and read the awful secrets inscribed therein. Laski eagerly implored that he might be admitted to one of their mysterious interviews with Uriel and the angels; but they knew human nature too well to accede at once to the request. To the Count’s entreaties they only replied by hints of the difficulty or impropriety of summoning the spirits in the presence of a stranger; or of one who might, perchance, have no other motive than the gratification of a vain curiosity: but they only meant to whet the edge of his appetite by this delay, and would have been sorry indeed if the Count had been discouraged. To show how exclusively the thoughts both of Dee and Kelly were fixed upon their dupe, at this time, it is only necessary to read the introduction to their first interview with the spirits, related in the volume of Dr. Casaubon. The entry made by Dee, under the date of the 25th of May 1583, says, that when the spirit appeared to them, “I, [John Dee], and E. K. [Edward Kelly], sat together, conversing of that noble Polonian Albertus Laski, his great honour here with us obtained, and of his great liking among all sorts of the people.” No doubt they were discussing how they might make the most of the “noble Polonian,” and concocting the fine story with which they afterwards excited his curiosity, and drew him firmly within their toils. “Suddenly,” says Dee, as they were thus employed, “there seemed to come out of the oratory, a spiritual creature, like a pretty girl, of seven or nine years of age, attired on her head, with her hair rolled up before, and hanging down behind; with a gown of silk, of changeable red and green, and with a train. She seemed to play up and down, and seemed to go in and out behind the books; and, as she seemed to go between them, the books displaced themselves, and made way for her.”

With such tales as these they lured on the Pole from day to day; and at last persuaded him to be a witness of their mysteries. Whether they played off any optical delusions upon him; or whether, by the force of a strong imagination, he deluded himself, does not appear; but certain it is, that he became a complete tool in their hands, and consented to do whatever they wished him. Kelly, at these interviews, placed himself at a certain distance from the wondrous crystal, and gazed intently upon it; while Dee took his place in corner, ready to set down the prophecies as they were uttered by the spirits. In this manner they prophesied to the Pole, that he should become the fortunate possessor of the philosopher’s stone; that he should live for centuries, and be chosen King of Poland; in which capacity he should gain many great victories over the Saracens, and make his name illustrious over all the earth. For this pose it was necessary, however, that Laski should leave England, and take them with him, together with their wives and families; that he should treat them all sumptuously, and allow them to want for nothing. Laski at once consented; and very shortly afterwards they were all on the road to Poland.

It took them upwards of four months to reach the Count’s estates, in the neighbourhood of Cracow. In the mean time, they led a pleasant life, and spent money with an unsparing hand. When once established in the Count’s palace, they commenced the great hermetic operation of transmuting iron into gold. Laski provided them with all necessary materials, and aided them himself with his knowledge of alchymy: but, somehow or other, the experiment always failed at the very moment that it ought to have succeeded; and they were obliged to recommence operations on a grander scale. But the hopes of Laski were not easily extinguished. Already, in idea, the possessor of countless millions, he was not to be cast down for fear of present expenses. He thus continued from day to day, and from month to month, till he was, at last, obliged to sell a portion of his deeply-mortgaged estates, to find aliment for the hungry crucibles of Dee and Kelly, and the no less hungry stomachs of their wives and families. It was not till ruin stared him in the face, that he awoke from his dream of infatuation — too happy, even then, to find that he had escaped utter beggary. Thus restored to his senses, his first thought was how to rid himself of his expensive visiters. Not wishing to quarrel with them, he proposed that they should proceed to Prague, well furnished with letters of recommendation to the Emperor Rudolph. Our alchymists too plainly saw that nothing more was to be made of the almost destitute Count Laski. Without hesitation, therefore, they accepted the proposal, and set out forthwith to the Imperial residence. They had no difficulty, on their arrival at Prague, in obtaining an audience of the Emperor. They found him willing enough to believe that such a thing as the philosopher’s stone existed, and flattered themselves that they had made a favourable impression upon him; but, from some cause or other — perhaps the look of low cunning and quackery upon the face of Kelly — the Emperor conceived no very high opinion of their abilities. He allowed them, however, to remain for some months at Prague, feeding themselves upon the hope that he would employ them: but the more he saw of them, the less he liked them; and, when the Pope’s Nuncio represented to him, that he ought not to countenance such heretic magicians, he gave orders that they should quit his dominions within four-and-twenty hours. It was fortunate for them that so little time was given them; for, had they remained six hours longer, the Nuncio had received orders to procure a perpetual dungeon, or the stake, for them.

Not knowing well where to direct their steps, they resolved to return to Cracow, where they had still a few friends; but, by this time, the funds they had drawn from Laski were almost exhausted; and they were many days obliged to go dinnerless and supperless. They had great difficulty to keep their poverty a secret from the world; but they managed to bear privation without murmuring, from a conviction that if the fact were known, it would militate very much against their pretensions. Nobody would believe that they were possessors of the philosopher’s stone, if it were once suspected that they did not know how to procure bread for their subsistence. They still gained a little by casting nativities, and kept starvation at arm’s length, till a new dupe, rich enough for their purposes, dropped into their toils, in the shape of a royal personage. Having procured an introduction to Stephen, King of Poland, they predicted to him, that the Emperor Rudolph would shortly be assassinated, and that the Germans would look to Poland for his successor. As this prediction was not precise enough to satisfy the King, they tried their crystal again; and a spirit appeared, who told them that the new sovereign of Germany would be Stephen of Poland. Stephen was credulous enough to believe them, and was once present when Kelly held his mystic conversations with the shadows of his crystal. He also appears to have furnished them with money to carry on their experiments in alchymy: but he grew tired, at last, of their broken promises, and their constant drains upon his pocket; and was on the point of discarding them with disgrace, when they met with another dupe, to whom they eagerly transferred their services. This was Count Rosenberg, a nobleman of large estates, at Trebona, in Bohemia. So comfortable did they find themselves in the palace of this munificent patron, that they remained nearly four years with him, faring sumptuously, and having an almost unlimited command of his money. The Count was more ambitious than avaricious: he had wealth enough, and did not care for the philosopher’s stone on account of the gold, but of the length of days it would bring him. They had their predictions, accordingly, all ready framed to suit his character. They prophesied that he should be chosen King of Poland; and promised, moreover, that he should live for five hundred years to enjoy his dignity; provided always, that he found them sufficient money to carry on their experiments.

But now, while fortune smiled upon them; while they revelled in the rewards of successful villany, retributive justice came upon them in a shape they had not anticipated. Jealousy and mistrust sprang up between the two confederates, and led to such violent and frequent quarrels, that Dee was in constant fear of exposure. Kelly imagined himself a much greater personage than Dee; measuring, most likely, by the standard of impudent roguery; and was displeased that on all occasions, and from all persons, Dee received the greater share of honour and consideration. He often threatened to leave Dee to shift for himself; and the latter, who had degenerated into the mere tool of his more daring associate, was distressed beyond measure at the prospect of his desertion. His mind was so deeply imbued with superstition, that he believed the rhapsodies of Kelly to be, in a great measure, derived from his intercourse with angels; and he knew not where, in the whole world, to look for a man of depth and wisdom enough to succeed him. As their quarrels every day became more and more frequent, Dee wrote letters to Queen Elizabeth, to secure a favourable reception on his return to England; whither he intended to proceed, if Kelly forsook him. He also sent her a round piece of silver, which he pretended he had made of a portion of brass cut out of a warming-pan. He afterwards sent her the warming-pan also, that she might convince herself that the piece of silver corresponded exactly with the hole which was cut into the brass. While thus preparing for the worst, his chief desire was to remain in Bohemia with Count Rosenberg, who treated him well, and reposed much confidence in him. Neither had Kelly any great objection to remain; but a new passion had taken possession of his breast, and he was laying deep schemes to gratify it. His own wife was ill-favoured and ill-natured; Dee’s was comely and agreeable: and he longed to make an exchange of partners, without exciting the jealousy or shocking the morality of Dee. This was a difficult matter; but, to a man like Kelly, who was as deficient in rectitude and right feeling as he was full of impudence and ingenuity, the difficulty was not insurmountable. He had also deeply studied the character and the foibles of Dee; and he took his measures accordingly. The next time they consulted the spirits, Kelly pretended to be shocked at their language, and refused to tell Dee what they had said. Dee insisted, and was informed that they were henceforth to have their wives in common. Dee, a little startled, inquired whether the spirits might not mean that they were to live in common harmony and good-will? Kelly tried again, with apparent reluctance, and said the spirits insisted upon the literal interpretation. The poor fanatic, Dee, resigned himself to their will; but it suited Kelly’s purpose to appear coy a little longer. He declared that the spirits must be spirits, not of good, but of evil; and refused to consult them any more. He thereupon took his departure, saying that he would never return.

Dee, thus left to himself, was in sore trouble and distress of mind. He knew not on whom to fix as the successor to Kelly for consulting the spirits; but at last chose his son Arthur, a boy of eight years of age. He consecrated him to this service with great ceremony, and impressed upon the child’s mind the dignified and awful nature of the duties he was called upon to perform; but the poor boy had neither the imagination, the faith, nor the artifice of Kelly. He looked intently upon the crystal, as he was told; but could see nothing and hear nothing. At last, when his eyes ached, he said he could see a vague indistinct shadow; but nothing more. Dee was in despair. The deception had been carried on so long, that he was never so happy as when he fancied he was holding converse with superior beings; and he cursed the day that had put estrangement between him and his dear friend Kelly. This was exactly what Kelly had foreseen; and, when he thought the Doctor had grieved sufficiently for his absence, he returned unexpectedly, and entered the room where the little Arthur was in vain endeavouring to distinguish something in the crystal. Dee, in entering this circumstance in his journal, ascribes this sudden return to a “miraculous fortune,” and a “divine fate;” and goes on to record that Kelly immediately saw the spirits, which had remained invisible to little Arthur. One of these spirits reiterated the previous command, that they should have their wives in common. Kelly bowed his head, and submitted; and Dee, in all humility, consented to the arrangement.

This was the extreme depth of the wretched man’s degradation. In this manner they continued to live for three or four months, when, new quarrels breaking out, they separated once more. This time their separation was final. Kelly, taking the elixir which he had found in Glastonbury Abbey, proceeded to Prague, forgetful of the abrupt mode in which he had previously been expelled from that city. Almost immediately after his arrival, he was seized by order of the Emperor Rudolph, and thrown into prison. He was released after some months’ confinement, and continued for five years to lead a vagabond life in Germany, telling fortunes at one place, and pretending to make gold at another. He was a second time thrown into prison, on a charge of heresy and sorcery; and he then resolved, if ever he obtained his liberty, to return to England. He soon discovered that there was no prospect of this, and that his imprisonment was likely to be for life. He twisted his bed-clothes into a rope, one stormy night in February 1595, and let himself down from the window of his dungeon, situated at the top of a very high tower. Being a corpulent man, the rope gave way, and he was precipitated to the ground. He broke two of his ribs, and both his legs; and was otherwise so much injured, that he expired a few days afterwards.

Dee, for a while, had more prosperous fortune. The warming-pan he had sent to Queen Elizabeth was not without effect. He was rewarded, soon after Kelly had left him, with an invitation to return to England. His pride, which had been sorely humbled, sprang up again to its pristine dimensions; and he set out for Bohemia with a train of attendants becoming an ambassador. How he procured the money does not appear, unless from the liberality of the rich Bohemian Rosenberg, or perhaps from his plunder. He travelled with three coaches for himself and family, and three waggons to carry his baggage. Each coach had four horses, and the whole train was protected by a guard of four and twenty soldiers. This statement may be doubted; but it is on the authority of Dee himself, who made it on oath before the commissioners appointed by Elizabeth to inquire into his circumstances. On his arrival in England he had an audience of the Queen, who received him kindly as far as words went, and gave orders that he should not be molested in his pursuits of chemistry and philosophy. A man who boasted of the power to turn baser metals into gold, could not, thought Elizabeth, be in want of money; and she, therefore, gave him no more substantial marks of her approbation than her countenance and protection.

Thrown thus unexpectedly upon his own resources, Dee began in earnest the search for the philosopher’s stone. He worked incessantly among his furnaces, retorts, and crucibles, and almost poisoned himself with deleterious fumes. He also consulted his miraculous crystal; but the spirits appeared not to him. He tried one Bartholomew to supply the place of the invaluable Kelly; but he being a man of some little probity, and of no imagination at all, the spirits would not hold any communication with him. Dee then tried another pretender to philosophy, of the name of Hickman; but had no better fortune. The crystal had lost its power since the departure of its great high-priest. From this quarter then Dee could get no information on the stone or elixir of the alchymists, and all his efforts to discover them by other means were not only fruitless but expensive. He was soon reduced to great distress, and wrote piteous letters to the Queen, praying relief. He represented that, after he left England with Count Laski, the mob had pillaged his house at Mortlake, accusing him of being a necromancer and a wizard; and had broken all his furniture, burned his library, consisting of four thousand rare volumes, and destroyed all the philosophical instruments and curiosities in his museum. For this damage he claimed compensation; and furthermore stated, that, as he had come to England by the Queen’s command, she ought to pay the expenses of his journey. Elizabeth sent him small sums of money at various times; but, Dee still continuing his complaints, a commission was appointed to inquire into his circumstances. He finally obtained a small appointment as Chancellor of St. Paul’s cathedral, which he exchanged, in 1595, for the wardenship of the college at Manchester. He remained in this capacity till 1602 or 1603, when, his strength and intellect beginning to fail him, he was compelled to resign. He retired to his old dwelling at Mortlake, in a state not far removed from actual want, supporting himself as a common fortune-teller, and being often obliged to sell or pawn his books to procure a dinner. James I. was often applied to on his behalf, but he refused to do anything for him. It may be said to the discredit of this King, that the only reward he would grant the indefatigable Stowe, in his days of old age and want, was the royal permission to beg; but no one will blame him for neglecting such a quack as John Dee. He died in 1608, in the eighty-first year of his age, and was buried at Mortlake.

THE COSMOPOLITE.

Many disputes have arisen as to the real name of the alchymist who wrote several works under the above designation. The general opinion is that he was a Scotsman, named Seton; and that by a fate very common to alchymists, who boasted too loudly of their powers of transmutation, he ended his days miserably in a dungeon, into which he was thrown by a German potentate until he made a million of gold to pay his ransom. By some he has been confounded with Michael Sendivog, or Sendivogius, a Pole, a professor of the same art, who made a great noise in Europe at the commencement of the seventeenth century. Lenglet du Fresnoy, who is in general well-informed with respect to the alchymists, inclines to the belief that these personages were distinct; and gives the following particulars of the Cosmopolite, extracted from George Morhoff, in his “Epistola ad Langelottum,” and other writers.

About the year 1600, one Jacob Haussen, a Dutch pilot, was shipwrecked on the coast of Scotland. A gentleman, named Alexander Seton, put off in a boat, and saved him from drowning, and afterwards entertained him hospitably for many weeks at his house on the shore. Haussen saw that he was addicted to the pursuits of chemistry, but no conversation on the subject passed between them at the time. About a year and a half afterwards, Haussen being then at home at Enkhuysen, in Holland, received a visit from his former host. He endeavoured to repay the kindness that had been shown him; and so great a friendship arose between them, that Seton, on his departure, offered to make him acquainted with the great secret of the philosopher’s stone. In his presence the Scotsman transmuted a great quantity of base metal into pure gold, and gave it him as a mark of his esteem. Seton then took leave of his friend, and travelled into Germany. At Dresden he made no secret of his wonderful powers; having, it is said, performed transmutation successfully before a great assemblage of the learned men of that city. The circumstance coming to the ears of the Duke or Elector of Saxony, he gave orders for the arrest of the alchymist. He caused him to be imprisoned in a high tower, and set a guard of forty men to watch that he did not escape, and that no strangers were admitted to his presence. The unfortunate Seton received several visits from the Elector, who used every art of persuasion to make him divulge his secret. Seton obstinately refused either to communicate his secret, or to make any gold for the tyrant; on which he was stretched upon the rack, to see if the argument of torture would render him more tractable. The result was still the same, – neither hope of reward nor fear of anguish could shake him. For several months he remained in prison, subjected alternately to a sedative and a violent regimen, till his health broke, and he wasted away almost to a skeleton.

There happened at that time to be in Dresden a learned Pole, named Michael Sendivogius, who had wasted a good deal of his time and substance in the unprofitable pursuits of alchymy. He was touched with pity for the hard fate, and admiration for the intrepidity of Seton; and determined, if possible, to aid him in escaping from the clutch of his oppressor. He requested the Elector’s permission to see the alchymist, and obtained it with some difficulty. He found him in a state of great wretchedness, — shut up from the light of day in a noisome dungeon, and with no better couch or fare than those allotted to the worst of criminals. Seton listened eagerly to the proposal of escape, and promised the generous Pole that he would make him richer than an Eastern monarch if by his means he were liberated. Sendivogius immediately commenced operations. He sold some property which he possessed near Cracow, and with the proceeds led a merry life at Dresden. He gave the most elegant suppers, to which he regularly invited the officers of the guard, and especially those who did duty at the prison of the alchymist. He insinuated himself at last into their confidence, and obtained free ingress to his friend as often as he pleased; pretending that he was using his utmost endeavours to conquer his obstinacy and worm his secret out of him. When their project was ripe, a day was fixed upon for the grand attempt; and Sendivogius was ready with a postchariot to convey him with all speed into Poland. By drugging some wine which he presented to the guards of the prison, he rendered them so drowsy that he easily found means to scale a wall unobserved, with Seton, and effect his escape. Seton’s wife was in the chariot awaiting him, having safely in her possession a small packet of a black powder, which was, in fact, the philosopher’s stone, or ingredient for the transmutation of iron and copper into gold. They all arrived in safety at Cracow; but the frame of Seton was so wasted by torture of body and starvation, to say nothing of the anguish of mind he had endured, that he did not long survive. He died in Cracow in 1603 or 1604, and was buried under the cathedral church of that city. Such is the story related of the author of the various works which bear the name of the Cosmopolite. A list of them may be found in the third volume of the “History of the Hermetic Philosophy.”

SENDIVOGIUS.

On the death of Seton, Sendivogius married his widow, hoping to learn from her some of the secrets of her deceased lord in the art of transmutation. The ounce of black powder stood him, however, in better service; for the alchymists say that, by its means, he converted great quantities of quicksilver into the purest gold. It is also said that he performed this experiment successfully before the Emperor Rudolph II, at Prague; and that the Emperor, to commemorate the circumstance, caused a marble tablet to be affixed to the wall of the room in which it was performed, bearing this inscription, “Faciat hoc quispiam alius, quod fecit Sendivogius Polonus.” M. Desnoyers, secretary to the Princess Mary of Gonzaga, Queen of Poland, writing from Warsaw in 1651, says that he saw this tablet, which existed at that time, and was often visited by the curious.

The after-life of Sendivogius is related in a Latin memoir of him by one Brodowski, his steward; and is inserted by Pierre Borel in his “Treasure of Gaulish Antiquities.” The Emperor Rudolph, according to this authority, was so well pleased with his success, that he made him one of his counsellors of state, and invited him to fill a station in the royal household and inhabit the palace. But Sendivogius loved his liberty, and refused to become a courtier. He preferred to reside on his own patrimonial estate of Gravarna, where, for many years, he exercised a princely hospitality. His philosophic powder, which, his steward says, was red, and not black, he kept in a little box of gold; and with one grain of it he could make five hundred ducats, or a thousand rix-dollars. He generally made his projection upon quicksilver. When he travelled, he gave this box to his steward, who hung it round his neck by a gold chain next his skin. But the greatest part of the powder he used to hide in a secret place cut into the step of his chariot. He thought that, if attacked at any time by robbers, they would not search such a place as that. When he anticipated any danger, he would dress himself in his valet’s clothes, and, mounting the coach-box, put the valet inside. He was induced to take these precautions, because it was no secret that he possessed the philosopher’s stone; and many unprincipled adventurers were on the watch for an opportunity to plunder him. A German Prince, whose name Brodowski has not thought fit to chronicle, served him a scurvy trick, which ever afterwards put him on his guard. This prince went on his knees to Sendivogius, and entreated him in the most pressing terms to satisfy his curiosity by converting some quicksilver into gold before him. Sendivogius, wearied by his importunity, consented, upon a promise of inviolable secrecy. After his departure, the Prince called a German alchymist, named Muhlenfels, who resided in his house, and told him all that had been done. Muhlenfels entreated that he might have a dozen mounted horsemen at his command, that he might instantly ride after the philosopher, and either rob him of all his powder or force from him the secret of making it. The Prince desired nothing better; and Muhlenfels, being provided with twelve men well mounted and armed, pursued Sendivogius in hot haste. He came up with him at a lonely inn by the road-side, just as he was sitting down to dinner. He at first endeavoured to persuade him to divulge the secret; but, finding this of no avail, he caused his accomplices to strip the unfortunate Sendivogius and tie him naked to one of the pillars of the house. He then took from him his golden box, containing a small quantity of the powder; a manuscript book on the philosopher’s stone; a golden medal with its chain, presented to him by the Emperor Rudolph; and a rich cap ornamented with diamonds, of the value of one hundred thousand rix-dollars. With this booty he decamped, leaving Sendivogius still naked and firmly bound to the pillar. His servants had been treated in a similar manner; but the people of the inn released them all as soon as the robbers were out of sight.

Sendivogius proceeded to Prague, and made his complaint to the Emperor. An express was instantly sent off to the Prince, with orders that he should deliver up Muhlenfels and all his plunder. The Prince, fearful of the Emperor’s wrath, caused three large gallows to be erected in his court-yard; on the highest of which he hanged Muhlenfels, with another thief on each side of him. He thus propitiated the Emperor, and got rid of an ugly witness against himself. He sent back, at the same time, the bejewelled hat, the medal and chain, and the treatise upon the philosopher’s stone, which had been stolen from Sendivogius. As regarded the powder, he said he had not seen it, and knew nothing about it.

This adventure made Sendivogius more prudent; he would no longer perform the process of transmutation before any strangers, however highly recommended. He pretended, also, to be very poor; and sometimes lay in bed for weeks together, that people might believe he was suffering from some dangerous malady, and could not therefore by any possibility be the owner of the philosopher’s stone. He would occasionally coin false money, and pass it off as gold; preferring to be esteemed a cheat rather than a successful alchymist.

Many other extraordinary tales are told of this personage by his steward Brodowski, but they are not worth repeating. He died in 1636, aged upwards of eighty, and was buried in his own chapel at Gravarna. Several works upon alchymy have been published under his name.

THE ROSICRUCIANS.

It was during the time of the last-mentioned author that the sect of the Rosicrucians first began to create a sensation in Europe. The influence which they exercised upon opinion during their brief career, and the permanent impression which they have left upon European literature, claim for them especial notice. Before their time, alchymy was but a grovelling delusion; and theirs is the merit of having spiritualised and refined it. They also enlarged its sphere, and supposed the possession of the philosopher’s stone to be, not only the means of wealth, but of health and happiness; and the instrument by which man could command the services of superior beings, control the elements to his will, defy the obstructions of time and space, and acquire the most intimate knowledge of all the secrets of the universe. Wild and visionary as they were, they were not without their uses; if it were only for having purged the superstitions of Europe of the dark and disgusting forms with which the monks had peopled it, and substituted, in their stead, a race of mild, graceful, and beneficent beings.

They are said to have derived their name from Christian Rosencreutz, or “Rose-cross,” a German philosopher, who travelled in the Holy Land towards the close of the fourteenth century. While dangerously ill at a place called Damcar, he was visited by some learned Arabs, who claimed him as their brother in science, and unfolded to him, by inspiration, all the secrets of his past life, both of thought and of action. They restored him to health by means of the philosopher’s stone, and afterwards instructed him in all their mysteries. He returned to Europe in 1401, being then only twenty-three years of age; and drew a chosen number of his friends around him, whom he initiated into the new science, and bound by solemn oaths to keep it secret for a century. He is said to have lived eighty-three years after this period, and to have died in 1484.

Many have denied the existence of such a personage as Rosencreutz, and have fixed the origin of this sect at a much later epoch. The first dawning of it, they say, is to be found in the theories of Paracelsus, and the dreams of Dr. Dee, who, without intending it, became the actual, though never the recognised founders of the Rosicrucian philosophy. It is now difficult, and indeed impossible, to determine whether Dee and Paracelsus obtained their ideas from the then obscure and unknown Rosicrucians, or whether the Rosicrucians did but follow and improve upon them. Certain it is, that their existence was never suspected till the year 1605, when they began to excite attention in Germany. No sooner were their doctrines promulgated, than all the visionaries, Paracelsists, and alchymists, flocked around their standard, and vaunted Rosencreutz as the new regenerator of the human race. Michael Mayer, a celebrated physician of that day, and who had impaired his health and wasted his fortune in searching for the philosopher’s stone, drew up a report of the tenets and ordinances of the new fraternity, which was published at Cologne, in the year 1615. They asserted, in the first place, “that the meditations of their founders surpassed everything that had ever been imagined since the creation of the world, without even excepting the revelations of the Deity; that they were destined to accomplish the general peace and regeneration of man before the end of the world arrived; that they possessed all wisdom and piety in a supreme degree; that they possessed all the graces of nature, and could distribute them among the rest of mankind according to their pleasure; that they were subject to neither hunger, nor thirst, nor disease, nor old age, nor to any other inconvenience of nature; that they knew by inspiration, and at the first glance, every one who was worthy to be admitted into their society; that they had the same knowledge then which they would have possessed if they had lived from the beginning of the world, and had been always acquiring it; that they had a volume in which they could read all that ever was or ever would be written in other books till the end of time; that they could force to, and retain in their service the most powerful spirits and demons; that, by the virtue of their songs, they could attract pearls and precious stones from the depths of the sea or the bowels of the earth; that God had covered them with a thick cloud, by means of which they could shelter themselves from the malignity of their enemies, and that they could thus render themselves invisible from all eyes; that the eight first brethren of the “Rose-cross” had power to cure all maladies; that, by means of the fraternity, the triple diadem of the Pope would be reduced into dust; that they only admitted two sacraments, with the ceremonies of the primitive Church, renewed by them; that they recognised the Fourth Monarchy and the Emperor of the Romans as their chief and the chief of all Christians; that they would provide him with more gold, their treasures being inexhaustible, than the King of Spain had ever drawn from the golden regions of Eastern and Western Ind.” This was their confession of faith. Their rules of conduct were six in number, and as follow:–

First. That, in their travels, they should gratuitously cure all diseases.

Secondly. That they should always dress in conformity to the fashion of the country in which they resided.

Thirdly. That they should, once every year, meet together in the place appointed by the fraternity, or send in writing an available excuse.

Fourthly. That every brother, whenever he felt inclined to die, should choose a person worthy to succeed him.

Fifthly. That the words “Rose-cross” should be the marks by which they should recognise each other.

Sixthly. That their fraternity should be kept secret for six times twenty years.

They asserted that these laws had been found inscribed in a golden book in the tomb of Rosencreutz, and that the six times twenty years from his death expired in 1604. They were consequently called upon, from that time forth, to promulgate their doctrine for the welfare of mankind. [The following legend of the tomb of Rosencreutz, written by Eustace Budgell, appears in No. 379 of the Spectator:– “A certain person, having occasion to dig somewhat deep in the ground where this philosopher lay interred, met with a small door, having a wall on each side of it. His curiosity, and the hope of finding some hidden treasure, soon prompted him to force open the door. He was immediately surprised by a sudden blaze of light, and discovered a very fair vault. At the upper end of it was a statue of a man in armour, sitting by a table, and leaning on his left arm. He held a truncheon in his right hand, and had a lamp burning before him. The man had no sooner set one foot within the vault, than the statue, erecting itself from its leaning posture, stood bolt upright; and, upon the fellow’s advancing another step, lifted up the truncheon in his right hand. The man still ventured a third step; when the statue, with a furious blow, broke the lamp into a thousand pieces, and left his guest in sudden darkness. Upon the report of this adventure, the country people came with lights to the sepulchre, and discovered that the statue, which was made of brass, was nothing more than a piece of clock-work; that the floor of the vault was all loose, and underlaid with several springs, which, upon any man’s entering, naturally produced that which had happened. Rosicreucius, say his disciples, made use of this method to show the world that he had re-invented the ever-burning lamps of the ancients, though he was resolved no one should reap any advantage from the discovery.”]

For eight years these enthusiasts made converts in Germany; but they excited little or no attention in other parts of Europe. At last they made their appearance in Paris, and threw all the learned, all the credulous, and all the lovers of the marvellous into commotion. In the beginning of March 1623, the good folks of that city, when they arose one morning, were surprised to find all their walls placarded with the following singular manifesto:–

“We, the deputies of the principal College of the Brethren of the Rose-cross, have taken up our abode, visible and invisible, in this city, by the grace of the Most High, towards whom are turned the hearts of the just. We show and teach without books or signs, and speak all sorts of languages in the countries where we dwell, to draw mankind, our fellows, from error and from death.”

For a long time this strange placard was the sole topic of conversation in all public places. Some few wondered; but the greater number only laughed at it. In the course of a few weeks two books were published, which raised the first alarm respecting this mysterious society, whose dwelling-place no one knew, and no members of which had ever been seen. The first was called a history of “The frightful Compacts entered into between the Devil and the pretended ‘Invisibles;’ with their damnable Instructions, the deplorable Ruin of their Disciples, and their miserable End.” The other was called an “Examination of the new and unknown Cabala of the Brethren of the Rose-cross, who have lately inhabited the City of Paris; with the History of their Manners, the Wonders worked by them, and many other Particulars.”

These books sold rapidly. Every one was anxious to know something of this dreadful and secret brotherhood. The badauds of Paris were so alarmed that they daily expected to see the arch-enemy walking in propria persona among them. It was said in these volumes, that the Rosicrucian society consisted of six-and-thirty persons in all, who had renounced their baptism and hope of resurrection. That it was not by means of good angels, as they pretended, that they worked their prodigies; but that it was the devil who gave them power to transport themselves from one end of the world to the other with the rapidity of thought; to speak all languages; to have their purses always full of money, however much they might spend; to be invisible, and penetrate into the most secret places, in spite of fastenings of bolts and bars; and to be able to tell the past and future. These thirty-six brethren were divided into bands or companies:- six of them only had been sent on the mission to Paris, six to Italy, six to Spain, six to Germany, four to Sweden, and two into Switzerland; two into Flanders, two into Lorraine, and two into Franche Comte. It was generally believed that the missionaries to France resided somewhere in the Marais du Temple. That quarter of Paris soon acquired a bad name; and people were afraid to take houses in it, lest they should be turned out by the six invisibles of the Rose-cross. It was believed by the populace, and by many others whose education should have taught them better, that persons of a mysterious aspect used to visit the inns and hotels of Paris, and eat of the best meats and drink of the best wines, and then suddenly melt away into thin air when the landlord came with the reckoning. That gentle maidens, who went to bed alone, often awoke in the night and found men in bed with them, of shape more beautiful than the Grecian Apollo, who immediately became invisible when an alarm was raised. It was also said that many persons found large heaps of pure gold in their houses, without knowing from whence they came. All Paris was in alarm. No man thought himself secure of his goods, no maiden of her virginity, or wife of her chastity, while these Rosicrucians were abroad. In the midst of the commotion, a second placard was issued to the following effect:–

“If any one desires to see the brethren of the Rose-cross from curiosity only, he will never communicate with us. But if his will really induces him to inscribe his name in the register of our brotherhood, we, who can judge of the thoughts of all men, will convince him of the truth of our promises. For this reason we do not publish to the world the place of our abode. Thought alone, in unison with the sincere will of those who desire to know us, is sufficient to make us known to them, and them to us.”

Though the existence of such a society as that of the Rose-cross was problematical, it was quite evident that somebody or other was concerned in the promulgation of these placards, which were stuck up on every wall in Paris. The police endeavoured in vain to find out the offenders, and their want of success only served to increase the perplexity of the public. The church very soon took up the question; and the Abbe Gaultier, a Jesuit, wrote a book to prove that, by their enmity to the Pope, they could be no other than disciples of Luther, sent to promulgate his heresy. Their very name, he added, proved that they were heretics; a cross surmounted by a rose being the heraldic device of the arch-heretic Luther. One Garasse said they were a confraternity of drunken impostors; and that their name was derived from the garland of roses, in the form of a cross, hung over the tables of taverns in Germany as the emblem of secrecy, and from whence was derived the common saying, when one man communicated a secret to another, that it was said “under the rose.” Others interpreted the letters F. R. C. to mean, not Brethren of the Rose-cross, but Fratres Roris Cocti, or Brothers of Boiled Dew; and explained this appellation by alleging that they collected large quantities of morning dew, and boiled it, in order to extract a very valuable ingredient in the composition of the philosopher’s stone and the water of life.

The fraternity thus attacked defended themselves as well as they were able. They denied that they used magic of any kind, or that they consulted the devil. They said they were all happy; that they had lived more than a century, and expected to live many centuries more; and that the intimate knowledge which they possessed of all nature was communicated to them by God himself as a reward for their piety and utter devotion to his service. Those were in error who derived their name from a cross of roses, or called them drunkards. To set the world right on the first point, they reiterated that they derived their name from Christian Rosencreutz, their founder; and, to answer the latter charge, they repeated that they knew not what thirst was, and had higher pleasures than those of the palate. They did not desire to meddle with the politics or religion of any man or set of men, although they could not help denying the supremacy of the Pope, and looking upon him as a tyrant. Many slanders, they said, had been repeated respecting them; the most unjust of which was, that they indulged in carnal appetites, and, under the cloak of their invisibility, crept into the chambers of beautiful maidens. They asserted, on the contrary, that the first vow they took on entering the society was a vow of chastity; and that any one among them who transgressed in that particular would immediately lose all the advantages he enjoyed, and be exposed once more to hunger, woe, disease, and death, like other men. So strongly did they feel on the subject of chastity, that they attributed the fall of Adam solely to his want of this virtue. Besides defending themselves in this manner, they entered into a further confession of their faith. They discarded for ever all the old tales of sorcery and witchcraft, and communion with the devil. They said there were no such horrid, unnatural, and disgusting beings as the incubi and succubi, and the innumerable grotesque imps that men had believed in for so many ages. Man was not surrounded with enemies like these, but with myriads of beautiful and beneficent beings, all anxious to do him service. The air was peopled with sylphs, the water with undines or naiads, the bowels of the earth with gnomes, and the fire with salamanders. All these beings were the friends of man, and desired nothing so much as that men should purge themselves of all uncleanness, and thus be enabled to see and converse with them. They possessed great power, and were unrestrained by the barriers of space or the obstructions of matter. But man was in one particular their superior. He had an immortal soul, and they had not. They might, however, become sharers in man’s immortality, if they could inspire one of that race with the passion of love towards them. Hence it was the constant endeavour of the female spirits to captivate the admiration of men; and of the male gnomes, sylphs, salamanders, and undines, to be beloved by a woman. The object of this passion, in returning their love, imparted a portion of that celestial fire the soul; and from that time forth the beloved became equal to the lover, and both, when their allotted course was run, entered together into the mansions of felicity. These spirits, they said, watched constantly over mankind by night and day. Dreams, omens, and presentiments were all their works, and the means by which they gave warning of the approach of danger. But, though so well inclined to befriend man for their own sakes, the want of a soul rendered them at times capricious and revengeful: they took offence on slight causes, and heaped injuries instead of benefits on the heads of those who extinguished the light of reason that was in them, by gluttony, debauchery, and other appetites of the body.

The excitement produced in Paris by the placards of the brotherhood, and the attacks of the clergy, wore itself away after a few months. The stories circulated about them became at last too absurd even for that age of absurdity, and men began to laugh once more at those invisible gentlemen and their fantastic doctrines. Gabriel Naude at that conjuncture brought out his “Avis a la France sur les Freres de la Rose-croix,” in which he very successfully exposed the folly of the new sect. This work, though not well written, was well timed. It quite extinguished the Rosicrucians of France; and, after that year, little more was heard of them. Swindlers, in different parts of the country, assumed the name at times to cloak their depredations; and now and then one of them was caught, and hanged for his too great ingenuity in enticing pearls and precious stones from the pockets of other people into his own, or for passing off lumps of gilded brass for pure gold, made by the agency of the philosopher’s stone. With these exceptions, oblivion shrouded them.

The doctrine was not confined to a sphere so narrow as France alone; it still flourished in Germany, and drew many converts in England. The latter countries produced two great masters, in the persons of Jacob Bohmen and Robert Fludd; pretended philosophers, of whom it is difficult to say which was the more absurd and extravagant. It would appear that the sect was divided into two classes,– the brothers Roseae Crucis, who devoted themselves to the wonders of this sublunary sphere; and the brothers Aureae Crucis, who were wholly occupied in the contemplation of things Divine. Fludd belonged to the first class, and Bohmen to the second. Fludd may be called the father of the English Rosicrucians, and as such merits a conspicuous niche in the temple of Folly.

He was born in the year 1574, at Milgate, in Kent; and was the son of Sir Thomas Fludd, Treasurer of War to Queen Elizabeth. He was originally intended for the army; but he was too fond of study, and of a disposition too quiet and retiring to shine in that sphere. His father would not, therefore, press him to adopt a course of life for which he was unsuited, and encouraged him in the study of medicine, for which he early manifested a partiality. At the age of twenty-five he proceeded to the Continent; and being fond of the abstruse, the marvellous, and the incomprehensible, he became an ardent disciple of the school of Paracelsus, whom he looked upon as the regenerator, not only of medicine, but of philosophy. He remained six years in Italy, France, and Germany; storing his mind with fantastic notions, and seeking the society of enthusiasts and visionaries. On his return to England, in 1605, he received the degree of Doctor of Medicine from the University of Oxford, and began to practice as a physician in London.

He soon made himself conspicuous. He Latinized his name from Robert Fludd into Robertus a Fluctibus, and began the promulgation of many strange doctrines. He avowed his belief in the philosopher’s stone, the water of life, and the universal alkahest; and maintained that there were but two principles of all things, — which were, condensation, the boreal or northern virtue; and rarefaction, the southern or austral virtue. A number of demons, he said, ruled over the human frame, whom he arranged in their places in a rhomboid. Every disease had its peculiar demon who produced it, which demon could only be combated by the aid of the demon whose place was directly opposite to his in the rhomboidal figure. Of his medical notions we shall have further occasion to speak in another part of this book, when we consider him in his character as one of the first founders of the magnetic delusion, and its offshoot, animal magnetism, which has created so much sensation in our own day.

