Chapter I: Preface

The career of John Law is one of the most striking and romantic in a period teeming with great and historic personages, and provides in the annals of the early part of the 18th century a chapter dealing with a series of exciting events which, in their character, their intensity, and their influence upon the French people, were almost revolutionary. As a financial genius he was incomparably the greatest man of his age. His schemes, original in their conception, and vast in their operation, captivated by their brilliance a nation already on the brink of ruin, and eager to embrace any possible means by which it might rehabilitate its shattered fortunes. His gigantic joint-stock undertakings, his sweeping financial proposals culminating in the discharge of the whole National Debt of France, his gradual increase of power and influence, and latterly his virtual control of the government of France, made him a man of international importance--a man to be respected, flattered, and feared.

It is, accordingly, a somewhat striking circumstance that, with the exception of the short account of Law’s career by John Philip Wood issued so long ago as 1824, no adequate biography of the great financier has yet appeared in this country. While essays, and critical articles have, no doubt, appeared in abundance in numerous publications, and while his phenomenal career has even been pressed into the service of fictional literature, it has only been possible to obtain a comprehensive impression of the man and his work by reference to the numerous treatises dealing with his system published in France during the 18th century, to the voluminous memoirs of the time, and last but not least to the state and official documents in which his various schemes are considered. In preparing the following pages, therefore, it has been necessary to deal with a considerable mass of unsifted material, no small portion of which seems to have been neglected by previous writers, although valuable and requisite for forming a just and impartial estimate.

Amongst the authorities to which I have been most indebted for guidance are the following,--“Histoire du Système des Finances pendant les années, 1719 and 1720,” by Duhautchamps; “Vue génèrale du Système de M. Law,” by Fourbonnais; “Correspondence of the 2nd Earl of Stair, in the Hardwicke State papers;” “Memoirs de Saint-Simon;” “Law et son système des Finances,” by Thiers; “Recherches historiques sur le systême de Law,” by Levasseur; and “Law, son systême et son époque,” by Cochut. Law’s own writings have, of course, also furnished valuable material, and particularly his “Proposals and Reasons for constituting a Council of Trade in Scotland,” and his “Money and Trade Considered.” His later writings form part of Daire’s “Collection des Principaux Economistes.”

A. W. W.-G.

EDINBURGH,
_26th November, 1907_.

ILLUSTRATIONS.

JOHN LAW OF LAURISTON Frontispiece.

facing page

LAURISTON CASTLE 4

LA SALLE 52

DUC D’ORLEANS 104

EARL OF STAIR 148

CARDINAL DUBOIS 186

CONTENTS

PAGE

CHAPTER I. 1
Standard of criticism hitherto applied to John Law.--
Birth and ancestry.--Education.--Death of father.--
Early devotion to study of finance.--Manner and
appearance.--Visits London.--Duel with Beau Wilson.--
Tried for murder.--Escapes to France.--Meets Lady
Catherine Knollys.--Career of gambling on the
Continent.--Studies banking.--Formulates new principles
of finance.--Returns to Scotland.

CHAPTER II. 15
Unsettled condition of Scottish politics in 1700.--
Financial and commercial insecurity of country.--Law’s
solution of difficulties.--Land Bank.--Supported by
Court party.--Rejected by Parliament.--Again resorts
to gambling.--Returns to Continent.--Expelled from
Holland.--Visits Paris.--Discusses finance with Duc
d’Orleans.--Expelled by Lieutenant General of Police.--
Submits proposals to Louis XIV. without success.--Again
attempts to secure adoption of proposals by France.--
Financial condition of France.--Earl of Stair’s
friendship with Law.

CHAPTER III. 33
Accession of Louis XV.--National debt of France.--
Debasement of coinage.--Arraignment of tax collectors.--
Council of Finances consider Law’s proposals
unfavourably.--Petition for permission to establish
private bank granted.--Constitution of the Bank.--Its
Success.--The “Pitt” diamond and its purchase.

CHAPTER IV. 50
Law’s notes become official tender.--The Mississippi
Scheme projected.--Early explorers of Mississippi
territory.--Establishment of the West India Company.--
Its absorption of depreciated _billets d’état_.--
D’Argenson appointed Chancellor of France, and attempts
extinction of National Debt.--Law innocently involved
in D’Argenson’s fatal scheme.--Saved from arrest by
Regent.--The brothers Paris and an anti-system.

