JOHN LAW

Evening Star, Issue 20167, 6 May 1929, Page 6

JOHN LAW

A FANTASTIC FINANCIER METEORIC CAREER 'On March 21 of this year occurred the bi-centenary of the death of one of the most remarkable men on the long and distinguished roll of famous men born in Edinburgh (says the ‘ Weekly Scotsman’). John Law, who was,destined in the course of an eventful career to earn for himself the reputation of being the greatest financier of his time, was born in Edinburgh in 1671, the son of a goldsmith. In a sense he may be said to have been born in the financial purple, for " his father was also a banker, a brother of the craft of George Hcriot, the “Jingling Geordie ” of James VI., in that he combined the double role of goldsmith and moneylender, a general practice in those early days. Law was educated in Edinburgh, and gave early evidence of his aptitude in handling figures as he was specially proficient in arithmetic and algebra. His studious habits, however, did not prevent him from leading a gay and riotous life in his youth. He early showed himself also to be a daring and inveterate gambler, a trait that held him in its power all through his hie. Good looks and great charm of manner were also his portion, and these gifts were to aid him not a little in securing converts to his later schemes. NOTORIOUS DUEL. When about twenty years old he went to London, where he continued his reckless way of living. He was soon hcad-over-ears in debt, and had to hand over the estate of Laiiriston to his mother in order to keep it within the family. The climax of the sowing of his wild oats came with the notorious duel, fought between him and “ Beau ” Wilson, in which tho latter was killed. Law was tried for murder, and condemned to death, _ but managed to escape to the Continent. At first he stayed in Holland, then the greatest commercial country in Europe, and it is said that Law was shrewd enough to learn all he could of the financial methods employed there, especially in connection with the working of the great Bank of Amsterdam. In 1700 he returned to Scotland, Lien almost ruined by the failure of tho Darien ■ Scheme. _ Law wrote two pamphlets giving his plans for putting things to rights, but his proposals were not accepted, on the principle, one may suppose, of a prophet never being honoured in'his own country. His remedies are of interest, however, as containing much of what he afterwards put in operation in France with such spectacular success. BELIEVER IN PAPER MONEY.

He maintained, for example, that the trade of a country depends on its sup-ply-of money, and that paper money, a" thing then unknown in (Scotland, was preferable in many ways to actual coinage, and that it could bo easily and safely issued in considerable quantities if it represented not merely gold or silver, but things of real value, especially laud. The Scots Parliament, however, would have none of Law’s arguments, and declared that “the forcing pt any paper credit by an Act of 1 arhament is unfit for this nation.” It appears, however, that the real opposition to Law'bs ideas was based not on economic grounds, but on the belief that his methods would have led to all the estates of the realm being under the thumb of the centra! government, fins was, in fact, what did actually happen in France later on when Law did get a chance of trying out his plans of restoring an impoverished country. From 1703 to 1715 Law was dnitnig about Europe, keeping himself by his skill and luck as a gambler, hut always trying to get important people interested in those colossal schemes which continually haunted him. It is told ol him that he was expelled by the authorities from more than one city, on account of Ins uncanny, gambling successes. He seems certainly to have been too much for them, as his skill and luck were alike phenomenal, and in 1715 his gambling gains were said to have then amounted to £114,000, a huge fortune in those days. " THE MISSISSIPPI SCHEME. Law was therefore no penniless adventurer when, at this period, he made his debut in France, where lie was to become the most powerful man lor at least “one crowded hour.” His luck at the start did not desert-him, for iio got the support of the Duke of Orleans, afterwards the Regent of France. At this time France was financially as much of a wreck as Scotland iird been after the Darien debacle. It "-as even being seriously proposed to declare tbo country bankrupt, and this was only avoided by granting Law powers to establish a royal bank to manage trade and currency, to collect the taxes, and to free the country from debt. Law's new bank was an immediate success, and its banknotes were at first preferred even to actual coin, as they had greater fixity of value. The untien followed Law like a flock of sheep, and he was eagerly supported when lie launched out on his famous “system.” This was the grandiose “Mississippi Scheme.” one of the most dazzling financial undertakings ever attempted.

The trade of the Mississippi region, then a French possession, had gro.in too big for the men tnen handing it, and Law took over the job. Ho established a company winch wielded almost sovereign power, and in a short whi o this amazing Scot had the whole of tho foreign trade of I'ranee in the hollow ot his hand.

A DISASTROUS END. Public confidence in him and his plans was so unbounded that shares valued at 500 livres were soon being sold for 8,000 livres. Even tins astonishing rise was soon eclipsed, ami when Law reached the pinnacle of his prosperity in 1719 the shares were actually selling at 20,000 livres, or iorty times the value of their issue. The nation had gone speculation mad, and the inevitable crash followed. Law endeavoured in vain to stem the tide by ordering his banknotes to have preference to specie, hut within a \oai. his hank was abolished ainl Ins system” overthrown.' In 1720 Law lelt Franco as a fugitive, and spent his remaining years in a Poor and forgotten, ho died in \ emco on March 21, 1729. It would be absurd to say that Law was onlv a speculator and gambler, still more absurd to call him an imposter. His “scheme” may not have been all it was given to be, but it is only lair to say that it was not really m operation loim enough to prove, cither its merits oi r its faults. Insane speculation bv the public really brought about its collapse, before it was set fully going. Nor was their sound reason why tho bank should also have been overwhelmed in the flood that swamped the company. As a I‘rench critic once said, they ruined tho bank without saving the company. HIS GAMBLING INSTINCT’S.

Law’s gambling instincts were, no doubt, a flaw in his armour. Ho put all-on the last throw. A gambler to tho core, ho risked and lost everything. Yet, in spile of spectacular failure, Law was a financial genius of the first order. His skill in adapting methods to suit the actual condition of things was unsurpassed, and, if he could have checked the reckless speculation, all might have gone well. His superb selfconfideilce and his belief in the .truth of his theories led both to his initial success and to his ultimate ruin. Like the horn gambler that he was, LaiV was not changed a whit by reverse of fortune. Montesquieu, when visiting him in Venice shortly before tho end, found him still planning colossal schemes' to restore France to prosperity and himself to power. In the midst of his dreams the hand of death stilled the activities of a brain never surpassed in the financial world for its range and daring.