As if the doctrines already mentioned were not wild enough, he joined the Rosicrucians as soon as they began to make a sensation in Europe, and succeeded in raising himself to high consideration among them. The fraternity having been violently attacked by several German authors, and among others by Libavius, Fludd volunteered a reply, and published, in 1616, his defence of the Rosicrucian philosophy, under the title of the “Apologia, compendiaria, Fraternitatem de Rosea-cruce, Suspicionis et Infamiae maculis aspersam, abluens.” This work immediately procured him great renown upon the Continent, and he was henceforth looked upon as one of the high-priests of the sect. Of so much importance was he considered, that Keppler and Gassendi thought it necessary to refute him; and the latter wrote a complete examination of his doctrine. Mersenne also, the friend of Descartes, and who had defended that philosopher when accused of having joined the Rosicrucians, attacked Dr. a Fluctibus, as he preferred to be called, and showed the absurdity of the brothers of the Rose-cross in general, and of Dr. a Fluctibus in particular. Fluctibus wrote a long reply, in which he called Mersenne an ignorant calumniator, and reiterated that alchymy was a profitable science, and the Rosicrucians worthy to be the regenerators of the world. This book was published at Frankfort, and was entitled “Summum Bonum, quod est Magiae, Cabalae, Alchimiae, Fratrum Roseae-Crucis verorum, et adversus Mersenium Calumniatorem.” Besides this, he wrote several other works upon alchymy, a second answer to Libavius upon the Rosicrucians, and many medical works. He died in London in 1637.

After his time there was some diminution of the sect in England. They excited but little attention, and made no effort to bring themselves into notice. Occasionally, some obscure and almost incomprehensible work made its appearance, to show the world that the folly was not extinguished. Eugenius Philalethes, a noted alchymist, who has veiled his real name under this assumed one, translated “The Fame and Confession of the Brethren of the Rosie Cross,” which was published in London in 1652. A few years afterwards, another enthusiast, named John Heydon, wrote two works on the subject: the one entitled “The Wise Man’s Crown, or the Glory of the Rosie Cross ;” and the other, “The Holy Guide, leading the way to unite Art and Nature, with the Rosie Crosse uncovered.” Neither of these attracted much notice. A third book was somewhat more successful: it was called “A New Method of Rosicrucian Physic; by John Heydon, the servant of God and the secretary of Nature.” A few extracts will show the ideas of the English Rosicrucians about this period. Its author was an attorney, “practising (to use his own words) at Westminster Hall all term times as long as he lived, and in the vacations devoting himself to alchymical and Rosicrucian meditation.” In his preface, called by him an Apologue for an Epilogue, he enlightens the public upon the true history and tenets of his sect. Moses, Elias, and Ezekiel were, he says, the most ancient masters of the Rosicrucian philosophy. Those few then existing in England and the rest of Europe, were as the eyes and ears of the great King of the universe, seeing and hearing all things; seraphically illuminated; companions of the holy company of unbodied souls and immortal angels; turning themselves, Proteus-like, into any shape, and having the power of working miracles. The most pious and abstracted brethren could slack the plague in cities, silence the violent winds and tempests, calm the rage of the sea and rivers, walk in the air, frustrate the malicious aspect of witches, cure all diseases, and turn all metals into gold. He had known in his time two famous brethren of the Rosie Cross, named Walfourd and Williams, who had worked miracles in his sight, and taught him many excellent predictions of astrology and earthquakes. “I desired one of these to tell me,” says he, “whether my complexion were capable of the society of my good genius. ‘When I see you again,’ said he, (which was when he pleased to come to me, for I knew not where to go to him,) ‘I will tell you.’ When I saw him afterwards, he said, ‘You should pray to God; for a good and holy man can offer no greater or more acceptable service to God than the oblation of himself — his soul.’ He said, also, that the good genii were the benign eyes of God, running to and fro in the world, and with love and pity beholding the innocent endeavours of harmless and single-hearted men, ever ready to do them good and to help them.”

Heydon held devoutly true that dogma of the Rosicrucians which said that neither eating nor drinking was necessary to men. He maintained that any one might exist in the same manher as that singular people dwelling near the source of the Ganges, of whom mention was made in the travels of his namesake, Sir Christopher Heydon, who had no mouths, and therefore could not eat, but lived by the breath of their nostrils; except when they took a far journey, and then they mended their diet with the smell of flowers. He said that in really pure air “there was a fine foreign fatness,” with which it was sprinkled by the sunbeams, and which was quite sufficient for the nourishment of the generality of mankind. Those who had enormous appetites he had no objection to see take animal food, since they could not do without it; but he obstinately insisted that there was no necessity why they should eat it. If they put a plaster of nicely-cooked meat upon their epigastrium, it would be sufficient for the wants of the most robust and voracious! They would by that means let in no diseases, as they did at the broad and common gate, the mouth, as any one might see by example of drink; for, all the while a man sat in water, he was never athirst. He had known, he said, many Rosicrucians, who, by applying wine in this manner, had fasted for years together. In fact, quoth Heydon, we may easily fast all our life, though it be three hundred years, without any kind of meat, and so cut off all danger of disease.

This “sage philosopher” further informed his wondering contemporaries that the chiefs of the doctrine always carried about with them to their place of meeting their symbol, called the R.C. which was an ebony cross, flourished and decked with roses of gold; the cross typifying Christ’s sufferings upon the Cross for our sins, and the roses of gold the glory and beauty of his Resurrection. This symbol was carried alternately to Mecca, Mount Calvary, Mount Sinai, Haran, and to three other places, which must have been in mid-air, called Cascle, Apamia, and Chaulateau Virissa Caunuch, where the Rosicrucian brethren met when they pleased, and made resolution of all their actions. They always took their pleasures in one of these places, where they resolved all questions of whatsoever had been done, was done, or should be done, in the world, from the beginning to the end thereof. “And these,” he concludes, “are the men called Rosicrucians

Towards the end of the seventeenth century, more rational ideas took possession of the sect, which still continued to boast of a few members. They appear to have considered that contentment was the true philosopher’s stone, and to have abandoned the insane search for a mere phantom of the imagination. Addison, in “The Spectator,” [No. 574. Friday, July 30th, 1714.] gives an account of his conversation with a Rosicrucian; from which it may be inferred that the sect had grown wiser in their deeds, though in their talk they were as foolish as ever. “I was once,” says he, “engaged in discourse with a Rosicrucian about the great secret. He talked of the secret as of a spirit which lived within an emerald, and converted everything that was near it to the highest perfection that it was capable of. ‘It gives a lustre,’ says he, ‘to the sun, and water to the diamond. It irradiates every metal, and enriches lead with all the properties of gold. It heightens smoke into flame, flame into light, and light into glory.’ He further added ‘that a single ray of it dissipates pain, and care, and melancholy from the person on whom it falls. In short,’ says he, ‘its presence naturally changes every place into a kind of heaven.’ After he had gone on for some time in this unintelligible cant, I found that he jumbled natural and moral ideas together into the same discourse, and that his great secret was nothing else but content.”

JACOB BOHMEN.

It is now time to speak of Jacob Bohmen, who thought he could discover the secret of the transmutation of metals in the Bible, and who invented a strange heterogeneous doctrine of mingled alchymy and religion, and founded upon it the sect of the Aurea-crucians. He was born at Gorlitz, in Upper Lusatia, in 1575; and followed, till his thirtieth year, the occupation of a shoemaker. In this obscurity he remained, with the character of a visionary and a man of unsettled mind, until the promulgation of the Rosicrucian philosophy in his part of Germany, toward the year 1607 or 1608. From that time he began to neglect his leather, and buried his brain under the rubbish of metaphysics. The works of Paracelsus fell into his hands; and these, with the reveries of the Rosicrucians, so completely engrossed his attention that be abandoned his trade altogether, sinking, at the same time, from a state of comparative independence into poverty and destitution. But he was nothing daunted by the miseries and privations of the flesh; his mind was fixed upon the beings of another sphere, and in thought he was already the new apostle of the human race. In the year 1612, after a meditation of four years, he published his first work, entitled “Aurora; or, The Rising of the Sun;” embodying the ridiculous notions of Paracelsus, and worse confounding the confusion of that writer. The philosopher’s stone might, he contended, be discovered by a diligent search of the Old and New Testaments, and more especially of the Apocalypse, which alone contained all the secrets of alchymy. He contended that the Divine Grace operated by the same rules, and followed the same methods, that the Divine Providence observed in the natural world; and that the minds of men were purged from their vices and corruptions in the very same manner that metals were purified from their dross, namely, by fire.

Besides the sylphs, gnomes, undines, and salamanders, he acknowledged various ranks and orders of demons. He pretended to invisibility and absolute chastity. He also said that, if it pleased him, he could abstain for years from meat and drink, and all the necessities of the body. It is needless, however, to pursue his follies any further. He was reprimanded for writing this work by the magistrates of Gorlitz, and commanded to leave the pen alone and stick to his wax, that his family might not become chargeable to the parish. He neglected this good advice, and continued his studies; burning minerals and purifying metals one day, and mystifying the Word of God on the next. He afterwards wrote three other works, as sublimely ridiculous as the first. The one was entitled “Metallurgia,” and has the slight merit of being the least obscure of his compositions. Another was called “The Temporal Mirror of Eternity ;” and the last his “Theosophy revealed,” full of allegories and metaphors,

“All strange and geason, Devoid of sense and ordinary reason.”

Bohmen died in 1624, leaving behind him a considerable number of admiring disciples. Many of them became, during the seventeenth century, as distinguished for absurdity as their master; amongst whom may be mentioned Gifftheil, Wendenhagen, John Jacob Zimmermann, and Abraham Frankenberg. Their heresy rendered them obnoxious to the Church of Rome; and many of them suffered long imprisonment and torture for their faith. One, named Kuhlmann, was burned alive at Moscow, in 1684, on a charge of sorcery. Bohmen’s works were translated into English, and published, many years afterwards by an enthusiast, named William Law.

MORMIUS.

Peter Mormius, a notorious alchymist, and contemporary of Bohmen, endeavoured, in 1630, to introduce the Rosicrucian philosophy into Holland. He applied to the States-General to grant him a public audience, that he might explain the tenets of the sect, and disclose a plan for rendering Holland the happiest and richest country on the earth, by means of the philosopher’s’ stone and the service of the elementary spirits. The States-General wisely resolved to have nothing to do with him. He thereupon determined to shame them by printing his book, which he did at Leyden the same year. It was entitled “The Book of the most Hidden Secrets of Nature,” and was divided into three parts; the first treating of “perpetual motion,” the second of the “transmutation of metals,” and the third of the “universal medicine.” He also published some German works upon the Rosicrucian philosophy, at Frankfort, in 1617.

BORRI.

Just at the time that Michael Mayer was making known to the world the existence of such a body as the Rosicrucians, there was born in Italy a man who was afterwards destined to become the most conspicuous member of the fraternity. The alchymic mania never called forth the ingenuity of a more consummate or more successful impostor than Joseph Francis Borri. He was born in 1616 according to some authorities, and in 1627 according to others, at Milan; where his father, the Signor Branda Borri, practised as a physician. At the age of sixteen, Joseph was sent to finish his education at the Jesuits’ College in Rome, where he distinguished himself by his extraordinary memory. He learned everything to which he applied himself with the utmost ease. In the most voluminous works no fact was too minute for his retention, and no study was so abstruse but that he could master it; but any advantages he might have derived from this facility, were neutralized by his ungovernable passions and his love of turmoil and debauchery. He was involved in continual difficulty, as well with the heads of the college as with the police of Rome, and acquired so bad a character that years could not remove it. By the aid of his friends he established himself as a physician in Rome, and also obtained some situation in the Pope’s household. In one of his fits of studiousness he grew enamoured of alchymy, and determined to devote his energies to the discovery of the philosopher’s stone. Of unfortunate propensities he had quite sufficient, besides this, to bring him to poverty. His pleasures were as expensive as his studies, and both were of a nature to destroy his health and ruin his fair fame. At the age of thirty-seven he found that he could not live by the practice of medicine, and began to look about for some other employment. He became, in 1653, private secretary to the Marquis di Mirogli, the minister of the Archduke of Innspruk at the court of Rome. He continued in this capacity for two years; leading, however, the same abandoned life as heretofore, frequenting the society of gamesters, debauchees, and loose women, involving himself in disgraceful street quarrels, and alienating the patrons who were desirous to befriend him.

All at once a sudden change was observed in his conduct. The abandoned rake put on the outward sedateness of a philosopher; the scoffing sinner proclaimed that he had forsaken his evil ways, and would live thenceforth a model of virtue. To his friends this reformation was as pleasing as it was unexpected; and Borri gave obscure hints that it had been brought about by some miraculous manifestation of a superior power. He pretended that he held converse with beneficent spirits; that the secrets of God and nature were revealed to him; and that he had obtained possession of the philosopher’s stone. Like his predecessor, Jacob Bohmen, he mixed up religious questions with his philosophical jargon, and took measures for declaring himself the founder of a new sect. This, at Rome itself, and in the very palace of the Pope, was a hazardous proceeding; and Borri just awoke to a sense of it in time to save himself from the dungeons of the Castle of St. Angelo. He fled to Innspruck, where he remained about a year, and then returned to his native city of Milan.

The reputation of his great sanctity had gone before him; and he found many persons ready to attach themselves to his fortunes. All who were desirous of entering into the new communion took an oath of poverty, and relinquished their possessions for the general good of the fraternity. Borri told them that he had received from the archangel Michael a heavenly sword, upon the hilt of which were engraven the names of the seven celestial Intelligences. “Whoever shall refuse,” said he, “to enter into my new sheepfold, shall be destroyed by the papal armies, of whom God has predestined me to be the chief. To those who follow me, all joy shall be granted. I shall soon bring my chemical studies to a happy conclusion by the discovery of the philosopher’s stone, and by this means we shall all have as much gold as we desire. I am assured of the aid of the angelic hosts, and more especially of the archangel Michael’s. When I began to walk in the way of the spirit, I had a vision of the night, and was assured by an angelic voice that I should become a prophet. In sign of it I saw a palm-tree, surrounded with all the glory of Paradise. The angels come to me whenever I call, and reveal to me all the secrets of the universe. The sylphs and elementary spirits obey me, and fly to the uttermost ends of the world to serve me, and those whom I delight to honour.” By force of continually repeating such stories as these, Borri soon found himself at the head of a very considerable number of adherents. As he figures in these pages as an alchymist, and not as a religious sectarian, it will be unnecessary to repeat the doctrines which he taught with regard to some of the dogmas of the Church of Rome, and which exposed him to the fierce resentment of the papal authority. They were to the full as ridiculous as his philosophical pretensions. As the number of his followers increased, he appears to have cherished the idea of becoming one day a new Mahomet, and of founding, in his native city of Milan, a monarchy and religion of which he should be the king and the prophet. He had taken measures, in the year 1658, for seizing the guards at all the gates of that city, and formally declaring himself the monarch of the Milanese. Just as he thought the plan ripe for execution, it was discovered. Twenty of his followers were arrested, and he himself managed, with the utmost difficulty, to escape to the neutral territory of Switzerland, where the papal displeasure could not reach him.

The trial of his followers commenced forthwith, and the whole of them were sentenced to various terms of imprisonment. Borri’s trial proceeded in his absence, and lasted for upwards of two years. He was condemned to death as a heretic and sorcerer in 1661, and was burned in effigy in Rome by the common hangman.

Borri, in the mean time, lived quietly in Switzerland, indulging himself in railing at the Inquisition and its proceedings. He afterwards went to Strasbourg, intending to fix his residence in that town. He was received with great cordiality, as a man persecuted for his religious opinions, and withal a great alchymist. He found that sphere too narrow for his aspiring genius, and retired in the same year to the more wealthy city of Amsterdam. He there hired a magnificent house, established an equipage which eclipsed in brilliancy those of the richest merchants, and assumed the title of Excellency. Where he got the money to live in this expensive style was long a secret: the adepts in alchymy easily explained it, after their fashion. Sensible people were of opinion that be had come by it in a less wonderful manner; for it was remembered that, among his unfortunate disciples in Milan, there were many rich men, who, in conformity with one of the fundamental rules of the sect, had given up all their earthly wealth into the hands of their founder. In whatever manner the money was obtained, Borri spent it in Holland with an unsparing hand, and was looked up to by the people with no little respect and veneration. He performed several able cures, and increased his reputation so much that he was vaunted as a prodigy. He continued diligently the operations of alchymy, and was in daily expectation that he should succeed in turning the inferior metals into gold. This hope never abandoned him, even in the worst extremity of his fortunes; and in his prosperity it led him into the most foolish expenses: but he could not long continue to live so magnificently upon the funds he had brought from Italy; and the philosopher’s stone, though it promised all for the wants of the morrow, never brought anything for the necessities of to-day. He was obliged in a few months to retrench, by giving up his large house, his gilded coach, and valuable blood-horses, his liveried domestics, and his luxurious entertainments. With this diminution of splendour came a diminution of renown. His cures did not appear so miraculous, when he went out on foot to perform them, as they had seemed when “his Excellency” had driven to a poor man’s door in his carriage with six horses. He sank from a prodigy into an ordinary man. His great friends showed him the cold shoulder, and his humble flatterers carried their incense to some other shrine. Borri now thought it high time to change his quarters. With this view he borrowed money wherever he could get it, and succeeded in obtaining two hundred thousand florins from a merchant, named De Meer, to aid, as he said, in discovering the water of life. He also obtained six diamonds, of great value, on pretence that he could remove the flaws from them without diminishing their weight. With this booty he stole away secretly by night, and proceeded to Hamburgh.

On his arrival in that city, he found the celebrated Christina, the ex-Queen of Sweden. He procured an introduction to her, and requested her patronage in his endeavour to discover the philosopher’s stone. She gave him some encouragement; but Borri, fearing that the merchants of Amsterdam, who had connexions in Hamburgh, might expose his delinquencies if he remained in the latter city, passed over to Copenhagen, and sought the protection of Frederic III, the King of Denmark.

This Prince was a firm believer in the transmutation of metals. Being in want of money, he readily listened to the plans of an adventurer who had both eloquence and ability to recommend him. He provided Borri with the means to make experiments, and took a great interest in the progress of his operations. He expected every month to possess riches that would buy Peru; and, when he was disappointed, accepted patiently the excuses of Borri who, upon every failure, was always ready with some plausible explanation. He became, in time, much attached to him; and defended him from the jealous attacks of his courtiers, and the indignation of those who were grieved to see their monarch the easy dupe of a charlatan. Borri endeavoured, by every means in his power, to find aliment for this good opinion. His knowledge of medicine was useful to him in this respect, and often stood between him and disgrace. He lived six years in this manner at the court of Frederic; but that monarch dying in 1670, he was left without a protector.

As he had made more enemies than friends in Copenhagen, and had nothing to hope from the succeeding sovereign, he sought an asylum in another country. He went first to Saxony; but met so little encouragement, and encountered so much danger from the emissaries of the Inquisition, that he did not remain there many months. Anticipating nothing but persecution in every country that acknowledged the spiritual authority of the Pope, he appears to have taken the resolution to dwell in Turkey, and turn Mussulman. On his arrival at the Hungarian frontier, on his way to Constantinople, he was arrested on suspicion of being concerned in the conspiracy of the Counts Nadasdi and Frangipani, which had just been discovered. In vain he protested his innocence, and divulged his real name and profession. He was detained in prison, and a letter despatched to the Emperor Leopold to know what should be done with him. The star of his fortunes was on the decline. The letter reached Leopold at an unlucky moment. The Pope’s Nuncio was closeted with his Majesty; and he no sooner heard the name of Joseph Francis Borri, than he demanded him as a prisoner of the Holy See. The request was complied with; and Borri, closely manacled, was sent under an escort of soldiers to the prison of the Inquisition at Rome. He was too much of an impostor to be deeply tinged with fanaticism, and was not unwilling to make a public recantation of his heresies if he could thereby save his life. When the proposition was made to him, he accepted it with eagerness. His punishment was to be commuted into the hardly less severe one of perpetual imprisonment; but he was too happy to escape the clutch of the executioner at any price, and he made the amende honorable in face of the assembled multitudes of Rome on the 27th of October 1672. He was then transferred to the prisons of the Castle of St. Angelo, where he remained till his death, twenty-three years afterwards. It is said that, towards the close of his life, considerable indulgence was granted him; that he was allowed to have a laboratory, and to cheer the solitude of his dungeon by searching for the philosopher’s stone. Queen Christina, during her residence at Rome, frequently visited the old man, to converse with him upon chemistry and the doctrines of the Rosicrucians. She even obtained permission that he should leave his prison occasionally for a day or two, and reside in her palace, she being responsible for his return to captivity. She encouraged him to search for the great secret of the alchymists, and provided him with money for the purpose. It may well be supposed that Borri benefited most by this acquaintance, and that Christina got nothing but experience. It is not sure that she gained even that; for, until her dying day, she was convinced of the possibility of finding the philosopher’s stone, and ready to assist any adventurer either zealous or impudent enough to pretend to it.

After Borri had been about eleven years in confinement, a small volume was published at Cologne, entitled “The Key of the Cabinet of the Chevalier Joseph Francis Borri; in which are contained many curious Letters upon Chemistry and other Sciences, written by him; together with a Memoir of his Life.” This book contained a complete exposition of the Rosicrucian philosophy, and afforded materials to the Abbe de Villars for his interesting “Count de Gabalis,” which excited so much attention at the close of the seventeenth century.

Borri lingered in the prison of St. Angelo till 1695, when he died in his eightieth year. Besides “The Key of the Cabinet,” written originally in Copenhagen, in 1666, for the edification of King Frederic III, he published a work upon alchymy and the secret sciences, under the title of “The Mission of Romulus to the Romans.”

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A Gold Classics Library Selection

Extraordinary Popular Delusions And The Madness Of Crowds

The Alchemists; or, Searchers for the Philosopher’s Stone and the Water of Life

by Charles Mackay

Introduction
The Mississippi Scheme
The South Sea Bubble
The Tulipomania
The Alchemists, part 1
The Alchemists, part 2
The Alchemists, part 3

“Mercury (loquitur). — The mischief a secret any of them know, above the consuming of coals and drawing of usquebaugh! Howsoever they may pretend, under the specious names of Geber, Arnold, Lulli, or bombast of Hohenheim, to commit miracles in art, and treason against nature! As if the title of philosopher, that creature of glory, were to be fetched out of a furnace! I am their crude, and their sublimate, their precipitate, and their unctions; their male and their female, sometimes their hermaphrodite — what they list to style me! They will calcine you a grave matron, as it might be a mother of the maids, and spring up a young virgin out of her ashes, as fresh as a phoenix; lay you an old courtier on the coals, like a sausage or a bloat-herring, and, after they have broiled him enough, blow a soul into him, with a pair of bellows! See! they begin to muster again, and draw their forces out against me! The genius of the place defend me!” — Ben Jonson’s Masque: Mercury vindicated from the Alchymists.

Dissatisfaction with his lot seems to be the characteristic of man in all ages and climates. So far, however, from being an evil, as at first might be supposed, it has been the great civiliser of our race; and has tended, more than anything else, to raise us above the condition of the brutes. But the same discontent which has been the source of all improvement, has been the parent of no small progeny of follies and absurdities; to trace these latter is the object of the present volume. Vast as the subject appears, it is easily reducible within such limits as will make it comprehensive without being wearisome, and render its study both instructive and amusing.

Three causes especially have excited our discontent; and, by impelling us to seek for remedies for the irremediable, have bewildered us in a maze of madness and error. These are death, toil, and ignorance of the future — the doom of man upon this sphere, and for which he shows his antipathy by his love of life, his longing for abundance, and his craving curiosity to pierce the secrets of the days to come. The first has led many to imagine that they might find means to avoid death, or, failing in this, that they might, nevertheless, so prolong existence as to reckon it by centuries instead of units. From this sprang the search, so long continued and still pursued, for the elixir vitae, or water of life, which has led thousands to pretend to it and millions to believe in it. From the second sprang the absurd search for the philosopher’s stone, which was to create plenty by changing all metals into gold; and from the third, the false sciences of astrology, divination, and their divisions of necromancy, chiromancy, augury, with all their train of signs, portents, and omens.

In tracing the career of the erring philosophers, or the wilful cheats, who have encouraged or preyed upon the credulity of mankind, it will simplify and elucidate the subject, if we divide it into three classes: — the first comprising alchymists, or those in general who have devoted themselves to the discovering of the philosopher’s stone and the water of life; the second comprising astrologers, necromancers, sorcerers, geomancers, and all those who pretended to discover futurity; and the third consisting of the dealers in charms, amulets, philters, universal-panacea mongers, touchers for the evil, seventh sons of a seventh son, sympathetic powder compounders, homeopathists, animal magnetizers, and all the motley tribe of quacks, empirics, and charlatans.

But, in narrating the career of such men, it will be found that many of them united several or all of the functions just mentioned; that the alchymist was a fortune-teller, or a necromancer — that he pretended to cure all maladies by touch or charm, and to work miracles of every kind. In the dark and early ages of European history, this is more especially the case. Even as we advance to more recent periods, we shall find great difficulty in separating the characters. The alchymist seldom confined himself strictly to his pretended science — the sorcerer and necromancer to theirs, or the medical charlatan to his. Beginning with alchymy, some confusion of these classes is unavoidable; but the ground will clear for us as we advance.

Let us not, in the pride of our superior knowledge, turn with contempt from the follies of our predecessors. The study of the errors into which great minds have fallen in the pursuit of truth can never be uninstructive. As the man looks back to the days of his childhood and his youth, and recalls to his mind the strange notions and false opinions that swayed his actions at that time, that he may wonder at them, so should society, for its edification, look back to the opinions which governed the ages fled. He is but a superficial thinker who would despise and refuse to hear of them merely because they are absurd. No man is so wise but that he may learn some wisdom from his past errors, either of thought or action, and no society has made such advances as to be capable of no improvement from the retrospect of its past folly and credulity. And not only is such a study instructive: he who reads for amusement only, will find no chapter in the annals of the human mind more amusing than this. It opens out the whole realm of fiction — the wild, the fantastic, and the wonderful, and all the immense variety of things “that are not, and cannot be; but that have been imagined and believed.”

HISTORY OF ALCHYMY FROM THE EARLIEST PERIODS TO THE FIFTEENTH CENTURY.

For more than a thousand years the art of alchymy captivated many noble spirits, and was believed in by millions. Its origin is involved in obscurity. Some of its devotees have claimed for it an antiquity coeval with the creation of man himself; others, again, would trace it no further back than the time of Noah. Vincent de Beauvais argues, indeed, that all the antediluvians must have possessed a knowledge of alchymy; and particularly cites Noah as having been acquainted with the elixir vitae, or he could not have lived to so prodigious an age, and have begotten children when upwards of five hundred. Lenglet du Fresnoy, in his History of the Hermetic Philosophy, says, “Most of them pretended that Shem, or Chem, the son of Noah, was an adept in the art, and thought it highly probable that the words chemistry and alchymy were both derived from his name.” Others say, the art was derived from the Egyptians, amongst whom it was first founded by Hermes Trismegistus. Moses, who is looked upon as a first-rate alchymist, gained his knowledge in Egypt; but he kept it all to himself, and would not instruct the children of Israel in its mysteries. All the writers upon alchymy triumphantly cite the story of the golden calf, in the 32nd chapter of Exodus, to prove that this great lawgiver was an adept, and could make or unmake gold at his pleasure. It is recorded, that Moses was so wroth with the Israelites for their idolatry, “that he took the calf which they had made, and burned it in the fire, and ground it to powder, and strewed it upon the water, and made the children of Israel drink of it.” This, say the alchymists, he never could have done, had he not been in possession of the philosopher’s stone; by no other means could he have made the powder of gold float upon the water. But we must leave this knotty point for the consideration of the adepts in the art, if any such there be, and come to more modern periods of its history. The Jesuit, Father Martini, in his Historia Sinica, says, it was practised by the Chinese two thousand five hundred years before the birth of Christ; but his assertion, being unsupported, is worth nothing. It would appear, however, that pretenders to the art of making gold and silver existed in Rome in the first centuries after the Christian era, and that, when discovered, they were liable to punishment as knaves and impostors. At Constantinople, in the fourth century, the transmutation of metals was very generally believed in, and many of the Greek ecclesiastics wrote treatises upon the subject. Their names are preserved, and some notice of their works given, in the third volume of Lenglet du Fresnoy’s History of the Hermetic Philosophy. Their notion appears to have been, that all metals were composed of two substances; the one, metallic earth; and the other, a red inflammable matter, which they called sulphur. The pure union of these substances formed gold; but other metals were mixed with and contaminated by various foreign ingredients. The object of the philosopher’s stone was to dissolve or neutralize all these ingredients, by which iron, lead, copper, and all metals would be transmuted into the original gold. Many learned and clever men wasted their time, their health, and their energies, in this vain pursuit; but for several centuries it took no great hold upon the imagination of the people. The history of the delusion appears, in a manner, lost from this time till the eighth century, when it appeared amongst the Arabians. From this period it becomes easier to trace its progress. A master then appeared, who was long looked upon as the father of the science, and whose name is indissolubly connected with it.

GEBER.

Of this philosopher, who devoted his life to the study of alchymy, but few particulars are known. He is thought to have lived in the year 730. His true name was Abou Moussah Djafar, to which was added Al Soft, or “The Wise,” and he was born at Hauran, in Mesopotamia. [Biographie Universelle.] Some have thought he was a Greek, others a Spaniard, and others, a prince of Hindostan: but, of all the mistakes which have been made respecting him, the most ludicrous was that made by the French translator of Sprenger’s “History of Medicine,” who thought, from the sound of his name, that he was a German, and rendered it as the “Donnateur,” or Giver. No details of his life are known; but it is asserted, that he wrote more than five hundred works upon the philosopher’s stone and the water of life. He was a great enthusiast in his art, and compared the incredulous to little children shut up in a narrow room, without windows or aperture, who, because they saw nothing beyond, denied the existence of the great globe itself. He thought that a preparation of gold would cure all maladies, not only in man, but in the inferior animals and plants. He also imagined that all the metals laboured under disease, with the exception of gold, which was the only one in perfect health. He affirmed, that the secret of the philosopher’s stone had been more than once discovered; but that the ancient and wise men who had hit upon it, would never, by word or writing, communicate it to men, because of their unworthiness and incredulity. [His “sum of perfection,” or instructions to students to aid them in the laborious search for the stone and elixir, has been translated into most of the languages of Europe. An English translation, by a great enthusiast in alchymy, one Richard Russell, was published in London in 1686. The preface is dated eight years previously, from the house of the alchymist, “at the Star, in Newmarket, in Wapping, near the Dock.” His design in undertaking the translation was, as he informs us, to expose the false pretences of the many ignorant pretenders to the science who abounded in his day.] But the life of Geber, though spent in the pursuit of this vain chimera, was not altogether useless. He stumbled upon discoveries which he did not seek, and science is indebted to him for the first mention of corrosive sublimate, the red oxide of mercury, nitric acid, and the nitrate of silver. [Article, Geber, Biographie Universelle.]

For more than two hundred years after the death of Geber, the Arabian philosophers devoted themselves to the study of alchymy, joining with it that of astrology. Of these the most celebrated was

ALFARABI.

Alfarabi flourished at the commencement of the tenth century, and enjoyed the reputation of being one of the most learned men of his age. He spent his life in travelling from country to country, that he might gather the opinions of philosophers upon the great secrets of nature. No danger dismayed him; no toil wearied him of the pursuit. Many sovereigns endeavoured to retain him at their courts; but he refused to rest until he had discovered the great object of his life — the art of preserving it for centuries, and of making gold as much as he needed. This wandering mode of life at last proved fatal to him. He had been on a visit to Mecca, not so much for religious as for philosophical purposes, when, returning through Syria, he stopped at the court of the Sultan Seifeddoulet, who was renowned as the patron of learning. He presented himself in his travelling attire, in the presence of that monarch and his courtiers; and, without invitation, coolly sat himself down upon the sofa, beside the Prince. The courtiers and wise men were indignant; and the Sultan, who did not know the intruder, was at first inclined to follow their example. He turned to one of his officers, and ordered him to eject the presumptuous stranger from the room; but Alfarabi, without moving, dared them to lay hands upon him; and, turning himself calmly to the prince, remarked, that he did not know who was his guest, or he would treat him with honour, not with violence. The Sultan, instead of being still further incensed, as many potentates would have been, admired his coolness; and, requesting him to sit still closer to him on the sofa, entered into a long conversation with him upon science and divine philosophy. All the court were charmed with the stranger. Questions for discussion were propounded, on all of which he showed superior knowledge. He convinced every one that ventured to dispute with him; and spoke so eloquently upon the science of alchymy, that he was at once recognised as only second to the great Geber himself. One of the doctors present inquired whether a man who knew so many sciences was acquainted with music? A1farabi made no reply, but merely requested that a lute should be brought him. The lute was brought; and he played such ravishing and tender melodies, that all the court were melted into tears. He then changed his theme, and played airs so sprightly, that he set the grave philosophers, Sultan and all, dancing as fast as their legs could carry them. He then sobered them again by a mournful strain, and made them sob and sigh as if broken-hearted. The Sultan, highly delighted with his powers, entreated him to stay, offering him every inducement that wealth, power, and dignity could supply; but the alchymist resolutely refused, it being decreed, he said, that he should never repose till he had discovered the philosopher’s stone. He set out accordingly the same evening, and was murdered by some thieves in the deserts of Syria. His biographers give no further particulars of his life beyond mentioning, that he wrote several valuable treatises on his art, all of which, however, have been lost. His death happened in the year 954.

AVICENNA.

Avicenna, whose real name was Ebn Cinna, another great alchymist, was born at Bokhara, in 980. His reputation as a physician and a man skilled in all sciences was so great, that the Sultan Magdal Douleth resolved to try his powers in the great science of government. He was accordingly made Grand Vizier of that Prince, and ruled the state with some advantage: but, in a science still more difficult, he failed completely. He could not rule his own passions, but gave himself up to wine and women, and led a life of shameless debauchery. Amid the multifarious pursuits of business and pleasure, he nevertheless found time to write seven treatises upon the philosopher’s stone, which were for many ages looked upon as of great value by pretenders to the art. It is rare that an eminent physician, as Avicenna appears to have been, abandons himself to sensual gratification; but so completely did he become enthralled in the course of a few years, that he was dismissed from his high office, and died shortly afterwards, of premature old age and a complication of maladies, brought on by debauchery. His death took place in the year 1036. After his time, few philosophers of any note in Arabia are heard of as devoting themselves to the study of alchymy; but it began shortly afterwards to attract greater attention in Europe. Learned men in France, England, Spain, and Italy expressed their belief in the science, and many devoted their whole energies to it. In the twelfth and thirteenth centuries especially, it was extensively pursued, and some of the brightest names of that age are connected with it. Among the most eminent of them are

ALBERTUS MAGNUS and THOMAS AQUINAS.

The first of these philosophers was born in the year 1193, of a noble family at Lawingen, in the duchy of Neuburg, on the Danube. For the first thirty years of his life, he appeared remarkably dull and stupid, and it was feared by every one that no good could come of him. He entered a Dominican monastery at an early age; but made so little progress in his studies, that he was more than once upon the point of abandoning them in despair; but he was endowed with extraordinary perseverance. As he advanced to middle age, his mind expanded, and he learned whatever he applied himself to with extreme facility. So remarkable a change was not, in that age, to be accounted for but by a miracle. It was asserted and believed that the Holy Virgin, touched with his great desire to become learned and famous, took pity upon his incapacity, and appeared to him in the cloister where he sat, almost despairing, and asked him whether he wished to excel in philosophy or divinity. He chose philosophy, to the chagrin of the Virgin, who reproached him in mild and sorrowful accents that he had not made a better choice. She, however, granted his request that he should become the most excellent philosopher of the age; but set this drawback to his pleasure, that he should relapse, when at the height of his fame, into his former incapacity and stupidity. Albertus never took the trouble to contradict the story, but prosecuted his studies with such unremitting zeal that his reputation speedily spread over all Europe. In the year 1244, the celebrated Thomas Aquinas placed himself under his tuition. Many extraordinary stories are told of the master and his pupil. While they paid all due attention to other branches of science, they never neglected the pursuit of the philosopher’s stone and the elixir vitae. Although they discovered neither, it was believed that Albert had seized some portion of the secret of life, and found means to animate a brazen statue, upon the formation of which, under proper conjunctions of the planets, he had been occupied many years of his life. He and Thomas Aquinas completed it together, endowed it with the faculty of speech, and made it perform the functions of a domestic servant. In this capacity it was exceedingly useful; but, through some defect in the machinery, it chattered much more than was agreeable to either philosopher. Various remedies were tried to cure it of its garrulity, but in vain; and one day Thomas Aquinas was so enraged at the noise it made, when he was in the midst of a mathematical problem, that he seized a ponderous hammer and smashed it to pieces. [Naude, Apologie des Grands Hommes accuses de Magie ;” chap. xviii.] He was sorry afterwards for what he had done, and was reproved by his master for giving way to his anger, so unbecoming in a philosopher. They made no attempt to re-animate the statue.

Such stories as these show the spirit of the age. Every great man who attempted to study the secrets of nature was thought a magician; and it is not to be wondered at that, when philosophers themselves pretended to discover an elixir for conferring immortality, or a red stone which was to create boundless wealth, that popular opinion should have enhanced upon their pretensions, and have endowed them with powers still more miraculous. It was believed of Albertus Magnus that he could even change the course of the seasons; a feat which the many thought less difficult than the discovery of the grand elixir. Albertus was desirous of obtaining a piece of ground on which to build a monastery, in the neighbourhood of Cologne. The ground belonged to William, Count of Holland and King of the Romans, who, for some reason or other, did not wish to part with it. Albertus is reported to have gained it by the following extraordinary method: — He invited the Prince, as he was passing through Cologne, to a magnificent entertainment prepared for him and all his court. The Prince accepted it, and repaired with a lordly retinue to the residence of the sage. It was in the midst of winter; the Rhine was frozen over, and the cold was so bitter that the knights could not sit on horseback without running the risk of losing their toes by the frost. Great, therefore, was their surprise, on arriving at Albert’s house, to find that the repast was spread in his garden, in which the snow had drifted to the depth of several feet. The Earl,in high dudgeon, remounted his steed; but Albert at last prevailed upon him to take his seat at the table. He had no sooner done so, than the dark clouds rolled away from the sky — a warm sun shone forth — the cold north wind veered suddenly round, and blew a mild breeze from the south — the snows melted away — the ice was unbound upon the streams, and the trees put forth their green leaves and their fruit — flowers sprang up beneath their feet, while larks, nightingales, blackbirds, cuckoos, thrushes, and every sweet song-bird, sang hymns from every tree. The Earl and his attendants wondered greatly; but they ate their dinner, and in recompence for it, Albert got his piece of ground to build a convent on. He had not, however, shown them all his power. Immediately that the repast was over, he gave the word, and dark clouds obscured the sun — the snow fell in large flakes — the singing-birds fell dead — the leaves dropped from the trees, and the winds blew so cold, and howled so mournfully, that the guests wrapped themselves up in their thick cloaks, and retreated into the house to warm themselves at the blazing fire in Albert’s kitchen. [Lenglet, Histoire de la Philosophie Hermetique. See also, Godwin’s Lives of the Necromancers.]

