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John Law
b. 1671
d. 1729
 John Law was born at Edinburgh in the year 1671. His
father was the younger son of an ancient family in Fife, and carried on the
business of a goldsmith and banker. He amassed considerable wealth in his
trade, sufficient to enable him to gratify the wish, so common among his
countrymen, of adding a territorial designation to his name. He purchased with
this view the estates of Lauriston and Randleston, on the Frith of Forth on the
borders of West and Mid Lothian, and was thenceforth known as Law of Lauriston.
The subject of our memoir, being the eldest son, was received into his
father’s counting- house at the age of fourteen, and for three years
laboured hard to acquire an insight into the principles of banking, as then
carried on in Scotland. He had always manifested great love for the study of
numbers, and his proficiency in the mathematics was considered extraordinary in
one of his tender years. At the age of seventeen he was tall, strong and his
face, although deeply scarred with the small-pox, was agreeable and full of
intelligence. At this time he began to neglect his business, and becoming vain,
indulged in considerable extravagance. He was a great favourite with the
ladies, by whom he was called Beau Law, while the other sex, despising his
foppery, nicknamed him Jessamy John. At the death of his father, which happened
in 1688, he withdrew entirely from the desk and proceeded to London to see the
world.
He was now very young, very vain, good-looking, tolerably rich,
and quite uncontrolled. It is no wonder that, on his arrival in the capital, he
should launch out into extravagance. He soon became a regular frequenter of the
gaming-houses, and by pursuing a certain plan, based upon some abstruse
calculation of chances, he contrived to gain considerable sums. All the
gamblers envied him his luck, and many made it a point to watch his play, and
stake their money on the same chances. In affairs of gallantry he was equally
fortunate; ladies of the first rank smiled graciously upon the handsome
Scotchman—the young, the rich, the witty, and the obliging. But all these
successes only paved the way for reverses.
After he had been for nine
years exposed to the dangerous attractions of the gay life he was leading, he
became an irrecoverable gambler. As his love of play increased in violence, it
diminished in prudence. Great losses were only to be repaired by still greater
ventures, and one unhappy day he lost more than he could repay without
mortgaging his family estate. To that step he was driven at last. At the same
time his gallantry brought him into trouble. A love affair, or slight
flirtation, with a lady of the name of Villiers exposed him to the resentment
of a Mr. Wilson, by whom he was challenged to fight a duel. Law accepted, and
had the ill fortune to shoot his antagonist dead. He was arrested the same day,
and brought to trial for murder by the relatives of Mr. Wilson. He was
afterwards found guilty, and sentenced to death. The sentence was commuted to a
fine, upon the ground that the offence only amounted to manslaughter. An appeal
being lodged by a brother of the deceased, Law was detained in the King’s
Bench, whence, by some means or other, which he never explained, he contrived
to escape; and an action being instituted against the sheriffs, he was
advertised in the Gazette, and a reward offered for his apprehension. He was
described as “Captain John Law, a Scotchman, aged twenty-six; a very tall,
black, lean man; well shaped, above six feet high, with large pockholes in his
face; big nosed, and speaking broad and loud.”
As this was rather
a caricature than a description of him, it has been supposed that it was drawn
up with a view to favour his escape. He succeeded in reaching the Continent,
where he travelled for three years, and devoted much of his attention to the
monetary and banking affairs of the countries through which he passed. He
stayed a few months in Amsterdam, and speculated to some extent in the funds.
His mornings were devoted to the study of finance and the principles of trade,
and his evenings to the gaming-house. It is generally believed that he returned
to Edinburgh in the year 1700.
Returning to Scotland (1700), he
proposed to Parliament plans for trade and revenue reforms and published Money
and Trade Considered (1705). His ideas and a proposal for a national bank were
rejected, and Law went to France.
The finances of France were in
critical condition at the death of King Louis XIV, and Law succeeded in winning
the support of the regent, Philippe II, duc d'Orléans, for a scheme that
promised to reduce the public debt and stimulate French trade and industry. Law
believed that credit and paper money, by encouraging investment, would
regenerate the French economy. In 1716 the regent chartered Law's private
Banque générale and authorized it to issue paper
currency.
In 1717, Law acquired the monopoly of commercial privileges in
the French colony of Louisiana and organized the Compagnie d'Occident, or
Mississippi Company, which was consolidated (1719) with the French East India
Company and other organizations as the Compagnie des Indes. The Banque
générale was made the royal bank in 1718, and its issues of notes
were guaranteed by the state.
Finally (1720), Law, made controller
general of finances, merged the huge stock company with the royal bank and took
over most of the public debt and the administration of revenue. A rash of
speculation swept France. Numerous small investors bought stock, which soared
to heights far beyond what could be expected in returns from the exploitation
of the colonies and from trade with East Asia.
The bubble burst
suddenly. Well-informed speculators sold their stock at huge profits, setting
off a frenzy of selling that ruined thousands of investors. The system
collapsed (1720), and Law left France in disgrace. He died in Venice, where he
had supported himself by gambling. |
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