THE BARBECUED CHEVALIER

See Also: ECONOMICS; FINANCIAL SCANDALS The South Sea Bubble

Richard Cantillon was the scion of a cosmopolitan Anglo-Irish family that backed the losing side in the Irish theatre (1688-91) of the Nine Years War. He moved to France where he had relatives who were employed by the French Crown. The War of the Spanish Succession was fought over much of Western Europe. During part of it, Cantillon worked in Iberia overseeing the distribution of pay to British soldiers who were serving on the peninsula. The young Irishman was employed to do this by the Paymaster-General To The Forces Abroad.

The Paymastership was held by James Brydges, who, in the space of a few years, created one of the great fortunes of the era. In between the time that the government transferred the troops pay to him and the time that he was required to disburse it to them, Brydges was at liberty to use the money how he wished to. He and his associates, often utilising their privileged access to market sensitive information, proved to be highly adept at playing the London and Amsterdam stock exchanges. For Cantillon, an awareness of their activities would have furnished him with a grounding in realfinanz. Following the re-establishment of peace, he chose to return to Paris. There, he acquired control of a small bank that belonged to one of his kinsmen.¹

John Law was a Scottish gambler. In 1694 he had killed a man in a duel that had been conducted in a questionable manner. Rather than face the consequences of his actions, he had opted to go into exile. In France the skills that had made him successful at the gaming tables had proven to be transferable to high finance. In 1717 he became the moving force behind the establishment of the Mississippi Company. The enterprise sought to oversee the development of a colony in French Louisiana. At about this time, he and Cantillon became business associates.²

The undertaking's opening share price was 150 livres per share. Over the following two years it rose strongly. A time came when Cantillon concluded that it had far exceeded its true value. Therefore, he sold a large proportion of his holding in the enterprise. He also regarded the capitalisation of Britain's South Sea Company as having become excessively inflated. He used some of the profits from the sale to buy put options on its stock. The Irishman then travelled to Italy, where he resided for several months.

Law announced a scheme by which the Mississippi Company would take over not only France's taxation system but also assume the country's national debt.³ Cantillon returned to Paris in 1720. He observed what was happening there and applied to it some of the economic ideas that he had developed. This process led him to conclude that Law s plan was going to fail. Therefore, he started to speculate against the livre. When the Scot appreciated what the Irishman was doing, he stated that he would have him lodged in the Bastille. The latter opted to withdraw beyond France's borders. Subsequently, both the Mississippi Company and the South Sea Company imploded financially. The trading positions that Cantillon had adopted enabled him to profit from both misfortunes.

The rest of the financier's life was plagued by litigation. This stemmed from the fact that he had made most of his speculations with money that had been entrusted to him. His most serious lawsuits were with members of the branch of the Herbert family that held the Marquisate of Powis.

Cantillon chose to spend much of his time living in London. He acquired a townhouse in Albemarle Street. In 1734 it burned down. It was widely assumed that he had been murdered by his French chef, who was thought to have then set the building alight in order to try to mask any evidence of the killing. However, one of the financier's neighbours who had hunted through the ruins stated that no bodily remains were to be found among them.

Several months later an apparently Francophone gentleman, who stated that he was the chevalier de Louvigny, disembarked in the Dutch South American colony of Surinam. The local officials sent a party of men to detain the fellow. He evaded them. All that they could find of him was a chest. This was packed with papers that had belonged to Cantillon.

Location: Albemarle Street, W1S 4HJ (purple yellow)

Covent Garden Piazza, WC2E 8HB. Cantillon lived for several years in a house that overlooked the Piazza. (blue, grey)

(Powys House), 66 Lincoln's Inn Fields, WC2A 3LH (blue, grey)

¹. Brydges was the eldest son of a baron. By means of payments that he made to various royal mistresses and kinswomen, he was to have himself promoted through the ranks of the nobility so that he became the Duke of Chandos.

². During the course of the 18^thC Britons flooded westwards across the Atlantic. French people were far less inclined to do so. That Law was an Anglophone may have been a factor in his decision to establish the Mississippi Company.

³. The South Sea Company's share price was soaring because the enterprise was seeking to assume Britain's national debt.

David Backhouse 2024