Thomas Aquinas also could work wonders as well as his master. It is related of him, that he lodged in a street at Cologne, where he was much annoyed by the incessant clatter made by the horses’ hoofs, as they were led through it daily to exercise by their grooms. He had entreated the latter to select some other spot where they might not disturb a philosopher, but the grooms turned a deaf ear to all his solicitations. In this emergency he had recourse to the aid of magic. He constructed a small horse of bronze, upon which he inscribed certain cabalistic characters, and buried it at midnight in the midst of the highway. The next morning, a troop of grooms came riding along as usual; but the horses, as they arrived at the spot where the magic horse was buried, reared and plunged violently — their nostrils distended with terror — their manes grew erect, and the perspiration ran down their sides in streams. In vain the riders applied the spur — in vain they coaxed or threatened, the animals would not pass the spot. On the following day, their success was no better. They were at length compelled to seek another spot for their exercise, and Thomas Aquinas was left in peace. [Naude, Apologie des Grands Hommes accuses de Magie; chap. xvii.]

Albertus Magnus was made Bishop of Ratisbon in 1259; but he occupied the See only four years, when he resigned, on the ground that its duties occupied too much of the time which he was anxious to devote to philosophy. He died in Cologne in 1280, at the advanced age of eighty-seven. The Dominican writers deny that he ever sought the philosopher’s stone, but his treatise upon minerals sufficiently proves that he did.

ARTIPHEUS

Artephius, a name noted in the annals of alchymy, was born in the early part of the twelfth century. He wrote two famous treatises; the one upon the philosopher’s stone, and the other on the art of prolonging human life. In the latter he vaunts his great qualifications for instructing mankind on such a matter, as he was at that time in the thousand and twenty-fifth year of his age! He had many disciples who believed in his extreme age, and who attempted to prove that he was Apollonius of Tyana, who lived soon after the advent of Jesus Christ, and the particulars of whose life and pretended miracles have been so fully described by Philostratus. He took good care never to contradict a story, which so much increased the power he was desirous of wielding over his fellow-mortals. On all convenient occasions, he boasted of it; and having an excellent memory, a fertile imagination, and a thorough knowledge of all existing history, he was never at a loss for an answer when questioned as to the personal appearance, the manners, or the character of the great men of antiquity. He also pretended to have found the philosopher’s stone; and said that, in search of it, he had descended to hell, and seen the devil sitting on a throne of gold, with a legion of imps and fiends around him. His works on alchymy have been translated into French, and were published in Paris in 1609 or 1610.

ALAIN DE LISLE.

Contemporary with Albertus Magnus was Alain de Lisle, of Flanders, who was named, from his great learning, the “universal doctor.” He was thought to possess a knowledge of all the sciences, and, like Artephius, to have discovered the elixir vitae. He became one of the friars of the abbey of Citeaux, and died in 1298, aged about one hundred and ten years. It was said of him, that he was at the point of death when in his fiftieth year; but that the fortunate discovery of the elixir enabled him to add sixty years to his existence. He wrote a commentary on the prophecies of Merlin.

ARNOLD DE VILLENEUVE.

This philosopher has left a much greater reputation. He was born in the year 1245, and studied medicine with great success in the University of Paris. He afterwards travelled for twenty years in Italy and Germany, where he made acquaintance with Pietro d’Apone; a man of a character akin to his own, and addicted to the same pursuits. As a physician, he was thought, in his own lifetime, to be the most able the world had ever seen. Like all the learned men of that day, he dabbled in astrology and alchymy, and was thought to have made immense quantities of gold from lead and copper. When Pietro d’Apone was arrested in Italy, and brought to trial as a sorcerer, a similar accusation was made against Arnold; but he managed to leave the country in time and escape the fate of his unfortunate friend. He lost some credit by predicting the end of the world, but afterwards regained it. The time of his death is not exactly known; but it must have been prior to the year 1311, when Pope Clement V. wrote a circular letter to all the clergy of Europe who lived under his obedience, praying them to use their utmost efforts to discover the famous treatise of Arnold on “The Practice of Medicine.” The author had promised, during his lifetime, to make a present of the work to the Holy See, but died without fulfilling it.

In a very curious work by Monsieur Longeville Harcouet, entitled “The History of the Persons who have lived several centuries, and then grown young again,” there is a receipt, said to have been given by Arnold de Villeneuve, by means of which any one might prolong his life for a few hundred years or so. In the first place, say Arnold and Monsieur Harcouet, “the person intending so to prolong his life must rub himself well, two or three times a week, with the juice or marrow of cassia (moelle de la casse). Every night, upon going to bed, he must put upon his heart a plaster, composed of a certain quantity of Oriental saffron, red rose-leaves, sandal-wood, aloes, and amber, liquified in oil of roses and the best white wax. In the morning, he must take it off, and enclose it carefully in a leaden box till the next night, when it must be again applied. If he be of a sanguine temperament, he shall take sixteen chickens — if phlegmatic, twenty-five — and if melancholy, thirty, which he shall put into a yard where the air and the water are pure. Upon these he is to feed, eating one a day; but previously the chickens are to be fattened by a peculiar method, which will impregnate their flesh with the qualities that are to produce longevity in the eater. Being deprived of all other nourishment till they are almost dying of hunger, they are to be fed upon broth made of serpents and vinegar, which broth is to be thickened with wheat and bran.” Various ceremonies are to be performed in the cooking of this mess, which those may see in the book of M. Harcouet, who are at all interested in the matter; and the chickens are to be fed upon it for two months. They are then fit for table, and are to be washed down with moderate quantities of good white wine or claret. This regimen is to be followed regularly every seven years, and any one may live to be as old as Methuselah! It is right to state, that M. Harcouet has but little authority for attributing this precious composition to Arnold of Villeneuve. It is not to be found in the collected works of that philosopher; but was first brought to light by a M. Poirier, at the commencement of the sixteenth century, who asserted that he had discovered it in MS. in the undoubted writing of Arnold.

PIETRO D’APONE.

This unlucky sage was born at Apone, near Padua, in the year 1250. Like his friend Arnold de Villeneuve, he was an eminent physician, and a pretender to the arts of astrology and alchymy. He practised for many years in Paris, and made great wealth by killing and curing, and telling fortunes. In an evil day for him, he returned to his own country, with the reputation of being a magician of the first order. It was universally believed that he had drawn seven evil spirits from the infernal regions, whom he kept enclosed in seven crystal vases, until he required their services, when he sent them forth to the ends of the earth to execute his pleasure. One spirit excelled in philosophy; a second, in alchymy; a third, in astrology; a fourth, in physic; a fifth, in poetry; a sixth, in music; and the seventh, in painting: and whenever Pietro wished for information or instruction in any of these arts, he had only to go to his crystal vase, and liberate the presiding spirit. Immediately, all the secrets of the art were revealed to him; and he might, if it pleased him, excel Homer in poetry, Apelles in painting, or Pythagoras himself in philosophy. Although he could make gold out of brass, it was said of him, that he was very sparing of his powers in that respect, and kept himself constantly supplied with money by other and less creditable means. Whenever he disbursed gold, he muttered a certain charm, known only to himself; and next morning the gold was safe again in his own possession. The trader to whom he gave it, might lock it in his strong box, and have it guarded by a troop of soldiers; but the charmed metal flew back to its old master. Even if it were buried in the earth, or thrown into the sea, the dawn of the next morning would behold it in the pockets of Pietro. Few people, in consequence, liked to have dealings with such a personage, especially for gold. Some, bolder than the rest, thought that his power did not extend over silver; but, when they made the experiment, they found themselves mistaken. Bolts and bars could not restrain it, and it sometimes became invisible in their very hands, and was whisked through the air to the purse of the magician. He necessarily acquired a very bad character; and, having given utterance to some sentiments regarding religion which were the very reverse of orthodox, he was summoned before the tribunals of the Inquisition to answer for his crimes as a heretic and a sorcerer. He loudly protested his innocence, even upon the rack, where he suffered more torture than nature could support. He died in prison ere his trial was concluded, but was afterwards found guilty. His bones were ordered to be dug up, and publicly burned. He was also burned in effigy in the streets of Padua.

RAYMOND LULLI.

While Arnold de Villeneuve and Pietro d’Apone flourished in France and Italy, a more celebrated adept than either appeared in Spain. This was Raymond Lulli, a name which stands in the first rank among the alchymists. Unlike many of his predecessors, he made no pretensions to astrology or necromancy; but, taking Geber for his model, studied intently the nature and composition of metals, without reference to charms, incantations, or any foolish ceremonies. It was not, however, till late in life that he commenced his study of the art. His early and middle age were spent in a different manner, and his whole history is romantic in the extreme. He was born of an illustrious family, in Majorca, in the year 1235. When that island was taken from the Saracens by James I, King of Aragon, in 1230, the father of Raymond, who was originally of Catalonia, settled there, and received a considerable appointment from the Crown. Raymond married at an early age; and, being fond of pleasure, he left the solitudes of his native isle, and passed over with his bride into Spain. He was made Grand Seneschal at the court of King James, and led a gay life for several years. Faithless to his wife, he was always in the pursuit of some new beauty, till his heart was fixed at last by the lovely, but unkind Ambrosia de Castello. This lady, like her admirer, was married; but, unlike him, was faithful to her vows, and treated all his solicitations with disdain. Raymond was so enamoured, that repulse only increased his flame; he lingered all night under her windows, wrote passionate verses in her praise, neglected his affairs, and made himself the butt of all the courtiers. One day, while watching under her lattice, he by chance caught sight of her bosom, as her neckerchief was blown aside by the wind. The fit of inspiration came over him, and he sat down and composed some tender stanzas upon the subject, and sent them to the lady. The fair Ambrosia had never before condescended to answer his letters; but she replied to this. She told him, that she could never listen to his suit; that it was unbecoming in a wise man to fix his thoughts, as he had done, on any other than his God; and entreated him to devote himself to a religious life, and conquer the unworthy passion which he had suffered to consume him. She, however, offered, if he wished it, to show him the fair bosom which had so captivated him. Raymond was delighted. He thought the latter part of this epistle but ill corresponded with the former, and that Ambrosia, in spite of the good advice she gave him, had, at last, relented, and would make him as happy as he desired. He followed her about from place to place, entreating her to fulfil her promise: but still Ambrosia was cold, and implored him with tears to importune her no longer; for that she never could be his, and never would, if she were free to-morrow. “What means your letter, then?” said the despairing lover. “I will show you!” replied Ambrosia, who immediately uncovered her bosom, and exposed to the eyes of her horror-stricken admirer, a large cancer, which had extended to both breasts. She saw that he was shocked; and, extending her hand to him, she prayed him once more to lead a religious life, and set his heart upon the Creator, and not upon the creature. He went home an altered man. He threw up, on the morrow, his valuable appointment at the court, separated from his wife, and took a farewell of his children, after dividing one-half of his ample fortune among them. The other half he shared among the poor. He then threw himself at the foot of a crucifix, and devoted himself to the service of God, vowing, as the most acceptable atonement for his errors, that he would employ the remainder of his days in the task of converting the Mussulmans to the Christian religion. In his dreams he saw Jesus Christ, who said to him, “Raymond! Raymond! follow me!” The vision was three times repeated, and Raymond was convinced that it was an intimation direct from Heaven. Having put his affairs in order, he set out on a pilgrimage to the shrine of St. James of Compostello, and afterwards lived for ten years in solitude amid the mountains of Aranda. Here he learned the Arabic, to qualify himself for his mission of converting the Mahometans. He also studied various sciences, as taught in the works of the learned men of the East, and first made acquaintance with the writings of Geber, which were destined to exercise so much influence over his future life.

At the end of this probation, and when he had entered his fortieth year, he emerged from his solitude into more active life. With some remains of his fortune, which had accumulated during his retirement, he founded a college for the study of Arabic, which was approved of by the Pope, with many commendations upon his zeal and piety. At this time he narrowly escaped assassination from an Arabian youth whom he had taken into his service. Raymond had prayed to God, in some of his accesses of fanaticism, that he might suffer martyrdom in his holy cause. His servant had overheard him; and, being as great a fanatic as his master, he resolved to gratify his wish, and punish him, at the same time, for the curses which he incessantly launched against Mahomet and all who believed in him, by stabbing him to the heart. He, therefore, aimed a blow at his master, as he sat one day at table; but the instinct of self-preservation being stronger than the desire of martyrdom, Raymond grappled with his antagonist, and overthrew him. He scorned to take his life himself; but handed him over to the authorities of the town, by whom he was afterwards found dead in his prison.

After this adventure Raymond travelled to Paris, where he resided for some time, and made the acquaintance of Arnold de Villeneuve. From him he probably received some encouragement to search for the philosopher’s stone, as he began from that time forth to devote less of his attention to religious matters, and more to the study of alchymy. Still he never lost sight of the great object for which he lived — the conversion of the Mahometans — and proceeded to Rome, to communicate personally with Pope John XXI, on the best measures to be adopted for that end. The Pope gave him encouragement in words, but failed to associate any other persons with him in the enterprise which he meditated. Raymond, therefore, set out for Tunis alone, and was kindly received by many Arabian philosophers, who had heard of his fame as a professor of alchymy. If he had stuck to alchymy while in their country, it would have been well for him; but he began cursing Mahomet, and got himself into trouble. While preaching the doctrines of Christianity in the great bazaar of Tunis, he was arrested and thrown into prison. He was shortly afterwards brought to trial, and sentenced to death. Some of his philosophic friends interceded hard for him, and he was pardoned, upon condition that he left Africa immediately, and never again set foot in it. If he was found there again, no matter what his object might be, or whatever length of time might intervene, his original sentence would be carried into execution. Raymond was not at all solicitous of martyrdom when it came to the point, whatever he might have been when there was no danger, and he gladly accepted his life upon these conditions, and left Tunis with the intention of proceeding to Rome. He afterwards changed his plan, and established himself at Milan, where, for a length of time, he practised alchymy, and some say astrology, with great success.

Most writers who believed in the secrets of alchymy, and who have noticed the life of Raymond Lulli, assert, that while in Milan, he received letters from Edward King of England, inviting him to settle in his states. They add, that Lulli gladly accepted the invitation, and had apartments assigned for his use in the Tower of London, where he refined much gold; superintended the coinage of “rose-nobles;” and made gold out of iron, quicksilver, lead, and pewter, to the amount of six millions. The writers in the Biographie Universelle, an excellent authority in general, deny that Raymond was ever in England, and say, that in all these stories of his wondrous powers as an alchymist, he has been mistaken for another Raymond, a Jew, of Tarragona. Naude, in his Apologie, says, simply, “that six millions were given by Raymond Lulli to King Edward, to make war against the Turks and other infidels:” not that he transmuted so much metal into gold; but, as he afterwards adds, that he advised Edward to lay a tax upon wool, which produced that amount. To show that Raymond went to England, his admirers quote a work attributed to him, “De Transmutatione Animae Metallorum,” in which he expressly says, that he was in England at the intercession of the King. [Vidimus omnia ista dum ad Angliam transiimus, propter intercessionem Domini Regis Edoardi illustrissimi.] The hermetic writers are not agreed whether it was Edward I, or Edward II, who invited him over; but, by fixing the date of his journey in 1312, they make it appear that it was Edward II. Edmond Dickenson, in his work on the “Quintessences of the Philosophers,” says, that Raymond worked in Westminster Abbey, where, a long time after his departure, there was found in the cell which he had occupied, a great quantity of golden dust, of which the architects made a great profit. In the biographical sketch of John Cremer, Abbot of Westminster, given by Lenglet, it is said, that it was chiefly through his instrumentality that Raymond came to England. Cremer had been himself for thirty years occupied in the vain search for the philosopher’s stone, when he accidentally met Raymond in Italy, and endeavoured to induce him to communicate his grand secret. Raymond told him that he must find it for himself, as all great alchymists had done before him. Cremer, on his return to England, spoke to King Edward in high terms of the wonderful attainments of the philosopher, and a letter of invitation was forthwith sent him. Robert Constantinus, in the Nomenclatore Scriptorum Medicorum, published in 1515, says, that after a great deal of research, be found that Raymond Lulli resided for some time in London, and that he actually made gold, by means of the philosopher’s stone, in the Tower; that he had seen the golden pieces of his coinage, which were still named in England the nobles of Raymond, or rose-nobles. Lulli himself appears to have boasted that he made gold; for, in his well-known Testamentum, he states, that he converted no less than fifty thousand pounds weight of quicksilver, lead, and pewter into that metal. [Converti una vice in aurum ad L millia pondo argenti vivi, plumbi, et stanni. — Lullii Testamentum.] It seems highly probable that the English King, believing in the extraordinary powers of the alchymist, invited him to England to make test of them, and that he was employed in refining gold and in coining. Camden, who is not credulous in matters like these, affords his countenance to the story of his coinage of nobles; and there is nothing at all wonderful in the fact of a man famous for his knowledge of metals being employed in such a capacity. Raymond was, at this time, an old man, in his seventy-seventh year, and somewhat in his dotage. He was willing enough to have it believed that he had discovered the grand secret, and supported the rumour rather than contradicted it. He did not long remain in England; but returned to Rome, to carry out the projects which were nearer to his heart than the profession of alchymy. He had proposed them to several successive Popes with little or no success. The first was a plan for the introduction of the Oriental languages into all the monasteries of Europe; the second, for the reduction into one of all the military orders, that, being united, they might move more efficaciously against the Saracens; and, the third, that the Sovereign Pontiff should forbid the works of Averroes to be read in the schools, as being more favourable to Mahometanism than to Christianity. The Pope did not receive the old man with much cordiality; and, after remaining for about two years in Rome, he proceeded once more to Africa, alone and unprotected, to preach the Gospel of Jesus. He landed at Bona in 1314; and so irritated the Mahometans by cursing their prophet, that they stoned him, and left him for dead on the sea-shore. He was found some hours afterwards by a party of Genoese merchants, who conveyed him on board their vessel, and sailed towards Majorca. The unfortunate man still breathed, but could not articulate. He lingered in this state for some days, and expired just as the vessel arrived within sight of his native shores. His body was conveyed with great pomp to the church of St. Eulalia, at Palma, where a public funeral was instituted in his honour. Miracles were afterwards said to have been worked at his tomb.

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Thus ended the career of Raymond Lulli, one of the most extraordinary men of his age; and, with the exception of his last boast about the six millions of gold, the least inclined to quackery of any of the professors of alchymy. His writings were very numerous, and include nearly five hundred volumes, upon grammar, rhetoric, morals, theology, politics, civil and canon law, physics, metaphysics, astronomy, medicine, and chemistry.

ROGER BACON.

The powerful delusion of alchymy seized upon a mind still greater than that of Raymond Lulli. Roger Bacon firmly believed in the philosopher’s stone, and spent much of his time in search of it. His example helped to render all the learned men of the time more convinced of its practicability, and more eager in the pursuit. He was born at Ilchester, in the county of Somerset, in the year 1214. He studied for some time in the University of Oxford, and afterwards in that of Paris, in which he received the degree of doctor of divinity. Returning to England in 1240, he became a monk of the order of St. Francis. He was by far the most learned man of his age; and his acquirements were so much above the comprehension of his contemporaries, that they could only account for them by supposing that he was indebted for them to the devil. Voltaire has not inaptly designated him “De l’or encroute de toutes les ordures de son siecle;” but the crust of superstition that enveloped his powerful mind, though it may have dimmed, could not obscure the brightness of his genius. To him, and apparently to him only, among all the inquiring spirits of the time, were known the properties of the concave and convex lens. He also invented the magic-lantern; that pretty plaything of modern days, which acquired for him a reputation that embittered his life. In a history of alchymy, the name of this great man cannot be omitted, although, unlike many others of whom we shall have occasion to speak, he only made it secondary to other pursuits. The love of universal knowledge that filled his mind, would not allow him to neglect one branch of science, of which neither he nor the world could yet see the absurdity. He made ample amends for his time lost in this pursuit by his knowledge in physics and his acquaintance with astronomy. The telescope, burning-glasses, and gunpowder, are discoveries which may well carry his fame to the remotest time, and make the world blind to the one spot of folly — the diagnosis of the age in which he lived, and the circumstances by which he was surrounded. His treatise on the “Admirable Power of Art and Nature in the Production of the Philosopher’s Stone” was translated into French by Girard de Tormes, and published at Lyons in 1557. His “Mirror of Alchymy” was also published in French in the same year, and in Paris in 1612, with some additions from the works of Raymond Lulli. A complete list of all the published treatises upon the subject may be seen in Lenglet du Fresnoy.

Pope John XXII.

This Prelate is said to have been the friend and pupil of Arnold de Villeneuve, by whom he was instructed in all the secrets of alchymy. Tradition asserts of him, that he made great quantities of gold, and died as rich as Croesus. He was born at Cahors, in the province of Guienne, in the year 1244. He was a very eloquent preacher, and soon reached high dignity in the Church. He wrote a work on the transmutation of metals, and had a famous laboratory at Avignon. He issued two Bulls against the numerous pretenders to the art, who had sprung up in every part of Christendom; from which it might be inferred that he was himself free from the delusion. The alchymists claim him, however, as one of the most distinguished and successful professors of their art, and say that his Bulls were not directed against the real adepts, but the false pretenders. They lay particular stress upon these words in his Bull, “Spondent, quas non exhibent, divitias, pauperes alchymistae.” These, it is clear, they say, relate only to poor alchymists, and therefore false ones. He died in the year 1344, leaving in his coffers a sum of eighteen millions of florins. Popular belief alleged that he had made, and not amassed, this treasure; and alchymists complacently cite this as a proof that the philosopher’s stone was not such a chimera as the incredulous pretended. They take it for granted that John really left this money, and ask by what possible means he could have accumulated it. Replying to their own question, they say triumphantly, “His book shows it was by alchymy, the secrets of which he learned from Arnold de Villeneuve and Raymond Lulli. But he was as prudent as all other hermetic philosophers. Whoever would read his book to find out his secret, would employ all his labour in vain; the Pope took good care not to divulge it.” Unluckily for their own credit, all these gold-makers are in the same predicament; their great secret loses its worth most wonderfully in the telling, and therefore they keep it snugly to themselves. Perhaps they thought that, if everybody could transmute metals, gold would be so plentiful that it would be no longer valuable, and that some new art would be requisite to transmute it back again into steel and iron. If so, society is much indebted to them for their forbearance.

Jean De Meung.

All classes of men dabbled in the art at this time; the last mentioned was a Pope, the one of whom we now speak was a poet. Jean de Meung, the celebrated author of the “Roman de la Rose,” was born in the year 1279 or 1280, and was a great personage at the courts of Louis X, Philip the Long, Charles IV, and Philip de Valois. His famous poem of the “Roman de la Rose,” which treats of every subject in vogue at that day, necessarily makes great mention of alchymy. Jean was a firm believer in the art, and wrote, besides his, “Roman,” two shorter poems, the one entitled, “The Remonstrance of Nature to the wandering Alchymist,” and “The Reply of the Alchymist to Nature.” Poetry and alchymy were his delight, and priests and women were his abomination. A pleasant story is related of him and the ladies of the court of Charles IV. He had written the following libellous couplet upon the fair sex :–

“Toutes etes, serez, ou futes
De fait ou de volonte, putains,
Et qui, tres bien vous chercherait Toutes putains, vous trouverait.”
[These verses are but a coarser expression of the slanderous line of Pope, that “every woman is at heart a rake.”]

This naturally gave great offence; and being perceived one day, in the King’s antechamber, by some ladies who were waiting for an audience, they resolved to punish him. To the number of ten or twelve, they armed themselves with canes and rods; and surrounding the unlucky poet, called upon the gentlemen present to strip him naked, that they might wreak just vengeance upon him, and lash him through the streets of the town. Some of the lords present were in no wise loth, and promised themselves great sport from his punishment. But Jean de Meung was unmoved by their threats, and stood up calmly in the midst of them, begging them to hear him first, and then, if not satisfied, they might do as they liked with him. Silence being restored, he stood upon a chair, and entered on his defence. He acknowledged that he was the author of the obnoxious verses, but denied that they bore reference to all womankind. He only meant to speak of the vicious and abandoned, whereas those whom he saw around him, were patterns of virtue, loveliness, and modesty. If, however, any lady present thought herself aggrieved, he would consent to be stripped, and she might lash him till her arms were wearied. It is added, that by this means Jean escaped his flogging, and that the wrath of the fair ones immediately subsided. The gentlemen present were, however, of opinion, that if every lady in the room, whose character corresponded with the verses, had taken him at his word, the poet would, in all probability, have been beaten to death. All his life long he evinced a great animosity towards the priesthood, and his famous poem abounds with passages reflecting upon their avarice, cruelty, and immorality. At his death he left a large box, filled with some weighty material, which he bequeathed to the Cordeliers, as a peace-offering, for the abuse he had lavished upon them. As his practice of alchymy was well-known, it was thought the box was filled with gold and silver, and the Cordeliers congratulated each other on their rich acquisition. When it came to be opened, they found to their horror that it was filled only with slates, scratched with hieroglyphic and cabalistic characters. Indignant at the insult, they determined to refuse him Christian burial, on pretence that he was a sorcerer. He was, however, honourably buried in Paris, the whole court attending his funeral.

NICHOLAS FLAMEL.

The story of this alchymist, as handed down by tradition, and enshrined in the pages of Lenglet du Fresnoy, is not a little marvellous. He was born at Pontoise of a poor but respectable family, at the end of the thirteenth, or beginning of the fourteenth, century. Having no patrimony, he set out for Paris at an early age, to try his fortune as a public scribe. He had received a good education, was well skilled in the learned languages, and was an excellent penman. He soon procured occupation as a letter-writer and copyist, and used to sit at the corner of the Rue de Marivaux, and practise his calling: but he hardly made profits enough to keep body and soul together. To mend his fortunes he tried poetry; but this was a more wretched occupation still. As a transcriber he had at least gained bread and cheese; but his rhymes were not worth a crust. He then tried painting with as little success; and as a last resource, began to search for the philosopher’s stone, and tell fortunes. This was a happier idea; he soon increased in substance, and had wherewithal to live comfortably. He, therefore, took unto himself his wife Petronella, and began to save money; but continued to all outward appearance as poor and miserable as before. In the course of a few years, he became desperately addicted to the study of alchymy, and thought of nothing but the philosopher’s stone, the elixir of life, and the universal alkahest. In the year 1257, he bought by chance an old book for two florins, which soon became the sole study and object of his life. It was written with a steel instrument upon the bark of trees, and contained twenty-one, or as he himself always expressed it, three times seven, leaves. The writing was very elegant and in the Latin language. Each seventh leaf contained a picture and no writing. On the first of these was a serpent swallowing rods; on the second, a cross with a serpent crucified; and on the third, the representation of a desert, in the midst of which was a fountain with serpents crawling from side to side. It purported to be written by no less a personage than “Abraham, patriarch, Jew, prince, philosopher, priest, Levite, and astrologer;” and invoked curses upon any one who should cast eyes upon it, without being a sacrificer or a scribe. Nicholas Flamel never thought it extraordinary that Abraham should have known Latin, and was convinced that the characters on his book had been traced by the hands of that great patriarch himself. He was at first afraid to read it, after he became aware of the curse it contained; but he got over that difficulty by recollecting that, although he was not a sacrificer, he had practised as a scribe. As he read he was filled with admiration, and found that it was a perfect treatise upon the transmutation of metals. All the process was clearly explained; the vessels, the retorts, the mixtures, and the proper times and seasons for the experiment. But as ill-luck would have it, the possession of the philosopher’s stone or prime agent in the work was presupposed. This was a difficulty which was not to be got over. It was like telling a starving man how to cook a beefsteak, instead of giving him the money to buy one. But Nicholas did not despair; and set about studying the hieroglyphics and allegorical representations with which the book abounded. He soon convinced himself that it had been one of the sacred books of the Jews, and that it was taken from the temple of Jerusalem on its destruction by Titus. The process of reasoning by which he arrived at this conclusion is not stated.

From some expression in the treatise, he learned that the allegorical drawings on the fourth and fifth leaves, enshrined the secret of the philosopher’s stone, without which all the fine Latin of the directions was utterly unavailing. He invited all the alchymists and learned men of Paris to come and examine them, but they all departed as wise as they came. Nobody could make anything either of Nicholas or his pictures; and some even went so far as to say that his invaluable book was not worth a farthing. This was not to be borne; and Nicholas resolved to discover the great secret by himself, without troubling the philosophers. He found on the first page, of the fourth leaf, the picture of Mercury, attacked by an old man resembling Saturn or Time. The latter had an hourglass on his head, and in his hand a scythe, with which he aimed a blow at Mercury’s feet. The reverse of the leaf represented a flower growing on a mountain top, shaken rudely by the wind, with a blue stalk, red and white blossoms, and leaves of pure gold. Around it were a great number of dragons and griffins. On the first page of the fifth leaf was a fine garden, in the midst of which was a rose tree in full bloom, supported against the trunk of a gigantic oak. At the foot of this there bubbled up a fountain of milk-white water, which forming a small stream, flowed through the garden, and was afterwards lost in the sands. On the second page was a King, with a sword in his hand, superintending a number of soldiers, who, in execution of his orders, were killing a great multitude of young children, spurning the prayers and tears of their mothers, who tried to save them from destruction. The blood of the children was carefully collected by another party of soldiers, and put into a large vessel, in which two allegorical figures of the Sun and Moon were bathing themselves.

For twenty-one years poor Nicholas wearied himself with the study of these pictures, but still he could make nothing of them. His wife Petronella at last persuaded him to find out some learned Rabbi; but there was no Rabbi in Paris learned enough to be of any service to him. The Jews met but small encouragement to fix their abode in France, and all the chiefs of that people were located in Spain. To Spain accordingly Nicholas Flamel repaired. He left his book in Paris for fear, perhaps, that he might be robbed of it on the road; and telling his neighbours that he was going on a pilgrimage to the shrine of St. James of Compostello, he trudged on foot towards Madrid in search of a Rabbi. He was absent two years in that country, and made himself known to a great number of Jews, descendants of those who had been expelled from France in the reign of Philip Augustus. The believers in the philosopher’s stone give the following account of his adventures: — They say that at Leon he made the acquaintance of a converted Jew, named Cauches, a very learned physician, to whom he explained the title and the nature of his little book. The Doctor was transported with joy as soon as he heard it named, and immediately resolved to accompany Nicholas to Paris, that he might have a sight of it. The two set out together; the Doctor on the way entertaining his companion with the history of his book, which, if the genuine book he thought it to be, from the description he had heard of it, was in the handwriting of Abraham himself, and had been in the possession of personages no less distinguished than Moses, Joshua, Solomon, and Esdras. It contained all the secrets of alchymy and of many other sciences, and was the most valuable book that had ever existed in this world. The Doctor was himself no mean adept, and Nicholas profited greatly by his discourse, as in the garb of poor pilgrims they wended their way to Paris, convinced of their power to turn every old shovel in that capital into pure gold. But, unfortunately, when they reached Orleans, the Doctor was taken dangerously ill. Nicholas watched by his bedside, and acted the double part of a physician and nurse to him; but he died after a few days, lamenting with his last breath that he had not lived long enough to see the precious volume. Nicholas rendered the last honours to his body; and with a sorrowful heart, and not one sous in his pocket, proceeded home to his wife Petronella. He immediately recommenced the study of his pictures; but for two whole years he was as far from understanding them as ever. At last, in the third year, a glimmer of light stole over his understanding. He recalled some expression of his friend, the Doctor, which had hitherto escaped his memory, and he found that all his previous experiments had been conducted on a wrong basis. He recommenced them now with renewed energy, and at the end of the year had the satisfaction to see all his toils rewarded. On the 13th January 1382, says Lenglet, he made a projection on mercury, and had some very excellent silver. On the 25th April following, he converted a large quantity of mercury into gold, and the great secret was his.

Nicholas was now about eighty years of age, and still a hale and stout old man. His friends say that, by the simultaneous discovery of the elixir of life, he found means to keep death at a distance for another quarter of a century; and that he died in 1415, at the age of 116. In this interval he had made immense quantities of gold, though to all outward appearance he was as poor as a mouse. At an early period of his changed fortune, he had, like a worthy man, taken counsel with his old wife Petronella, as to the best use he could make of his wealth. Petronella replied, that as unfortunately they had no children, the best thing he could do, was to build hospitals and endow churches. Nicholas thought so too, especially when he began to find that his elixir could not keep off death, and that the grim foe was making rapid advances upon him. He richly endowed the church of St. Jacques de la Boucherie, near the Rue de Marivaux, where he had all his life resided, besides seven others in different parts of the kingdom. He also endowed fourteen hospitals, and built three chapels.

The fame of his great wealth and his munificent benefactions soon spread over all the country, and he was visited, among others, by the celebrated Doctors of that day, Jean Gerson, Jean de Courtecuisse, and Pierre d’Ailli. They found him in his humble apartment, meanly clad, and eating porridge out of an earthen vessel; and with regard to his secret, as impenetrable as all his predecessors in alchymy. His fame reached the ears of the King, Charles VI, who sent M. de Cramoisi, the Master of Requests, to find out whether Nicholas had indeed discovered the philosopher’s stone. But M. de Cramoisi took nothing by his visit; all his attempts to sound the alchymist were unavailing, and he returned to his royal master no wiser than he came. It was in this year, 1414, that he lost his faithful Petronella. He did not long survive her; but died in the following year, and was buried with great pomp by the grateful priests of St. Jacques de la Boucherie.

The great wealth of Nicholas Flamel is undoubted, as the records of several churches and hospitals in France can testify. That he practised alchymy is equally certain, as he left behind several works upon the subject.

Those who knew him well, and who were incredulous about the philosopher’s stone, give a very satisfactory solution of the secret of his wealth. They say that he was always a miser and a usurer; that his journey to Spain was undertaken with very different motives from those pretended by the alchymists; that, in fact, he went to collect debts due from Jews in that country to their brethren in Paris, and that he charged a commission of fully cent. per cent. in consideration of the difficulty of collecting and the dangers of the road; that when he possessed thousands, he lived upon almost nothing; and was the general money-lender, at enormous profits, of all the dissipated young men at the French court.

Among the works written by Nicholas Flamel on the subject of alchymy, is “The Philosophic Summary,” a poem, reprinted in 1735, as an appendix to the third volume of the “Roman de la Rose.” He also wrote three treatises upon natural philosophy, and an alchymic allegory, entitled “Le Desir desire.” Specimens of his writing, and a fac-simile of the drawings in his book of Abraham, may be seen in Salmon’s “Bibliotheque des Philosophes Chimiques.” The writer of the article, “Flamel,” in the “Biographie Universelle,” says that, for a hundred years after the death of Flamel, many of the adepts believed that he was still alive, and that he would live for upwards of six hundred years. The house he formerly occupied, at the corner of the Rue de Marivaux, has been often taken by credulous speculators, and ransacked from top to bottom, in the hopes that gold might be found. A report was current in Paris, not long previous to the year 1816, that some lodgers had found in the cellars several jars filled with a dark-coloured ponderous matter. Upon the strength of the rumour, a believer in all the wondrous tales told of Nicholas Flamel bought the house, and nearly pulled it to pieces in ransacking the walls and wainscotting for hidden gold. He got nothing for his pains, however, and had a heavy bill to pay to restore his dilapidations.

GEORGE RIPLEY.

While alchymy was thus cultivated on the continent of Europe, it was not neglected in the isles of Britain. Since the time of Roger Bacon, it had fascinated the imagination of many ardent men in England. In the year 1404, an act of parliament was passed, declaring the making of gold and silver to be felony. Great alarm was felt at that time lest any alchymist should succeed in his projects, and perhaps bring ruin upon the state, by furnishing boundless wealth to some designing tyrant, who would make use of it to enslave his country. This alarm appears to have soon subsided; for, in the year 1455, King Henry VI, by advice of his council and parliament, granted four successive patents and commissions to several knights, citizens of London, chemists, monks, mass-priests, and others, to find out the philosopher’s stone and elixir, “to the great benefit,” said the patent, “of the realm, and the enabling of the King to pay all the debts of the Crown in real gold and silver.” Prinn, in his “Aurum Reginae,” observes, as a note to this passage, that the King’s reason for granting this patent to ecclesiastics was, that they were such good artists in transubstantiating bread and wine in the Eucharist, and therefore the more likely to be able to effect the transmutation of baser metals into better. No gold, of course, was ever made; and, next year, the King, doubting very much of the practicability of the thing, took further advice, and appointed a commission of ten learned men, and persons of eminence, to judge and certify to him whether the transmutation of metals were a thing practicable or no. It does not appear whether the commission ever made any report upon the subject.

In the succeeding reign, an alchymist appeared who pretended to have discovered the secret. This was George Ripley, the canon of Bridlington, in Yorkshire. He studied for twenty years in the universities of Italy, and was a great favourite with Pope Innocent VIII, who made him one of his domestic chaplains, and master of the ceremonies in his household. Returning to England in 1477, he dedicated to King Edward IV. his famous work, “The Compound of Alchymy; or, the Twelve Gates leading to the Discovery of the Philosopher’s Stone.” These gates he described to be calcination, solution, separation, conjunction, putrefaction, congelation, cibation, sublimation, fermentation, exaltation, multiplication, and projection! to which he might have added botheration, the most important process of all. He was very rich, and allowed it to be believed that he could make gold out of iron. Fuller, in his “Worthies of England,” says that an English gentleman of good credit reported that, in his travels abroad, he saw a record in the island of Malta, which declared that Ripley gave yearly to the knights of that island, and of Rhodes, the enormous sum of one hundred thousand pounds sterling, to enable them to carry on the war against the Turks. In his old age, he became an anchorite near Boston, and wrote twenty-five volumes upon the subject of alchymy, the most important of which is the “Duodecim Portarum,” already mentioned. Before he died, he seems to have acknowledged that he had misspent his life in this vain study, and requested that all men, when they met with any of his books, would burn them, or afford them no credit, as they had been written merely from his opinion, and not from proof; and that subsequent trial had made manifest to him that they were false and vain. [Fuller’s “Worthies of England.”]

BASIL VALENTINE.

Germany also produced many famous alchymists in the fifteenth century, the chief of whom are Basil Valentine, Bernard of Treves, and the Abbot Trithemius. Basil Valentine was born at Mayence, and was made prior of St. Peter’s, at Erfurt, about the year 1414. It was known, during his life, that he diligently sought the philosopher’s stone, and that he had written some works upon the process of transmutation. They were thought, for many years, to be lost; but were, after his death, discovered enclosed in the stone work of one of the pillars in the Abbey. They were twenty-one in number, and are fully set forth in the third volume of Lenglet’s “History of the Hermetic Philosophy.” The alchymists asserted, that Heaven itself conspired to bring to light these extraordinary works; and that the pillar in which they were enclosed was miraculously shattered by a thunderbolt; and that, as soon as the manuscripts were liberated, the pillar closed up again of its own accord!

