Millionaire_ The Philanderer, Gambler, and Duelist Who Invented Modern Finance Part 7

Watching developments closely was Sir Robert Walpole, the first lord of the Treasury and chancellor of the Exchequer, who, having risen to power in the aftermath of the South Sea debacle, was now Britain's prime minister in all but name. Despite Law's financial vulnerability, Walpole felt that he might soon be invited back to France. "If the Duke of Orleans is disposed to recall him [Law] as Mr. Law's friends here are very sanguine in hoping," he wrote to the diplomat Sir Luke Schaub,

it is not our business to obstruct it. . . . If Mr. Law does not return there can be no doubt but that the power might fall into worse hands; and if any who are neither Englishmen by birth or affection should prevail, we should have a less chance than by admitting one who has sundry ties to wish well to his native country.

The conviction that he would soon be back in power also helped buy time from Law's creditors. Some moneylenders had enough confidence in his prospects to offer him primes option loans: for a 10 loan he would repay 100, but only if he returned to France. He admitted he would be tempted by the offer "if they wanted to give me enough to settle my commitments."

The pace of progress was excruciatingly slow. Eventually, in October 1723, almost two years after his arrival in London, Law's departure for Paris, accompanied by Walpole's brother, seemed imminent. "I have so ordered my brother's journey to Paris with him that he thinks Horace goes with his advice," wrote Walpole. But it was not to be. Preparations were under way and Law was awaiting final instructions from Paris when, on December 2, inauspicious news reached London. Orleans, worn out by debauchery and the pressures of government, had suffered a ma.s.sive heart attack at the age of forty-nine and collapsed and died in the arms of one of his mistresses, the d.u.c.h.esse Marie Therese de Falaris.

Law's hopes of return to France died with him. Bourbon took over the reins of power, but his ambitious and scheming mistress, Madame de Prie, who had lent Law her coach when he escaped from France, had grown hostile to him. The recall for which he had hoped never came, and payment of his pension was suspended. The charity of friends and wins at the tables were again his only means of support. Profound humiliation s.h.i.+nes through his letter to the Countess of Suffolk: "Can you not prevail on the Duke to help me something more than the half year? Or is there n.o.body that could have the good nature enough to lend me one thousand pounds? I beg that, if nothing of this can be done, that it may only be betwixt us two, as I take you as my great friend."

A poignant letter to Bourbon from the following summer of 1724 resounds with turmoil at his circ.u.mstances: "There is scarcely an example, perhaps not one instance, of a foreigner like him [Law], who acquired in so high a degree the confidence of the Prince, who made so large a fortune in so upright a manner, and who, on leaving France, reserved nothing for himself and his family, not even what he had brought into the kingdom with him." As time pa.s.sed, rancor at this injustice yielded to a sense of remorse at the opportunities he had let slip:

I have sacrificed everything, even my property and my credit, being now bankrupt not only in France but also in all other countries. For them I have sacrificed the interests of my children, whom I tenderly love, and who are deserving of all my affection; these children, once courted by the most considerable families in France, are now dest.i.tute of fortune and of a.s.sets. I had it in my power to have settled my daughter in marriage in the first houses of Italy, Germany, and England; but I refused all offers of that nature, thinking it inconsistent with my duty.

Desperate for money, worried that he might be thrown into debtor's prison at any moment, and hopeful that if he were employed by the English authorities they might take up his case with France, Law now turned to Walpole for a diplomatic post. Although as a Catholic he was barred from holding an official diplomatic position, Walpole agreed. Law was delighted: "I will do all I can so that his majesty and his ministers are satisfied with my services," he wrote a few days before leaving.

Having received his first payment from the government, presumably with much relief, John Law crossed the channel on August 9, 1725, accompanied by his nephew. He had been instructed to head for the spa of Aix-la-Chapelle, and take the waters while awaiting further orders. His role was to be far from orthodox: he was to journey through Europe, pretending to be a traveler but in reality acting as an undercover agent, reporting anything of interest he noticed. France's "meteor" was poised at the age of fifty-four to embark on a new career as a spy.

18.

VENETIAN S SUNSET.

