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 shewn 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