When the Sun King died in September 1715, he left his kingdom in a fragile state. Public finances, overseas trade, and the colonies had been highly affected by the War of Spanish Succession (1701-1713), a conflict which had shown that the European balance of power had shifted towards nations combining effective colonisation and management of public debt, such as Great Britain.

To confront this rivalry and revitalize France, the Regent Philippe d’Orléans (1674-1723) called upon the services of the Scottish adventurer and economist John Law (1671-1729). In 1716, the latter set up a bank, and introduced paper money; in 1717 he created the Compagnie d’Occident, a company aimed at colonizing Louisiana and extinguishing the state’s debt.

Louisiana as a fantasy

At the time, the term Louisiana alluded to a vast area stretching from the Great Lakes to the mouth of the Mississippi. Thanks to the expeditions of Pierre Le Moyne d’Iberville (1661-1706), this territory had been mapped by Nicolas de Fer and Guillaume Delisle, none of which prevented the persistence of myths, such as the existence of a “Western Sea” providing access to the Pacific via Missouri. French Louisiana was sparsely settled by Europeans and poorly supplied under the regime of Antoine Crozat (1655-1738) until, in 1718, the Compagnie d’Occident took control. To promote interest in the region, the company launched an intense program of propaganda: texts presenting Louisiana as an earthly paradise; new maps, showing fabulous riches, were produced by Delisle and Fer, as well as engravings, like that of François-Gérard Jollain with its peaceful Indigenous figures, its bustling commerce, and a fortified town, altogether a scene of utter fantasy. The activity of the Compagnie subsequently developed and many private individuals bought shares in exchange for their titles for the French debt, lessening the state's financial burden.

An economic Leviathan

In September 1718, the Compagnie d’Occident gained a monopoly over the imports, transformation and sales of tobacco in France, which was a highly lucrative businesses. It also absorbed other trade companies, such as those of Senegal and Guinea, which were involved in the slave trade, as well as those of the East Indies and China. In May 1719, this huge conglomerate adopted the name Compagnies des Indes. Law decided in August of that year to convert the entire public debt into company shares. It was thus no longer the state, but this company that managed public debt. The Company obtained other regalian prerogatives, such as a monopoly over the minting of coin and the recovery of indirect taxes. It was thus at the heart of commercial and imperial strategy: dozens of ships and several thousand colonists arrived in Louisiana; cotton, tobacco and indigo were grown on plantations worked by enslaved people in the Lower Mississippi Valley, while further north, farmers produced grain, and miners exploited galena (lead and silver) in the Illinois country. The Company also brought over skilled workers from England to build workshops and arsenals. It set certain prices, requisitioned ships, and tended to take the place of the State, supplanting the influence of ministers and intermediary corps.

The final collapse
When John Law became controller general of finances in January 1720, or principal minister, a frenzy ensued: intense speculation drove up share prices, from an initial value of 500 livres, to over 10,000 livres. Many shareholders then decided to convert their financial titles into cash, emptying the bank’s vaults and driving precious metals out of the kingdom. In an attempt to stop this phenomenon, John Law and the Regent decided arbitrarily to decrease the value of the company’s shares. Speculators were gripped by panic. In the summer of 1720, the share prices collapsed, bank notes were demonetized, and classic public debt instruments returned. Law, who had been physically threatened several times and had become politically isolated, left the kingdom in December 1720. He never returned, and died in Venice in 1729. As for the Compagnie des Indes, it lost its regalian privileges and was privatised during the next few months, while continuing to handle some French colonial trade, particularly in Louisiana, until 1769.

Published in may 2021