I stood in Venice, on the Bridge of Sighs; A palace and a prison on each hand: I saw from out the waves her structures rise As from the stroke of the enchanter's wand: A thousand years their cloudy wings expand Around me, and a dying Glory smiles O'er the far times, when many a subject land Look'd to the winged Lion's marble piles, Where Venice sate in state, throned on her hundred isles!

Byron, Childe Harold's Pilgrimage Childe Harold's Pilgrimage, canto the fourth

LAW ALWAYS RELISHED PLAYING THE MAN OF MYSTERY. Relieved to have a distraction from his problems in France, he threw himself into the subterfuge with typical enthusiasm. He arrived, as planned, in the German resort of Aix-la-Chapelle in early September to await orders. Aix-la-Chapelle-or Aachen, as it was also known-was one of Europe's most famous spas, where the fas.h.i.+onable congregated to take the sulfur waters, socialize, and happily for Law, to gamble. He made no attempt to conceal his ident.i.ty, and visitors to the chic watering hole were enchanted to meet and quiz the international celebrity-little suspecting that while they were trying to extract snippets about his system he was pumping them for political insights. The elector of Cologne and Prince Theodore, his brother, were pa.s.sing through incognito when they heard Law was in town and immediately sent word to his lodging inviting him to wait on them. Law was still in bed when his valet informed him that the elector desired to see him, but conscious of his duties as a secret agent, he dressed hastily and rushed to pay his respects, then reported the encounter back to Whitehall.

A month later he was still waiting for instructions, and the suspicion that his a.s.sistance was not quite as crucial to the British authorities as he had presumed was beginning to grow. To jolt them into action he dispatched a sharp reminder that his fame in Europe was undimmed and offered entree to the highest circles. "The work I did in France and the confidence that the Duc d'Orleans had in me excites curiosity. I see that in Vienna ministers and even the Emperor wanted to speak to me on the business that pa.s.sed between my hands." Although to English eyes the imperial court at Vienna was of particular interest-Austria had recently broken her alliance with England and France and forged new ties with Spain-Law was much too high-profile and contentious a figure to be trusted to dabble in such delicate matters. Eventually he was given the far less crucial job of visiting Munich to try to persuade the elector of Bavaria to break with Vienna and favor the English alliance.

Leaving Aix-la-Chapelle in early December, he broke the journey in Augsburg, where he had arranged for letters from France to be sent. Again, mindful of his new position, he took every opportunity to mingle in political circles. The amba.s.sador of Savoy to France, Monsieur de Courtance, was in town and eager to talk. Law made diligent use of the opportunity at hand: "I made him see that the Alliance of Spain and Portugal won't be a great help to the Emperor; that his British Majesty was today the only maritime power, who could put more vessels to sea than all the other powers combined, that Spain and Portugal risk much with regards America if they enter into war with England." Like everyone else in Europe, Courtance was hungry to find the secret of Law's moneymaking. Law hated to be viewed as a failed conjuror, but could rarely resist an opportunity to hold forth on his pet subject. Discussions such as these meant he could justify his actions-probably to himself as much as to those listening-and gave him a sounding board for new ideas. He held forth on the subject of luxury and told Courtance that luxury was not to be feared-unless it creates a trade deficit. So long as industry and output expand, a country will prosper.

On New Year's Day, Law's party left Augsburg for the short journey to Munich and the court of Elector Maximilian Emmanuel of Bavaria. Munich was generally thought to be one of the most pleasant of German courts. "The splendour and beauty of its buildings both public and private . . . surpa.s.ses anything in Germany," wrote one eighteenth-century tourist. And as an added attraction, the carnival was in full swing. Law, still fired with commitment to his a.s.signment, and eager at last to have the chance to get on with it, ignored the entertainments and headed straight for the electoral palace. Maximilian had been indisposed for several days with "a type of rheumatism in his neck which greatly torments him and prevents him from sleeping, and forces him to remain in bed." Nevertheless, news of the arrival of the ill.u.s.trious Law cheered him, and the following day Law was summoned to his bedchamber.