BERNARD of TREVES.

The life of this philosopher is a remarkable instance of talent and perseverance misapplied. In the search of his chimera nothing could daunt him. Repeated disappointment never diminished his hopes; and, from the age of fourteen to that of eighty-five, he was incessantly employed among the drugs and furnaces of his laboratory, wasting his life with the view of prolonging it, and reducing himself to beggary in the hopes of growing rich.

He was born at either Treves or Padua, in the year 1406. His father is said by some to have been a physician in the latter city; and by others, to have been Count of the Marches of Treves, and one of the most wealthy nobles of his country. At all events, whether noble or physician, he was a rich man, and left his son a magnificent estate. At the age of fourteen he first became enamoured of the science of alchymy, and read the Arabian authors in their own language. He himself has left a most interesting record of his labours and wanderings, from which the following particulars are chiefly extracted: — The first book which fell into his hands, was that of the Arabian philosopher, Rhazes, from the reading of which he imagined that he had discovered the means of augmenting gold a hundred fold. For four years he worked in his laboratory, with the book of Rhazes continually before him. At the end of that time, he found that he had spent no less than eight hundred crowns upon his experiment, and had got nothing but fire and smoke for his pains. He now began to lose confidence in Rhazes, and turned to the works of Geber. He studied him assiduously for two years; and, being young, rich, and credulous, was beset by all the chymists of the town, who kindly assisted him in spending his money. He did not lose his faith in Geber, or patience with his hungry assistants, until he had lost two thousand crowns – a very considerable sum in those days.

Among all the crowd of pretended men of science who surrounded him, there was but one as enthusiastic and as disinterested as himself. With this man, who was a monk of the order of St. Francis, he contracted an intimate friendship, and spent nearly all his time. Some obscure treatises of Rupecissa and Sacrobosco having fallen into their hands, they were persuaded, from reading them, that highly rectified spirits of wine was the universal alkahest, or dissolvent, which would aid them greatly in the process of transmutation. They rectified the alcohol thirty times, till they made it so strong as to burst the vessels which contained it. After they had worked three years, and spent three hundred crowns in the liquor, they discovered that they were on the wrong track. They next tried alum and copperas; but the great secret still escaped them. They afterwards imagined that there was a marvellous virtue in all excrement, especially the human, and actually employed more than two years in experimentalizing upon it, with mercury, salt, and molten lead! Again the adepts flocked around him from far and near, to aid him with their counsels. He received them all hospitably, and divided his wealth among them so generously and unhesitatingly, that they gave him the name of the “good Trevisan,” by which he is still often mentioned in works that treat on alchymy. For twelve years he led this life, making experiments every day upon some new substance, and praying to God night and morning that he might discover the secret of transmutation.

In this interval he lost his friend the monk, and was joined by a magistrate of the city of Treves, as ardent as himself in the search. His new acquaintance imagined that the ocean was the mother of gold, and that sea-salt would change lead or iron into the precious metals. Bernard resolved to try; and, transporting his laboratory to a house on the coast of the Baltic, he worked upon salt for more than a year, melting it, sublimating it, crystalizing it, and occasionally drinking it, for the sake of other experiments. Still the strange enthusiast was not wholly discouraged, and his failure in one trial only made him the more anxious to attempt another.

He was now approaching the age of fifty, and had as yet seen nothing of the world. He, therefore, determined to travel through Germany, Italy, France, and Spain. Wherever he stopped he made inquiries whether there were any alchymists in the neighbourhood. He invariably sought them out; and, if they were poor, relieved, and, if affluent, encouraged them. At Citeaux he became acquainted with one Geoffrey Leuvier, a monk of that place, who persuaded him that the essence of egg-shells was a valuable ingredient. He tried, therefore, what could be done; and was only prevented from wasting a year or two on the experiment by the opinions of an attorney, at Berghem, in Flanders, who said that the great secret resided in vinegar and copperas. He was not convinced of the absurdity of this idea until he had nearly poisoned himself. He resided in France for about five years, when, hearing accidentally that one Master Henry, confessor to the Emperor Frederic III, had discovered the philosopher’s stone, he set out for Germany to pay him a visit. He had, as usual, surrounded himself with a set of hungry dependants, several of whom determined to accompany him. He had not heart to refuse them, and he arrived at Vienna with five of them. Bernard sent a polite invitation to the confessor, and gave him a sumptuous entertainment, at which were present nearly all the alchymists of Vienna. Master Henry frankly confessed that he had not discovered the philosopher’s stone, but that he had all his life been employed in searching for it, and would so continue, till he found it; — or died. This was a man after Bernard’s own heart, and they vowed with each other an eternal friendship. It was resolved, at supper, that each alchymist present should contribute a certain sum towards raising forty-two marks of gold, which, in five days, it was confidently asserted by Master Henry, would increase, in his furnace, five fold. Bernard, being the richest man, contributed the lion’s share, ten marks of gold, Master Henry five, and the others one or two a piece, except the dependants of Bernard, who were obliged to borrow their quota from their patron. The grand experiment was duly made; the golden marks were put into a crucible, with a quantity of salt, copperas, aquafortis, egg-shells, mercury, lead, and dung. The alchymists watched this precious mess with intense interest, expecting that it would agglomerate into one lump of pure gold. At the end of three weeks they gave up the trial, upon some excuse that the crucible was not strong enough, or that some necessary ingredient was wanting. Whether any thief had put his hands into the crucible is not known, but it is certain that the gold found therein at the close of the experiment was worth only sixteen marks, instead of the forty-two, which were put there at the beginning.

Bernard, though he made no gold at Vienna, made away with a very considerable quantity. He felt the loss so acutely, that he vowed to think no more of the philosopher’s stone. This wise resolution he kept for two months; but he was miserable. He was in the condition of the gambler, who cannot resist the fascination of the game while he has a coin remaining, but plays on with the hope of retrieving former losses, till hope forsakes him, and he can live no longer. He returned once more to his beloved crucibles, and resolved to prosecute his journey in search of a philosopher who had discovered the secret, and would communicate it to so zealous and persevering an adept as himself. From Vienna he travelled to Rome, and from Rome to Madrid. Taking ship at Gibraltar, he proceeded to Messina; from Messina to Cyprus; from Cyprus to Greece; from Greece to Constantinople; and thence into Egypt, Palestine, and Persia. These wanderings occupied him about eight years. From Persia he made his way back to Messina, and from thence into France. He afterwards passed over into England, still in search of his great chimera; and this occupied four years more of his life. He was now growing both old and poor; for he was sixty-two years of age, and had been obliged to sell a great portion of his patrimony to provide for his expenses. His journey to Persia had cost upwards of thirteen thousand crowns, about one-half of which had been fairly melted in his all-devouring furnaces: the other half was lavished upon the sycophants that he made it his business to search out in every town he stopped at.

On his return to Treves he found, to his sorrow, that, if not an actual beggar, he was not much better. His relatives looked upon him as a madman, and refused even to see him. Too proud to ask for favours from any one, and still confident that, some day or other, he would be the possessor of unbounded wealth, he made up his mind to retire to the island of Rhodes, where he might, in the mean time, hide his poverty from the eyes of all the world. Here he might have lived unknown and happy; but, as ill luck would have it, he fell in with a monk as mad as himself upon the subject of transmutation. They were, however, both so poor that they could not afford to buy the proper materials to work with. They kept up each other’s spirits by learned discourses on the Hermetic Philosophy, and in the reading of all the great authors who had written upon the subject. Thus did they nurse their folly, as the good wife of Tam O’Shanter did her wrath, “to keep it warm.” After Bernard had resided about a year in Rhodes, a merchant, who knew his family, advanced him the sum of eight thousand florins, upon the security of the last-remaining acres of his formerly large estate. Once more provided with funds, he recommenced his labours with all the zeal and enthusiasm of a young man. For three years he hardly stepped out of his laboratory: he ate there, and slept there, and did not even give himself time to wash his hands and clean his beard, so intense was his application. It is melancholy to think that such wonderful perseverance should have been wasted in so vain a pursuit, and that energies so unconquerable should have had no worthier field to strive in. Even when he had fumed away his last coin, and had nothing left in prospective to keep his old age from starvation, hope never forsook him. He still dreamed of ultimate success, and sat down a greyheaded man of eighty, to read over all the authors on the hermetic mysteries, from Geber to his own day, lest he should have misunderstood some process, which it was not yet too late to recommence. The alchymists say, that he succeeded at last, and discovered the secret of transmutation in his eighty-second year. They add, that he lived three years afterwards to enjoy his wealth. He lived, it is true, to this great age, and made a valuable discovery – more valuable than gold or gems. He learned, as he himself informs us, just before he had attained his eighty-third year, that the great secret of philosophy was contentment with our lot. Happy would it have been for him if he had discovered it sooner, and before he became decrepit, a beggar, and an exile!

He died at Rhodes, in the year 1490, and all the alchymists of Europe sang elegies over him, and sounded his praise as the “good Trevisan.” He wrote several treatises upon his chimera, the chief of which are, the “Book of Chemistry,” the “Verbum dimissum,” and an essay “De Natura Ovi.”

TRITHEMIUS.

The name of this eminent man has become famous in the annals of alchymy, although he did but little to gain so questionable an honour. He was born in the year 1462, at the village of Trittheim, in the electorate of Treves. His father was John Heidenberg, a vine-grower, in easy circumstances, who, dying when his son was but seven years old, left him to the care of his mother. The latter married again very shortly afterwards, and neglected the poor boy, the offspring of her first marriage. At the age of fifteen he did not even know his letters, and was, besides, half starved, and otherwise ill-treated by his step-father; but the love of knowledge germinated in the breast of the unfortunate youth, and he learned to read at the house of a neighbour. His father-in-law set him to work in the vineyards, and thus occupied all his days; but the nights were his own. He often stole out unheeded, when all the household were fast asleep, poring over his studies in the fields, by the light of the moon; and thus taught himself Latin and the rudiments of Greek. He was subjected to so much ill-usage at home, in consequence of this love of study, that he determined to leave it. Demanding the patrimony which his father had left him, he proceeded to Treves; and, assuming the name of Trithemius, from that of his native village of Trittheim, lived there for some months, under the tuition of eminent masters, by whom he was prepared for the university. At the age of twenty, he took it into his head that he should like to see his mother once more; and he set out on foot from the distant university for that purpose. On his arrival near Spannheim, late in the evening of a gloomy winter’s day, it came on to snow so thickly, that he could not proceed onwards to the town. He, therefore, took refuge for the night in a neighbouring monastery; but the storm continued several days, the roads became impassable, and the hospitable monks would not hear of his departure. He was so pleased with them and their manner of life, that he suddenly resolved to fix his abode among them, and renounce the world. They were no less pleased with him, and gladly received him as a brother. In the course of two years, although still so young, he was unanimously elected their Abbot. The financial affairs of the establishment had been greatly neglected, the walls of the building were falling into ruin, and everything was in disorder. Trithemius, by his good management and regularity, introduced a reform in every branch of expenditure. The monastery was repaired, and a yearly surplus, instead of a deficiency, rewarded him for his pains. He did not like to see the monks idle, or occupied solely between prayers for their business, and chess for their relaxation. He, therefore, set them to work to copy the writings of eminent authors. They laboured so assiduously, that, in the course of a few years, their library, which had contained only about forty volumes, was enriched with several hundred valuable manuscripts, comprising many of the classical Latin authors, besides the works of the early fathers, and the principal historians and philosophers of more modern date. He retained the dignity of Abbot of Spannheim for twenty-one years, when the monks, tired of the severe discipline he maintained, revolted against him, and chose another abbot in his place. He was afterwards made Abbot of St. James, in Wurtzburg, where he died in 1516.

During his learned leisure at Spannheim, he wrote several works upon the occult sciences, the chief of which are an essay on geomancy, or divination by means of lines and circles on the ground; another upon sorcery; a third upon alchymy; and a fourth upon the government of the world by its presiding angels, which was translated into English, and published by the famous William Lilly in 1647.

It has been alleged by the believers in the possibility of transmutation, that the prosperity of the abbey of Spannheim, while under his superintendence, was owing more to the philosopher’s stone than to wise economy. Trithemius, in common with many other learned men, has been accused of magic; and a marvellous story is told of his having raised from the grave the form of Mary of Burgundy, at the intercession of her widowed husband, the Emperor Maximilian. His work on steganographia, or cabalistic writing, was denounced to the Count Palatine, Frederic II, as magical and devilish; and it was by him taken from the shelves of his library and thrown into the fire. Trithemius is said to be the first writer who makes mention of the wonderful story of the devil and Dr. Faustus, the truth of which he firmly believed. He also recounts the freaks of a spirit, named Hudekin, by whom he was at times tormented. [Biographie Universelle]

THE MARECHAL DE RAYS.

One of the greatest encouragers of alchymy in the fifteenth century was Gilles de Laval, Lord of Rays and a Marshal of France. His name and deeds are little known; but in the annals of crime and folly, they might claim the highest and worst pro-eminence. Fiction has never invented anything wilder or more horrible than his career; and were not the details but too well authenticated by legal and other documents which admit no doubt, the lover of romance might easily imagine they were drawn to please him from the stores of the prolific brain, and not from the page of history.

He was born about the year 1420, of one of the noblest families of Brittany. His father dying when Gilles had attained his twentieth year, he came into uncontrolled possession, at that early age, of a fortune which the monarchs of France might have envied him. He was a near kinsman of the Montmorencys, the Roncys, and the Craons; possessed fifteen princely domains, and had an annual revenue of about three hundred thousand livres. Besides this, he was handsome, learned, and brave. He distinguished himself greatly in the wars of Charles VII, and was rewarded by that monarch with the dignity of a marshal of France. But he was extravagant and magnificent in his style of living, and accustomed from his earliest years to the gratification of every wish and passion; and this, at last, led him from vice to vice, and from crime to crime, till a blacker name than his is not to be found in any record of human iniquity.

In his castle of Champtoce, he lived with all the splendour of an Eastern Caliph. He kept up a troop of two hundred horsemen to accompany him wherever he went; and his excursions for the purposes of hawking and hunting were the wonder of all the country around, so magnificent were the caparisons of his steeds and the dresses of his retainers. Day and night, his castle was open all the year round to comers of every degree. He made it a rule to regale even the poorest beggar with wine and hippocrass. Every day an ox was roasted whole in his spacious kitchens, besides sheep, pigs, and poultry sufficient to feed five hundred persons. He was equally magnificent in his devotions. His private chapel at Champtoce was the most beautiful in France, and far surpassed any of those in the richly-endowed cathedrals of Notre Dame in Paris, of Amiens, of Beauvais, or of Rouen. It was hung with cloth of gold and rich velvet. All the chandeliers were of pure gold, curiously inlaid with silver. The great crucifix over the altar was of solid silver, and the chalices and incense-burners were of pure gold. He had, besides, a fine organ, which he caused to be carried from one castle to another, on the shoulders of six men, whenever he changed his residence. He kept up a choir of twenty-five young children of both sexes, who were instructed in singing by the first musicians of the day. The master of his chapel he called a bishop, who had under him his deans, archdeacons, and vicars, each receiving great salaries; the bishop four hundred crowns a year, and the rest in proportion.

He also maintained a whole troop of players, including ten dancing-girls and as many ballad-singers, besides morris-dancers, jugglers, and mountebanks of every description. The theatre on which they performed was fitted up without any regard to expense; and they played mysteries, or danced the morris-dance, every evening, for the amusement of himself and household, and such strangers as were sharing his prodigal hospitality.

At the age of twenty-three, he married Catherine, the wealthy heiress of the house of Touars, for whom he refurnished his castle at an expense of a hundred thousand crowns. His marriage was the signal for new extravagance, and he launched out more madly than ever he had done before; sending for fine singers or celebrated dancers from foreign countries to amuse him and his spouse, and instituting tilts and tournaments in his great court-yard almost every week for all the knights and nobles of the province of Brittany. The Duke of Brittany’s court was not half so splendid as that of the Marechal de Rays. His utter disregard of wealth was so well known that he was made to pay three times its value for everything he purchased. His castle was filled with needy parasites and panderers to his pleasures, amongst whom he lavished rewards with an unsparing hand. But the ordinary round of sensual gratification ceased at last to afford him delight: he was observed to be more abstemious in the pleasures of the table, and to neglect the beauteous dancing-girls who used formerly to occupy so much of his attention. He was sometimes gloomy and reserved; and there was an unnatural wildness in his eye which gave indications of incipient madness. Still, his discourse was as reasonable as ever; his urbanity to the guests that flocked from far and near to Champtoce suffered no diminution; and learned priests, when they conversed with him, thought to themselves that few of the nobles of France were so well-informed as Gilles de Laval. But dark rumours spread gradually over the country; murder, and, if possible, still more atrocious deeds were hinted at; and it was remarked that many young children, of both sexes, suddenly disappeared, and were never afterwards heard of. One or two had been traced to the castle of Champtoce, and had never been seen to leave it; but no one dared to accuse openly so powerful a man as the Marechal de Rays. Whenever the subject of the lost children was mentioned in his presence, he manifested the greatest astonishment at the mystery which involved their fate, and indignation against those who might be guilty of kidnapping them. Still the world was not wholly deceived; his name became as formidable to young children as that of the devouring ogre in fairy tales; and they were taught to go miles round, rather than pass under the turrets of Champtoce.

In the course of a very few years, the reckless extravagance of the Marshal drained him of all his funds, and he was obliged to put up some of his estates for sale. The Duke of Brittany entered into a treaty with him for the valuable seignory of Ingrande; but the heirs of Gilles implored the interference of Charles VII. to stay the sale. Charles immediately issued an edict, which was confirmed by the Provincial Parliament of Brittany, forbidding him to alienate his paternal estates. Gilles had no alternative but to submit. He had nothing to support his extravagance but his allowance as a Marshal of France, which did not cover the one-tenth of his expenses. A man of his habits and character could not retrench his wasteful expenditure and live reasonably; he could not dismiss without a pang his horsemen, his jesters, his morris-dancers, his choristers, and his parasites, or confine his hospitality to those who really needed it. Notwithstanding his diminished resources, he resolved to live as he had lived before, and turn alchymist, that he might make gold out of iron, and be still the wealthiest and most magnificent among the nobles of Brittany.

In pursuance of this determination he sent to Paris, Italy, Germany, and Spain, inviting all the adepts in the science to visit him at Champtoce. The messengers he despatched on this mission were two of his most needy and unprincipled dependants, Gilles de Sille and Roger de Bricqueville. The latter, the obsequious panderer to his most secret and abominable pleasures, he had intrusted with the education of his motherless daughter, a child but five years of age, with permission, that he might marry her at the proper time to any person he chose, or to himself if he liked it better. This man entered into the new plans of his master with great zeal, and introduced to him one Prelati, an alchymist of Padua, and a physician of Poitou, who was addicted to the same pursuits. The Marshal caused a splendid laboratory to be fitted up for them, and the three commenced the search for the philosopher’s stone. They were soon afterwards joined by another pretended philosopher, named Anthony of Palermo, who aided in their operations for upwards of a year. They all fared sumptuously at the Marshal’s expense, draining him of the ready money he possessed, and leading him on from day to day with the hope that they would succeed in the object of their search. From time to time new aspirants from the remotest parts of Europe arrived at his castle, and for months he had upwards of twenty alchymists at work – trying to transmute copper into gold, and wasting the gold, which was still his own, in drugs and elixirs.

But the Lord of Rays was not a man to abide patiently their lingering processes. Pleased with their comfortable quarters, they jogged on from day to day, and would have done so for years, had they been permitted. But he suddenly dismissed them all, with the exception of the Italian Prelati, and the physician of Poitou. These he retained to aid him to discover the secret of the philosopher’s stone by a bolder method. The Poitousan had persuaded him that the devil was the great depositary of that and all other secrets, and that he would raise him before Gilles, who might enter into any contract he pleased with him. Gilles expressed his readiness, and promised to give the devil anything but his soul, or do any deed that the arch-enemy might impose upon him. Attended solely by the physician, he proceeded at midnight to a wild-looking place in a neighbouring forest; the physician drew a magic circle around them on the sward, and muttered for half an hour an invocation to the Evil Spirit to arise at his bidding, and disclose the secrets of alchymy. Gilles looked on with intense interest, and expected every moment to see the earth open, and deliver to his gaze the great enemy of mankind. At last the eyes of the physician became fixed, his hair stood on end, and he spoke, as if addressing the fiend. But Gilles saw nothing except his companion. At last the physician fell down on the sward as if insensible. Gilles looked calmly on to see the end. After a few minutes the physician arose, and asked him if he had not seen how angry the devil looked? Gilles replied, that he had seen nothing; upon which his companion informed him that Beelzebub had appeared in the form of a wild leopard, growled at him savagely, and said nothing; and that the reason why the Marshal had neither seen nor heard him, was that he hesitated in his own mind as to devoting himself entirely to the service. De Rays owned that he had indeed misgivings, and inquired what was to be done to make the devil speak out, and unfold his secret? The physician replied, that some person must go to Spain and Africa to collect certain herbs which only grew in those countries, and offered to go himself, if De Rays would provide the necessary funds. De Rays at once consented; and the physician set out on the following day with all the gold that his dupe could spare him. The Marshal never saw his face again.

But the eager Lord of Champtoce could not rest. Gold was necessary for his pleasures; and unless, by supernatural aid, he had no means of procuring many further supplies. The physician was hardly twenty leagues on his journey, before Gilles resolved to make another effort to force the devil to divulge the art of gold making. He went out alone for that purpose, but all his conjurations were of no effect. Beelzebub was obstinate, and would not appear. Determined to conquer him if he could, he unbosomed himself to the Italian alchymist, Prelati. The latter offered to undertake the business, upon condition that De Rays did not interfere in the conjurations, and consented besides to furnish him with all the charms and talismans that might be required. He was further to open a vein in his arm, and sign with his blood a contract that he would work the devil’s will in all things, and offer up to him a sacrifice of the heart, lungs, hands, eyes, and blood of a young child. The grasping monomaniac made no hesitation; but agreed at once to the disgusting terms proposed to him. On the following night, Prelati went out alone; and after having been absent for three or four hours, returned to Gilles, who sat anxiously awaiting him. Prelati then informed him that he had seen the devil in the shape of a handsome youth of twenty. He further said, that the devil desired to be called Barron in all future invocations; and had shown him a great number of ingots of pure gold, buried under a large oak in the neighbouring forest, all of which, and as many more as he desired, should become the property of the Marechal de Rays if he remained firm, and broke no condition of the contract. Prelati further showed him a small casket of black dust, which would turn iron into gold; but as the process was very troublesome, he advised that they should be contented with the ingots they found under the oak tree, and which would more than supply all the wants that the most extravagant imagination could desire. They were not, however, to attempt to look for the gold till a period of seven times seven weeks, or they would find nothing but slates and stones for their pains. Gilles expressed the utmost chagrin and disappointment, and at once said that he could not wait for so long a period; if the devil were not more prompt, Prelati might tell him, that the Marechal de Rays was not to be trifled with, and would decline all further communication with him. Prelati at last persuaded him to wait seven times seven days. They then went at midnight with picks and shovels to dig up the ground under the oak, where they found nothing to reward them but a great quantity of slates, marked with hieroglyphics. It was now Prelati’s turn to be angry; and he loudly swore that the devil was nothing but a liar and a cheat. The Marshal joined cordially in the opinion, but was easily persuaded by the cunning Italian to make one more trial. He promised at the same time that he would endeavour, on the following night, to discover the reason why the devil had broken his word. He went out alone accordingly, and on his return informed his patron that he had seen Barron, who was exceedingly angry that they had not waited the proper time ere they looked for the ingots. Barron had also said, that the Marechal de Rays could hardly expect any favours from him, at a time when he must know that he had been meditating a pilgrimage to the Holy Land, to make atonement for his sins. The Italian had doubtless surmised this, from some incautious expression of his patron, for De Rays frankly confessed that there were times when, sick of the world and all its pomps and vanities, he thought of devoting himself to the service of God.

In this manner the Italian lured on from month to month his credulous and guilty patron, extracting from him all the valuables he possessed, and only waiting a favourable opportunity to decamp with his plunder. But the day of retribution was at hand for both. Young girls and boys continued to disappear in the most mysterious manner; and the rumours against the owner of Champtoce grew so loud and distinct, that the Church was compelled to interfere. Representations were made by the Bishop of Nantes to the Duke of Brittany, that it would be a public scandal if the accusations against the Marechal de Rays were not inquired into. He was arrested accordingly in his own castle, along with his accomplice Prelati, and thrown into a dungeon at Nantes to await his trial.

The judges appointed to try him were the Bishop of Nantes Chancellor of Brittany, the Vicar of the Inquisition in France, and the celebrated Pierre l’Hopital, the President of the Provincial Parliament. The offences laid to his charge were sorcery, sodomy, and murder. Gilles, on the first day of his trial, conducted himself with the utmost insolence. He braved the judges on the judgment seat, calling them simoniacs and persons of impure life, and said he would rather be hanged by the neck like a dog without trial, than plead either guilty or not guilty to such contemptible miscreants. But his confidence forsook him as the trial proceeded, and he was found guilty on the clearest evidence of all the crimes laid to his charge. It was proved that he took insane pleasure in stabbing the victims of his lust, and in observing the quivering of their flesh, and the fading lustre of their eyes as they expired. The confession of Prelati first made the judges acquainted with this horrid madness, and Gilles himself confirmed it before his death. Nearly a hundred children of the villagers around his two castles of Champtoce and Machecoue, had been missed within three years the greater part, if not all, of whom were immolated to the lust or the cupidity of this monster. He imagined that he thus made the devil his friend, and that his recompence would be the secret of the philosopher’s stone.

Gilles and Prelati were both condemned to be burned alive. At the place of execution they assumed the air of penitence and religion. Gilles tenderly embraced Prelati, saying, “Farewell, friend Francis! In this world we shall never meet again; but let us place our hopes in God; we shall see each other in Paradise.” Out of consideration for his high rank and connections, the punishment of the Marshal was so far mitigated, that he was not burned alive like Prelati. He was first strangled, and then thrown into the flames: his body, when half consumed, was given over to his relatives for interment; while that of the Italian was burned to ashes, and then scattered in the winds. [For full details of this extraordinary trial, see “Lobineau’s Nouvelle Histoire de Bretagne;” and D’Argentre’s work on the same subject.]

JACQUES COEUR.

This remarkable pretender to the secret of the philosopher’s stone, was contemporary with the last mentioned. He was a great personage at the court of Charles VII, and in the events of his reign played a prominent part. From a very humble origin he rose to the highest honours of the state, and amassed enormous wealth, by peculation and the plunder of the country which he should have served. It was to hide his delinquencies in this respect, and to divert attention from the real source of his riches, that he boasted of having discovered the art of transmuting the inferior metals into gold and silver.

His father was a goldsmith in the city of Bourges; but so reduced in circumstances towards the latter years of his life, that he was unable to pay the necessary fees to procure his son’s admission into the guild. Young Jacques became, however, a workman in the Royal Mint of Bourges, in 1428, and behaved himself so well, and showed so much knowledge of metallurgy, that he attained rapid promotion in that establishment. He had also the good fortune to make the acquaintance of the fair Agnes Sorel, by whom he was patronized and much esteemed. Jacques had now three things in his favour – ability, perseverance, and the countenance of the King’s mistress. Many a man succeeds with but one of these to help him forward: and it would have been strange indeed, if Jacques Coeur, who had them all, should have languished in obscurity. While still a young man he was made Master of the Mint, in which he had been a journeyman, and installed at the same time into the vacant office of Grand Treasurer of the royal household.

He possessed an extensive knowledge of finance, and turned it wonderfully to his own advantage as soon as he became intrusted with extensive funds. He speculated in articles of the first necessity, and made himself very unpopular by buying up grain, honey, wines, and other produce, till there was a scarcity, when he sold it again at enormous profit. Strong in the royal favour, he did not hesitate to oppress the poor by continual acts of forestalling and monopoly. As there is no enemy so bitter as the estranged friend, so of all the tyrants and tramplers upon the poor, there is none so fierce and reckless as the upstart that sprang from their ranks. The offensive pride of Jacques Coeur to his inferiors was the theme of indignant reproach in his own city, and his cringing humility to those above him was as much an object of contempt to the aristocrats into whose society he thrust himself. But Jacques did not care for the former, and to the latter he was blind. He continued his career till he became the richest man in France, and so useful to the King that no important enterprise was set on foot until he had been consulted. He was sent in 1446 on an embassy to Genoa, and in the following year to Pope Nicholas V. In both these missions he acquitted himself to the satisfaction of his sovereign, and was rewarded with a lucrative appointment, in addition to those which he already held.

In the year 1449, the English in Normandy, deprived of their great general, the Duke of Bedford, broke the truce with the French King, and took possession of a small town belonging to the Duke of Brittany. This was the signal for the recommencemerit of a war, in which the French regained possession of nearly the whole province. The money for this war was advanced, for the most part, by Jacques Coeur. When Rouen yielded to the French, and Charles made his triumphal entry into that city, accompanied by Dunois and his most famous generals, Jacques was among the most brilliant of his cortege. His chariot and horses vied with those of the King in the magnificence of their trappings; and his enemies said of him that he publicly boasted that he alone had driven out the English, and that the valour of the troops would would have been nothing without his gold.

Dunois appears, also, to have been partly of the same opinion. Without disparaging the courage of the army, he acknowledged the utility of the able financier, by whose means they had been fed and paid, and constantly afforded him his powerful protection.

When peace returned, Jacques again devoted himself to commerce, and fitted up several galleys to trade with the Genoese. He also bought large estates in various parts of France; the chief of which were the baronies of St. Fargeau, Meneton, Salone, Maubranche, Meaune, St. Gerant de Vaux, and St. Aon de Boissy; the earldoms or counties of La Palisse, Champignelle, Beaumont, and Villeneuve la Genet, and the marquisate of Toucy. He also procured for his son, Jean Coeur, who had chosen the Church for his profession, a post no less distinguished than that of Archbishop of Bourges.

Everybody said that so much wealth could not have been honestly acquired; and both rich and poor longed for the day that should humble the pride of the man, whom the one class regarded as an upstart and the other as an oppressor. Jacques was somewhat alarmed at the rumours that were afloat respecting him, and of dark hints that he had debased the coin of the realm and forged the King’s seal to an important document, by which he had defrauded the state of very considerable sums. To silence these rumours, he invited many alchymists from foreign countries to reside with him, and circulated a counter-rumour, that he had discovered the secret of the philosopher’s stone. He also built a magnificent house in his native city, over the entrance of which he caused to be sculptured the emblems of that science. Some time afterwards, he built another, no less splendid, at Montpellier, which he inscribed in a similar manner. He also wrote a treatise upon the hermetic philosophy, in which he pretended that he knew the secret of transmuting metals.

But all these attempts to disguise his numerous acts of peculation proved unavailing; and he was arrested in 1452, and brought to trial on several charges. Upon one only, which the malice of his enemies invented to ruin him, was he acquitted; which was, that he had been accessory to the death, by poison, of his kind patroness, Agnes Sorel. Upon the others, he was found guilty; and sentenced to be banished the kingdom, and to pay the enormous fine of four hundred thousand crowns. It was proved that he had forged the King’s seal; that, in his capacity of Master of the Mint of Bourges, he had debased, to a very great extent, the gold and silver coin of the realm; and that he had not hesitated to supply the Turks with arms and money to enable them to carry on war against their Christian neighbours, for which service he had received the most munificent recompences. Charles VII. was deeply grieved at his condemnation, and believed to the last that he was innocent. By his means the fine was reduced within a sum which Jacques Coeur could pay. After remaining for some time in prison, he was liberated, and left France with a large sum of money, part of which, it was alleged, was secretly paid him by Charles out of the produce of his confiscated estates. He retired to Cyprus, where he died about 1460, the richest and most conspicuous personage of the island.

The writers upon alchymy all claim Jacques Coeur as a member of their fraternity, and treat as false and libellous the more rational explanation of his wealth which the records of his trial afford. Pierre Borel, in his “Antiquites Gauloises,” maintains the opinion that Jacques was an honest man, and that he made his gold out of lead and copper by means of the philosopher’s stone. The alchymic adepts in general were of the same opinion; but they found it difficult to persuade even his contemporaries of the fact. Posterity is still less likely to believe it.

A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)

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Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.

A Gold Classics Library Selection

Extraordinary Popular Delusions And The Madness Of Crowds

The Tulipomania

by Charles Mackay

Introduction
The Mississippi Scheme
The South Sea Bubble
The Tulipomania
The Alchemists, part 1
The Alchemists, part 2
The Alchemists, part 3

Quis furor o cives! — Lucan.

The tulip,–so named, it is said, from a Turkish word, signifying a turban,– was introduced into western Europe about the middle of the sixteenth century. Conrad Gesner, who claims the merit of having brought it into repute,–little dreaming of the extraordinary commotion it was to make in the world,–says that he first saw it in the year 1559, in a garden at Augsburg, belonging to the learned Counsellor Herwart, a man very famous in his day for his collection of rare exotics. The bulbs were sent to this gentleman by a friend at Constantinople, where the flower had long been a favourite. In the course of ten or eleven years after this period, tulips were much sought after by the wealthy, especially in Holland and Germany. Rich people at Amsterdam sent for the bulbs direct to Constantinople, and paid the most extravagant prices for them. The first roots planted in England were brought from Vienna in 1600. Until the year 1634 the tulip annually increased in reputation, until it was deemed a proof of bad taste in any man of fortune to be without a collection of them. Many learned men, including Pompeius de Angelis and the celebrated Lipsius of Leyden, the author of the treatise “De Constantia,” were passionately fond of tulips. The rage for possessing them soon caught the middle classes of society, and merchants and shopkeepers, even of moderate means, began to vie with each other in the rarity of these flowers and the preposterous prices .they paid for them. A trader at Harlaem was known to pay one-half of his fortune for a single root–not with the design of selling it again at a profit, but to keep in his own conservatory for the admiration of his acquaintance.

One would suppose that there must have been some great virtue in this flower to have made it so valuable in the eyes of so prudent a people as the Dutch; but it has neither the beauty nor the perfume of the rose–hardly the beauty of the “sweet, sweet-pea;” neither is it as enduring as either. Cowley, it is true, is loud in its praise. He says–

“The tulip next appeared, all over gay, But wanton, full of pride, and full of play; The world can’t show a dye but here has place; Nay, by new mixtures, she can change her face; Purple and gold are both beneath her care- The richest needlework she loves to wear; Her only study is to please the eye, And to outshine the rest in finery.”

This, though not very poetical, is the description of a poet. Beckmann, in his History of Inventions, paints it with more fidelity, and in prose more pleasing than Cowley’s poetry. He says, “There are few plants which acquire, through accident, weakness, or disease, so many variegations as the tulip. When uncultivated, and in its natural state, it is almost of one colour, has large leaves, and an extraordinarily long stem. When it has been weakened by cultivation, it becomes more agreeable in the eyes of the florist. The petals are then paler, smaller, and more diversified in hue; and the leaves acquire a softer green colour. Thus this masterpiece of culture, the more beautiful it turns, grows so much the weaker, so that, with the greatest skill and most careful attention, it can scarcely be transplanted, or even kept alive.”

Many persons grow insensibly attached to that which gives them a great deal of trouble, as a mother often loves her sick and ever-ailing child better than her more healthy offspring. Upon the same principle we must account for the unmerited encomia lavished upon these fragile blossoms. In 1634, the rage among the Dutch to possess them was so great that the ordinary industry of the country was neglected, and the population, even to its lowest dregs, embarked in the tulip trade. As the mania increased, prices augmented, until, in the year 1635, many persons were known to invest a fortune of 100,000 florins in the purchase of forty roots. It then became necessary to sell them by their weight in perits, a small weight less than a grain. A tulip of the species called Admiral Liefken, weighing 400 perits, was worth 4400 florins; an Admiral Von der Eyk, weighing 446 perits, was worth 1260 florins; a shilder of 106 perits was worth 1615 florins; a viceroy of 400 perits, 3000 florins, and, most precious of all, a Semper Augustus, weighing 200 perits, was thought to be very cheap at 5500 florins. The latter was much sought after, and even an inferior bulb might command a price of 2000 florins. It is related that, at one time, early in 1636, there were only two roots of this description to be had in all Holland, and those not of the best. One was in the possession of a dealer in Amsterdam, and the other in Harlaem. So anxious were the speculators to obtain them that one person offered the fee-simple of twelve acres of building ground for the Harlaem tulip. That of Amsterdam was bought for 4600 florins, a new carriage, two grey horses, and a complete suit of harness. Munting, an industrious author of that day, who wrote a folio volume of one thousand pages upon the tulipomania, has preserved the following list of the various articles, and their value, which were delivered for one single root of the rare species called the viceroy :– florins. Two lasts of wheat………….. 448 Four lasts of rye…………… 558 Four fat oxen………………. 480 Eight fat swine…………….. 240 Twelve fat sheep……………. 120 Two hogsheads of wine……….. 70 Four tuns of beer…………… 32 Two tons of butter………….. 192 One thousand lbs. of cheese….. 120 A complete bed……………… 100 A suit of clothes…………… 80 A silver drinking cup……….. 60 —– 2500 —–

People who had been absent from Holland, and whose chance it was to return when this folly was at its maximum, were sometimes led into awkward dilemmas by their ignorance. There is an amusing instance of the kind related in Blainville’s Travels. A wealthy merchant, who prided himself not a little on his rare tulips, received upon one occasion a very valuable consignment of merchandise from the Levant. Intelligence of its arrival was brought him by a sailor, who presented himself for that purpose at the counting-house, among bales of goods of every description. The merchant, to reward him for his news, munificently made him a present of a fine red herring for his breakfast. The sailor had, it appears, a great partiality for onions, and seeing a bulb very like an onion lying upon the counter of this liberal trader, and thinking it, no doubt, very much out of its place among silks and velvets, he slily seized an opportunity and slipped it into his pocket, as a relish for his herring. He got clear off with his prize, and proceeded to the quay to eat his breakfast. Hardly was his back turned when the merchant missed his valuable Semper Augustus, worth three thousand florins, or about 280 pounds sterling. The whole establishment was instantly in an uproar; search was everywhere made for the precious root, but it was not to be found. Great was the merchant’s distress of mind. The search was renewed, but again without success. At last some one thought of the sailor.

