Nature's Evil

It wasn’t just the orgies that were contagious. One after another, fashionable coffeehouses opened around the Palais Royal. Louis XIV had his first taste of coffee with the Ottoman ambassador and received a coffee bush as a gift. According to legend, seedlings from this bush started the coffee plantations in Martinique. By the middle of the eighteenth century, millions of these bushes were growing in the French Atlantic colonies. ‘The whole of Paris turned into one big café,’ wrote the historian Jules Michelet about the regency. Indeed, the French Revolution began in the coffeehouses near the Palais Royal. Discussing human and civil rights, the revolutionaries drank coffee, stirred sugar into it and smoked tobacco, which were all produced by black slave labour. In Radishchev’s

Journey

(see chapter 4 ), two white men chat over coffee in far-away Russia: ‘“Remember”, my friend once said, “that the coffee in your cup and the sugar dissolved in it, have deprived a man like yourself of his rest, that they have been the cause … of tears, groans, blows and abuse …” – my hand trembled and I spilled the coffee.’ 5 In Voltaire’s

Candide

, it is the mutilated black slave who speaks. ‘If we catch a finger in the sugar mill where we work, they cut off our hand; if we try to run away, they cut off our leg. I have undergone both these experiences.’ 6

John Law

In the first year of his regency, the duke of Orléans was persuaded by the Scottish economist John Law to launch a very unusual project. Law, the son of a jeweller, was known in London for his luck in games of chance. But he had killed someone in a duel and somehow escaped from prison. After an unsuccessful attempt to start a national bank in Scotland, he moved to Paris. There he got to know the regent, also a gambler and libertine. The Scottish economist explained to the French regent that a country needs money like a body needs blood; that there would be no income from taxes until the circulation of money was re-established; and that gold wasn’t essential to achieve it – there were other means. The last point was of particular interest to the regent. As Pushkin wrote, ‘It was at this time that Law appeared. Greed for money was united to a thirst for enjoyment and dissipation. Estates vanished; morals went by the board; Frenchmen laughed and calculated, and the state fell to pieces to the skittish music of the satirical vaudevilles.’ 7

Paper money was John Law’s pet subject. In England it had been introduced to finance the war effort; Sweden and even far-off Massachusetts had also experimented with bank notes. At first these pieces of paper functioned as credit notes, and they guaranteed precise sums of gold or silver. The probability that all the bank’s clients would simultaneously want to cash in their bank notes didn’t seem very likely, and the banks issued more notes than they could redeem. The supply of money grew while the metal was locked in the bank’s safes. Now the banks could give credit to merchants, princes and generals without running out of money. Law wrote that, if England were to convert her circulating paper notes back into silver, the volume of its trade would be halved. 8

Then it turned out that probability theory, which was also developing then, was not entirely applicable to banking. Economic agents are mutually dependent and inclined to run into difficulties simultaneously. Granted, different clients took credit for different reasons and would lose their fortunes at different moments. But they all went to the bank to change their bank notes for gold every time they felt that a crisis was looming; moreover, this feeling arose in different people simultaneously. The first newspapers in Europe appeared at about the same time as paper money. Every day they published the value of shares and currencies, as well as reports from battlefields, geographical discoveries and high society rumours. Various investors all read the same newspapers.

John Law knew that, in England and the Netherlands, paper money was backed by gold. France had no such reserves. Her national wealth consisted of land, and Law proposed to create a land bank which would release money guaranteed by land. Every unit equalled a specific portion of land; on demand, the bank would have to distribute land from its reserves in exchange for the assignat. The amount of the bank’s land would grow as a result of colonial conquests, and the quantity of money would also increase accordingly. If there was enough money in circulation, wrote John Law, French land would be just as well cultivated as Dutch.