Greeting him warmly, Maximilian questioned why, when Law had pa.s.sed through Munich on his departure from France four years earlier, he had failed to visit. Law alluded vaguely to his dilemma with creditors: "I had then reasons for pa.s.sing without being known." But the fact that he was now lingering in international resorts, living the life of a well-to-do tourist, can only have added further fuel to the rumors that he had a hidden cache of funds somewhere. Maximilian, in common with most of Europe, was under the impression that Law was still fabulously wealthy, and he was as keen as everyone else to get him onto the subject of money. Bemoaning the high interest he was being forced to pay on loans, he wondered whether Law might help him out. Law replied frankly, "I took the occasion to tell him that if I was in a position to do so I would lend to His Excellency with pleasure, and at a reasonable rate of interest, but that I had nothing outside France, and that since my affairs were still undecided I had my own difficulties."

After promising initial discussions, Law left the ailing elector without tackling the question of the English alliance, but the intention on both sides was that the talks should continue soon. The following day the elector's health seemed improved, but he was not well enough to receive visitors. Law pa.s.sed the time meticulously reporting the details of his first meeting back to London. He was still frantic for news from France, and the letter begins and ends with entreaties to the Duke of Newcastle and Walpole to intercede on his behalf with the Duc de Bourbon.

A week later the elector's health deteriorated. The pains spread from his neck to his stomach and were so severe that it was feared his life was endangered. More medical advice was urgently sought, and leading physicians were summoned. A French doctor p.r.o.nounced the illness not life-threatening and promised to restore him to full health, but despite his confident prognosis, a fortnight later Maximilian was dead.

Uncertain what he should do next, Law remained in Munich. Ostensibly he was still fulfilling his role as undercover agent, dispatching information about the armies of Bavaria and the neighboring state of Hesse Ca.s.sel and waiting for further instruction. His presence in Bavaria drew several influential visitors, among them Count von Sinzendorff, an Austrian minister to whom Law gave a copy of a memoir explaining his ideas, which, he said, would prove the scheme "well founded and that it would have lasted if extraordinary events had not intervened." Despite his sufferings his idealistic approach to money remained unchanged, and when von Sinzendorff asked him about state lotteries, Law, still haunted by visions of the rue Quincampoix tumult, replied disapprovingly that they encouraged debauchery, whereas "wealth should be acquired by industry not by luck or gambling." Bearing in mind that apart from his salary from the British government, he relied heavily on gambling for his own income, it seems Law was far from gratified or easy with the life he had been forced to lead.

As months pa.s.sed, his presence in Munich seemed increasingly futile. The new elector Charles Albert had no intention of joining forces with Britain against Austria. No further a.s.signments were proposed. There was no indication that anyone in England paid heed to his reports. When, eventually, Law grew tired of waiting and tendered his resignation to the British government, it was accepted without any apparent dismay. Venice, the city in which he had always felt at home, beckoned once more.

Henry James once wrote that only by living in Venice from day to day does one feel the fullness of its charm. It is, he said, as "changeable and nervous as a woman, and you know it only when you know all the aspects of its beauty." In 1726, as Law returned for the third and final time to the city of ca.n.a.ls, campaniles, and card games, similar sentiments must have struck him. Venice's artistic riches, its Baccha.n.a.lian masqued b.a.l.l.s, regattas, pageants, and processions, which had first entranced him and Katherine a quarter of a century ago, were comfortably familiar but captivating still. As time pa.s.sed, and his affairs in France remained unresolved, the city's tranquil beauty must also have brought solace from the clouds of disillusionment.

Creditors remained an overwhelming worry. Some were patient in their demands, others made menacing threats against his life and that of his son if they were not refunded. Defenseless in the face of financial demands he could not hope to meet, and desperate to find a surrept.i.tious way to leave something to his family, he began to invest surplus winnings in art and dabble in picture dealing. Katherine may have helped the burgeoning collection by sending some of his paintings from Paris before their household effects were seized. Within two years he had a.s.sembled a collection of nearly five hundred works, including paintings by t.i.tian, Raphael, Tintoretto, Veronese, Holbein, Michelangelo, Poussin, and Leonardo.