The unhappy merchant sprang into the street at the bare suggestion. His alarmed household followed him. The sailor, simple soul! had not thought of concealment. He was found quietly sitting on a coil of ropes, masticating the last morsel of his “onion.” Little did he dream that he had been eating a breakfast whose cost might have regaled a whole ship’s crew for a twelvemonth; or, as the plundered merchant himself expressed it, “might have sumptuously feasted the Prince of Orange and the whole court of the Stadtholder.” Anthony caused pearls to be dissolved in wine to drink the health of Cleopatra; Sir Richard Whittington was as foolishly magnificent in an entertainment to King Henry V; and Sir Thomas Gresham drank a diamond, dissolved in wine, to the health of Queen Elizabeth, when she opened the Royal Exchange: but the breakfast of this roguish Dutchman was as splendid as either. He had an advantage, too, over his wasteful predecessors: their gems did not improve the taste or the wholesomeness of their wine, while his tulip was quite delicious with his red herring. The most unfortunate part of the business for him was, that he remained in prison for some months, on a charge of felony, preferred against him by the merchant.

Another story is told of an English traveller, which is scarcely less ludicrous. This gentleman, an amateur botanist, happened to see a tulip-root lying in the conservatory of a wealthy Dutchman. Being ignorant of its quality, he took out his penknife, and peeled off its coats, with the view of making experiments upon it. When it was by this means reduced to half its original size, he cut it into two equal sections, making all the time many learned remarks on the singular appearances of the unknown bulb. Suddenly the owner pounced upon him, and, with fury in his eyes, asked him if he knew what he had been doing? “Peeling a most extraordinary onion,” replied the philosopher. “Hundert tausend duyvel,” said the Dutchman; “it’s an Admiral Van der E. yck.” “Thank you,” replied the traveller, taking out his note-book to make a memorandum of the same; “are these admirals common in your country?” “Death and the devil,” said the Dutchman, seizing the astonished man of science by the collar; “come before the syndic, and you shall see.” In spite of his remonstrances, the traveller was led through the streets, followed by a mob of persons. When brought into the presence of the magistrate, he learned, to his consternation, that the root upon which he had been experimentalizing was worth four thousand florins; and, notwithstanding all he could urge in extenuation, he was lodged in prison until he found securities for the payment of this sum.

The demand for tulips of a rare species increased so much in the year 1636, that regular marts for their sale were established on the Stock Exchange of Amsterdam, in Rotterdam, Harlaem, Leyden, Alkmar, Hoorn, and other towns. Symptoms of gambling now became, for the first time, apparent. The stockjobbers, ever on the alert for a new speculation, dealt largely in tulips, making use of all the means they so well knew how to employ, to cause fluctuations in prices. At first, as in all these gambling mania, confidence was at its height, and everybody gained. The tulip-jobbers speculated in the rise and fall of the tulip stocks, and made large profits by buying when prices fell, and selling out when they rose. Many individuals grew suddenly rich. A golden bait hung temptingly out before the people, and, one after the other, they rushed to the tulip marts, like flies around a honeypot. Every one imagined that the passion for tulips would last for ever, and that the wealthy from every part of the world would send to Holland, and pay whatever prices were asked for them. The riches of Europe would be concentrated on the shores of the Zuyder Zee, and poverty banished from the favoured clime of Holland. Nobles, citizens, farmers, mechanics, seamen, footmen, maidservants, even chimney-sweeps and old clotheswomen, dabbled in tulips. People of all grades converted their property into cash, and invested it in flowers. Houses and lands were offered for sale at ruinously low prices, or assigned in payment of bargains made at the tulip-mart. Foreigners became smitten with the same frenzy, and money poured into Holland from all directions. The prices of the necessaries of life rose again by degrees; houses and lands, horses and carriages, and luxuries of every sort, rose in value with them, and for some months Holland seemed the very antechamber of Plutus. The operations of the trade became so extensive and so intricate, that it was found necessary to draw up a code of laws for the guidance of the dealers. Notaries and clerks were also appointed, who devoted themselves exclusively to the interests of the trade. The designation of public notary was hardly known in some towns, that of tulip notary usurping its place. In the smaller towns, where there was no exchange, the principal tavern was usually selected as the “showplace,” where high and low traded in tulips, and confirmed their bargains over sumptuous entertainments. These dinners were sometimes attended by two or three hundred persons, and large vases of tulips, in full bloom, were placed at regular intervals upon the tables and sideboards, for their gratification during the repast.

At last, however, the more prudent began to see that this folly could not last for ever. Rich people no longer bought the flowers to keep them in their gardens, but to sell them again at cent. per cent. profit. It was seen that somebody must lose fearfully in the end. As this conviction spread, prices fell, and never rose again. Confidence was destroyed, and a universal panic seized upon the dealers. A had agreed to purchase ten Sempers Augustines from B, at four thousand florins each, at six weeks after the signing of the contract. B was ready with the flowers at the appointed time; but the price had fallen to three or four hundred florins, and A refused either to pay the difference or receive the tulips. Defaulters were announced day after day in all the towns of Holland. Hundreds who, a few months previously, had begun to doubt that there was such a thing as poverty in the land, suddenly found themselves the possessors of a few bulbs, which nobody would buy, even though they offered them at one quarter of the sums they had paid for them. The cry of distress resounded everywhere, and each man accused his neighbour. The few who had contrived to enrich themselves hid their wealth from the knowledge of their fellow-citizens, and invested it in the English or other funds. Many who, for a brief season, had emerged from the humbler walks of life, were cast back into their original obscurity. Substantial merchants were reduced almost to beggary, and many a representative of a noble line saw the fortunes of his house ruined beyond redemption.

When the first alarm subsided, the tulip-holders in the several towns held public meetings to devise what measures were best to be taken to restore public credit. It was generally agreed, that deputies should be sent from all parts to Amsterdam, to consult with the government upon some remedy for the evil. The Government at first refused to interfere, but advised the tulip-holders to agree to some plan among themselves. Several meetings were held for this purpose; but no measure could be devised likely to give satisfaction to the deluded people, or repair even a slight portion of the mischief that had been done. The language of complaint and reproach was in everybody’s mouth, and all the meetings were of the most stormy character. At last, however, after much bickering and ill-will, it was agreed, at Amsterdam, by the assembled deputies, that all contracts made in the height of the mania, or prior to the month of November 1636, should be declared null and void, and that, in those made after that date, purchasers should be freed from their engagements, on paying ten per cent. to the vendor. This decision gave no satisfaction. The vendors who had their tulips on hand were, of course, discontented, and those who had pledged themselves to purchase, thought themselves hardly treated. Tulips which had, at one time, been worth six thousand florins, were now to be procured for five hundred; so that the composition of ten per cent. was one hundred florins more than the actual value. Actions for breach of contract were threatened in all the courts of the country; but the latter refused to take cognizance of gambling transactions.

The matter was finally referred to the Provincial Council at the Hague, and it was confidently expected that the wisdom of this body would invent some measure by which credit should be restored. Expectation was on the stretch for its decision, but it never came. The members continued to deliberate week after week, and at last, after thinking about it for three months, declared that they could offer no final decision until they had more information. They advised, however, that, in the mean time, every vendor should, in the presence of witnesses, offer the tulips in natura to the purchaser for the sums agreed upon. If the latter refused to take them, they might be put up for sale by public auction, and the original contractor held responsible for the difference between the actual and the stipulated price. This was exactly the plan recommended by the deputies, and which was already shown to be of no avail. There was no court in Holland which would enforce payment. The question was raised in Amsterdam, but the judges unanimously refused to interfere, on the ground that debts contracted in gambling were no debts in law.

Thus the matter rested. To find a remedy was beyond the power of the government. Those who were unlucky enough to have had stores of tulips on hand at the time of the sudden reaction were left to bear their ruin as philosophically as they could; those who had made profits were allowed to keep them; but the commerce of the country suffered a severe shock, from which it was many years ere it recovered.

The example of the Dutch was imitated to some extent in England. In the year 1636 tulips were publicly sold in the Exchange of London, and the jobbers exerted themselves to the utmost to raise them to the fictitious value they had acquired in Amsterdam. In Paris also the jobbers strove to create a tulipomania. In both cities they only partially succeeded. However, the force of example brought the flowers into great favour, and amongst a certain class of people tulips have ever since been prized more highly than any other flowers of the field. The Dutch are still notorious for their partiality to them, and continue to pay higher prices for them than any other people. As the rich Englishman boasts of his fine race-horses or his old pictures, so does the wealthy Dutchman vaunt him of his tulips.

In England, in our day, strange as it may appear, a tulip will produce more money than an oak. If one could be found, rara in tetris, and black as the black swan alluded to by Juvenal, its price would equal that of a dozen acres of standing corn. In Scotland, towards the close of the seventeenth century, the highest price for tulips, according to the authority of a writer in the supplement to the third edition of the “Encyclopedia Britannica,” was ten guineas. Their value appears to have diminished from that time till the year 1769, when the two most valuable species in England were the Don Quevedo and the Valentinier, the former of which was worth two guineas and the latter two guineas and a half. These prices appear to have been the minimum. In the year 1800, a common price was fifteen guineas for a single bulb. In 1835, so foolish were the fanciers, that a bulb of the species called the Miss Fanny Kemble was sold by public auction in London for seventy-five pounds. Still more astonishing was the price of a tulip in the possession of a gardener in the King’s Road, Chelsea. In his catalogues, it was labelled at two hundred guineas!

Thus a flower, which for beauty and perfume was surpassed by the abundant roses of the garden,–a nosegay of which might be purchased for a penny,–was priced at a sum which would have provided an industrious labourer and his family with food, and clothes, and lodging for six years! Should chickweed and groundsel ever come into fashion, the wealthy would, no doubt, vie with each other in adorning their gardens with them, and paying the most extravagant prices for them. In so doing, they would hardly be more foolish than the admirers of tulips. The common prices for these flowers at the present time vary from five to fifteen guineas, according to the rarity of the species.

A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)

ORDER DESK
1-800-869-5115 Ext#100
[email protected]

Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.

A Gold Classics Library Selection

Extraordinary Popular Delusions And The Madness Of Crowds

The South Sea Bubble

by Charles Mackay

Introduction
The Mississippi Scheme
The South Sea Bubble
The Tulipomania
The Alchemists, part 1
The Alchemists, part 2
The Alchemists, part 3

At length corruption, like a general flood,
Did deluge all, and avarice creeping on,
Spread, like a low-born mist, and hid the sun.
Statesmen and patriots plied alike the stocks,
Peeress and butler shared alike the box;
And judges jobbed, and bishops bit the town,
And mighty dukes packed cards for half-a-crown:
Britain was sunk in lucre’s sordid charms.
– Alexander Pope.

The South Sea Company was originated by the celebrated Harley, Earl of Oxford, in the year 1711, with the view of restoring public credit, which had suffered by the dismissal of the Whig ministry, and of providing for the discharge of the army and navy debentures, and other parts of the floating debt, amounting to nearly ten millions sterling. A company of merchants, at that time without a name, took this debt upon themselves, and the government agreed to secure them, for a certain period, the interest of six per cent. To provide for this interest, amounting to 600,000 pounds per annum, the duties upon wines, vinegar, India goods, wrought silks, tobacco, whale-fins, and some other articles, were rendered permanent. The monopoly of the trade to the South Seas was granted, and the company, being incorporated by Act of Parliament, assumed the title by which it has ever since been known. The minister took great credit to himself for his share in this transaction, and the scheme was always called by his flatterers “the Earl of Oxford’s masterpiece.”

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

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

“Parturiunt montes, nascitur ridiculus mus,”

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

The King’s speech, at the opening of the session of 1717, made pointed allusion to the state of public credit, and recommended that proper measures should be taken to reduce the national debt. The two great monetary corporations, the South Sea Company and the Bank of England, made proposals to Parliament on the 20th of May ensuing. The South Sea Company prayed that their capital stock of ten millions might be increased to twelve, by subscription or otherwise, and offered to accept five per cent. instead of six upon the whole amount. The Bank made proposals equally advantageous. The House debated for some time, and finally three acts were passed, called the South Sea Act, the Bank Act, and the General Fund Act. By the first, the proposals of the South Sea Company were accepted, and that body held itself ready to advance the sum of two millions towards discharging the principal and interest of the debt due by the state for the four lottery funds of the ninth and tenth years of Queen Anne. By the second act, the Bank received a lower rate of interest for the sum of 1,775,027 pounds 15 shillings due to it by the state, and agreed to deliver up to be cancelled as many Exchequer bills as amounted to two millions sterling, and to accept of an annuity of one hundred thousand pounds, being after the rate of five per cent, the whole redeemable at one year’s notice. They were further required to be ready to advance, in case of need, a sum not exceeding 2,500,000 pounds upon the same terms of five per cent interest, redeemable by Parliament. The General Fund Act recited the various deficiencies, which were to be made good by the aids derived from the foregoing sources.

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

It was while Law’s plan was at its greatest height of popularity, while people were crowding in thousands to the Rue Quincampoix, and ruining themselves with frantic eagerness, that the South Sea directors laid before Parliament their famous plan for paying off the national debt. Visions of boundless wealth floated before the fascinated eyes of the people in the two most celebrated countries of Europe. The English commenced their career of extravagance somewhat later than the French; but as soon as the delirium seized them, they were determined not to be outdone. Upon the 22nd of January 1720, the House of Commons resolved itself into a Committee of the whole House, to take into consideration that part of the King’s speech at the opening of the session which related to the public debts, and the proposal of the South Sea Company towards the redemption and sinking of the same. The proposal set forth at great length, and under several heads, the debts of the state, amounting to 30,981,712 pounds, which the Company were anxious to take upon themselves, upon consideration of five per cent. per annum, secured to them until Midsummer 1727; after which time, the whole was to become redeemable at the pleasure of the legislature, and the interest to be reduced to four per cent. The proposal was received with great favour; but the Bank of England had many friends in the House of Commons, who were desirous that that body should share in the advantages that were likely to accrue. On behalf of this corporation it was represented, that they had performed great and eminent services to the state, in the most difficult times, and deserved, at least, that if any advantage was to be made by public bargains of this nature, they should be preferred before a company that had never done any thing for the nation. The further consideration of the matter was accordingly postponed for five days. In the mean time, a plan was drawn up by the Governors of the Bank. The South Sea Company, afraid that the Bank might offer still more advantageous terms to the government than themselves, reconsidered their former proposal, and made some alterations in it, which they hoped would render it more acceptable. The principal change was a stipulation that the government might redeem these debts at the expiration of four years, instead of seven, as at first suggested. The Bank resolved not to be outbidden in this singular auction, and the Governors also reconsidered their first proposal, and sent in a new one.

Thus, each corporation having made two proposals, the House began to deliberate. Mr. Robert Walpole was the chief speaker in favour of the Bank, and Mr. Aislabie, the Chancellor of the Exchequer, the principal advocate on behalf of the South Sea Company. It was resolved, on the 2nd of February, that the proposals of the latter were most advantageous to the country. They were accordingly received, and leave was given to bring in a bill to that effect.

Exchange Alley was in a fever of excitement. The Company’s stock, which had been at a hundred and thirty the previous day, gradually rose to three hundred, and continued to rise with the most astonishing rapidity during the whole time that the bill in its several stages was under discussion. Mr. Walpole was almost the only statesman in the House who spoke out boldly against it. He warned them, in eloquent and solemn language, of the evils that would ensue. It countenanced, he said, “the dangerous practice of stockjobbing, and would divert the genius of the nation from trade and industry. It would hold out a dangerous lure to decoy the unwary to their ruin, by making them part with the earnings of their labour for a prospect of imaginary wealth. The great principle of the project was an evil of first-rate magnitude; it was to raise artificially the value of the stock, by exciting and keeping up a general infatuation, and by promising dividends out of funds which could never be adequate to the purpose. In a prophetic spirit he added, that if the plan succeeded, the directors would become masters of the government, form a new and absolute aristocracy in the kingdom, and control the resolutions of the legislature. If it failed, which he was convinced it would, the result would bring general discontent and ruin upon the country. Such would be the delusion, that when the evil day came, as come it would, the people would start up, as from a dream, and ask themselves if these things could have been true. All his eloquence was in vain. He was looked upon as a false prophet, or compared to the hoarse raven, croaking omens of evil. His friends, however, compared him to Cassandra, predicting evils which would only be believed when they came home to men’s hearths, and stared them in the face at their own boards. Although, in former times, the House had listened with the utmost attention to every word that fell from his lips, the benches became deserted when it was known that he would speak on the South Sea question.

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

In the House of Lords the bill was hurried through all its stages with unexampled rapidity. On the 4th of April it was read a first time; on the 5th, it was read a second time; on the 6th, it was committed; and on the 7th, was read a third time, and passed.

Several peers spoke warmly against the scheme; but their warnings fell upon dull, cold ears. A speculating frenzy had seized them as well as the plebeians. Lord North and Grey said the bill was unjust in its nature, and might prove fatal in its consequences, being calculated to enrich the few and impoverish the many. The Duke of Wharton followed; but, as he only retailed at second-hand the arguments so eloquently stated by Walpole in the Lower House, he was not listened to with even the same attention that had been bestowed upon Lord North and Grey. Earl Cowper followed on the same side, and compared the bill to the famous horse of the siege of Troy. Like that, it was ushered in and received with great pomp and acclamations of joy, but bore within it treachery and destruction. The Earl of Sunderland endeavoured to answer all objections; and, on the question being put, there appeared only seventeen peers against, and eighty-three in favour of the project. The very same day on which it passed the Lords, it received the Royal assent, and became the law of the land.

It seemed at that time as if the whole nation had turned stockjobbers. Exchange Alley was every day blocked up by crowds, and Cornhill was impassable for the number of carriages. Everybody came to purchase stock. “Every fool aspired to be a knave.” In the words of a ballad, published at the time, and sung about the streets, [“A South Sea Ballad; or, Merry Remarks upon Exchange Alley Bubbles. To a new tune, called ‘ The Grand Elixir; or, the Philosopher’s Stone Discovered.'”]

Then stars and garters did appear Among the meaner rabble; To buy and sell, to see and hear, The Jews and Gentiles squabble.

The greatest ladies thither came, And plied in chariots daily, Or pawned their jewels for a sum To venture in the Alley.

The inordinate thirst of gain that had afflicted all ranks of society, was not to be slaked even in the South Sea. Other schemes, of the most extravagant kind, were started. The share-lists were speedily filled up, and an enormous traffic carried on in shares, while, of course, every means were resorted to, to raise them to an artificial value in the market.

Contrary to all expectation, South Sea stock fell when the bill received the Royal assent. On the 7th of April the shares were quoted at three hundred and ten, and. on the following day, at two hundred and ninety. Already the directors had tasted the profits of their scheme, and it was not likely that they should quietly allow the stock to find its natural level, without an effort to raise it. Immediately their busy emissaries were set to work. Every person interested in the success of the project endeavoured to draw a knot of listeners around him, to whom he expatiated on the treasures of the South American seas. Exchange Alley was crowded with attentive groups. One rumour alone, asserted with the utmost confidence, had an immediate effect upon the stock. It was said, that Earl Stanhope had received overtures in France from the Spanish Government to exchange Gibraltar and Port Mahon for some places on the coast of Peru, for the security and enlargement of the trade in the South Seas. Instead of one annual ship trading to those ports, and allowing the King of Spain twenty-five per cent. out of the profits, the Company might build and charter as many ships as they pleased, and pay no per centage whatever to any foreign potentate.

Visions of ingots danced before their eyes,

and stock rose rapidly. On the 12th of April, five days after the bill had become law, the directors opened their books for a subscription of a million, at the rate of 300 pounds for every 100 pounds capital. Such was the concourse of persons, of all ranks, that this first subscription was found to amount to above two millions of original stock. It was to be paid at five payments, of 60 pounds each for every 100 pounds. In a few days the stock advanced to three hundred and forty, and the subscriptions were sold for double the price of the first payment. To raise the stock still higher, it was declared, in a general court of directors, on the 21st of April, that the midsummer dividend should be ten per cent., and that all subscriptions should be entitled to the same. These resolutions answering the end designed, the directors, to improve the infatuation of the monied men, opened their books for a second subscription of a million, at four hundred per cent. Such was the frantic eagerness of people of every class to speculate in these funds, that in the course of a few hours no less than a million and a half was subscribed at that rate.

In the mean time, innumerable joint-stock companies started up everywhere. They soon received the name of Bubbles, the most appropriate that imagination could devise. The populace are often most happy in the nicknames they employ. None could be more apt than that of Bubbles. Some of them lasted for a week, or a fortnight, and were no more heard of, while others could not even live out that short span of existence. Every evening produced new schemes, and every morning new projects. The highest of the aristocracy were as eager in this hot pursuit of gain as the most plodding jobber in Cornhill. The Prince of Wales became governor of one company, and is said to have cleared 40,000 pounds by his speculations. [Coxe’s Walpole, Correspondence between Mr. Secretary Craggs and Earl Stanhope.] The Duke of Bridgewater started a scheme for the improvement of London and Westminster, and the Duke of Chandos another. There were nearly a hundred different projects, each more extravagant and deceptive than the other. To use the words of the “Political State,” they were “set on foot and promoted by crafty knaves, then pursued by multitudes of covetous fools, and at last appeared to be, in effect, what their vulgar appellation denoted them to be — bubbles and mere cheats.” It was computed that near one million and a half sterling was won and lost by these unwarrantable practices, to the impoverishment of many a fool, and the enriching of many a rogue.

Some of these schemes were plausible enough, and, had they been undertaken at a time when the public mind was unexcited, might have been pursued with advantage to all concerned. But they were established merely with the view of raising the shares in the market. The projectors took the first opportunity of a rise to sell out, and next morning the scheme was at an end. Maitland, in his History of London, gravely informs us, that one of the projects which received great encouragement, was for the establishment of a company “to make deal-boards out of saw-dust.” This is, no doubt, intended as a joke; but there is abundance of evidence to show that dozens of schemes hardly a whir more reasonable, lived their little day, ruining hundreds ere they fell. One of them was for a wheel for perpetual motion — capital, one million; another was “for encouraging the breed of horses in England, and improving of glebe and church lands, and repairing and rebuilding parsonage and vicarage houses.” Why the clergy, who were so mainly interested in the latter clause, should have taken so much interest in the first, is only to be explained on the supposition that the scheme was projected by a knot of the foxhunting parsons, once so common in England. The shares of this company were rapidly subscribed for. But the most absurd and preposterous of all, and which showed, more completely than any other, the utter madness of the people, was one, started by an unknown adventurer, entitled “company for carrying on an undertaking of great advantage, but nobody to know what it is.” Were not the fact stated by scores of credible witnesses, it would be impossible to believe that any person could have been duped by such a project. The man of genius who essayed this bold and successful inroad upon public credulity, merely stated in his prospectus that the required capital was half a million, in five thousand shares of 100 pounds each, deposit 2 pounds per share. Each subscriber, paying his deposit, would be entitled to 100 pounds per annum per share. How this immense profit was to be obtained, he did not condescend to inform them at that time, but promised, that in a month full particulars should be duly announced, and a call made for the remaining 98 pounds of the subscription. Next morning, at nine o’clock, this great man opened an office in Cornhill. Crowds of people beset his door, and when he shut up at three o’clock, he found that no less than one thousand shares had been subscribed for, and the deposits paid. He was thus, in five hours, the winner of 2,000 pounds. He was philosopher enough to be contented with his venture, and set off the same evening for the Continent. He was never heard of again.

Well might Swift exclaim, comparing Change Alley to a gulf in the South Sea,–

Subscribers here by thousands float, And jostle one another down, Each paddling in his leaky boat, And here they fish for gold, and drown.

Now buried in the depths below, Now mounted up to heaven again, They reel and stagger to and fro, At their wit’s end, like drunken men

Meantime, secure on Garraway cliffs, A savage race, by shipwrecks fed, Lie waiting for the foundered skiffs, And strip the bodies of the dead.

Another fraud that was very successful, was that of the “Globe Permits,” as they were called. They were nothing more than square pieces of playing cards, on which was the impression of a seal, in wax, bearing the sign of the Globe Tavern, in the neighbourhood of Exchange Alley, with the inscription of “Sail Cloth Permits.” The possessors enjoyed no other advantage from them than permission to subscribe, at some future time, to a new sail-cloth manufactory, projected by one who was then known to be a man of fortune, but who was afterwards involved in the peculation and punishment of the South Sea directors. These permits sold for as much as sixty guineas in the Alley.

Persons of distinction, of both sexes, were deeply engaged in all these bubbles, those of the male sex going to taverns and coffee-houses to meet their brokers, and the ladies resorting for the same purpose to the shops of milliners and haberdashers. But it did not follow that all these people believed in the feasibility of the schemes to which they subscribed; it was enough for their purpose that their shares would, by stock-jobbing arts, be soon raised to a premium, when they got rid of them with all expedition to the really credulous. So great was the confusion of the crowd in the alley, that shares in the same bubble were known to have been sold at the same instant ten per cent. higher at one end of the alley than at the other. Sensible men beheld the extraordinary infatuation of the people with sorrow and alarm. There were some, both in and out of Parliament, who foresaw clearly the ruin that was impending. Mr. Walpole did not cease his gloomy forebodings. His fears were shared by all the thinking few, and impressed most forcibly upon the government. On the 11th of June, the day the Parliament rose, the King published a proclamation, declaring that all these unlawful projects should be deemed public nuisances, and prosecuted accordingly, and forbidding any broker, under a penalty of five hundred pounds, from buying or selling any shares in them. Notwithstanding this proclamation, roguish speculators still carried them on, and the deluded people still encouraged them. On the 12th of July, an order of the Lords Justices assembled in privy council was published, dismissing all the petitions that had been presented for patents and charters, and dissolving all the bubble companies. The following copy of their lordships’ order, containing a list of all these nefarious projects, will not be deemed uninteresting at the present day, when there is but too much tendency in the public mind to indulge in similar practices :-

“At the Council Chamber, Whitehall, the 12th day of July, 1720. Present, their Excellencies the Lords Justices in Council.

“Their Excellencies, the Lords Justices in council, taking into consideration the many inconveniences arising to the public from several projects set on foot for raising of joint stock for various purposes, and that a great many of his Majesty’s subjects have been drawn in to part with their money on pretence of assurances that their petitions for patents and charters, to enable them to carry on the same, would be granted: to prevent such impositions, their Excellencies, this day, ordered the said several petitions, together with such reports from the Board of Trade, and from his Majesty’s Attorney and Solicitor General, as had been obtained thereon, to be laid before them, and after mature consideration thereof, were pleased, by advice of his Majesty’s Privy Council, to order that the said petitions be dismissed, which are as follow :–

[Continues below]

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“1. Petition of several persons, praying letters patent for carrying on a fishing trade, by the name of the Grand Fishery of Great Britain.

“2. Petition of the Company of the Royal Fishery of England, praying letters patent for such further powers as will effectually contribute to carry on the said fishery.

“3. Petition of George James, on behalf of himself and divers persons of distinction concerned in a national fishery; praying letters patent of incorporation to enable them to carry on the same.

“4. Petition of several merchants, traders, and others, whose names are thereunto subscribed, praying to be incorporated for reviving and carrying on a whale fishery to Greenland and elsewhere.

“5. Petition of Sir John Lambert, and others thereto subscribing, on behalf of themselves and a great number of merchants, praying to be incorporated for carrying on a Greenland trade, and particularly a whale fishery in Davis’s Straits.

“6. Another petition for a Greenland trade.

“7. Petition of several merchants, gentlemen, and citizens, praying to be incorporated. for buying and building of ships to let or freight.

“8. Petition of Samuel Antrim and others, praying for letters patent for sowing hemp and flax.

“9. Petition of several merchants, masters of ships, sail-makers, and manufacturers of sail-cloth, praying a charter of incorporation, to enable them to carry on and promote the said manufactory by a joint stock.

“10. Petition of Thomas Boyd, and several hundred merchants, owners and masters of ships, sailmakers, weavers, and other traders, praying a charter of incorporation, empowering them to borrow money for purchasing lands, in order to the manufacturing sail-cloth and fine Holland.

“11. Petition on behalf of several persons interested in a patent granted by the late King William and Queen Mary, for the making of linen and sail-cloth, praying that no charter may be granted to any persons whatsoever for making sail-cloth, but that the privilege now enjoyed by them may be confirmed, and likewise an additional power to carry on the cotton and cotton-silk manufactures.

“12. Petition of several citizens, merchants, and traders in London, and others, subscribers to a British stock, for a general insurance from fire in any part of England, praying to be incorporated for carrying on the said undertaking.

“13. Petition of several of his Majesty’s loyal snbjects of the city of London, and other parts of Great Britain, praying to be incorporated, for carrying on a general insurance from losses by fire within the kingdom of England.

“14. Petition of Thomas Burges, and others his Majesty’s subjects thereto subscribing, in behalf of themselves and others, subscribers to a fund of 1,200,000 pounds, for carrying on a trade to his Majesty’s German dominions, praying to be incorporated, by the name of the Harburg Company.

“15. Petition of Edward Jones, a dealer in timber, on behalf of himself and others, praying to be incorporated for the importation of timber from Germany.

“16. Petition of several merchants of London, praying a charter of incorporation for carrying on a salt-work.

“17. Petition of Captain Macphedris, of London, merchant, on behalf of himself and several merchants, clothiers, hatters, dyers, and other traders, praying a charter of incorporation, empowering them to raise a sufficient sum of money to purchase lands for planting and rearing a wood called madder, for the use of dyers.

“18. Petition of Joseph Galendo, of London, snuff-maker, praying a patent for his invention to prepare and cure Virginia tobacco for snuff in Virginia, and making it into the same in all his Majesty’s dominions.”

LIST OF BUBBLES.

The following Bubble Companies were by the same order declared to be illegal, and abolished accordingly :–

1. For the importation of Swedish iron.

2. For supplying London with sea-coal. Capital, three millions.

3. For building and rebuilding houses throughout all England. Capital, three millions.

4. For making of muslin.

5. For carrying on and improving the British alum works.

6. For effectually settling the island of Blanco and Sal Tartagus.

7. For supplying the town of Deal with fresh water.

8. For the importation of Flanders lace.

9. For improvement of lands in Great Britain. Capital, four millions.

10. For encouraging the breed of horses in England, and improving of glebe and church lands, and for repairing and rebuilding parsonage and vicarage houses.

11. For making of iron and steel in Great Britain.

12. For improving the land in the county of Flint. Capital, one million.

13. For purchasing lands to build on. Capital, two millions.

14. For trading in hair.

15. For erecting salt-works in Holy Island. Capital, two millions.

16. For buying and selling estates, and lending money on mortgage.

17. For carrying on an undertaking of great advantage, but nobody to know what it is.

18. For paving the streets of London. Capital, two millions.

19. For furnishing funerals to any part of Great Britain.

20. For buying and selling lands and lending money at interest. Capital, five millions.

21. For carrying on the Royal Fishery of Great Britain. Capital, ten millions.

22. For assuring of seamen’s wages.

23. For erecting loan-offices for the assistance and encouragement of the industrious. Capital, two millions.

24. For purchasing and improving leasable lands. Capital, four millions.

25. For importing pitch and tar, and other naval stores, from North Britain and America.

26. For the clothing, felt, and pantile trade.

27. For purchasing and improving a manor and royalty in Essex.

28. For insuring of horses. Capital, two millions.

29. For exporting the woollen manufacture, and importing copper, brass, and iron. Capital, four millions.

30. For a grand dispensary. Capital, three millions.

31. For erecting mills and purchasing lead mines. Capital, two millions.

32. For improving the art of making soap.

33. For a settlement on the island of Santa Cruz.

34. For sinking pits and smelting lead ore in Derbyshire.

35. For making glass bottles and other glass.

36. For a wheel for perpetual motion. Capital, one million.

37. For improving of gardens.

38. For insuring and increasing children’s fortunes.

39. For entering and loading goods at the custom-house, and for negotiating business for merchants.

40. For carrying on a woollen manufacture in the north of England.

41. For importing walnut-trees from Virginia. Capital, two millions.

42. For making Manchester stuffs of thread and cotton.

43. For making Joppa and Castile soap.

44. For improving the wrought-iron and steel manufactures of this kingdom. Capital, four millions.

45. For dealing in lace, Hollands, cambrics, lawns, &c. Capital, two millions.

46. For trading in and improving certain commodities of the produce of this kingdom, &c. Capital, three millions.

47. For supplying the London markets with cattle.

48. For making looking-glasses, coach glasses, &c. Capital, two millions.

49. For working the tin and lead mines in Cornwall and Derbyshire.

50. For making rape-oil.

51. For importing beaver fur. Capital, two millions.

52. For making pasteboard and packing-paper.

53. For importing of oils and other materials used in the woollen manufacture.

54. For improving and increasing the silk manufactures.

55. For lending money on stock, annuities, tallies, &c.

56. For paying pensions to widows and others, at a small discount. Capital, two millions.

57. For improving malt liquors. Capital, four millions.

58. For a grand American fishery.

59. For purchasing and improving the fenny lands in Lincolnshire. Capital, two millions.

60. For improving the paper manufacture of Great Britain.

61. The Bottomry Company.

62. For drying malt by hot air.

63. For carrying on a trade in the river Oronooko.

64. For the more effectual making of baize, in Colchester and other parts of Great Britain.

65. For buying of naval stores, supplying the victualling, and paying the wages of the workmen.

66. For employing poor artificers, and furnishing merchants and others with watches.

67. For improvement of tillage and the breed of cattle.

68. Another for the improvement of our breed of horses.

69. Another for a horse-insurance.

70. For carrying on the corn trade of Great Britain.

71. For insuring to all masters and mistresses the losses they may sustain by servants. Capital, three millions.

72. For erecting houses or hospitals, for taking in and maintaining illegitimate children. Capital, two millions.

73. For bleaching coarse sugars, without the use of fire or loss of substance.

74. For building turnpikes and wharfs in Great Britain.

75. For insuring from thefts and robberies.

76. For extracting silver from lead.

77. For making China and Delft ware. Capital, one million.

78. For importing tobacco, and exporting it again to Sweden and the north of Europe. Capital, four millions.

79. For making iron with pit coal.

80. For furnishing the cities of London and Westminster with hay and straw. Capital, three millions.

81. For a sail and packing cloth manufactory in Ireland.

82. For taking up ballast.

83. For buying and fitting out ships to suppress pirates.

84. For the importation of timber from Wales. Capital, two millions.

85. For rock-salt.

86. For the transmutation of quicksilver into a malleable fine metal.

Besides these bubbles, many others sprang up daily, in spite of the condemnation of the Government and the ridicule of the still sane portion of the public. The print-shops teemed with caricatures, and the newspapers with epigrams and satires, upon the prevalent folly. An ingenious card-maker published a pack of South Sea playing-cards, which are now extremely rare, each card containing, besides the usual figures, of a very small size, in one corner, a caricature of a bubble company, with appropriate verses underneath. One of the most famous bubbles was “Puckle’s Machine Company,” for discharging round and square cannon-balls and bullets, and making a total revolution in the art of war. Its pretensions to public favour were thus summed up, on the eight of spades :–

A rare invention to destroy the crowd Of fools at home, instead of fools abroad. Fear not, my friends, this terrible machine, They’re only wounded who have shares therein.

The nine of hearts was a caricature of the English Copper and Brass Company, with the following epigram :–

The headlong fool that wants to be a swopper Of gold and silver coin for English copper, May, in Change Alley, prove himself an ass, And give rich metal for adulterate brass.

The eight of diamonds celebrated the Company for the Colonization of Acadia, with this doggrel :–

He that is rich and wants to fool away A good round sum in North America, Let him subscribe himself a headlong sharer, And asses’ ears shall honour him or bearer.

And in a similar style every card of the pack exposed some knavish scheme, and ridiculed the persons who were its dupes. It was computed that the total amount of the sums proposed for carrying on these projects was upwards of three hundred millions sterling, a sum so immense that it exceeded the value of all the lands in England at twenty years’ purchase.

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

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

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

The state of things now became alarming. To prevent, if possible, the utter extinction of public confidence in their proceedings, the directors summoned a general court of the whole corporation, to meet in Merchant Tailors’ Hall, on the 8th of September. By nine o’clock in the morning, the room was filled to suffocation; Cheapside was blocked up by a crowd unable to gain admittance, and the greatest excitement prevailed. The directors and their friends mustered in great. numbers. Sir John Fellowes, the sub-governor, was called to the chair. He acquainted the assembly with the cause of their meeting, read to them the several resolutions of the court of directors, and gave them an account of their proceedings; of the taking in the redeemable and unredeemable funds, and of the subscriptions in money. Mr. Secretary Craggs then made a short speech, wherein he commended the conduct of the directors, and urged that nothing could more effectually contribute to the bringing this scheme to perfection than union among themselves. He concluded with a motion for thanking the court of directors for their prudent and skilful management, and for desiring them to proceed in such manner as they should think most proper for the interest and advantage of the corporation. Mr. Hungerford, who had rendered himself very conspicuous in the House of Commons for his zeal in behalf of the South Sea Company, and who was shrewdly suspected to have been a considerable gainer by knowing the right time to sell out, was very magniloquent on this occasion. He said that he had seen the rise and fall, the decay and resurrection of many communities of this nature, but that, in his opinion, none had ever performed such wonderful things in so short a time as the South Sea Company. They had done more than the crown, the pulpit, or the bench could do. They had reconciled all parties in one common interest; they had laid asleep, if not wholly extinguished, all the domestic jars and animosities of the nation. By the rise of their stock, monied men had vastly increased their fortunes; country-gentlemen had seen the value of their lands doubled and trebled in their hands. They had at the same time done good to the Church, not a few of the reverend clergy having got great sums by the project. In short, they had enriched the whole nation, and he hoped they had not forgotten themselves. There was some hissing at the latter part of this speech, which for the extravagance of its eulogy was not far removed from satire; but the directors and their friends, and all the winners in the room, applauded vehemently. The Duke of Portland spoke in a similar strain, and expressed his great wonder why anybody should be dissatisfied: of course, he was a winner by his speculations, and in a condition similar to that of the fat alderman in Joe Miller’s Jests, who, whenever he had eaten a good dinner, folded his hands upon his paunch, and expressed his doubts whether there could be a hungry man in the world.

Several resolutions were passed at this meeting, but they had no effect upon the public. Upon the very same evening the stock fell to six hundred and forty, and on the morrow to five hundred and forty. Day after day it continued to fall, until it was as low as four hundred. In a letter dated September 13th, from Mr. Broderick, M.P. to Lord Chancellor Middleton, and published in Coxo’s Walpole, the former says,–“Various are the conjectures why the South Sea directors have suffered the cloud to break so early. I made no doubt but they would do so when they found it to their advantage. They have stretched credit so far beyond what it would bear, that specie proves insufficient to support it. Their most considerable men have drawn out, securing themselves by the losses of the deluded, thoughtless numbers, whose understandings have been overruled by avarice and the hope of making mountains out of mole-hills. Thousands of families will be reduced to beggary. The consternation is inexpressible– the rage beyond description, and the case altogether so desperate that I do not see any plan or scheme so much as thought of for averting the blow, so that I cannot pretend to guess what is next to be done.” Ten days afterwards, the stock still falling, he writes,–” The Company have yet come to no determination, for they are in such a wood that they know not which way to turn. By several gentlemen lately come to town, I perceive the very name of a South-Sea-man grows abominable in every country. A great many goldsmiths are already run off, and more will daily. I question whether one-third, nay, one-fourth, of them can stand it. From the very beginning, I founded my judgment of the whole affair upon the unquestionable maxim, that ten millions (which is more than our running cash) could not circulate two hundred millions, beyond which our paper credit extended. That, therefore, whenever that should become doubtful, be the cause what it would, our noble state machine must inevitably fall to the ground.”

