John Law
John Law, by Casimir Balthazar
Born	(1671-04-21)21 April 1671 Edinburgh, Kingdom of Scotland
Died	21 March 1729(1729-03-21) (aged 57) Venice, Republic of Venice
Occupation	Economist, banker, financier, author, controller-general of finances
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John Law (pronounced [lɑs] in French in the traditional approximation of Laws, the colloquial Scottish form of the name;^[1][2] 21 April 1671 – 21 March 1729) was a Scottish-French^[3] economist and financier. He served as Controller General of Finances under Philippe II, Duke of Orléans, who was regent for the juvenile Louis XV of France, and promoted a novel financial scheme for French public finances known as Law's System (French: le système de Law) with two institutions at its core, John Law's Bank and John Law's Company.

Whereas Law's System unquestionably ended in failure as a monetary framework, it had lasting influence as an early experiment in fiat money. Its soundness remains debated, with some analysts maintaining that it was not fundamentally flawed. Whereas the Mississippi company ended in bankruptcy, whether the collapse of Law's System represented an episode of sovereign default is ambiguous, given that France's debt situation was largely unchanged.

Law was born into a family of Lowland Scots bankers and goldsmiths from Fife; his father, William, had purchased Lauriston Castle, a landed estate at Cramond on the Firth of Forth and was known as Law of Lauriston. On leaving the High School of Edinburgh, Law joined the family business at the age of 14 and studied the banking business until his father died in 1688. He subsequently neglected the firm in favour of extravagant pursuits and travelled to London, where he lost large sums by gambling.^[4]

On 9 April 1694, John Law fought a duel with another British dandy, Edward "Beau" Wilson, in Bloomsbury Square, London.^[5] Wilson had challenged Law over the affections of Elizabeth Villiers. Law killed Wilson with a single pass and thrust of his sword.^[5] He was arrested and charged with murder and stood trial at the Old Bailey.^[5] He appeared before the infamously sadistic "hanging judge" Salathiel Lovell and was found guilty of murder and sentenced to death.^[5] He was initially incarcerated in Newgate Prison to await execution.^[5] His sentence was later commuted to a fine, on the grounds that the killing only amounted to manslaughter. Wilson's brother appealed and had Law imprisoned, but he managed to escape to Amsterdam.^[4]

Law urged the establishment of a national bank to create and increase instruments of credit and the issue of banknotes backed by land, gold, or silver. The first manifestation of Law's System came when he had returned to Scotland and contributed to the debates leading to the Treaty of Union 1707. He wrote a pamphlet entitled Two Overtures Humbly Offered to His Grace John Duke of Argyll, Her Majesties High Commissioner, and the Right Honourable the Estates of Parliament (1705)^[6][7] which foreshadowed the ideas he would propose for establishing new systems of finance, paper money and refinancing the national debt in a subsequent tract entitled Money and Trade Considered: with a Proposal for Supplying the Nation with Money (1705).^{[8][9]: 136} Law's propositions of creating a national bank in Scotland were ultimately rejected, and he left to pursue his ambitions abroad.^[10]

Law spent ten years moving between France and the Netherlands, dealing in financial speculations. He had the idea of abolishing minor monopolies and private farming of taxes. He would create a bank for national finance and a state company for commerce, ultimately to exclude all private revenue. This would create a huge monopoly of finance and trade run by the state, and its profits would pay off the national debt.

John Law's system, first endorsed by the Regent Philippe d'Orléans in May 1716 and developed from then in increasing ambitious stages until 1720, rested on the expansion of monetary supply^[11]: 277 through the creation of fiat money and a complete overhaul of the French state's revenue collection, coinage and borrowing, all of which were centralized in Law's Company.^[12] Along the way, Law's Company absorbed all French colonial trading companies which had developed in fits and starts over the previous century, and started an unprecedented colonization of its own in Louisiana with the foundation of New Orleans in 1718. It was renamed the Compagnie des Indes (Indies Company) in 1719, and in February 1720 absorbed the bank that Law had initially established in May 1716.

Law's social standing rose with his financial heft. On 17 September 1719, he converted to Catholicism in the low-profile convent of the Recollects [fr] in Melun. On 2 December 1719, he was elected an honorary member of the Royal Academy of Sciences.^[13]: 244 The Regent then appointed Law as Controller-General of Finances on 5 January 1720,^[14]: 81 effectively giving him control over external and internal commerce. As Controller-General, Law instituted many reforms, some of which had lasting effect, while others were soon abolished. He tried to break up large land-holdings to benefit the peasants; he abolished internal road and canal tolls; he encouraged the building of new roads, the starting of new industries (even importing artisans but mostly by offering low-interest loans), and the revival of overseas commerce — and indeed industry increased by 60 per cent in two years, and the number of French ships engaged in export went from 16 to 300.^[15]

The system started to unravel in 1720 as price inflation started to surge.^[16] Law sought to hold the Indies Company's share price at 9,000 livres in March 1720, and then on 21 May 1720 to engineer a controlled reduction in the value of both notes and the shares, a measure that was itself reversed six days later.^{[9]: 147 [17]: 920 [18]} As the public rushed to convert banknotes to coin, Law was forced to close the Banque Générale for ten days, then limit the transaction size once the bank reopened. On 29 May 1720, Law was dismissed as Comptroller-General of Finances.^[13]: 285 The queues grew longer, the Indies Company's stock price continued to fall, and food prices soared by as much as 60 per cent.^[16] At the end of 1720, the Regent eventually dismissed Law as Controller General^[16] and as head of the Indies Company.