CHAPTER V. 66
Exaggerated accounts of resources of Louisiana.--
Law’s judgment at fault.--His ultimate aim.--He
creates an artificial rise in the value of Company
shares.--His unsuccessful efforts to gain influence
over Saint-Simon.--Acquisition of Tobacco monopoly.--
Absorption of other companies.--Reconstitution of West
India Company.--Parliamentary opposition overcome.--
“Mothers” and “Daughters”.--Excited speculation in
shares.--Issue of notes to colonists.--A pioneer’s
account of Louisiana.

CHAPTER VI. 82
Company acquires right of coinage.--Issue of fresh stock
and rise in price.--Attempts made to discredit Law.--
Stair’s account of the situation.--Law defeats the
anti-scheme.--The concluding proposal of his schemes.--
The Company’s capital and sources of revenue.--Report of
directors for 1719.--Law’s bank converted into a Royal
bank against Law’s wish.--The Regent divests notes of
the bank of their most valuable features.--Provincial
branches established.--Restriction of gold and silver
tender.--Extravagance of successful speculators.

CHAPTER VII. 98
Hotel Mazarin acquired as office of Company and of
Bank.--Excitement of crowds in the Rue Vivienne and
the Rue Quincampoix.--Curious sources of fortune.--
Instances of enormous fortunes acquired by members of the
nobility.--Enormous influx of foreign speculators into
Paris.

CHAPTER VIII. 111
Law’s importance causes him to be courted by all
classes.--Socially ostracised by nobility.--Law’s
conversion to Roman Catholicism.--The part of the
Abbé Dubois and the Abbé Tencin in the conversion.--
Difficulties in its accomplishment.--Law becomes
naturalised.--Law appointed Controller-General
of Finance.--Regent celebrates appointment by a
distribution of pensions.--Law honoured with the freedom
of the City of Edinburgh.--Elected member of Academy
of Sciences.--William Law brought to France and made
Postmaster-General.--Law’s private investments.--His
fiscal reforms.--His introduction of free university
education.

CHAPTER IX. 128
Law’s designs against England’s political and industrial
position.--Earl of Stair’s correspondence with Mr.
Secretary Craggs.--Stair accused by Law of threatening
the safety of the Bank.--Stair’s recall intimated.--
Lord Stanhope sent to conciliate Law.--Threatened
rupture between England and France over question of
evacuation of Gibraltar.--Stair endeavours to justify
his hostile attitude towards Law.--His apprehensions
as to Law’s purpose in acquiring South Sea stock.--The
humiliating nature of Stair’s dismissal.

CHAPTER X. 154
The beginning of Law’s difficulties.--The Bank’s reserve
of specie begins to be depleted.--Law attempts a remedy
by altering the standard of the coinage, and restricting
the currency of specie.--Temporary success of remedy.--
Domiciliary visits resorted to for detection of hoarded
specie.--Bank and Company United.--Discharge of
National Debt.--Use of the Rue Quincampoix prohibited as
a stock market.--The assassination of a stock-jobber by
the Comte des Horn, and the latter’s execution.

CHAPTER XI. 171
New measures prove ineffectual.--New edict issued
fixing price of shares and depreciating value of
notes.--Authorship of edict.--People hostile to
edict.--Parliament refuses to register it, and a
revocation is issued.--Law deposed from office of
Controller-General.--D’Aguessau reinstated in his former
office.--New schemes for absorption of bank-notes.--
Widespread distress produced amongst community.--Law’s
person in danger.--Stock-jobbers establish themselves in
the gardens of the Hotel de Soissons.--Parliament exiled
to Pontoise, and Bank closed for an indefinite period.

CHAPTER XII. 189
Starvation produced amongst poorer classes by issue of
new edict.--Law’s expulsion from France demanded.--
Law resigns all his offices and leaves for Venice.--
Privileges of Company withdrawn.--Commission appointed
to value unliquidated securities.--Law in vain applies
for recovery of a portion of his wealth.--His death
at Venice.--Attitude of French people towards Law.--
Circumstances to be considered in passing judgment.

John Law of Lauriston