On the 12th of September, at the earnest solicitation of Mr. Secretary Craggs, several conferences were held between the directors of the South Sea and the directors of the Bank. A report which was circulated, that the latter had agreed to circulate six millions of the South Sea Company’s bonds, caused the stock to rise to six hundred and seventy; but in the afternoon, as soon as the report was known to be groundless, the stock fell again to five hundred and eighty; the next day to five hundred and seventy, and so gradually to four hundred. [Gay (the poet), in that disastrous year, had a present from young Craggs of some South Sea stock, and once supposed himself to be master of twenty thousand pounds. His friends persuaded him to sell his share, but he dreamed of dignity and splendour, and could not bear to obstruct his own fortune. He was then importuned to sell as much as would purchase a hundred a year for life, “which,” says Fenton, “will make you sure of a clean shirt and a shoulder of mutton every day.” This counsel was rejected; the profit and principal were lost, and Gay sunk under the calamity so low that his life became in danger.–Johnson’s Lives of the Poets.]

The ministry were seriously alarmed at the aspect of affairs. The directors could not appear in the streets without being insulted; dangerous riots were every moment apprehended. Despatches were sent off to the King at Hanover, praying his immediate return. Mr. Walpole, who was staying at his country-seat, was sent for, that he might employ his known influence with the directors of the Bank of England to induce them to accept the proposal made by the South Sea Company for circulating a number of their bonds.

The Bank was very unwilling to mix itself up with the affairs of the Company; it dreaded being involved in calamities which it could not relieve, and received all overtures with visible reluctance. But the universal voice of the nation called upon it to come to the rescue. Every person of note in commercial politics was called in to advise in the emergency. A rough draft of a contract drawn up by Mr. Walpole was ultimately adopted as the basis of further negotiations, and the public alarm abated a little.

On the following day, the 20th of September, a general court of the South Sea Company was held at Merchant Tailors’ Hall, in which resolutions were carried, empowering the directors to agree with the Bank of England, or any other persons, to circulate the Company’s bonds, or make any other agreement with the Bank which they should think proper. One of the speakers, a Mr. Pulteney, said it was most surprising to see the extraordinary panic which had seized upon the people. Men were running to and fro in alarm and terror, their imaginations filled with some great calamity, the form and dimensions of which nobody knew.

“Black it stood as night– Fierce as ten furies–terrible as hell.”

At a general court of the Bank of England held two days afterwards, the governor informed them of the several meetings that had been held on the affairs of the South Sea Company, adding that the directors had not yet thought fit to come to any decision upon the matter. A resolution was then proposed, and carried without a dissentient voice, empowering the directors to agree with those of the South Sea to circulate their bonds, to what sum, and upon what terms, and for what time, they might think proper.

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

The Bank, finding they were not able to restore public confidence, and stem the tide of ruin, without running the risk of being swept away with those they intended to save, declined to carry out the agreement into which they had partially entered. They were under no obligation whatever to continue; for the so called Bank contract was nothing more than the rough draught of an agreement, in which blanks had been left for several important particulars, and which contained no penalty for their secession. “And thus,” to use the words of the Parliamentary History, “were seen, in the space of eight months, the rise, progress, and fall of that mighty fabric, which, being wound up by mysterious springs to a wonderful height, had fixed the eyes and expectations of all Europe, but whose foundation, being fraud, illusion, credulity, and infatuation, fell to the ground as soon as the artful management of its directors was discovered.”

In the hey-day of its blood, during the progress of this dangerous delusion, the manners of the nation became sensibly corrupted. The Parliamentary inquiry, set on foot to discover the delinquents, disclosed scenes of infamy, disgraceful alike to the morals of the offenders and the intellects of the people among whom they had arisen. It is a deeply interesting study to investigate all the evils that were the result. Nations, like individuals, cannot become desperate gamblers with impunity. Punishment is sure to overtake them sooner or later. A celebrated writer [Smollett.] is quite wrong, when he says, “that such an era as this is the most unfavourable for a historian; that no reader of sentiment and imagination can be entertained or interested by a detail of transactions such as these, which admit of no warmth, no colouring, no embellishment; a detail of which only serves to exhibit an inanimate picture of tasteless vice and mean degeneracy.” On the contrary, and Smollett might have discovered it, if he had been in the humour–the subject is capable of inspiring as much interest as even a novelist can desire. Is there no warmth in the despair of a plundered people?–no life and animation in the picture which might be drawn of the woes of hundreds of impoverished and ruined families? of the wealthy of yesterday become the beggars of to-day? of the powerful and influential changed into exiles and outcasts, and the voice of self-reproach and imprecation resounding from every corner of the land? Is it a dull or uninstructive picture to see a whole people shaking suddenly off the trammels of reason, and running wild after a golden vision, refusing obstinately to believe that it is not real, till, like a deluded hind running after an ignis fatuus, they are plunged into a quagmire ? But in this false spirit has history too often been written. The intrigues of unworthy courtiers to gain the favour of still more unworthy kings; or the records of murderous battles and sieges have been dilated on, and told over and over again, with all the eloquence of style and all the charms of fancy; while the circumstances which have most deeply affected the morals and welfare of the people, have been passed over with but slight notice as dry and dull, and capable of neither warmth nor colouring.

During the progress of this famous bubble, England presented a singular spectacle. The public mind was in a state of unwholesome fermentation. Men were no longer satisfied with the slow but sure profits of cautious industry. The hope of boundless wealth for the morrow made them heedless and extravagant for to-day. A luxury, till then unheard-of, was introduced, bringing in its train a corresponding laxity of morals. The overbearing insolence of ignorant men, who had arisen to sudden wealth by successful gambling, made men of true gentility of mind and manners, blush that gold should have power to raise the unworthy in the scale of society. The haughtiness of some of these “cyphering cits,” as they were termed by Sir Richard Steele, was remembered against them in the day of their adversity. In the Parliamentary inquiry, many of the directors suffered more for their insolence than for their peculation. One of them, who, in the full-blown pride of an ignorant rich man, had said that he would feed his horse upon gold, was reduced almost to bread and water for himself; every haughty look, every overbearing speech, was set down, and repaid them a hundredfold in poverty and humiliation.

The state of matters all over the country was so alarming, that George I shortened his intended stay in Hanover, and returned in all haste to England. He arrived on the 11th of November, and Parliament was summoned to meet on the 8th of December. In the mean time, public meetings were held in every considerable town of the empire, at which petitions were adopted, praying the vengeance of the Legislature upon the South Sea directors, who, by their fraudulent practices, had brought the nation to the brink of ruin. Nobody seemed to imagine that the nation itself was as culpable as the South Sea Company. Nobody blamed the credulity and avarice of the people,–the degrading lust of gain, which had swallowed up every nobler quality in the national character, or the infatuation which had made the multitude run their heads with such frantic eagerness into the net held out for them by scheming projectors. These things were never mentioned. The people were a simple, honest, hard-working people, ruined by a gang of robbers, who were to be hanged, drawn, and quartered without mercy.

This was the almost unanimous feeling of the country. The two Houses of Parliament were not more reasonable. Before the guilt of the South Sea directors was known, punishment was the only cry. The King, in his speech from the throne, expressed his hope that they would remember that all their prudence, temper, and resolution were necessary to find out and apply the proper remedy for their misfortunes. In the debate on the answer to the address, several speakers indulged in the most violent invectives against the directors of the South Sea project. The Lord Molesworth was particularly vehement. “It had been said by some, that there was no law to punish the directors of the South Sea Company, who were justly looked upon as the authors of the present misfortunes of the state. In his opinion they ought, upon this occasion, to follow the example of the ancient Romans, who, having no law against parricide, because their legislators supposed no son could be so unnaturally wicked as to embrue his hands in his father’s blood, made a law to punish this heinous crime as soon as it was committed. They adjudged the guilty wretch to be sown in a sack, and thrown alive into the Tyber. He looked upon the contrivers and executors of the villanous South Sea scheme as the parricides of their country, and should be satisfied to see them tied in like manner in sacks, and thrown into the Thames.” Other members spoke with as much want of temper and discretion. Mr. Walpole was more moderate. He recommended that their first care should be to restore public credit. “If the city of London were on fire, all wise men would aid in extinguishing the flames, and preventing the spread of the conflagration before they inquired after the incendiaries. Public credit had received a dangerous wound, and lay bleeding, and they ought to apply a speedy remedy to it. It was time enough to punish the assassin afterwards.” On the 9th of December an address, in answer to his Majesty’s speech, was agreed upon, after an amendment, which was carried without a division, that words should be added expressive of the determination of the House not only to seek a remedy for the national distresses, but to punish the authors of them.

The inquiry proceeded rapidly. The directors were ordered to lay before the House a full account of all their proceedings. Resolutions were passed to the effect that the calamity was mainly owing to the vile arts of stockjobbers, and that nothing could tend more to the re-establishment of public credit than a law to prevent this infamous practice. Mr. Walpole then rose, and said, that “as he had previously hinted, he had spent some time upon a scheme for restoring public credit, but that, the execution of it depending upon a position which had been laid down as fundamental, he thought it proper, before he opened out his scheme, to be informed whether he might rely upon that foundation. It was, whether the subscription of public debts and encumbrances, money subscriptions, and other contracts, made with the South Sea Company should remain in the present state?” This question occasioned an animated debate. It was finally agreed, by a majority of 259 against 117, that all these contracts should remain in their present state, unless altered for the relief of the proprietors by a general court of the South Sea Company, or set aside by due course of law. On the following day Mr. Walpole laid before a committee of the whole House his scheme for the restoration of public credit, which was, in substance, to ingraft nine millions of South Sea stock into the Bank of England, and the same sum into the East India Company, upon certain conditions. The plan was favourably received by the House. After some few objections, it was ordered that proposals should be received from the two great corporations. They were both unwilling to lend their aid, and the plan met with a warm but fruitless opposition at the general courts summoned for the purpose of deliberating upon it. They, however, ultimately agreed upon the terms on which they would consent to circulate the South Sea bonds, and their report, being presented to the committee, a bill was brought in, under the superintendence of Mr. Walpole, and safely carried through both Houses of Parliament.

A bill was at the same time brought in, for restraining the South Sea directors, governor, sub-governor, treasurer, cashier, and clerks from leaving the kingdom for a twelvemonth, and for discovering their estates and effects, and preventing them from transporting or alienating the same. All the most influential members of the House supported the bill. Mr. Shippen, seeing Mr. Secretary Craggs in his place, and believing the injurious rumours that were afloat of that minister’s conduct in the South Sea business, determined to touch him to the quick. He said, he was glad to see a British House of Commons resuming its pristine vigour and spirit, and acting with so much unanimity for the public good. It was necessary to secure the persons and estates of the South Sea directors and their officers; “but,” he added, looking fixedly at Mr. Craggs as he spoke, “there were other men in high station, whom, in time, he would not be afraid to name, who were no less guilty than the directors.” Mr. Craggs arose in great wrath, and said, that if the innuendo were directed against him, he was ready to give satisfaction to any man who questioned him, either in the House or out of it. Loud cries of order immediately arose on every side. In the midst of the uproar Lord Molesworth got up, and expressed his wonder at the boldness of Mr. Craggs in challenging the whole House of Commons. He, Lord Molesworth, though somewhat old, past sixty, would answer Mr. Craggs whatever he had to say in the House, and he trusted there were plenty of young men beside him, who would not be afraid to look Mr. Craggs in the face, out of the House. The cries of order again resounded from every side; the members arose simultaneously; everybody seemed to be vociferating at once. The Speaker in vain called order. The confusion lasted several minutes, during which Lord Molesworth and Mr. Craggs were almost the only members who kept their seats. At last the call for Mr. Craggs became so violent that he thought proper to submit to the universal feeling of the House, and explain his unparliamentary expression. He said, that by giving satisfaction to the impugners of his conduct in that House, he did not mean that he would fight, but that he would explain his conduct. Here the matter ended, and the House proceeded to debate in what manner they should conduct their inquiry into the affairs of the South Sea Company, whether in a grand or a select committee. Ultimately, a Secret Committee of thirteen was appointed, with power to send for persons, papers, and records.

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The Lords were as zealous and as hasty as the Commons. The Bishop of Rochester said the scheme had been like a pestilence. The Duke of Wharton said the House ought to show no respect of persons; that, for his part, he would give up the dearest friend he had, if he had been engaged in the project. The nation had been plundered in a most shameful and flagrant manner, and he would go as far as anybody in the punishment of the offenders. Lord Stanhope said, that every farthing possessed by the criminals, whether directors or not directors, ought to be confiscated, to make good the public losses.

During all this time the public excitement was extreme. We learn, front Coxe’s Walpole, that the very name of a South Sea director was thought to be synonymous. with every species of fraud and villany. Petitions from counties, cities, and boroughs, in all parts of the kingdom, were presented, crying for the justice due to an injured nation and the punishment of the villanous peculators. Those moderate men, who would not go to extreme lengths, even in the punishment of the guilty, were accused of being accomplices, were exposed to repeated insults and virulent invectives, and devoted, both in anonymous letters and public writings, to the speedy vengeance of an injured people. The accusations against Mr. Aislabie, Chancellor of the Exchequer, and Mr. Craggs, another member of the ministry, were so loud, that the House of Lords resolved to proceed at once into the investigation concerning them. It was ordered, on the 21st of January, that all brokers concerned in the South Sea scheme should lay before the House an account of the stock or subscriptions bought or sold by them for any of the officers of the Treasury or Exchequer, or in trust for any of them, since Michaelmas 1719. When this account was delivered, it appeared that large quantities of stock had been transferred to the use of Mr. Aislabie. Five of the South Sea directors, ineluding Mr. Edward Gibbon, the grandfather of the celebrated historian, were ordered into the custody of the black rod. Upon a motion made by Earl Stanhope, it was unanimously resolved, that the taking in or giving credit for stock without a valuable consideration actually paid or sufficiently secured; or the purchasing stock by any director or agent of the South Sea Company, for the use or benefit of any member of the administration, or any member of either House of Parliament, during such time as the South Sea Bill was yet pending in Parliament, was a notorious and dangerous corruption. Another resolution was passed a few days afterwards, to the effect that several of the directors and officers of the Company having, in a clandestine manner, sold their own stock to the Company, had been guilty of a notorious fraud and breach of trust, and had thereby mainly caused the unhappy turn of affairs that had so much affected public credit. Mr. Aislabie resigned his office as Chancellor of the Exchequer, and absented himself from Parliament until the formal inquiry into his individual guilt was brought under the consideration of the Legislature.

In the mean time, Knight, the treasurer of the Company, and who was intrusted with all the dangerous secrets of the dishonest directors, packed up his books and documents, and made his escape from the country. He embarked in disguise, in a small boat on the river, and proceeding to a vessel hired for the purpose, was safely conveyed to Calais. The Committee of Secrecy informed the House of the circumstance, when it was resolved unanimously that two addresses should be presented to the King; the first praying that he would issue a proclamation, offering a reward for the apprehension of Knight; and the second, that he would give immediate orders to stop the ports, and to take effectual care of the coasts, to prevent the said Knight, or any other officers of the South Sea Company, from escaping out of the kingdom. The ink was hardly dry upon these addresses before they were carried to the King by Mr. Methuen, deputed by the House for that purpose. The same evening a royal proclamation was issued, offering a reward of two thousand pounds for the apprehension of Knight. The Commons ordered the doors of the House to be locked, and the keys to be placed upon the table. General Ross, one of the members of the Committee of Secrecy, acquainted them that they had already discovered a train of the deepest villany and fraud that Hell had ever contrived to ruin a nation, which in due time they would lay before the House. In the mean time, in order to a further discovery, the Committee thought it highly necessary to secure the persons of some of the directors and principal South Sea officers, and to seize their papers. A motion to this effect having been made, was carried unanimously. Sir Robert Chaplin, Sir Theodore Janssen, Mr. Sawbridge, and Mr. F. Eyles, members of the House, and directors of the South Sea Company, were summoned to appear in their places, and answer for their corrupt practices. Sir Theodore Janssen and Mr. Sawbridge answered to their names, and endeavoured to exculpate themselves. The House heard them patiently, and then ordered them to withdraw. A motion was then made, and carried nemine contradicente, that they had been guilty of a notorious breach of trust–had occasioned much loss to great numbers of his Majesty’s subjects, and had highly prejudiced the public credit. It was then ordered that, for their offence, they should be expelled the House, and taken into the custody of the sergeant-at-arms. Sir Robert Chaplin and Mr. Eyles, attending in their places four days afterwards, were also expelled the House. It was resolved at the same time to address the King, to give directions to his ministers at foreign courts to make application for Knight, that he might be delivered up to the English authorities, in ease he took refuge in any of their dominions. The King at once agreed, and messengers were despatched to all parts of the Continent the same night.

Among the directors taken into custody, was Sir John Blunt, the man whom popular opinion has generally accused of having been the original author and father of the scheme. This man, we are informed by Pope, in his epistle to Allen, Lord Bathurst, was a dissenter, of a most religious deportment, and professed to be a great believer. He constantly declaimed against the luxury and corruption of the age, the partiality of parliaments, and the misery of party spirit. He was particularly eloquent against avarice in great and noble persons. He was originally a scrivener, and afterwards became, not only a director, but the most active manager of the South Sea Company. Whether it was during his career in this capacity that he first began to declaim against the avarice of the great, we are not informed. He certainly must have seen enough of it to justify his severest anathema; but if the preacher had himself been free from the vice he condemned, his declamations would have had a better effect. He was brought up in custody to the bar of the House of Lords, and underwent a long examination. He refused to answer several important questions. He said he had been examined already by a committee of the House of Commons, and as he did not remember his answers, and might contradict himself, he refused to answer before another tribunal. This declaration, in itself an indirect proof of guilt, occasioned some commotion in the House. He was again asked peremptorily whether he had ever sold any portion of the stock to any member of the administration, or any member of either House of Parliament, to facilitate the passing of the hill. He again declined to answer. He was anxious, he said, to treat the House with all possible respect, but he thought it hard to be compelled to accuse himself. After several ineffectual attempts to refresh his memory, he was directed to withdraw. A violent discussion ensued between the friends and opponents of the ministry. It was asserted that the administration were no strangers to the convenient taciturnity of Sir John Blunt. The Duke of Wharton made a reflection upon the Earl Stanhope, which the latter warmly resented. He spoke under great excitement, and with such vehemence as to cause a sudden determination of blood to the head. He felt himself so ill that he was obliged to leave the House and retire to his chamber. He was cupped immediately, and also let blood on the following morning, but with slight relief. The fatal result was not anticipated. Towards evening he became drowsy, and turning himself on his face, expired. The sudden death of this statesman caused great grief to the nation. George I was exceedingly affected, and shut himself up for some hours in his closet, inconsolable for his loss.

Knight, the treasurer of the company, was apprehended at Tirlemont, near Liege, by one of the secretaries of Mr. Leathes, the British resident at Brussels, and lodged in the citadel of Antwerp. Repeated applications were made to the court of Austria to deliver him up, but in vain. Knight threw himself upon the protection of the states of Brabant, and demanded to be tried in that country. It was a privilege granted to the states of Brabant by one of the articles of the Joyeuse Entree, that every criminal apprehended in that country should be tried in that country. The states insisted on their privilege, and refused to deliver Knight to the British authorities. The latter did not cease their solicitations; but in the mean time, Knight escaped from the citadel.

On the 16th of February the Committee of Secrecy made their first report to the House. They stated that their inquiry had been attended with numerous difficulties and embarrassments; every one they had examined had endeavoured, as far as in him lay, to defeat the ends of justice. In some of the books produced before them, false and fictitious entries had been made; in others, there were entries of money, with blanks for the name of the stockholders. There were frequent erasures and alterations, and in some of the books leaves were torn out. They also found that some books of great importance had been destroyed altogether, and that some had been taken away or secreted. At the very entrance into their inquiry, they had observed that the matters referred to them were of great variety and extent. Many persons had been intrusted with various parts in the execution of the law, and under colour thereof had acted in an unwarrantable manner, in disposing of the properties of many thousands of persons, amounting to many millions of money. They discovered that, before the South Sea Act was passed, there was an entry in the Company’s books of the sum of 1,259,325 pounds, upon account of stock stated to have been sold to the amount of 574,500 pounds. This stock was all fictitious, and had been disposed of with a view to promote the passing of the bill. It was noted as sold at various days, and at various prices, from 150 to 325 per cent. Being surprised to see so large an account disposed of, at a time when the Company were not empowered to increase their capital, the committee determined to investigate most carefully the whole transaction. The governor, sub-governor, and several directors were brought before them, and examined rigidly. They found that, at the time these entries were made, the Company was not in possession of such a quantity of stock, having in their own right only a small quantity, not exceeding thirty thousand pounds at the utmost. Pursuing the inquiry, they found that this amount of stock, was to be esteemed as taken in or holden by the Company, for the benefit of the pretended purchasers, although no mutual agreement was made for its delivery or acceptance at any certain time. No money was paid down, nor any deposit or security whatever given to the Company by the supposed purchasers; so that if the stock had fallen, as might have been expected, had the act not passed, they would have sustained no loss. If, on the contrary, the price of stock advanced (as it actually did by the success of the scheme), the difference by the advanced price was to be made good to them. Accordingly, after the passing of the act, the account of stock was made up and adjusted with Mr. Knight, and the pretended purchasers were paid the difference out of the Company’s cash. This fictitious stock, which had been chiefly at the disposal of Sir John Blunt, Mr. Gibbon, and Mr. Knight, was distributed among several members of the government and their connexions, by way of bribe, to facilitate the passing of the bill. To the Earl of Sunderland was assigned 50,000 pounds of this stock; to the Duchess of Kendal 10,000 pounds; to the Countess of Platen 10,000 pounds; to her two nieces 10,000 pounds; to Mr. Secretary Craggs 30,000 pounds; to Mr. Charles Stanhope (one of the Secretaries of the Treasury) 10,000 pounds; to the Swordblade Company 50,000 pounds. It also appeared that Mr. Stanhope had received the enormous sum of 250,000 pounds as the difference in the price of some stock, through the hands of Turner, Caswall, and Co., but that his name had been partly erased from their books, and altered to Stangape. Aislabie, the Chancellor of the Exchequer, had made profits still more abominable. He had an account with the same firm, who were also South Sea directors, to the amount of 794,451 pounds. He had, besides, advised the Company to make their second subscription one million and a half, instead of a million, by their own authority, and without any warrant. The third subscription had been conducted in a manner as disgraceful. Mr. Aislabie’s name was down for 70,000 pounds; Mr. Craggs, senior, for 659,000 pounds; the Earl of Sunderland’s for 160,000 pounds; and Mr. Stanhope for 47,000 pounds. This report was succeeded by six others, less important. At the end of the last, the committee declared that the absence of Knight, who had been principally intrusted, prevented them from carrying on their inquiries.

The first report was ordered to be printed, and taken into consideration on the next day but one succeeding. After a very angry and animated debate, a series of resolutions were agreed to, condemnatory of the conduct of the directors, of the members of the Parliament and of the administration concerned with them; and declaring that they ought, each and all, to make satisfaction out of their own estates for the injury they had done the public. Their practices were declared to be corrupt, infamous, and dangerous; and a bill was ordered to be brought in for the relief of the unhappy sufferers.

Mr. Charles Stanhope was the first person brought to account for his share in these transactions. He urged in his defence that, for some years past, he had lodged all the money he was possessed of in Mr. Knight’s hands, and whatever stock Mr. Knight had taken in for him, he had paid a valuable consideration for it. As to the stock that had been bought for him by Turner, Caswall, and Co. he knew nothing about it. Whatever had been done in that matter was done without his authority, and he could not be responsible for it. Turner and Co. took the latter charge upon themselves, but it was notorious to every unbiassed and unprejudiced person that Mr. Stanhope was a gainer of the 250,000 pounds which lay in the hands of that firm to his credit. He was, however, acquitted by a majority of three only. The greatest exertions were made to screen him. Lord Stanhope, the son of the Earl of Chesterfield, went round to the wavering members, using all the eloquence he was possessed of to induce them either to vote for the acquittal or to absent themselves from the house. Many weak-headed country-gentlemen were led astray by his persuasions, and the result was as already stated. The acquittal caused the greatest discontent throughout the country. Mobs of a menacing character assembled in different parts of London; fears of riots were generally entertained, especially as the examination of a still greater delinquent was expected by many to have a similar termination. Mr. Aislabie, whose high office and deep responsibilities should have kept him honest, even had native principle been insufficient, was very justly regarded as perhaps the greatest criminal of all. His case was entered into on the day succeeding the acquittal of Mr. Starthope. Great excitement prevailed, and the lobbies and avenues of the house were beset by crowds, impatient to know the result. The debate lasted the whole day. Mr. Aislabie found few friends: his guilt was so apparent and so heinous that nobody had courage to stand up in his favour. It was finally resolved, without a dissentient voice, that Mr. Aislabie had encouraged and promoted the destructive execution of the South Sea scheme with a view to his own exorbitant profit, and had combined with the directors in their pernicious practices to the ruin of the public trade and credit of the kingdom: that he should for his offences be ignominiously expelled from the House of Commons, and committed a close prisoner to the Tower of London; that he should be restrained from going out of the kingdom for a whole year, or till the end of the next session of Parliament; and that he should make out a correct account of all his estate, in order that it might be applied to the relief of those who had suffered by his malpractices.

This verdict caused the greatest joy. Though it was delivered at half-past twelve at night, it soon spread over the city. Several persons illuminated their houses in token of their joy. On the following day, when Mr. Aislabie was conveyed to the Tower, the mob assembled on Tower-hill with the intention of hooting and pelting him. Not succeeding in this, they kindled a large bonfire, and danced around it in the exuberance of their delight. Several bonfires were made in other places; London presented the appearance of a holiday, and people congratulated one another as if they had just escaped from some great calamity. The rage upon the acquittal of Mr. Stanhope had grown to such a height that none could tell where it would have ended, had Mr. Aislabie met with the like indulgence.

To increase the public satisfaction, Sir George Caswall, of the firm of Turner, Caswall, & Co. was expelled the House on the following day, and ordered to refund the sum of 250,000 pounds.

That part of the report of the Committee of Secrecy which related to the Earl of Sunderland was next taken into consideration. Every effort was made to clear his Lordship from the imputation. As the case against him rested chiefly on the evidence extorted from Sir John Blunt, great pains were taken to make it appear that Sir John’s word was not to be believed, especially in a matter affecting the honour of a peer and privy councillor. All the friends of the ministry rallied around the Earl, it being generally reported that a verdict of guilty against him would bring a Tory ministry into power. He was eventually acquitted, by a majority of 233 against 172; but the country was convinced of his guilt. The greatest indignation was everywhere expressed, and menacing mobs again assembled in London. Happily no disturbances took place.

This was the day on which Mr. Craggs, the elder, expired. The morrow had been appointed for the consideration of his case. It was very generally believed that he had poisoned himself. It appeared, however, that grief for the loss of his son, one of the Secretaries of the Treasury, who had died five weeks previously of the small-pox, preyed much on his mind. For this son, dearly beloved, he had been amassing vast heaps of riches: he had been getting money, but not honestly; and he for whose sake he had bartered his honour and sullied his fame, was now no more. The dread of further exposure increased his trouble of mind, and ultimately brought on an apoplectic fit, in which he expired. He left a fortune of a million and a half, which was afterwards confiscated for the benefit of the sufferers by the unhappy delusion he had been so mainly instrumental in raising.

One by one the case of every director of the Company was taken into consideration. A sum amounting to two millions and fourteen thousand pounds was confiscated from their estates towards repairing the mischief they had done, each man being allowed a certain residue, in proportion to his conduct and circumstances, with which he might begin the world anew. Sir John Blunt was only allowed 5,000 pounds out of his fortune of upwards of 183,000 pounds; Sir John Fellows was allowed 10,000 pounds out of 243,000 pounds; Sir Theodore Janssen, 50,000 pounds out of 243,000 pounds; Mr. Edward Gibbon, 10,000 pounds out of 106,000 pounds.; Sir John Lambert, 5000 pounds out of 72,000 pounds. Others, less deeply involved, were treated with greater liberality. Gibbon, the historian, whose grandfather was the Mr. Edward Gibbon so severely mulcted, has given, in the Memoirs of his Life and Writings, an interesting account of the proceedings in Parliament at this time. He owns that he is not an unprejudiced witness; but, as all the writers from which it is possible to extract any notice of the proceedings of these disastrous years, were prejudiced on the other side, the statements of the great historian become of additional value. If only on the principle of audi alteram partem, his opinion is entitled to consideration. “In the year 1716,” he says, “my grandfather was elected one of the directors of the South Sea Company, and his books exhibited the proof that before his acceptance of that fatal office, he had acquired an independent fortune of 60,000 pounds. But his fortune was overwhelmed in the shipwreck of the year twenty, and the labours of thirty years were blasted in a single day. Of the use or abuse of the South Sea scheme, of the guilt or innocence of my grandfather and his brother directors, I am neither a competent nor a disinterested judge. Yet the equity of modern times must condemn the violent and arbitrary proceedings, which would have disgraced the cause of justice, and rendered injustice still more odious. No sooner had the nation awakened from its golden dream, than a popular, and even a Parliamentary clamour, demanded its victims; but it was acknowledged on all sides, that the directors, however guilty, could not be touched by any known laws of the land. The intemperate notions of Lord Molesworth were not literally acted on; but a bill of pains and penalties was introduced — a retro-active statute, to punish the offences which did not exist at the time they were committed. The Legislature restrained the persons of the directors, imposed an exorbitant security for their appearance, and marked their character with a previous note of ignominy. They were compelled to deliver, upon oath, the strict value of their estates, and were disabled from making any transfer or alienation of any part of their property. Against a bill of pains and penalties, it is the common right of every subject to be heard by his counsel at the bar. They prayed to be heard. Their prayer was refused, and their oppressors, who required no evidence, would listen to no defence. It had been at first proposed, that one eighth of their respective estates should be allowed for the future support of the directors; but it was speciously urged, that in the various shades of opulence and guilt, such a proportion would be too light for many, and for some might possibly be too heavy. The character and conduct of each man were separately weighed; but, instead of the calm solemnity of a judicial inquiry, the fortune and honour of thirty-three Englishmen were made the topics of hasty conversation, the sport of a lawless majority; and the basest member of the committee, by a malicious word, or a silent vote, might indulge his general spleen or personal animosity. Injury was aggravated by insult, and insult was embittered by pleasantry. Allowances of 20 pounds or 1 shilling were facetiously moved. A vague report that a director had formerly been concerned in another project, by which some unknown persons had lost their money, was admitted as a proof of his actual guilt. One man was ruined because he had dropped a foolish speech, that his horses should feed upon gold; another, because he was grown so proud, that one day, at the Treasury, he had refused a civil answer to persons much above him. All were condemned, absent and unheard, in arbitrary fines and forfeitures, which swept away the greatest part of their substance. Such bold oppression can scarcely be shielded by the omnipotence of Parliament. My grandfather could not expect to be treated with more lenity than his companions. His Tory principles and connexions rendered him obnoxious to the ruling powers. His name was reported in a suspicious secret. His well-known abilities could not plead the excuse of ignorance or error. In the first proceedings against the South Sea directors, Mr. Gibbon was one of the first taken into custody, and in the final sentence the measure of his fine proclaimed him eminently guilty. The total estimate, which he delivered on oath to the House of Commons, amounted to 106,543 pounds 5 shillings 6 pence, exclusive of antecedent settlements. Two different allowances of 15,000 pounds and of 10,000 pounds were moved for Mr. Gibbon; but, on the question being put, it was carried without a division for the smaller sum. On these ruins, with the skill and credit of which Parliament had not been able to despoil him, my grandfather, at a mature age, erected the edifice of a new fortune. The labours of sixteen years were amply rewarded; and I have reason to believe that the second structure was not much inferior to the first.”

The next consideration of the Legislature, after the punishment of the directors, was to restore public credit. The scheme of Walpole had been found insufficient, and had fallen into disrepute. A computation was made of the whole capital stock of the South Sea Company at the end of the year 1720. It was found to amount to thirty-seven millions eight hundred thousand pounds, of which the stock allotted to all the proprietors only amounted to twenty-four millions five hundred thousand pounds. The remainder of thirteen millions three hundred thousand pounds belonged to the Company in their corporate capacity, and was the profit they had made by the national delusion. Upwards of eight millions of this were taken from the Company, and divided among the proprietors and subscribers generally, making a dividend of about 33 pounds 6 shillings 8 pence per cent. This was a great relief. It was further ordered, that such persons as had borrowed money from the South Sea Company upon stock actually transferred and pledged at the time of borrowing to or for the use of the Company, should be free from all demands, upon payment of ten per cent. of the sums so borrowed. They had lent about eleven millions in this manner, at a time when prices were unnaturally raised; and they now received back one million one hundred thousand, when prices had sunk to their ordinary level.

But it was a long time before public credit was thoroughly restored. Enterprise, like Icarus, had soared too high, and melted the wax of her wings; like Icarus, she had fallen into a sea, and learned, while floundering in its waves, that her proper element was the solid ground. She has never since attempted so high a flight.

In times of great commercial prosperity there has been a tendency to over-speculation on several occasions since then. The success of one project generally produces others of a similar kind. Popular imitativeness will always, in a trading nation, seize hold of such successes, and drag a community too anxious for profits into an abyss from which extrication is difficult. Bubble companies, of a kind similar to those engendered by the South Sea project, lived their little day in the famous year of the panic, 1825. On that occasion, as in 1720, knavery gathered a rich harvest from cupidity, but both suffered when the day of reckoning came. The schemes of the year 1836 threatened, at one time, results as disastrous; but they were happily averted before it was too late. The South Sea project thus remains, and, it is to be hoped, always will remain, the greatest example in British history, of the infatuation of the people for commercial gambling. From the bitter experience of that period, posterity may learn how dangerous it is to let speculation riot unrestrained, and to hope for enormous profits from inadequate causes. Degrading as were the circumstances, there is wisdom to be gained from the lesson which they teach.

A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)

ORDER DESK
1-800-869-5115
[email protected]

Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.

A Gold Classics Library Selection

Extraordinary Popular Delusions And The Madness Of Crowds

Introduction

by Charles Mackay

Introduction
The Mississippi Scheme
The South Sea Bubble
The Tulipomania
The Alchemists, part 1
The Alchemists, part 2
The Alchemists, part 3

Editor’s Note: Charles Mackay in his Extraordinary Popular Delusions and Madness of Crowds, written in 1841, unwittingly provides us one of the better studies of modern market behavior. I doubt Mackay would have guessed that his book would be read, digested and taken as revelation by readers in the 21st century. At the same time, he probably would have not been surprised that the pull of the same dark gravity that caused people to throw their fortunes at tulip bulbs in Holland, or land they never had a hope of seeing in the New World, would be omnipresent in the age of computers, instantaneous communication, and the nearly infinite availability of market analysis. The highly successful speculator and gold investor Bernard Baruch put his blessing on this book as one of the secrets to his success on Wall Street.

Said Baruch:

“Have you ever seen in some wood, on a sunny quiet day, a cloud of flying midges — thousands of them — hovering, apparently motionless, in a sunbeam? …Yes? …Well, did you ever see the whole flight — each mite apparently preserving its distance from all others — suddenly move, say three feet, to one side or the other? Well, what made them do that? A breeze? I said a quiet day. But try to recall — did you ever see them move directly back again in the same unison? Well, what made them do that? Great human mass movements are slower of inception but much more effective.”

So we bring you Charles Mackay and his Extraordinary Popular Delusions with our own sense of mission. If the rising generations now receiving their education, or even their more jaded elders, find application in their own investment philosophy, then the purpose of this Gold Classic Library entry has been served. Complicated and timelessly revealing, here you will find examples of herd behavior, delusion, mania, craftiness, and financial loss and gain. Solomon taught us that there are no new things under the sun. Mackay teaches us how we might recognize the signs and that the crowd gone mad is a matter to be reckoned with in almost every era.

This book’s relevance to gold is simple and straightforward: Gold is the talisman in the portfolio which protects against these occasional bouts of social madness. There is an historical example which illustrates the point. Early 18th century French finance minister, John Law, who perpetrated perhaps the most notorious mania covered by Mackay, ruined the French currency and, with it, the French economy. Needless to say, the citizenry did whatever they could to shelter themselves from the rapidly depreciating paper scrip. Law in one of his final acts before fleeing the country abolished gold and silver coin as a medium of exchange, made gold ownership illegal and closed down the borders to anyone hoping to escape with hard assets.

Needless to say, both Law and the public understood the value of gold under such circumstances. Those who converted their paper early in the process preserved their assets; those who didn’t were left penniless.

With that we welcome you to the extraordinary portrayals of financial madness as recorded by Charles Mackay.

— Michael J. Kosares

Author’s Preface: In reading the history of nations, we find that, like individuals, they have their whims and their peculiarities; their seasons of excitement and recklessness, when they care not what they do. We find that whole communities suddenly fix their minds upon one object, and go mad in its pursuit; that millions of people become simultaneously impressed with one delusion, and run after it, till their attention is caught by some new folly more captivating than the first. We see one nation suddenly seized, from its highest to its lowest members, with a fierce desire of military glory; another as suddenly becoming crazed upon a religious scruple, and neither of them recovering its senses until it has shed rivers of blood and sowed a harvest of groans and tears, to be reaped by its posterity…

Money, again, has often been a cause of the delusion of multitudes. Sober nations have all at once become desperate gamblers, and risked almost their existence upon the turn of a piece of paper. To trace the history of the most prominent of these delusions is the object of the present pages. Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.

In the present state of civilization, society has often shown itself very prone to run a career of folly from the last-mentioned cases. This infatuation has seized upon whole nations in a most extraordinary manner. France, with her Mississippi madness, set the first great example, and was very soon imitated by England with her South Sea Bubble. At an earlier period, Holland made herself still more ridiculous in the eyes of the world, by the frenzy which came over her people for the love of Tulips. Melancholy as all these delusions were in their ultimate results, their history is most amusing. A more ludicrous and yet painful spectacle, than that which Holland presented in the years 1635 and 1636, or France in 1719 and 1720, can hardly be imagined. Taking them in the order of their importance, we shall commence our history with John Law and the famous Mississippi scheme of the years above mentioned.

