John Law

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John Law as director of Banque Royale, painted by Alexis Simon Belle .

John Law's signature:Signature John Law.PNG
John Law, painted by Casimir Balthazar

John Law of Lauriston or French John Law de Lauriston (born April 16, 1671 in Edinburgh , † March 21, 1729 in Venice ) was a Scottish economist and banker .


John Law was the fifth of twelve children of the guild master of the Edinburgh goldsmiths and moneylender William Law (* approx. 1630–1688) and his wife Jeanne Campbell (* approx. 1645). He had a younger brother, William Law de Lauriston (1675-1752). After attending school in his hometown and boarding school, he went to London - soon after his father's untimely death (1688). There he worked as a professional gambler . As a brilliant mental calculator, he developed the ability to calculate chances of winning with astonishing speed, for which he also used the reading of the mathematicians Antoine Arnauld and Jakob I. Bernoulli . In 1694 he was sentenced to death for a fatal duel and fled to the continent in Holland during the appeal hearing . In the following years Law studied the financial system of the Bank of Amsterdam and met the British pretender James III. know. In Paris, Madame Katherine Seigneur, b. Knowles, (1669–1747) his mistress; with her he fled to Venice. After a decade in exile, he was back in still independent Scotland , trying in vain to save it from the financial disaster of the Darién project . His plan to reform the financial constitution was rejected; when the unification of the parliaments of England and Scotland threatened, Law (who was still considered a fugitive criminal in England) went back to the continent.

By gambling he made a fortune in Paris and in 1707 became a friend of Philip of Orléans , the regent of France (from 1715). In 1715 he was appointed head of the Banque Générale in Paris , and in 1717 the death sentence was overturned by a pardon from the English king. At the end of 1719 he converted to the Catholic faith. In early 1720 the king appointed him supreme financial controller ( French Contrôleur général des finances ), the highest office in the state after the king. Since then he has been able to put his monetary policy ideas into practice in Paris, which resulted in the Mississippi Bubble . As one of the main shareholders of the companies he controlled, he not only became very rich, but also the star of Paris. In financial terms, he was the ruler of France and at the same time - as the director of the Mississippi Company  - of a third of the North American continent. As director of this Mississippi company, John Law merged the French East India Company with the French West India Company and thus bundled all of France's non-European trading monopolies in one conglomerate, Fondateur de la Compagnie des Indes (1719). In order to support his social recognition, he spent huge sums on charitable purposes ( Liselotte von der Pfalz and Daniel Defoe report unanimously ).

However, the result of his activities as a banker and financier of the state was a monetary policy disaster. When Law had reason to doubt the regent's support in the spring of 1720, he suffered a nervous breakdown. The children were brought to the country, and Katherine stayed with him. In December 1720 he fled to Venice via Brussels; his assets were initially blocked, then he transferred them to the company as compensation. In the fall of 1721 he traveled to London - alone, because Katherine and the children were still not allowed to leave Paris. After an episode as a secret agent for England in Aachen and Munich, he turned back to Venice in 1726, where he worked as a painting dealer. There he died in 1729 of complications from pneumonia. Law was buried in the former church of San Geminiano , his tomb is now in the church of San Moisè .

Contemporary political cartoon Het Groote Tafereel der Dwaasheid (1720)

The rest of his fortune (collected paintings) inherited Katherine (with whom he had never been married) and their children.

On December 4, 1719 he became an honorary member of the Académie des Sciences in Paris.


To claim that John Law invented European paper money would be incorrect. The Bank of Amsterdam had been issuing banknotes as early as 1609, and for decades careful attention was paid to ensuring that there was sufficient cover at all times with coins. In 1661, banknotes were issued in Stockholm by a private central bank - but with moderate success due to a lack of trust.

Banque royale billets from the time of John Law, circa 1720

The decisive new thing about Law's approach was to use not only precious metals, but also real estate - with their future earnings prospects - to cover the banknote in circulation. Law strove to prevent deflation by means of paper money created in this way and to provide trade and industry with sufficient liquidity - a concept that was only recognized as suitable in the 20th century. After the speculative bubble burst in 1720, however, his ideas were initially taboo for the following generations of serious monetary politicians. Karl Marx later described Law as "a mixture of impostor and prophet."

Also noteworthy is the socio-politically revolutionary attempt to replace countless consumption taxes with an income-related tax. In the feudal France of his time, this measure could not last, because it would have relieved the low-income earner and burdened influential high-earners. Another aspect of his economic policy measures was the attempt to transfer all commercial monopolies, banknote issuance and tax collection from private hands into state control. This, he hoped, would enable the public sector to make sufficient profits and repay its liabilities.

John Law agreed with the leading economic politicians of his time that abundant and rapid circulation of money was beneficial to the economy. One liked to lose sight of the inflationary dangers of such a policy. Law - the son of a moneylender - was well aware of these dangers. However, from 1719 onwards, he could no longer assert himself against influential decision-makers in Paris. Their unchecked expansion of banknote and share issues heated up the speculative bubble that was to lead to the catastrophe.


When he became a millionaire, he said

«L'économie c'est moi. »

"The economy, that's me."

based on the statement attributed to King Louis XIV

«  L'État, c'est moi . »

"The state, that's me."

Literary reception

John Law is the main character in Claude Cueni's novel The Big Game .


Money and trade considered, with a proposal for supplying the Nation with money , 1934
  • Money and Trade Considered - With a Proposal for Supplying the Nation with Money , 1705

See also

  • Südseeblase (English South Sea Bubble , also Südsee- (stock exchange) vertigo) from 1720



  • Michael Kwass: Privilege and the politics of taxation in eighteenth-century France: Liberté, Egalité, Fiscalité. Cambridge 2000
  • Antoin E. Murphy: John Law. Economist and visionary. Düsseldorf 2002
  • Michael Sonenscher: Before the Deluge. Public Debt Inequality and the intellectual Origins of the French Revolution. Princeton 2007
  • Herbert Lüthy : La Banque Protestante en France de la Révocation de l ' Édit de Nantes à la Révolution 1685–1794 . Paris 1959/1961
  • Lawrence Montague Lande: John Law, the French Régime and the Beginnings of Exploration, Trade and Paper Money in North America: a Third Bibliography. Lawrence Lande Foundation for Canadian Historical Research, Montreal 1985
  • Karl Walker : The Money in History . Chapter.
  • Wolfgang Uchatius: Now everyone is getting rich . In: Die Zeit , No. 14/2010


Web links

Commons : John Law  - collection of pictures, videos and audio files

Individual evidence

  1. Family genealogy
  2. Roland Seuhs: Modern Shamans: Experts, Politicians and the Economic Crisis . 2011, p. 44 ff.
  3. ^ List of members since 1666: Letter L. Académie des sciences, accessed on January 9, 2020 (French).
  4. "What was wrong with John Law was not that he created means of payment in vacuo , but that he used them for purposes that failed." Joseph A. Schumpeter : Business Cycles. A theoretical, historical and statistical analysis of the capitalist process . Volume I. Göttingen 1961, p. 122 (English: Business Cycles. A Theoretical, Historical, and Statistical Analysis of the Capitalist Process. New York 1939)
  5. ^ Paul Strathern: A Brief History of Economic Genius . Thomson Texere, New York 2001, ISBN 1-58799-189-6 , p. 56.
  6. ^ John E. Sandrock: John Law's Banque Royale and the Mississippi Bubble . (PDF; 5.1 MB; English)

predecessor Office successor
Henri Jacques Nompar de Caumont Controllers General of Finance
January 5, 1720 - May 28, 1720
Michel Robert Le Peletier of the fort