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This historic book may have numerous typos and missing text
Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1911 Excerpt: ...cent., and promised 40 per cent. in the future. Law''s wildest dreams seemed likely to be fulfilled. It was not, however, long before a reaction set in. The price at which the shares stood was not based on the earnings from the business of the company, which had not yet been properly set going, and people began to ask whence the dividends were to be derived, and saw further that even a 40 per cent. dividend would only give a return of 2 per cent. on the market value of the shares. At once the price of the shares began to fall, and a panic soon ensued. At the same time the bank notes became depreciated, as inevitably happens when there is an over-issue, that is, when more notes are issued than there is gold or silver in the hands of the issuers to represent them. Law was now face to face with a double difficulty, how to keep up the market price of the shares, and how to prevent the further depreciation of the bank notes. Desperate measures were resorted to (February-March, 1720). The bank notes were declared to be inconvertible, that is to say, the bank would no longer give gold and silver coins for them. He then proscribed the use of gold and silver coins, and finally forbade the use of the precious metals for other purposes, for jewellery and the like; he hoped in this way to destroy their value and keep up the value of the bank notes. But you cannot make people believe by legislation that paper money, which can be no longer exchanged for gold and silver, is of the same value as the precious metals themselves, at least for this reason, that gold and silver can be exported; while the foreigner will not take an inconvertible paper currency. i He then tried to fix the price of the shares, and offered to exchange them for bank notes. But as both still continued...
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