– Charles Mackay

A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)

ORDER DESK
1-800-869-5115
[email protected]

Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.

A Gold Classics Library Selection

Extraordinary Popular Delusions And The Madness Of Crowds

The Mississippi Scheme

by Charles Mackay

Introduction
The Mississippi Scheme
The South Sea Bubble
The Tulipomania
The Alchemists, part 1
The Alchemists, part 2
The Alchemists, part 3

Some in clandestine companies combine;
Erect new stocks to trade beyond the line;
With air and empty names beguile the town,
And raise new credits first, then cry ’em down;
Divide the empty nothing into shares, And set the crowd together by the ears.
– Daniel Defoe –

The personal character and career of one man are so intimately connected with the great scheme of the years 1719 and 1720, that a history of the Mississippi madness can have no fitter introduction than a sketch of the life of its great author, John Law. Historians are divided in opinion as to whether they should designate him a knave or a madman. Both epithets were unsparingly applied to him in his lifetime, and while the unhappy consequences of his projects were still deeply felt. Posterity, however, has found reason to doubt the justice of the accusation, and to confess that John Law was neither knave nor madman, but one more deceived than deceiving; more sinned against than sinning. He was thoroughly acquainted with the philosophy and true principles of credit. He understood the monetary question better than any man of his day; and if his system fell with a crash so tremendous, it was not so much his fault as that of the people amongst whom he had erected it. He did not calculate upon the avaricious frenzy of a whole nation; he did not see that confidence, like mistrust, could be increased, almost ad infinitum, and that hope was as extravagant as fear. How was he to foretell that the French people, like the man in the fable, would kill, in their frantic eagerness, the fine goose he had brought to lay them so many golden eggs? His fate was like that which may be supposed to have overtaken the first adventurous boatman who rowed from Erie to Ontario. Broad and smooth was the river on which he embarked; rapid and pleasant was his progress; and who was to stay him in his career? Alas for him! the cataract was nigh. He saw, when it was too late, that the tide which wafted him so joyously along was a tide of destruction; and when he endeavoured to retrace his way, he found that the current was too strong for his weak efforts to stem, and that he drew nearer every instant to the tremendous falls. Down he went over the sharp rocks, and the waters with him. He was dashed to pieces with his bark, but the waters, maddened and turned to foam by the rough descent, only boiled and bubbled for a time, and then flowed on again as smoothly as ever. Just so it was with Law and the French people. He was the boatman and they were the waters.

John Law was born at Edinburgh in the year 1671. His father was the younger son of an ancient family in Fife, and carried on the business of a goldsmith and banker. He amassed considerable wealth in his trade, sufficient to enable him to gratify the wish, so common among his countrymen, of adding a territorial designation to his name. He purchased with this view the estates of Lauriston and Randleston, on the Frith of Forth on the borders of West and Mid Lothian, and was thenceforth known as Law of Lauriston. The subject of our memoir, being the eldest son, was received into his father’s counting-house at the age of fourteen, and for three years laboured hard to acquire an insight into the principles of banking, as then carried on in Scotland. He had always manifested great love for the study of numbers, and his proficiency in the mathematics was considered extraordinary in one of his tender years. At the age of seventeen he was tall, strong, and well made; and his face, although deeply scarred with the small-pox, was agreeable in its expression, and full of intelligence. At this time he began to neglect his business, and becoming vain of his person, indulged in considerable extravagance of attire. He was a great favourite with the ladies, by whom he was called Beau Law, while the other sex, despising his foppery, nicknamed him Jessamy John. At the death of his father, which happened in 1688, he withdrew entirely from the desk, which had become so irksome, and being possessed of the revenues of the paternal estate of Lauriston, he proceeded to London, to see the world.

He was now very young, very vain, good-looking, tolerably rich, and quite uncontrolled. It is no wonder that, on his arrival in the capital, he should launch out into extravagance. He soon became a regular frequenter of the gaming-houses, and by pursuing a certain plan, based upon some abstruse calculation of chances, he contrived to gain considerable sums. All the gamblers envied him his luck, and many made it a point to watch his play, and stake their money on the same chances. In affairs of gallantry he was equally fortunate; ladies of the first rank smiled graciously upon the handsome Scotchman — the young, the rich, the witty, and the obliging. But all these successes only paved the way for reverses. After he had been for nine years exposed to the dangerous attractions of the gay life he was leading, he became an irrecoverable gambler. As his love of play increased in violence, it diminished in prudence. Great losses were only to be repaired by still greater ventures, and one unhappy day he lost more than he could repay without mortgaging his family estate. To that step he was driven at last. At the same time his gallantry brought him into trouble. A love affair, or slight flirtation, with a lady of the name of Villiers [Miss Elizabeth Villiers, afterwards Countess of Orkney] exposed him to the resentment of a Mr. Wilson, by whom he was challenged to fight a duel. Law accepted, and had the ill fortune to shoot his antagonist dead upon the spot. He was arrested the same day, and brought to trial for murder by the relatives of Mr. Wilson. He was afterwards found guilty, and sentenced to death. The sentence was commuted to a fine, upon the ground that the offence only amounted to manslaughter. An appeal being lodged by a brother of the deceased, Law was detained in the King’s Bench, whence, by some means or other, which he never explained, he contrived to escape; and an action being instituted against the sheriffs, he was advertised in the Gazette, and a reward offered for his apprehension. He was described as “Captain John Law, a Scotchman, aged twenty-six; a very tall, black, lean man; well shaped, above six feet high, with large pockholes in his face; big nosed, and speaking broad and loud.” As this was rather a caricature than a description of him, it has been supposed that it was drawn up with a view to favour his escape. He succeeded in reaching the Continent, where he travelled for three years, and devoted much of his attention to the monetary and banking affairs of the countries through which he passed. He stayed a few months in Amsterdam, and speculated to some extent in the funds. His mornings were devoted to the study of finance and the principles of trade, and his evenings to the gaming-house. It is generally believed that he returned to Edinburgh in the year 1700. It is certain that he published in that city his “Proposals and Reasons for constituting a Council of Trade.” This pamphlet did not excite much attention.

In a short time afterwards he published a project for establishing what he called a Land-bank [The wits of the day called it a sand-bank, which would wreck the vessel of the state.], the notes issued by which were never to exceed the value of the entire lands of the state, upon ordinary interest, or were to be equal in value to the land, with the right to enter into possession at a certain time. The project excited a good deal of discussion in the Scottish parliament, and a motion for the establishment of such a bank was brought forward by a neutral party, called the Squadrone, whom Law had interested in his favour. The Parliament ultimately passed a resolution to the effect, that, to establish any kind of paper credit, so as to force it to pass, was an improper expedient for the nation.

Upon the failure of this project, and of his efforts to procure a pardon for the murder of Mr. Wilson, Law withdrew to the Continent, and resumed his old habits of gaming. For fourteen years he continued to roam about, in Flanders, Holland, Germany, Hungary, Italy, and France. He soon became intimately acquainted with the extent of the trade and resources of each, and daily more confirmed in his opinion that no country could prosper without a paper currency. During the whole of this time he appears to have chiefly supported himself by successful play. At every gambling-house of note in the capitals of Europe, he was known and appreciated as one better skilled in the intricacies of chance than any other man of the day. It is stated in the “Biographie Universelle” that he was expelled, first from Venice, and afterwards from Genoa, by the magistrates, who thought him a visitor too dangerous for the youth of those cities. During his residence in Paris he rendered himself obnoxious to D’Argenson, the lieutenant-general of the police, by whom he was ordered to quit the capital. This did not take place, however, before he had made the acquaintance in the saloons, of the Duke de Vendome, the Prince de Conti, and of the gay Duke of Orleans, the latter of whom was destined afterwards to exercise so much influence over his fate. The Duke of Orleans was pleased with the vivacity and good sense of the Scottish adventurer, while the latter was no less pleased with the wit and amiability of a prince who promised to become his patron. They were often thrown into each other’s society, and Law seized every opportunity to instil his financial doctrines into the mind of one whose proximity to the throne pointed him out as destined, at no very distant date, to play an important part in the government.

Shortly before the death of Louis XIV, or, as some say, in 1708, Law proposed a scheme of finance to Desmarets, the Comptroller. Louis is reported to have inquired whether the projector were a Catholic, and, on being answered in the negative, to have declined having anything to do with him. [This anecdote, which is related in the correspondence of Madame de Baviere, Duchess of Orleans, and mother of the Regent, is discredited by Lord John Russell, in his “History of the principal States of Europe, from the Peace of Utrecht;” for what reason he does not inform us. There is no doubt that Law proposed his scheme to Desmarets, and that Louis refused to hear of it. The reason given for the refusal is quite consistent with the character of that bigoted and tyrannical monarch.]

It was after this repulse that he visited Italy. His mind being still occupied with schemes of finance, he proposed to Victor Amadeus, Duke of Savoy, to establish his land-bank in that country. The Duke replied that his dominions were too circumscribed for the execution of so great a project, and that he was by far too poor a potentate to be ruined. He advised him, however, to try the King of France once more; for he was sure, if he knew anything of the French character, that the people would be delighted with a plan, not only so new, but so plausible.

Louis XIV died in 1715, and the heir to the throne being an infant only seven years of age, the Duke of Orleans assumed the reins of government, as Regent, during his minority. Law now found himself in a more favourable position. The tide in his affairs had come, which, taken at the flood, was to waft him on to fortune. The Regent was his friend, already acquainted with his theory and pretensions, and inclined, moreover, to aid him in any efforts to restore the wounded credit of France, bowed down to the earth by the extravagance of the long reign of Louis XIV.

Hardly was that monarch laid in his grave ere the popular hatred, suppressed so long, burst forth against his memory. He who, during his life, had been flattered with an excess of adulation, to which history scarcely offers a parallel, was now cursed as a tyrant, a bigot, and a plunderer. His statues were pelted and disfigured; his effigies torn down, amid the execrations of the populace, and his name rendered synonymous with selfishness and oppression. The glory of his arms was forgotten, and nothing was remembered but his reverses, his extravagance, and his cruelty.

The finances of the country were in a state of the utmost disorder. A profuse and corrupt monarch, whose profuseness and corruption were imitated by almost every functionary, from the highest to the lowest grade, had brought France to the verge of ruin. The national debt amounted to 3000 millions of livres, the revenue to 145 millions, and the expenditure to 142 millions per annum; leaving only three millions to pay the interest upon 3000 millions. The first care of the Regent was to discover a remedy for an evil of such magnitude, and a council was early summoned to take the matter into consideration. The Duke de St. Simon was of opinion that nothing could save the country from revolution but a remedy at once bold and dangerous. He advised the Regent to convoke the States-General, and declare a national bankruptcy. The Duke de Noailles, a man of accommodating principles, an accomplished courtier, and totally averse from giving himself any trouble or annoyance that ingenuity could escape from, opposed the project of St. Simon with all his influence. He represented the expedient as alike dishonest and ruinous. The Regent was of the same opinion, and this desperate remedy fell to the ground.

The measures ultimately adopted, though they promised fair, only aggravated the evil. The first, and most dishonest measure, was of no advantage to the state. A recoinage was ordered, by which the currency was depreciated one-fifth; those who took a thousand pieces of gold or silver to the mint received back an amount of coin of the same nominal value, but only four-fifths of the weight of metal. By this contrivance the treasury gained seventy-two millions of livres, and all the commercial operations of the country were disordered. A trifling diminution of the taxes silenced the clamours of the people, and for the slight present advantage the great prospective evil was forgotten.

A chamber of justice was next instituted, to inquire into the malversations of the loan-contractors and the farmers of the revenues. Tax collectors are never very popular in any country, but those of France at this period deserved all the odium with which they were loaded. As soon as these farmers-general, with all their hosts of subordinate agents, called maltotiers [From maltote, an oppressive tax.], were called to account for their misdeeds, the most extravagant joy took possession of the nation. The Chamber of Justice, instituted chiefly for this purpose, was endowed with very extensive powers. It was composed of the presidents and councils of the parliament, the judges of the Courts of Aid and of Requests, and the officers of the Chamber of Account, under the general presidence of the minister of finance. Informers were encouraged to give evidence against the offenders by the promise of one-fifth part of the fines and confiscations. A tenth of all concealed effects belonging to the guilty was promised to such as should furnish the means of discovering them.

The promulgation of the edict constituting this court caused a degree of consternation among those principally concerned which can only be accounted for on the supposition that their peculation had been enormous. But they met with no sympathy. The proceedings against them justified their terror. The Bastile was soon unable to contain the prisoners that were sent to it, and the gaols all over the country teemed with guilty or suspected persons. An order was issued to all innkeepers and postmasters to refuse horses to such as endeavoured to seek safety in flight; and all persons were forbidden, under heavy fines, to harbour them or favour their evasion. Some were condemned to the pillory, others to the gallies, and the least guilty to fine and imprisonment. One only, Samuel Bernard, a rich banker, and farmer-general of a province remote from the capital, was sentenced to death. So great had been the illegal profits of this man, — looked upon as the tyrant and oppressor of his district, — that he offered six millions of livres, or 250,000 pounds sterling, to be allowed to escape.

His bribe was refused, and he suffered the penalty of death. Others, perhaps more guilty, were more fortunate. Confiscation, owing to the concealment of their treasures by the delinquents, often produced less money than a fine. The severity of the government relaxed, and fines, under the denomination of taxes, were indiscriminately levied upon all offenders. But so corrupt was every department of the administration, that the country benefited but little by the sums which thus flowed into the treasury. Courtiers, and courtiers’ wives and mistresses, came in for the chief share of the spoils. One contractor had been taxed in proportion to his wealth and guilt, at the sum of twelve millions of livres. The Count * * *, a man of some weight in the government, called upon him, and offered to procure a remission of the fine, if he would give him a hundred thousand crowns. “Vous etes trop tard, mon ami,” replied the financier; “I have already made a bargain with your wife for fifty thousand.” [This anecdote is related by M. de la Hode, in his Life of Philippe of Orleans. It would have looked more authentic if he had given the names of the dishonest contractor and the still more dishonest minister. But M. de la Hode’s book is liable to the same objection as most of the French memoirs of that and of subsequent periods. It is sufficient with most of them that an anecdote be ben trovato; the veto is but matter of secondary consideration.]

About a hundred and eighty millions of livres were levied in this manner, of which eighty were applied in payment of the debts contracted by the government. The remainder found its way into the pockets of the courtiers. Madame de Maintenon, writing on this subject, says, “We hear every day of some new grant of the Regent; the people murmur very much at this mode of employing the money taken from the peculators.” The people, who, after the first burst of their resentment is over, generally express a sympathy for the weak, were indignant that so much severity should be used to so little purpose. They did not see the justice of robbing one set of rogues to fatten another. In a few months all the more guilty had been brought to punishment, and the chamber of justice looked for victims in humbler walks of life. Charges of fraud and extortion were brought against tradesmen of good character, in consequence of the great inducements held out to common informers. They were compelled to lay open their affairs before this tribunal in order to establish their innocence. The voice of complaint resounded from every side, and at the expiration of a year the government found it advisable to discontinue further proceedings. The chamber of justice was suppressed, and a general amnesty granted to all against whom no charges had yet been preferred.

In the midst of this financial confusion Law appeared upon the scene. No man felt more deeply than the Regent the deplorable state of the country, but no man could be more averse from putting his shoulders manfully to the wheel. He disliked business; he signed official documents without proper examination, and trusted to others what he should have undertaken himself. The cares inseparable from his high office were burdensome to him; he saw that something was necessary to be done, but he lacked the energy to do it, and had not virtue enough to sacrifice his case and his pleasures in the attempt. No wonder that, with this character, he listened favourably to the mighty projects, so easy of execution, of the clever adventurer whom he had formerly known, and whose talents he appreciated.

When Law presented himself at court, he was most cordially received. He offered two memorials to the Regent, in which he set forth the evils that had befallen France, owing to an insufficient currency, at different times depreciated. He asserted that a metallic currency, unaided by a paper money, was wholly inadequate to the wants of a commercial country, and particularly cited the examples of Great Britain and Holland to show the advantages of paper. He used many sound arguments on the subject of credit, and proposed, as a means of restoring that of France, then at so low an ebb among the nations, that he should be allowed to set up a bank, which should have the management of the royal revenues, and issue notes, both on that and on landed security. He further proposed that this bank should be administered in the King’s name, but subject to the control of commissioners, to be named by the States-General.

While these memorials were under consideration, Law translated into French his essay on money and trade, and used every means to extend through the nation his renown as a financier. He soon became talked of. The confidants of the Regent spread abroad his praise, and every one expected great things of Monsieur Lass. [The French pronounced his name in this manner to avoid the ungallic sound, aw. After the failure of his scheme, the wags said the nation was lasse de lui, and proposed that he should in future be known by the name of Monsieur Helas!]

On the 5th of May, 1716, a royal edict was published, by which Law was authorised, in conjunction with his brother, to establish a bank, under the name of Law and Company, the notes of which should be received in payment of the taxes. The capital was fixed at six millions of livres, in twelve thousand shares of five hundred livres each, purchasable one-fourth in specie and the remainder in billets d’etat. It was not thought expedient to grant him the whole of the privileges prayed for in his memorials until experience should have shown their safety and advantage.

Law was now on the high road to fortune. The study of thirty years was brought to guide him in the management of his bank. He made all his notes payable at sight, and in the coin current at the time they were issued. This last was a master-stroke of policy, and immediately rendered his notes more valuable than the precious metals. The latter were constantly liable to depreciation by the unwise tampering of the government. A thousand livres of silver might be worth their nominal value one day and be reduced one-sixth the next, but a note of Law’s bank retained its original value. He publicly declared at the same time that a banker deserved death if he made issues without having sufficient security to answer all demands. The consequence was, that his notes advanced rapidly in public estimation, and were received at one per cent. more than specie. It was not long before the trade of the country felt the benefit. Languishing commerce began to lift up her head; the taxes were paid with greater regularity and less murmuring, and a degree of confidence was established that could not fail, if it continued, to become still more advantageous. In the course of a year Law’s notes rose to fifteen per cent. premium, while the billets d’etat, or notes issued by the government, as security for the debts contracted by the extravagant Louis XIV, were at a discount of no less than seventy-eight and a half per cent. The comparison was too great in favour of Law not to attract the attention of the whole kingdom, and his credit extended itself day by day. Branches of his bank were almost simultaneously established at Lyons, Rochelle, Tours, Amiens, and Orleans.

The Regent appears to have been utterly astonished at his success, and gradually to have conceived the idea, that paper, which could so aid a metallic currency, could entirely supersede it. Upon this fundamental error he afterwards acted. In the mean time, Law commenced the famous project which has handed his name down to posterity. He proposed to the Regent, who could refuse him nothing, to establish a company, that should have the exclusive privilege of trading to the great river Mississippi and the province of Louisiana, on its western bank. The country was supposed to abound in the precious metals, and the company, supported by the profits of their exclusive commerce, were to be the sole farmers of the taxes, and sole coiners of money. Letters patent were issued, incorporating the company, in August 1717. The capital was divided into two hundred thousand shares of five hundred livres each, the whole of which might be paid in billets d’etat, at their nominal value, although worth no more than 160 livres in the market.

It was now that the frenzy of speculating began to seize upon the nation. Law’s bank had effected so much good, that any promises for the future which he thought proper to make were readily believed. The Regent every day conferred new privileges upon the fortunate projector. The bank obtained the monopoly of the sale of tobacco; the sole right of refinage of gold and silver, and was finally erected into the Royal Bank of France. Amid the intoxication of success, both Law and the Regent forgot the maxim so loudly proclaimed by the former, that a banker deserved death who made issues of paper without the necessary funds to provide for them. As soon as the bank, from a private, became a public institution, the Regent caused a fabrication of notes to the amount of one thousand millions of livres. This was the first departure from sound principles, and one for which Law is not justly blameable. While the affairs of the bank were under his control, the issues had never exceeded sixty millions. Whether Law opposed the inordinate increase is not known, but as it took place as soon as the bank was made a royal establishment, it is but fair to lay the blame of the change of system upon the Regent.

Law found that he lived under a despotic government, but he was not yet aware of the pernicious influence which such a government could exercise upon so delicate a framework as that of credit. He discovered it afterwards to his cost, but in the mean time suffered himself to be impelled by the Regent into courses which his own reason must have disapproved. With a weakness most culpable, he lent his aid in inundating the country with paper money, which, based upon no solid foundation, was sure to fall, sooner or later. The extraordinary present fortune dazzled his eyes, and prevented him from seeing the evil day that would burst over his head, when once, from any cause or other, the alarm was sounded. The Parliament were from the first jealous of his influence as a foreigner, and had, besides, their misgivings as to the safety of his projects. As his influence extended, their animosity increased. D’Aguesseau, the Chancellor, was unceremoniously dismissed by the Regent for his opposition to the vast increase of paper money, and the constant depreciation of the gold and silver coin of the realm. This only served to augment the enmity of the Parliament, and when D’Argenson, a man devoted to the interests of the Regent, was appointed to the vacant chancellorship, and made at the same time minister of finance, they became more violent than ever. The first measure of the new minister caused a further depreciation of the coin. In order to extinguish the billets d’etat, it was ordered that persons bringing to the mint four thousand livres in specie and one thousand livres in billets d’etat, should receive back coin to the amount of five thousand livres. D’Argenson plumed himself mightily upon thus creating five thousand new and smaller livres out of the four thousand old and larger ones, being too ignorant of the true principles of trade and credit to be aware of the immense injury he was inflicting upon both.

The Parliament saw at once the impolicy and danger of such a system, and made repeated remonstrances to the Regent. The latter refused to entertain their petitions, when the Parliament, by a bold, and very unusual stretch of authority, commanded that no money should be received in payment but that of the old standard. The Regent summoned a lit de justice, and annulled the decree. The Parliament resisted, and issued another. Again the Regent exercised his privilege, and annulled it, till the Parliament, stung to fiercer opposition, passed another decree, dated August 12th, 1718, by which they forbade the bank of Law to have any concern, either direct or indirect, in the administration of the revenue; and prohibited all foreigners, under heavy penalties, from interfering, either in their own names, or in that of others, in the management of the finances of the state. The Parliament considered Law to be the author of all the evil, and some of the counsellors, in the virulence of their enmity, proposed that he should be brought to trial, and, if found guilty, be hung at the gates of the Palais de Justice.

Law, in great alarm, fled to the Palais Royal, and threw himself on the protection of the Regent, praying that measures might be taken to reduce the Parliament to obedience. The Regent had nothing so much at heart, both on that account and because of the disputes that had arisen relative to the legitimation of the Duke of Maine and the Count of Thoulouse, the sons of the late King. The Parliament was ultimately overawed by the arrest of their president and two of the counsellors, who were sent to distant prisons.

Thus the first cloud upon Law’s prospects blew over: freed from apprehension of personal danger, he devoted his attention to his famous Mississippi project, the shares of which were rapidly rising, in spite of the Parliament. At the commencement of the year 1719 an edict was published, granting to the Mississippi Company the exclusive privilege of trading to the East Indies, China, and the South Seas, and to all the possessions of the French East India Company, established by Colbert. The Company, in consequence of this great increase of their business, assumed, as more appropriate, the title of Company of the Indies, and created fifty thousand new shares. The prospects now held out by Law were most magnificent. He promised a yearly dividend of two hundred livres upon each share of five hundred, which, as the shares were paid for in billets d’etat, at their nominal value, but worth only 100 livres, was at the rate of about 120 per cent. profit.

The public enthusiasm, which had been so long rising, could not resist a vision so splendid. At least three hundred thousand applications were made for the fifty thousand new shares, and Law’s house in the Rue de Quincampoix was beset from morning to night by the eager applicants. As it was impossible to satisfy them all, it was several weeks before a list of the fortunate new stockholders could be made out, during which time the public impatience rose to a pitch of frenzy. Dukes, marquises, counts, with their duchesses, marchionesses, and countesses, waited in the streets for hours every day before Mr. Law’s door to know the result. At last, to avoid the jostling of the plebeian crowd, which, to the number of thousands, filled the whole thoroughfare, they took apartments in the adjoining houses, that they might be continually near the temple whence the new Plutus was diffusing wealth. Every day the value of the old shares increased, and the fresh applications, induced by the golden dreams of the whole nation, became so numerous that it was deemed advisable to create no less than three hundred thousand new shares, at five thousand livres each, in order that the Regent might take advantage of the popular enthusiasm to pay off the national debt. For this purpose, the sum of fifteen hundred millions of livres was necessary. Such was the eagerness of the nation, that thrice the sum would have been subscribed if the government had authorised it.

[Continues below]

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Law was now at the zenith of his prosperity, and the people were rapidly approaching the zenith of their infatuation. The highest and the lowest classes were alike filled with a vision of boundless wealth. There was not a person of note among the aristocracy, with the exception of the Duke of St. Simon and Marshal Villars, who was not engaged in buying or selling stock. People of every age and sex, and condition in life, speculated in the rise and fall of the Mississippi bonds. The Rue de Quincampoix was the grand resort of the jobbers, and it being a narrow, inconvenient street, accidents continually occurred in it, from the tremendous pressure of the crowd. Houses in it, worth, in ordinary times, a thousand livres of yearly rent, yielded as much as twelve or sixteen thousand. A cobbler, who had a stall in it, gained about two hundred livres a day by letting it out, and furnishing writing materials to brokers and their clients. The story goes, that a hump-backed man who stood in the street gained considerable sums by lending his hump as a writing-desk to the eager speculators! The great concourse of persons who assembled to do business brought a still greater concourse of spectators. These again drew all the thieves and immoral characters of Paris to the spot, and constant riots and disturbances took place. At nightfall, it was often found necessary to send a troop of soldiers to clear the street.

Law, finding the inconvenience of his residence, removed to the Place Vendome, whither the crowd of agioteurs followed him. That spacious square soon became as thronged as the Rue de Quincampoix : from morning to night it presented the appearance of a fair. Booths and tents were erected for the transaction of business and the sale of refreshments, and gamblers with their roulette tables stationed themselves in the very middle of the place, and reaped a golden, or rather a paper, harvest from the throng. The Boulevards and public gardens were forsaken; parties of pleasure took their walks in preference in the Place Vendome, which became the fashionable lounge of the idle, as well as the general rendezvous of the busy. The noise was so great all day, that the Chancellor, whose court was situated in the square, complained to the Regent and the municipality, that he could not hear the advocates. Law, when applied to, expressed his willingness to aid in the removal of the nuisance, and for this purpose entered into a treaty with the Prince de Carignan for the Hotel de Soissons, which had a garden of several acres in the rear. A bargain was concluded, by which Law became the purchaser of the hotel, at an enormous price, the Prince reserving to himself the magnificent gardens as a new source of profit. They contained some fine statues and several fountains, and were altogether laid out with much taste. As soon as Law was installed in his new abode, an edict was published, forbidding all persons to buy or sell stock anywhere but in the gardens of the Hotel de Soissons. In the midst among the trees, about five hundred small tents and pavilions were erected, for the convenience of the stock-jobbers. Their various colours, the gay ribands and banners which floated from them, the busy crowds which passed continually in and out–the incessant hum of voices, the noise, the music, and the strange mixture of business and pleasure on the countenances of the throng, all combined to give the place an air of enchantment that quite enraptured the Parisians. The Prince de Carignan made enormous profits while the delusion lasted. Each tent was let at the rate of five hundred livres a month; and, as there were at least five hundred of them, his monthly revenue from this source alone must have amounted to 250,000 livres, or upwards of 10,000 pounds sterling.

The honest old soldier, Marshal Villars, was so vexed to see the folly which had smitten his countrymen, that he never could speak with temper on the subject. Passing one day through the Place Vendome in his carriage, the choleric gentleman was so annoyed at the infatuation of the people, that he abruptly ordered his coachman to stop, and, putting his head out of the carriage window, harangued them for full half an hour on their “disgusting avarice.” This was not a very wise proceeding on his part. Hisses and shouts of laughter resounded from every side, and jokes without number were aimed at him. There being at last strong symptoms that something more tangible was flying through the air in the direction of his head, Marshal was glad to drive on. He never again repeated the experiment.

Two sober, quiet, and philosophic men of letters, M. de la Motte and the Abbe Terrason, congratulated each other, that they, at least, were free from this strange infatuation. A few days afterwards, as the worthy Abbe was coming out of the Hotel de Soissons, whither he had gone to buy shares in the Mississippi, whom should he see but his friend La Motte entering for the same purpose. “Ha!” said the Abbe, smiling, “is that you?” “Yes,” said La Motte, pushing past him as fast as he was able; “and can that be you?” The next time the two scholars met, they talked of philosophy, of science, and of religion, but neither had courage for a long time to breathe one syllable about the Mississippi. At last, when it was mentioned, they agreed that a man ought never to swear against his doing any one thing, and that there was no sort of extravagance of which even a wise man was not capable.

During this time, Law, the new Plutus, had become all at once the most important personage of the state. The ante-chambers of the Regent were forsaken by the courtiers. Peers, judges, and bishops thronged to the Hotel de Soissons; officers of the army and navy, ladies of title and fashion, and every one to whom hereditary rank or public employ gave a claim to precedence, were to be found waiting in his ante-chambers to beg for a portion of his India stock. Law was so pestered that he was unable to see one-tenth part of the applicants, and every manoeuvre that ingenuity could suggest was employed to gain access to him. Peers, whose dignity would have been outraged if the Regent had made them wait half an hour for an interview, were content to wait six hours for the chance of seeing Monsieur Law. Enormous fees were paid to his servants, if they would merely announce their names. Ladies of rank employed the blandishments of their smiles for the same object; but many of them came day after day for a fortnight before they could obtain an audience. When Law accepted an invitation, he was sometimes so surrounded by ladies, all asking to have their names put down in his lists as shareholders in the new stock, that, in spite of his well-known and habitual gallantry, he was obliged to tear himself away par force. The most ludicrous stratagems were employed to have an opportunity of speaking to him. One lady, who had striven in vain during several days, gave up in despair all attempts to see him at his own house, but ordered her coachman to keep a strict watch whenever she was out in her carriage, and if he saw Mr. Law coming, to drive against a post, and upset her. The coachman promised obedience, and for three days the lady was driven incessantly through the town, praying inwardly for the opportunity to be overturned. At last she espied Mr. Law, and, pulling the string, called out to the coachman, “Upset us now! for God’s sake, upset us now!” The coachman drove against a post, the lady screamed, the coach was overturned, and Law, who had seen the accident, hastened to the spot to render assistance. The cunning dame was led into the Hotel de Soissons, where she soon thought it advisable to recover from her fright, and, after apologizing to Mr. Law, confessed her stratagem. Law smiled, and entered the lady in his books as the purchaser of a quantity of India stock. Another story is told of a Madame de Boucha, who, knowing that Mr. Law was at dinner at a certain house, proceeded thither in her carriage, and gave the alarm of fire. The company started from table, and Law among the rest; but, seeing one lady making all haste into the house towards him, while everybody else was scampering away, he suspected the trick, and ran off in another direction.

Many other anecdotes are related, which even, though they may be a little exaggerated, are nevertheless worth preserving, as showing the spirit of that singular period. [The curious reader may find an anecdote of the eagerness of the French ladies to retain Law in their company, which will make him blush or smile according as he happens to be very modest or the reverse. It is related in the Letters of Madame Charlotte Elizabeth de Baviere, Duchess of Orleans, vol. ii. p. 274.] The Regent was one day mentioning, in the presence of D’Argenson, the Abbe Dubois, and some other persons, that he was desirous of deputing some lady, of the rank at least of a Duchess, to attend upon his daughter at Modena; “but,” added he, “I do not exactly know where to find one.” “No!” replied one, in affected surprise; “I can tell you where to find every Duchess in France :–you have only to go to Mr. Law’s; you will see them every one in his ante-chamber.”

M. de Chirac, a celebrated physician, had bought stock at an unlucky period, and was very anxious to sell out. Stock, however continued to fall for two or three days, much to his alarm. His mind was filled with the subject, when he was suddenly called upon to attend a lady, who imagined herself unwell. He arrived, was shown up stairs, and felt the lady’s pulse. “It falls! it falls! good God! it falls continually!” said he, musingly, while the lady looked up in his face, all anxiety for his opinion. “Oh! M. de Chirac,” said she, starting to her feet, and ringing the bell for assistance; “I am dying! I am dying! it falls! it falls! it falls!” “What falls?” inquired the doctor, in amazement. “My pulse! my pulse!” said the lady; “I must be dying.” “Calm your apprehensions, my dear Madam,” said M. de Chirac; “I was speaking of the stocks. The truth is, I have been a great loser, and my mind is so disturbed, I hardly know what I have been saying.”

The price of shares sometimes rose ten or twenty per cent. in the course of a few hours, and many persons in the humbler walks of life, who had risen poor in the morning, went to bed in affluence. An extensive holder of stock, being taken ill, sent his servant to sell two hundred and fifty shares, at eight thousand livres each, the price at which they were then quoted. The servant went, and, on his arrival in the Jardin de Soissons, found that in the interval the price had risen to ten thousand livres. The difference of two thousand livres on the two hundred and fifty shares, amounting to 500,000 livres, or 2O,000 pounds sterling, he very coolly transferred to his own use, and, giving the remainder to his master, set out the same evening for another country. Law’s coachman in a very short time made money enough to set up a carriage of his own, and requested permission to leave his service. Law, who esteemed the man, begged of him as a favour, that he would endeavour, before he went, to find a substitute as good as himself. The coachman consented, and in the evening brought two of his former comrades, telling Mr. Law to choose between them, and he would take the other. Cookmaids and footmen were now and then as lucky, and, in the full-blown pride of their easily-acquired wealth, made the most ridiculous mistakes. Preserving the language and manners of their old, with the finery of their new station, they afforded continual subjects for the pity of the sensible, the contempt of the sober, and the laughter of everybody. But the folly and meanness of the higher ranks of society were still more disgusting. One instance alone, related by the Duke de St. Simon, will show the unworthy avarice which infected the whole of society. A man of the name of Andre, without character or education, had, by a series of well-timed speculations in Mississippi bonds, gained enormous wealth, in an incredibly short space of time. As St. Simon expresses it, “he had amassed mountains of gold.” As he became rich, he grew ashamed of the lowness of his birth, and anxious above all things to be allied to nobility. He had a daughter, an infant only three years of age, and he opened a negotiation with the aristocratic and needy family of D’Oyse, that this child should, upon certain conditions, marry a member of that house. The Marquis d’Oyse, to his shame, consented, and promised to marry her himself on her attaining the age of twelve, if the father would pay him down the sum of a hundred thousand crowns, and twenty thousand livres every year, until the celebration of the marriage. The Marquis was himself in his thirty-third year. This scandalous bargain was duly signed and sealed, the stockjobber furthermore agreeing to settle upon his daughter, on the marriage-day, a fortune of several millions. The Duke of Brancas, the head of the family, was present throughout the negotiation, and shared in all the profits. St. Simon, who treats the matter with the levity becoming what he thought so good a joke, adds, “that people did not spare their animadversions on this beautiful marriage,” and further informs us, “that the project fell to the ground some months afterwards by the overthrow of Law, and the ruin of the ambitious Monsieur Andre.” It would appear, however, that the noble family never had the honesty to return the hundred thousand crowns.

Amid events like these, which, humiliating though they be, partake largely of the ludicrous, others occurred of a more serious nature. Robberies in the streets were of daily occurrence, in consequence of the immense sums, in paper, which people carried about with them. Assassinations were also frequent. One case in particular fixed the attention of the whole of France, not only on account of the enormity of the offence, but of the rank and high connexions of the criminal.

The Count d’Horn, a younger brother of the Prince d’Horn, and related to the noble families of D’Aremberg, De Ligne, and De Montmorency, was a young man of dissipated character, extravagant to a degree, and unprincipled as he was extravagant. In connexion with two other young men as reckless as himself, named Mille, a Piedmontese captain, and one Destampes, or Lestang, a Fleming, he formed a design to rob a very rich broker, who was known, unfortunately for himself, to carry great sums about his person. The Count pretended a desire to purchase of him a number of shares in the Company of the Indies, and for that purpose appointed to meet him in a cabaret, or low public-house, in the neighbourhood of the Place Vendome. The unsuspecting broker was punctual to his appointment; so were the Count d’Horn and his two associates, whom he introduced as his particular friends. After a few moments’ conversation, the Count d’Horn suddenly sprang upon his victim, and stabbed him three times in the breast with a poniard. The man fell heavily to the ground, and, while the Count was employed in rifling his portfolio of bonds in the Mississippi and Indian schemes to the amount of one hundred thousand crowns, Mille, the Piedmontese, stabbed the unfortunate broker again and again, to make sure of his death. But the broker did not fall without a struggle, and his cries brought the people of the cabaret to his assistance. Lestang, the other assassin, who had been set to keep watch at a staircase, sprang from a window and escaped; but Mille and the Count d’Horn were seized in the very act.

This crime, committed in open day, and in so public a place as a cabaret, filled Paris with consternation. The trial of the assassins commenced on the following day, and the evidence being so clear, they were both found guilty and condemned to be broken alive on the wheel. The noble relatives of the Count d’Horn absolutely blocked up the ante-chambers of the Regent, praying for mercy on the misguided youth, and alleging that he was insane. The Regent avoided them as long as possible, being determined that, in a case so atrocious, justice should take its course; but the importunity of these influential suitors was not to be overcome so silently, and they at last forced themselves into the presence of the Regent, and prayed him to save their house the shame of a public execution. They hinted that the Princes d’Horn were allied to the illustrious family of Orleans, and added that the Regent himself would be disgraced if a kinsman of his should die by the hands of a common executioner. The Regent, to his credit, was proof against all their solicitations, and replied to their last argument in the words of Corneille,- “Le crime fait la honte, et non pas l’echafaud:” adding, that whatever shame there might be in the punishment he would very willingly share with the other relatives. Day after day they renewed their entreaties, but always with the same result. At last they thought that if they could interest the Duke de St. Simon in their layout, a man for whom the Regent felt sincere esteem, they might succeed in their object. The Duke, a thorough aristocrat, was as shocked as they were, that a noble assassin should die by the same death as a plebeian felon, and represented to the Regent the impolicy of making enemies of so numerous, wealthy, and powerful a family. He urged, too, that in Germany, where the family of D’Aremberg had large possessions, it was the law, that no relative of a person broken on the wheel could succeed to any public office or employ until a whole generation had passed away. For this reason he thought the punishment of the guilty Count might be transmuted into beheading, which was considered all over Europe as much less infamous. The Regent was moved by this argument, and was about to consent, when Law, who felt peculiarly interested in the fate of the murdered man, confirmed him in his former resolution, to let the law take its course.