Law made his home in Place Louis-le-Grand, now place Vendôme, in the Hôtel de Gramont [fr] where he hosted and entertained various Parisian nobles. On 30 April 1718 he purchased the Château de la Marche [fr] from Nicolas Desmarets, and on 30 June 1718, the Château de Tancarville from Louis Henri de La Tour d'Auvergne, comte d'Evreux. That latter day Law also purchased the Hôtel Langlée on rue des Petits-Champs in Paris.^{[13]: 169–171} In subsequent years, he went on to purchase numerous estates and properties throughout France, including Toucy, Valençay and Roissy [fr] in the second half of 1719, and Orcher, Effiat [fr], Guermantes and Yville [fr] in the course of 1720.^{[13]: 423-424}

On 10 May 1719 Law purchased the western part of the former Palais Mazarin known as the Hôtel de Nevers.^[13]: 201 In September 1719, he negotiated with Paul Jules de La Porte [de] to purchase the rest of the Palais Mazarin, and bought six houses bordering rue Vivienne on the western side, then went on to acquire the entire city block that later became the Bibliothèque nationale de France (now its Site Richelieu).^[13]: 235 In 1720, Law relocated the Indies Company there. In late October of that year, the site also became the official location for the Paris stock exchange, following the closure of the market's previous incarnation at rue Quincampoix on 22 March 1720 (even though unregulated trading lingered there) and subsequent short-lived venues on place Vendôme and in the garden of the Hôtel de Soissons.^{[13]: 274, 315, 335} Law commissioned Venetian painter Giovanni Antonio Pellegrini to redecorate the first-floor gallery of the Hôtel de Nevers for the purpose of hosting the company's shareholders meetings.^[13]: 236

Some of these acquisitions gave Law the right to use nobility titles, such as Marquess of Toucy.^[19] Law appears never to have taken advantage of that option, however, except in isolated cases of notarized documents that refer to him as Count of Tancarville.^[13]: 170 He has been occasionally said to claim or aim at the title of "Duke of Arkansas" for his company's endeavors in the Mississippi valley,^[20][21] but this assertion, generally made in the United States, has no documentary basis.^[13]: 208

• 
  John Law's rented home from 1714 to 1718 on Place Vendôme, now Hôtel Ritz Paris
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  Château de Roissy, demolished in 1794
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  Château de Guermantes
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  Château de Toucy
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  Château de Tancarville
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  Château d'Orcher
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  Château d'Yville
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  Château de Valençay
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  Château d'Effiat

Law moved to Brussels on 22 December 1720 in impoverished circumstances when his properties in France were voluntarily confiscated.^[9]: 148 He spent the next few years gambling in Rome, Copenhagen and Venice but never regained his former prosperity. Law realised he would never return to France when Orléans died suddenly in 1723 and Law was granted permission to return to London, having been pardoned in 1719. He lived in London for four years and then moved to Venice, where he contracted pneumonia and died poor in 1729.^[9]: 150 His gravestone is in the San Moisè, Venice.

Law had lasting influence as a monetary theorist. He held that money creation stimulated an economy, paper money was preferable to metal, and dividend-paying shares a superior form of money.^[22] He propounded ideas such as the scarcity theory of value^[23] and the real bills doctrine.^[24]

The chaotic collapse of Law's System has been compared to the 17th-century tulip mania parable in Holland.^[16] The Mississippi bubble coincided with the South Sea bubble in England, which allegedly took ideas from it.

Henry Thornton explained why Law's scheme failed: "He forgot that there might be no bounds to the demand for paper; that the increasing quantity would contribute to the rise of commodities: and the price of commodities require, and seem to justify, a still further increase."^[25]

Law's nephew, Jean Law de Lauriston, was later Governor-General of Pondicherry.^[26]

The term "millionaire" was coined for beneficiaries of Law's scheme.^[27][28]

While most of Law's system was directed at domestic financial reform, its overseas impact was also notable, including the founding of New Orleans on behalf of the Compagnie d'Occident in 1718. More broadly, it has been assessed that "Law's was the most determined French colonial enterprise until the capture of Algiers in 1830".^[13]: 152

Sharon Condie and Richard Condie's 1978 National Film Board of Canada (NFB) animated short John Law and the Mississippi Bubble is a humorous interpretation. The film was produced by the NFB at its newly opened Winnipeg studio. It opened in Canadian cinemas starting in September 1979 and was sold to international broadcasters. The film received an award at the Tampere Film Festival.^[29]

In 1864 William Harrison Ainsworth published the novel John Law based on his career.^[30] John Law is the focus of Rafael Sabatini's 1949 novel The Gamester.^[31]

John Law is referenced in Voltaire's 'Dictionnaire Philosophique', as part of the entry on reason.^[32]

John Law is the subject of the section entitled "Fragment d'un ancien mythologiste" in "Lettre CXLII" of Montesquieu's epistolary novel "Lettres Persanes" published in 1721.

