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Author Topic: John Law, the Englishman who saved... France?  (Read 5860 times)


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    • Six Degrees of Radio
on: September 01, 2018, 11:24:15 AM

Anyone who feels gloomy about the current state of the world’s advanced economies — with their public finances groaning and their policymaking paralysed by vested interests — should spare a thought for France in September 1715.

That was the month in which Louis XIV, the “Sun King”, died after 72 years on the throne and half a century of near-constant war. He left behind a necrotic economy, a treasury on the verge of bankruptcy and a system of state finance that depended on a vast class of rentiers virulently opposed to any kind of entitlement reform. Philippe, Duke of Orléans, France’s newly appointed regent, was at a loss for what to do.

Into this desperate situation stepped one of history’s most extraordinary, versatile and enigmatic characters: the subject of James Buchan’s masterly new biography — a little-known Scots gambler, adventurer and sometime economist by the name of John Law.

Born the son of an Edinburgh goldsmith in 1671, Law had travelled to London as a young man and immersed himself in the intellectual ferment of the English financial revolution of the 1690s. His own genius was not destined for England, however; on the morning of April 9 1694, he killed a man in a duel in Bloomsbury Square, was arrested and charged with murder. The following New Year’s Day, he engineered an audacious jailbreak and fled abroad.

As Buchan writes, this “was the capital event of John Law’s life . . . Had he stayed in London, Law might have been just another financial pamphleteer . . . An outlaw, [he] was driven into the world, to live on his wits and his engaging manners, without allegiance except to his family and his ideas.”

And what ideas they were. By the time Law appeared before the regent of France in 1715, he had racked up two decades of financial speculation all across Europe, from Scotland to Savoie. In the new science of money and banking, he had discovered, he believed, the secret sauce for economic success. He wasted no time in recommending shock therapy for France’s feudal economy.

The institutions of capitalism were hot-housed post-haste. In 1716, Law introduced the bank — the Banque Générale — and gave France its first experience with paper money. The following year, he established France’s first modern corporation — the Company of the West — to develop French America. In two bounds, France had drawn level with its great rival England, whose own national bank had already been printing banknotes for two decades, and where joint stock companies were more than a century old.


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