The relatives of D’Horn were now reduced to the last extremity. The Prince de Robec Montmorency, despairing of other methods, found means to penetrate into the dungeon of the criminal, and offering him a cup of poison, implored him to save them from disgrace. The Count d’Horn turned away his head, and refused to take it. Montmorency pressed him once more, and losing all patience at his continued refusal, turned on his heel, and exclaiming, “Die, then, as thou wilt, mean-spirited wretch! thou art fit only to perish by the hands of the hangman!” left him to his fate.

D’Horn himself petitioned the Regent that he might be beheaded, but Law, who exercised more influence over his mind than any other person, with the exception of the notorious Abbe Dubois, his tutor, insisted that he could not in justice succumb to the self-interested views of the D’Horns. The Regent had from the first been of the same opinion, and within six days after the commission of their crime, D’Horn and Mille were broken on the wheel in the Place de Greve. The other assassin, Lestang, was never apprehended.

This prompt and severe justice was highly pleasing to the populace of Paris; even M. de Quincampoix, as they called Law, came in for a share of their approbation for having induced the Regent to show no favour to a patrician. But the number of robberies and assassinations did not diminish. No sympathy was shown for rich jobbers when they were plundered: the general laxity of public morals, conspicuous enough before, was rendered still more so by its rapid pervasion of the middle classes, who had hitherto remained comparatively pure, between the open vices of the class above and the hidden crimes of the class below them. The pernicious love of gambling diffused itself through society, and bore all public, and nearly all private, virtue before it.

For a time, while confidence lasted, an impetus was given to trade, which could not fail to be beneficial. In Paris, especially, the good results were felt. Strangers flocked into the capital from every part, bent, not only upon making money, but on spending it. The Duchess of Orleans, mother of the Regent, computes the increase of the population during this time, from the great influx of strangers from all parts of the world, at 305,000 souls. The housekeepers were obliged to make up beds in garrets, kitchens, and even stables, for the accommodation of lodgers; and the town was so full of carriages and vehicles of every description, that they were obliged in the principal streets to drive at a foot-pace for fear of accidents. The looms of the country worked with unusual activity, to supply rich laces, silks, broad-cloth, and velvets, which being paid for in abundant paper, increased in price four-fold. Provisions shared the general advance; bread, meat, and vegetables were sold at prices greater than had ever before been known; while the wages of labour rose in exactly the same proportion. The artisan, who formerly gained fifteen sous per diem, now gained sixty. New houses were built in every direction; an illusory prosperity shone over the land, and so dazzled the eyes of the whole nation that none could see the dark cloud on the horizon, announcing the storm that was too rapidly approaching.

Law himself, the magician whose wand had wrought so surprising a change, shared, of course, in the general prosperity. His wife and daughter were courted by the highest nobility, and their alliance sought by the heirs of ducal and princely houses. He bought two splendid estates in different parts of France, and entered into a negotiation with the family of the Duke de Sully for the purchase of the Marquisate of Rosny. His religion being an obstacle to his advancement, the Regent promised, if he would publicly conform to the Catholic faith, to make him comptroller-general of the finances. Law, who had no more real religion than any other professed gambler, readily agreed, and was confirmed by the Abbe de Tencin in the cathedral of Melun, in presence of a great crowd of spectators. [The following squib was circulated on the occasion :– “Foin de ton zele seraphique, Malheureux Abbe de Tencin, Depuis que Law est Catholique, Tout le royaume est Capucin

Thus, somewhat weakly and paraphrastically rendered by Justansond, in his translation of the “Memoirs of Louis XV:”– “Tencin, a curse on thy seraphic zeal, Which by persuasion hath contrived the means To make the Scotchman at our altars kneel, Since which we all are poor as Capucines?] On the following day he was elected honorary churchwarden of the parish of St. Roch, upon which occasion he made it a present of the sum of five hundred thousand livres. His charities, always magnificent, were not always so ostentatious. He gave away great sums privately, and no tale of real distress ever reached his ears in vain.

At this time, he was by far the most influential person of the state. The Duke of Orleans had so much confidence in his sagacity, and the success of his plans, that he always consulted him upon every matter of moment. He was by no means unduly elevated by his prosperity, but remained the same simple, affable, sensible man that he had shown himself in adversity. His gallantry, which was always delightful to the fair objects of it, was of a nature, so kind, so gentlemanly, and so respectful, that not even a lover could have taken offence at it. If upon any occasion he showed any symptoms of haughtiness, it was to the cringing nobles, who lavished their adulation upon him till it became fulsome. He often took pleasure in seeing how long he could make them dance attendance upon him for a single favour. To such of his own countrymen as by chance visited Paris, and sought an interview with him, he was, on the contrary, all politeness and attention. When Archibald Campbell, Earl of Islay, and afterwards Duke of Argyle, called upon him in the Place Vendome, he had to pass through an ante-chamber crowded with persons of the first distinction, all anxious to see the great financier, and have their names put down as first on the list of some new subscription. Law himself was quietly sitting in his library, writing a letter to the gardener at his paternal estate of Lauriston about the planting of some cabbages! The Earl stayed for a considerable time, played a game of piquet with his countryman, and left him, charmed with his ease, good sense, and good breeding.

Among the nobles who, by means of the public credulity at this time, gained sums sufficient to repair their ruined fortunes, may be mentioned the names of the Dukes de Bourbon, de Guiche, de la Force [The Duke de la Force gained considerable sums, not only by jobbing in the stocks, but in dealing in porcelain, spices, &c. It was debated for a length of time in the Parliament of Paris whether he had not, in his quality of spice-merchant, forfeited his rank in the peerage. It was decided in the negative. A caricature of him was made, dressed as a street porter, carrying a large bale of spices on his back, with the inscription, “Admirez La Force.”], de Chaulnes, and d’Antin; the Marechal d’Estrees, the Princes de Rohan, de Poix, and de Leon. The Duke de Bourbon, son of Louis XIV by Madame de Montespan, was peculiarly fortunate in his speculations in Mississippi paper. He rebuilt the royal residence of Chantilly in a style of unwonted magnificence, and, being passionately fond of horses, he erected a range of stables, which were long renowned throughout Europe, and imported a hundred and fifty of the finest racers from England, to improve the breed in France. He bought a large extent of country in Picardy, and became possessed of nearly all the valuable lands lying between the Oise and the Somme.

When fortunes such as these were gained, it is no wonder that Law should have been almost worshipped by the mercurial population. Never was monarch more flattered than he was. All the small poets and litterateurs of the day poured floods of adulation upon him. According to them he was the saviour of the country, the tutelary divinity of France; wit was in all his words, goodness in all his looks, and wisdom in all his actions. So great a crowd followed his carriage whenever he went abroad, that the Regent sent him a troop of horse as his permanent escort, to clear the streets before him.

It was remarked at this time, that Paris had never before been so full of objects of elegance and luxury. Statues, pictures, and tapestries were imported in great quantities from foreign countries, and found a ready market. All those pretty trifles in the way of furniture and ornament which the French excel in manufacturing, were no longer the exclusive play-things of the aristocracy, but were to be found in abundance in the houses of traders and the middle classes in general. Jewellery of the most costly description was brought to Paris as the most favourable mart. Among the rest, the famous diamond, bought by the Regent, and called by his name, and which long adorned the crown of France. It was purchased for the sum of two millions of livres, under circumstances which show that the Regent was not so great a gainer as some of his subjects, by the impetus which trade had received. When the diamond was first offered to him, he refused to buy it, although he desired, above all things, to possess it, alleging as his reason, that his duty to the country he governed would not allow him to spend so large a sum of the public money for a mere jewel. This valid and honourable excuse threw all the ladies of the court into alarm, and nothing was heard for some days but expressions of regret, that so rare a gem should be allowed to go out of France; no private individual being rich enough to buy it. The Regent was continually importuned about it; but all in vain, until the Duke de St. Simon, who, with all his ability, was something of a twaddler, undertook the weighty business. His entreaties, being seconded by Law, the good-natured Regent gave his consent, leaving to Law’s ingenuity to find the means to pay for it. The owner took security for the payment of the sum of two millions of livres within a stated period, receiving, in the mean time, the interest of five per cent. upon that amount, and being allowed, besides, all the valuable clippings of the gem. St. Simon, in his Memoirs, relates, with no little complacency, his share in this transaction. After describing the diamond to be as large as a greengage, of a form nearly round, perfectly white, and without flaw, and weighing more than five hundred grains, he concludes with a chuckle, by telling the world, “that he takes great credit to himself for having induced the Regent to make so illustrious a purchase.” In other words, he was proud that he had induced him to sacrifice his duty, and buy a bauble for himself, at an extravagant price, out of the public money.

Thus the system continued to flourish till the commencement of the year 1720. The warnings of the Parliament, that too great a creation of paper money would, sooner or later, bring the country to bankruptcy, were disregarded. The Regent, who knew nothing whatever of the philosophy of finance, thought that a system which had produced such good effects could never be carried to excess. If five hundred millions of paper had been of such advantage, five hundred millions additional would be of still greater advantage. This was the grand error of the Regent, and which Law did not attempt to dispel. The extraordinary avidity of the people kept up the delusion; and the higher the price of Indian and Mississippi stock, the more billets de banque were issued to keep pace with it. The edifice thus reared might not unaptly be compared to the gorgeous palace erected by Potemkin, that princely barbarian of Russia, to surprise and please his imperial mistress: huge blocks of ice were piled one upon another; ionic pillars, of chastest workmanship, in ice, formed a noble portico; and a dome, of the same material, shone in the sun, which had just strength enough to gild, but not to melt it. It glittered afar, like a palace of crystals and diamonds; but there came one warm breeze from the south, and the stately building dissolved away, till none were able even to gather up the fragments. So with Law and his paper system. No sooner did the breath of popular mistrust blow steadily upon it, than it fell to ruins, and none could raise it up again.

The first slight alarm that was occasioned was early in 1720. The Prince de Conti, offended that Law should have denied him fresh shares in India stock, at his own price, sent to his bank to demand payment in specie of so enormous a quantity of notes, that three waggons were required for its transport. Law complained to the Regent, and urged on his attention the mischief that would be done, if such an example found many imitators. The Regent was but too well aware of it, and, sending for the Prince de Conti, ordered him, under penalty of his high displeasure, to refund to the Bank two-thirds of the specie which he had withdrawn from it. The Prince was forced to obey the despotic mandate. Happily for Law’s credit, De Conti was an unpopular man: everybody condemned his meanness and cupidity, and agreed that Law had been hardly treated. It is strange, however, that so narrow an escape should not have made both Law and the Regent more anxious to restrict their issues. Others were soon found who imitated, from motives of distrust, the example which had been set by De Conti in revenge. The more acute stockjobbers imagined justly that prices could not continue to rise for ever. Bourdon and La Richardiere, renowned for their extensive operations in the funds, quietly and in small quantities at a time, converted their notes into specie, and sent it away to foreign countries. They also bought as much as they could conveniently carry of plate and expensive jewellery, and sent it secretly away to England or to Holland. Vermalet, a jobber, who sniffed the coming storm, procured gold and silver coin to the amount of nearly a million of livres, which he packed in a farmer’s cart, and covered over with hay and cow-dung. He then disguised himself in the dirty smock-frock, or blouse, of a peasant, and drove his precious load in safety into Belgium. From thence he soon found means to transport it to Amsterdam.

Hitherto no difficulty had been experienced by any class in procuring specie for their wants. But this system could not long be carried on without causing a scarcity. The voice of complaint was heard on every side, and inquiries being instituted, the cause was soon discovered. The council debated long on the remedies to be taken, and Law, being called on for his advice, was of opinion, that an edict should be published, depreciating the value of coin five per cent. below that of paper. The edict was published accordingly; but, failing of its intended effect, was followed by another, in which the depreciation was increased to ten per cent. The payments of the bank were at the same time restricted to one hundred livres in gold, and ten in silver. All these measures were nugatory to restore confidence in the paper, though the restriction of cash payments within limits so extremely narrow kept up the credit of the Bank.

Notwithstanding every effort to the contrary, the precious metals continued to be conveyed to England and Holland. The little coin that was left in the country was carefully treasured, or hidden until the scarcity became so great, that the operations of trade could no longer be carried on. In this emergency, Law hazarded the bold experiment of forbidding the use of specie altogether. In February 1720 an edict was published, which, instead of restoring the credit of the paper, as was intended, destroyed it irrecoverably, and drove the country to the very brink of revolution. By this famous edict it was forbidden to any person whatever to have more than five hundred livres (20 pounds sterling) of coin in his possession, under pain of a heavy fine, and confiscation of the sums found. It was also forbidden to buy up jewellery, plate, and precious stones, and informers were encouraged to make search for offenders, by the promise of one-half the amount they might discover. The whole country sent up a cry of distress at this unheard-of tyranny. The most odious persecution daily took place. The privacy of families was violated by the intrusion of informers and their agents. The most virtuous and honest were denounced for the crime of having been seen with a louis d’or in their possession. Servants betrayed their masters, one citizen became a spy upon his neighbour, and arrests and confiscations so multiplied, that the courts found a difficulty in getting through the immense increase of business thus occasioned. It was sufficient for an informer to say that he suspected any person of concealing money in his house, and immediately a search-warrant was granted. Lord Stair, the English ambassador, said, that it was now impossible to doubt of the sincerity of Law’s conversion to the Catholic religion; he had established the inquisition, after having given abundant evidence of his faith in transubstantiation, by turning so much gold into paper.

Every epithet that popular hatred could suggest was showered upon the Regent and the unhappy Law. Coin, to any amount above five hundred livres, was an illegal tender, and nobody would take paper if he could help it. No one knew to-day what his notes would be worth to-morrow. “Never,” says Duclos, in his Secret Memoirs of the Regency, “was seen a more capricious government-never was a more frantic tyranny exercised by hands less firm. It is inconceivable to those who were witnesses of the horrors of those times, and who look back upon them now as on a dream, that a sudden revolution did not break out–that Law and the Regent did not perish by a tragical death. They were both held in horror, but the people confined themselves to complaints; a sombre and timid despair, a stupid consternation, had seized upon all, and men’s minds were too vile even to be capable of a courageous crime.” It would appear that, at one time, a movement of the people was organised. Seditious writings were posted up against the walls, and were sent, in hand-bills, to the houses of the most conspicuous people. One of them, given in the “Memoires de la Regence,” was to the following effect :–” Sir and Madam,–This is to give you notice that a St. Bartholomew’s Day will be enacted again on Saturday and Sunday, if affairs do not alter. You are desired not to stir out, nor you, nor your servants. God preserve you from the flames! Give notice to your neighbours. Dated Saturday, May 25th, 1720.” The immense number of spies with which the city was infested rendered the people mistrustful of one another, and beyond some trifling disturbances made in the evening by an insignificant group, which was soon dispersed, the peace of the capital was not compromised.

The value of shares in the Louisiana, or Mississippi stock, had fallen very rapidly, and few indeed were found to believe the tales that had once been told of the immense wealth of that region. A last effort was therefore tried to restore the public confidence in the Mississippi project. For this purpose, a general conscription of all the poor wretches in Paris was made by order of government. Upwards of six thousand of the very refuse of the population were impressed, as if in time of war, and were provided with clothes and tools to be embarked for New Orleans, to work in the gold mines alleged to abound there. They were paraded day after day through the streets with their pikes and shovels, and then sent off in small detachments to the out-ports to be shipped for America. Two-thirds of them never reached their destination, but dispersed themselves over the country, sold their tools for what they could get, and returned to their old course of life. In less than three weeks afterwards, one-half of them were to be found again in Paris. The manoeuvre, however, caused a trifling advance in Mississippi stock. Many persons of superabundant gullibility believed that operations had begun in earnest in the new Golconda, and that gold and silver ingots would again be found in France.

[Continues below]

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In a constitutional monarchy some surer means would have been found for the restoration of public credit. In England, at a subsequent period, when a similar delusion had brought on similar distress, how different were the measures taken to repair the evil; but in France, unfortunately, the remedy was left to the authors of the mischief. The arbitrary will of the Regent, which endeavoured to extricate the country, only plunged it deeper into the mire. All payments were ordered to be made in paper, and between the 1st of February and the end of May, notes were fabricated to the amount of upwards of 1500 millions of livres, or 60,000,000 pounds sterling. But the alarm once sounded, no art could make the people feel the slightest confidence in paper which was not exchangeable into metal. M. Lambert, the President of the Parliament of Paris, told the Regent to his face that he would rather have a hundred thousand livres in gold or silver than five millions in the notes of his bank. When such was the general feeling, the superabundant issues of paper but increased the evil, by rendering still more enormous the disparity between the amount of specie and notes in circulation. Coin, which it was the object of the Regent to depreciate, rose in value on every fresh attempt to diminish it. In February, it was judged advisable that the Royal Bank should be incorporated with the Company of the Indies. An edict to that effect was published and registered by the Parliament. The state remained the guarantee for the notes of the bank, and no more were to be issued without an order in council. All the profits of the bank, since the time it had been taken out of Law’s hands and made a national institution, were given over by the Regent to the Company of the Indies. This measure had the effect of raising for a short time the value of the Louisiana and other shares of the company, but it failed in placing public credit on any permanent basis.

A council of state was held in the beginning of May, at which Law, D’Argenson (his colleague in the administration of the finances), and all the ministers were present. It was then computed that the total amount of notes in circulation was 2600 millions of livres, while the coin in the country was not quite equal to half that amount. It was evident to the majority of the council that some plan must be adopted to equalise the currency. Some proposed that the notes should be reduced to the value of the specie, while others proposed that the nominal value of the specie should be raised till it was on an equality with the paper. Law is said to have opposed both these projects, but failing in suggesting any other, it was agreed that the notes should be depreciated one-half. On the 21st of May, an edict was accordingly issued, by which it was decreed that the shares of the Company of the Indies, and the notes of the bank, should gradually diminish in value, till at the end of a year they should only pass current for one half of their nominal worth. The Parliament refused to register the edict–the greatest outcry was excited, and the state of the country became so alarming, that, as the only means of preserving tranquillity, the council of the regency was obliged to stultify its own proceedings, by publishing within seven days another edict, restoring the notes to their original value.

On the same day (the 27th of May) the bank stopped payment in specie. Law and D’Argenson were both dismissed from the ministry. The weak, vacillating, and cowardly Regent threw the blame of all the mischief upon Law, who, upon presenting himself at the Palais Royal, was refused admitance. At nightfall, however, he was sent for, and admitted into the palace by a secret door,[Duclos, Memoires Secrets de la Regence.] when the Regent endeavoured to console him, and made all manner of excuses for the severity with which in public he had been compelled to treat him. So capricious was his conduct, that, two days afterwards, he took him publicly to the opera, where he sat in the royal box, alongside of the Regent, who treated him with marked consideration in face of all the people. But such was the hatred against Law that the experiment had well nigh proved fatal to him. The mob assailed his carriage with stones just as he was entering his own door; and if the coachman had not made a sudden jerk into the court-yard, and the domestics closed the gate immediately, he would, in all probability, have been dragged out and torn to pieces. On the following day, his wife and daughter were also assailed by the mob as they were returning in their carriage from the races. When the Regent was informed of these occurrences he sent Law a strong detachment of Swiss guards, who were stationed night and day in the court of his residence. The public indignation at last increased so much, that Law, finding his own house, even with this guard, insecure, took refuge in the Palais Royal, in the apartments of the Regent.

The Chancellor, D’Aguesseau, who had been dismissed in 1718 for his opposition to the projects of Law, was now recalled to aid in the restoration of credit. The Regent acknowledged too late, that he had treated with unjustifiable harshness and mistrust one of the ablest, and perhaps the sole honest public man of that corrupt period. He had retired ever since his disgrace to his country-house at Fresnes, where, in the midst of severe but delightful philosophic studies, he had forgotten the intrigues of an unworthy court. Law himself, and the Chevalier de Conflans, a gentleman of the Regent’s household, were despatched in a post-chaise, with orders to bring the ex-chancellor to Paris along with them. D’Aguesseau consented to render what assistance he could, contrary to the advice of his friends, who did not approve that he should accept any recall to office of which Law was the bearer. On his arrival in Paris, five counsellors of the Parliament were admitted to confer with the Commissary of Finance, and on the 1st of June an order was published, abolishing the law which made it criminal to amass coin to the amount of more than five hundred livres. Every one was permitted to have as much specie as he pleased. In order that the bank-notes might be withdrawn, twenty-five millions of new notes were created, on the security of the revenues of the city of Paris, at two-and-a-half per cent. The bank-notes withdrawn were publicly burned in front of the Hotel de Ville. The new notes were principally of the value of ten livres each; and on the 10th of June the bank was re-opened, with a sufficiency of silver coin to give in change for them.

These measures were productive of considerable advantage. All the population of Paris hastened to the bank, to get coin for their small notes; and silver becoming scarce, they were paid in copper. Very few complained that this was too heavy, although poor fellows might be continually seen toiling and sweating along the streets, laden with more than they could comfortably carry, in the shape of change for fifty livres. The crowds around the bank were so great, that hardly a day passed that some one was not pressed to death. On the 9th of July, the multitude was so dense and clamorous that the guards stationed at the entrance of the Mazarin Gardens closed the gate, and refused to admit any more. The crowd became incensed, and flung stones through the railings upon the soldiers. The latter, incensed in their turn, threatened to fire upon the people. At that instant one of them was hit by a stone, and, taking up his piece, he fired into the crowd. One man fell dead immediately, and another was severely wounded. It was every instant expected that a general attack would have been commenced upon the bank; but the gates of the Mazarin Gardens being opened to the crowd, who saw a whole troop of soldiers, with their bayonets fixed, ready to receive them, they contented themselves by giving vent to their indignation in groans and hisses.

Eight days afterwards the concourse of people was so tremendous, that fifteen persons were squeezed to death at the doors of the bank. The people were so indignant that they took three of the bodies on stretchers before them, and proceeded, to the number of seven or eight thousand, to the gardens of the Palais Royal, that they might show the Regent the misfortunes that he and Law had brought upon the country. Law’s coachman, who was sitting on the box of his master’s carriage, in the court-yard of the palace, happened to have more zeal than discretion, and, not liking that the mob should abuse his master, he said, loud enough to be overheard by several persons, that they were all blackguards, and deserved to be hanged. The mob immediately set upon him, and, thinking that Law was in the carriage, broke it to pieces. The imprudent coachman narrowly escaped with his life. No further mischief was done; a body of troops making their appearance, the crowd quietly dispersed, after an assurance had been given by the Regent that the three bodies they had brought to show him should be decently buried at his own expense. The Parliament was sitting at the time of this uproar, and the President took upon himself to go out and see what was the matter. On his return he informed the councillors, that Law’s carriage had been broken by the mob. All the members rose simultaneously, and expressed their joy by a loud shout, while one man, more zealous in his hatred than the rest, exclaimed, “And Law himself, is he torn to pieces ?” [The Duchess of Orleans gives a different version of this story; but whichever be the true one, the manifestation of such feeling in a legislative assembly was not very creditable. She says, that the President was so transported with joy, that he was seized with a rhyming fit, and, returning into the hall, exclaimed to the members :–

“Messieurs ! Messieurs ! bonne nouvelle ! Le carfosse de Lass est reduit en canelle !”]

Much undoubtedly depended on the credit of the Company of the Indies, which was answerable for so great a sum to the nation. It was, therefore, suggested in the council of the ministry, that any privileges which could be granted to enable it to fulfil its engagements, would be productive of the best results. With this end in view, it was proposed that the exclusive privilege of all maritime commerce should be secured to it, and an edict to that effect was published. But it was unfortunately forgotten that by such a measure all the merchants of the country would be ruined. The idea of such an immense privilege was generally scouted by the nation, and petition on petition was presented to the Parliament, that they would refuse to register the decree. They refused accordingly, and the Regent, remarking that they did nothing but fan the flame of sedition, exiled them to Blois. At the intercession of D’Aguesseau, the place of banishment was changed to Pontoise, and thither accordingly the councillors repaired, determined to set the Regent at defiance. They made every arrangement for rendering their temporary exile as agreeable as possible. The President gave the most elegant suppers, to which he invited all the gayest and wittiest company of Paris. Every night there was a concert and ball for the ladies. The usually grave and solemn judges and councillors joined in cards and other diversions, leading for several weeks a life of the most extravagant pleasure, for no other purpose than to show the Regent of how little consequence they deemed their banishment, and that when they willed it, they could make Pontoise a pleasanter residence than Paris.

Of all the nations in the world the French are the most renowned for singing over their grievances. Of that country it has been remarked with some truth, that its whole history may be traced in its songs. When Law, by the utter failure of his best-laid plans, rendered himself obnoxious, satire of course seized hold upon him, and, while caricatures of his person appeared in all the shops, the streets resounded with songs, in which neither he nor the Regent was spared. Many of these songs were far from decent; and one of them in particular counselled the application of all his notes to the most ignoble use to which paper can be applied. But the following, preserved in the letters of the Duchess of Orleans, was the best and the most popular, and was to be heard for months in all the carrefours of Paris. The application of the chorus is happy enough :–

Aussitot que Lass arriva Dans notre bonne ville, Monsieur le Regent publia Que Lass serait utile Pour retablir la nation. La faridondaine! la faridondon. Mais il nous a tous enrich!, Biribi! A la facon de Barbari, Mort ami!

Ce parpaillot, pour attirer Tout l’argent de la France, Songea d’abord a s’assurer De notre confiance. Il fit son abjuration. La faridondaine! la faridondon! Mais le fourbe s’est converti, Biribi! A la facon de Barbari, Mon ami!

Lass, le fils aine de Satan Nous met tous a l’aumone, Il nous a pris tout notre argent Et n’en rend a personne. Mais le Regent, humain et bon, La faridondaine! la faridondon! Nous rendra ce qu’on nous a pris, Biribi! A la facon de Barbari, Mon ami!

The following smart epigram is of the same date:–

Lundi, j’achetai des actions; Mardi, je gagnai des millions; Mercredi, j’arrangeai mon menage, Jeudi, je pris un equipage, Vendredi, je m’en fus au bal, Et Samedi, a l’Hopital.

Among the caricatures that were abundantly published, and that showed as plainly as graver matters, that the nation had awakened to a sense of its folly, was one, a fac-simile of which is preserved in the “Memoires de la Regence.” It was thus described by its author: “The ‘Goddess of Shares,’ in her triumphal car, driven by the Goddess of Folly. Those who are drawing the car are impersonations of the Mississippi, with his wooden leg, the South Sea, the Bank of England, the Company of the West of Senegal, and of various assurances. Lest the car should not roll fast enough, the agents of these companies, known by their long fox-tails and their cunning looks, turn round the spokes of the wheels, upon which are marked the names of the several stocks, and their value, sometimes high and sometimes low, according to the turns of the wheel. Upon the ground are the merchandise, day-books and ledgers of legitimate commerce, crushed under the chariot of Folly. Behind is an immense crowd of persons, of all ages, sexes, and conditions, clamoring after Fortune, and fighting with each other to get a portion of the shares which she distributes so bountifully among them. In the clouds sits a demon, blowing bubbles of soap, which are also the objects of the admiration and cupidity of the crowd, who jump upon one another’s backs to reach them ere they burst. Right in the pathway of the car, and blocking up the passage, stands a large building, with three doors, through one of which it must pass, if it proceeds further, and all the crowd along with it. Over the first door are the words, “Hopital des Foux,” over the second, “Hopital des Malades,” and over the third, “Hopital des Gueux.” Another caricature represented Law sitting in a large cauldron, boiling over the flames of popular madness, surrounded by an impetuous multitude, who were pouring all their gold and silver into it, and receiving gladly in exchange the bits of paper which he distributed among them by handsfull.

While this excitement lasted, Law took good care not to expose himself unguarded in the streets. Shut up in the apartments of the Regent, he was secure from all attack, and, whenever he ventured abroad, it was either incognito, or in one of the Royal carriages, with a powerful escort. An amusing anecdote is recorded of the detestation in which he was held by the people, and the ill treatment he would have met, had he fallen into their hands. A gentleman, of the name of Boursel, was passing in his carriage down the Rue St. Antoine, when his further progress was stayed by a hackneycoach that had blocked up the road. M. Boursel’s servant called impatiently to the hackneycoachman to get out of the way, and, on his refusal, struck him a blow on the face. A crowd was soon drawn together by the disturbance, and M. Boursel got out of the carriage to restore order. The hackney-coachman, imagining that he had now another assailant, bethought him of an expedient to rid himself of both, and called out as loudly as he was able, “Help! help! murder! murder! Here are Law and his servant going to kill me! Help! help!” At this cry, the people came out of their shops, armed with sticks and other weapons, while the mob gathered stones to inflict summary vengeance upon the supposed financier. Happily for M. Boursel and his servant, the door of the church of the Jesuits stood wide open, and, seeing the fearful odds against them, they rushed towards it with all speed. They reached the altar, pursued by the people, and would have been ill treated even there, if, finding the door open leading to the sacristy, they had not sprang through, and closed it after them. The mob were then persuaded to leave the church by the alarmed and indignant priests; and, finding M. Boursel’s carriage still in the streets, they vented their ill-will against it, and did it considerable damage.

The twenty-five millions secured on the municipal revenues of the city of Paris, bearing so low an interest as two and a half per cent., were not very popular among the large holders of Mississippi stock. The conversion of the securities was, therefore, a work of considerable difficulty; for many preferred to retain the falling paper of Law’s Company, in the hope that a favourable turn might take place. On the 15th of August, with a view to hasten the conversion, an edict was passed, declaring that all notes for sums between one thousand and ten thousand livres; should not pass current, except for the purchase of annuities and bank accounts, or for the payment of instalments still due on the shares of the company.

In October following another edict was passed, depriving these notes of all value whatever after the month of November next ensuing. The management of the mint, the farming of the revenue, and all the other advantages and privileges of the India, or Mississippi Company, were taken from them, and they were reduced to a mere private company. This was the deathblow to the whole system, which had now got into the hands of its enemies. Law had lost all influence in the Council of Finance, and the company, being despoiled of its immunities, could no longer hold out the shadow of a prospect of being able to fulfil its engagements. All those suspected of illegal profits at the time the public delusion was at its height, were sought out and amerced in heavy fines. It was previously ordered that a list of the original proprietors should be made out, and that such persons as still retained their shares should place them in deposit with the company, and that those who had neglected to complete the shares for which they had put down their names, should now purchase them of the company, at the rate of 13,500 livres for each share of 500 livres. Rather than submit to pay this enormous sum for stock which was actually at a discount, the shareholders packed up all their portable effects, and endeavoured to find a refuge in foreign countries. Orders were immediately issued to the authorities at the ports and frontiers, to apprehend all travellers who sought to leave the kingdom, and keep them in custody, until it was ascertained whether they had any plate or jewellery with them, or were concerned in the late stock-jobbing. Against such few as escaped, the punishment of death was recorded, while the most arbitrary proceedings were instituted against those who remained.

Law himself, in a moment of despair, determined to leave a country where his life was no longer secure. He at first only demanded permission to retire from Paris to one of his country-seats; a permission which the Regent cheerfully granted. The latter was much affected at the unhappy turn affairs had taken, but his faith continued unmoved in the truth and efficacy of Law’s financial system. His eyes were opened to his own errors, and during the few remaining years of his life, he constantly longed for an opportunity of again establishing the system upon a securer basis. At Law’s last interview with the Prince, he is reported to have said–” I confess that I have committed many faults; I committed them because I am a man, and all men are liable to error; but I declare to you most solemnly that none of them proceeded from wicked or dishonest motives, and that nothing of the kind will be found in the whole course of my conduct.”

Two or three days after his departure the Regent sent him a very kind letter, permitting him to leave the kingdom whenever he pleased, and stating that he had ordered his passports to be made ready. He at the same time offered him any sum of money he might require. Law respectfully declined the money, and set out for Brussels in a postchaise belonging to Madame de Prie, the mistress of the Duke of Bourbon, escorted by six horse-guards. From thence he proceeded to Venice, where he remained for some months, the object of the greatest curiosity to the people, who believed him to be the possessor of enormous wealth. No opinion, however, could be more erroneous. With more generosity than could have been expected from a man who during the greatest part of his life had been a professed gambler, he had refused to enrich himself at the expense of a ruined nation. During the height of the popular frenzy for Mississippi stock, he had never doubted of the final success of his projects, in making France the richest and most powerful nation of Europe. He invested all his gains in the purchase of landed property in France – a sure proof of his own belief in the stability of his schemes. He had hoarded no plate or jewellery, and sent no money, like the dishonest jobbers, to foreign countries. His all, with the exception of one diamond, worth about five or six thousand pounds sterling, was invested in the French soil; and when he left that country, he left it almost a beggar. This fact alone ought to rescue his memory from the charge of knavery, so often and so unjustly brought against him.

As soon as his departure was known, all his estates and his valuable library were confiscated. Among the rest, an annuity of 200,000 livres, (8000 pounds sterling,) on the lives of his wife and children, which had been purchased for five millions of livres, was forfeited, notwithstanding that a special edict, drawn up for the purpose in the days of his prosperity, had expressly declared that it should never be confiscated for any cause whatever. Great discontent existed among the people that Law had been suffered to escape. The mob and the Parliament would have been pleased to have seen him hanged. The few who had not suffered by the commercial revolution, rejoiced that the quack had left the country; but all those (and they were by far the most numerous class) whose fortunes were implicated, regretted that his intimate knowledge of the distress of the country, and of the causes that had led to it, had not been rendered more available in discovering a remedy.

At a meeting of the Council of Finance, and the general council of the Regency, documents were laid upon the table, from which it appeared that the amount of notes in circulation was 2700 millions. The Regent was called upon to explain how it happened that there was a discrepancy between the dates at which these issues were made, and those of the edicts by which they were authorised. He might have safely taken the whole blame upon himself, but he preferred that an absent man should bear a share of it, and he therefore stated that Law, upon his own authority, had issued 1200 millions of notes at different times, and that he (the Regent) seeing that the thing had been irrevocably done, had screened Law, by antedating the decrees of the council, which authorised the augmentation. It would have been more to his credit if he had told the whole truth while he was about it, and acknowledged that it was mainly through his extravagance and impatience that Law had been induced to overstep the bounds of safe speculation. It was also ascertained that the national debt, on the 1st of January, 1721, amounted to upwards of $100 millions of livres, or more than 124,000,000 pounds sterling, the interest upon which was 3,196,000 pounds. A commission, or visa, was forthwith appointed to examine into all the securities of the state creditors, who were to be divided into five classes, the first four comprising those who had purchased their securities with real effects, and the latter comprising those who could give no proofs that the transactions they had entered into were real and bona fide. The securities of the latter were ordered to be destroyed, while those of the first four classes were subjected to a most rigid and jealous scrutiny. The result of the labours of the visa was a report, in which they counselled the reduction of the interest upon these securities to fifty-six millions of livres. They justified this advice by a statement of the various acts of peculation and extortion which they had discovered, and an edict to that effect was accordingly published and duly registered by the parliaments of the kingdom.

Another tribunal was afterwards established, under the title of the Chambre de l’Arsenal, which took cognizance of all the malversations committed in the financial departments of the government during the late unhappy period. A Master of Requests, named Falhonet, together with the Abbe Clement, and two clerks in their employ, had been concerned in divers acts of peculation, to the amount of upwards of a million of livres. The first two were sentenced to be beheaded, and the latter to be hanged; but their punishment was afterwards commuted into imprisonment for life in the Bastile. Numerous other acts of dishonesty were discovered, and punished by fine and imprisonment.

D’Argenson shared with Law and the Regent the unpopularity which had alighted upon all those concerned in the Mississippi madness. He was dismissed from his post of Chancellor, to make room for D’Aguesseau; but he retained the title of Keeper of the Seals, and was allowed to attend the councils whenever he pleased. He thought it better, however, to withdraw from Paris, and live for a time a life of seclusion at his country-seat. But he was not formed for retirement, and becoming moody and discontented, he aggravated a disease under which he had long laboured, and died in less than a twelvemonth. The populace of of Paris so detested him, that they carried their hatred even to his grave. As his funeral procession passed to the church of St. Nicholas du Chardonneret, the burying-place of his family, it was beset by a riotous mob, and his two sons, who were following as chief-mourners, were obliged to drive as fast as they were able down a by-street to escape personal violence.

As regards Law, he for some time entertained a hope that he should be recalled to France, to aid in establishing its credit upon a firmer basis. The death of the Regent, in 1723, who expired suddenly, as he was sitting by the fireside conversing with his mistress, the Duchess de Phalaris, deprived him of that hope, and he was reduced to lead his former life of gambling. He was more than once obliged to pawn his diamond, the sole remnant of his vast wealth, but successful play generally enabled him to redeem it. Being persecuted by his creditors at Rome, he proceeded to Copenhagen, where he received permission from the English ministry to reside in his native country, his pardon for the murder of Mr. Wilson having been sent over to him in 1719. He was brought over in the admiral’s ship, a circumstance which gave occasion for a short debate in the House of Lords. Earl Coningsby complained that a man, who had renounced both his country and his religion, should have been treated with such honour, and expressed his belief that his presence in England, at a time when the people were so bewildered by the nefarious practices of the South Sea directors, would be attended with no little danger. He gave notice of a motion on the subject; but it was allowed to drop, no other member of the House having the slightest participation in his lordship’s fears. Law remained for about four years in England, and then proceeded to Venice, where he died in 1729, in very embarrassed circumstances. The following epitaph was written at the time :–

“Ci git cet Ecossais celebre, Ce calculateur sans egal, Qui, par les regles de l’algebre, A mis la France a l’Hopital.”

His brother, William Law, who had been concerned with him in the administration both of the Bank and the Louisiana Company, was imprisoned in the Bastile for alleged malversation, but no guilt was ever proved against him. He was liberated after fifteen months, and became the founder of a family, which is still known in France under the title of Marquises of Lauriston.

In the next chapter will be found an account of the madness which infected the people of England at the same time, and under very similar circumstances, but which, thanks to the energies and good sense of a constitutional government, was attended with results far less disastrous than those which were seen in France.

A word on USAGOLD – USAGOLD ranks among the most reputable gold companies in the United States. Founded in the 1970s and still family-owned, it is one of the oldest and most respected names in the gold industry. USAGOLD has always attracted a certain type of investor – one looking for a high degree of reliability and market insight coupled with a professional client (rather than customer) approach to precious metals ownership. We are large enough to provide the advantages of scale, but not so large that we do not have time for you. (We invite your visit to the Better Business Bureau website to review our five-star, zero-complaint record. The report includes a large number of verified customer reviews.)

ORDER DESK
1-800-869-5115
[email protected]

Disclaimer – Opinions expressed on the USAGOLD.com website do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any precious metals product, nor should they be viewed in any way as investment advice or advice to buy, sell or hold. USAGOLD, Inc. recommends the purchase of physical precious metals for asset preservation purposes, not speculation. Utilization of these opinions for speculative purposes is neither suggested nor advised. Commentary is strictly for educational purposes, and as such USAGOLD does not warrant or guarantee the accuracy, timeliness or completeness of the information found here.