• Johan Palmstruch
• William Paterson (banker)
• Assignat, bank note system during the French Revolution

• Adams, Gavin John (2012). Letters to John Law. Newton Page. ISBN 9781934619087. A collection of early eighteenth-century political propagandist pamphlets documenting the hysteria surrounding John Law's return to Britain after the collapse of his Mississippi Scheme and expulsion from France. It also contains a very useful chronology and extensive biographical introduction to John Law and the Mississippi Scheme.
• Adams, Gavin John (2017). John Law: The Lauriston Lecture and Collected Writings. Newton Page. ISBN 9781934619155. Includes the entire first lecture on the life of John Law to be delivered by the author at Law's ancestral home of Lauriston Castle, and other accounts of John Law's life and the Mississippi Scheme by some of the most popular writers of the last 250 years, including: Bram Stoker; Washington Irving, Charles Mackay; Adam Smith; and Voltaire.
• Buchan, James (2018). John Law: A Scottish Adventurer of the Eighteenth Century. MacLehose Press. p. 528. ISBN 9781848666078. A biography/memoir of John Law's life and how he built his way to becoming an "economist abroad" in France, yet oversaw a debilitating bank run/financial crisis in the early 18th century.
  • "The rise and fall of an alchemical Scottish economist". The Economist. 13 September 2018.
• Defoe, Daniel (2013). John Law and the Mississippi Scheme: An Anthology. Newton Page. ISBN 978-1934619070. Contains Defoe's contemporary accounts of the euphoria and excess of the first ever stock market boom unleashed by John Law and his Mississippi Scheme and his remarkable insight into the European economic crises of the 1720s. It includes: The Chimera (1720), The Case of Mr. Law Truly Stated (1721), and Selected Journalism (1719–1722).
• Gleeson, Janet (1999). The Moneymaker. London: Bantam Press. ISBN 978-0-59304-498-8.
  • US edition: Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance (2001). New York: Simon & Schuster. ISBN 978-0-68487-295-7.
• Hyde, H. Montgomery (1948). John Law: The History of an Honest Adventurer. Home & Van Thal. A post-war account of John Law.
• Lanchester, John, "The Invention of Money: How the heresies of two bankers became the basis of our modern economy", The New Yorker, 5 & 12 August 2019, pp. 28–31.
• Mackay, Charles (1841). Extraordinary Popular Delusions and the Madness of Crowds. Richard Bentley. A negative account of John Law.
• Minton, Robert (1975). John Law: The Father of Paper Money. Association Press. ISBN 978-0809619047.
• Murphy, Antoin E. (1997). John Law: Economic Theorist and Policy-Maker. Oxford University Press. ISBN 9780198286493. The most extensive account of Law's writings. It is given credit for restoring the reputation of Law as an important economic theorist.
• Pollard, S. (September 1953). "John Law and the Mississippi Bubble". History Today 3#9 pp. 622–630. JSTOR j.ctt6wpz4m.
• Thiers, Adolphe (2011). The Mississippi Bubble: A Memoir of John Law. Newton Page Classics. ISBN 978-1934619056. An account of the euphoria and wealth John Law created by engineering the first stock market boom, and the despair, poverty and destroyed lives that followed its crash.
• Velde, Francois R. (2003). Government Equity and Money: John Law's System in 1720 France. Available at SSRN: Government Equity and Money: John Law's System in 1720 France or doi:10.2139/ssrn.486983.

• LM Shakespeare (2023). Monsieur Law. ISBN B0C6GZKF2J. France, following the death of Louis XIV, was bankrupt, but into the court of the Regent there arrived a Scot called John Law, whose courage combined with a brilliant financial intellect briefly fired the whole country with a wild excitement which very nearly succeeded. This is history in the genre of Munich and Wolf Hall.
• Anonymous (1720). Het Groote Tafereel der Dwaasheid (in Dutch). Amsterdam. A contemporary satire on the financial crisis in 1720.
• Ainsworth, William Harrison (1864). John Law: The Protector. London: Chapman and Hall. A fictionalised biography.
• Sabatini, Rafael (1949). The Gamester. Houghton Mifflin. A sympathetic fictionalised account of Law's career as financial adviser to the Duke of Orléans, Regent under Louis XV.
• Greig, David (1999). The Speculator. Methuen. ISBN 978-0413743107. A costume drama based on John Law's life.

• Works by or about John Law at the Internet Archive

Wikimedia Commons has media related to John Law.

• John Law on mapforum.com
• Project Gutenberg Edition of Fiat Money Inflation in France: How ...
• John Law: Proto-Keynesian, by Murray Rothbard
• Texts on Wikisource:
  • "Law, John". Encyclopædia Britannica (11th ed.). 1911.
  • "Law, John". The New Student's Reference Work. 1914.
• John Law collection at The Historic New Orleans Collection
• Works by John Law at LibriVox (public domain audiobooks)