In exploring the art market Law was again revealing his highly original business ac.u.men. At the time paintings were viewed as symbols of status and signals of good taste rather than as a sound investment. Burges, the English resident (government agent), was typical of the age in failing to perceive the intrinsic value in art, and wrote disparagingly of Law's dealings, "No man alive believes that his pictures when they come to be sold will bring half the money they cost him." Law, he felt, had been badly cheated. "I think it is generally agreed he bought his pictures very ill and was horribly imposed on in every bargain he made." Time proved Law correct. Today such a collection would be far beyond the reach of all but a handful of multimillionaires.

On his return to Venice, perhaps as a memento for Burges or his family, Law commissioned a portrait of himself by the Dutch artist John Verelst. Last seen on the open market in the 1960s and now in an unknown private collection, the portrait is a world away from the image painted when he was at the height of his power. He is plainly dressed in an unb.u.t.toned velvet jacket and white cravat, cla.s.sically posed, with one arm bent and the other holding a glove. The stance is taken, appropriately, from the great Venetian artist t.i.tian. The face that broods disconcertingly away from the viewer has filled out. The wig, no longer the ripplingly extravagant peruke of earlier days, is in the new shorter style known as a perruque a noeuds, perruque a noeuds, powdered a pale gray suggestive of advancing years. He was now fifty-six. For all that, it is still a face of distinction and allure: the wide forehead, heavy eyebrows, and extravagantly beaked nose are marked as in every portrait of him; the mouth is sensually full and half smiles, as if at some remembered diversion. But the air of placid, well-to-do contentment it conveys is deceiving. powdered a pale gray suggestive of advancing years. He was now fifty-six. For all that, it is still a face of distinction and allure: the wide forehead, heavy eyebrows, and extravagantly beaked nose are marked as in every portrait of him; the mouth is sensually full and half smiles, as if at some remembered diversion. But the air of placid, well-to-do contentment it conveys is deceiving.

Law's pleasure was tinged progressively with despair, but until the end, when the facade finally fell, few realized his underlying melancholy. When the celebrated writer and political philosopher Montesquieu came to call a year after the portrait was painted, on August 29, 1728, Law retraced the early days of the bank and company and "pretended that the fall of his system came about because of suspicion with regard to his arret arret (which divided the notes) so that it was revoked, and the public could no longer have confidence in him after he had been flouted in such a way." Montesquieu was struck by Law's argumentativeness: "The whole force of [his] arguments is to attempt to turn your reply against you, by finding some objection in it," he recalled. Montesquieu had never been sympathetic to Law: in 1721 he had anonymously published (which divided the notes) so that it was revoked, and the public could no longer have confidence in him after he had been flouted in such a way." Montesquieu was struck by Law's argumentativeness: "The whole force of [his] arguments is to attempt to turn your reply against you, by finding some objection in it," he recalled. Montesquieu had never been sympathetic to Law: in 1721 he had anonymously published The Persian Letters, The Persian Letters, a savage satire on the excesses of the regency in which he had scathingly attacked Law. In Venice, after spending two hours with Law, even though he declared him to be "more in love with his ideas than his money," his suspicions remained. Law, wrote Montesquieu, was "still the same man, with small means but playing high and boldly, his mind occupied with projects, his head filled with calculations." a savage satire on the excesses of the regency in which he had scathingly attacked Law. In Venice, after spending two hours with Law, even though he declared him to be "more in love with his ideas than his money," his suspicions remained. Law, wrote Montesquieu, was "still the same man, with small means but playing high and boldly, his mind occupied with projects, his head filled with calculations."

But even if Montesquieu failed to realize it, Law was profoundly changed. After seven long years the scrutinizing of his affairs in France dragged relentlessly on, no closer to conclusion. He had sustained his belief that eventually justice would prevail, but the news that a further commission had been appointed to reexamine his accounts forced him to the depressing conclusion that matters would never be resolved in his lifetime. With the realization, despair descended and his health became frail. As winter pa.s.sed and another carnival drew to a close, Law fell gravely ill with pneumonia. He had suffered from a weak chest, rheumatism, and recurrent fevers for some years, and the dampness of the winter months in Venice must have made it worse. At the end of February he developed "a s.h.i.+vering cold fit which lasted him five or six hours, and that was succeeded by a violent hot one, which has never intermitted but continued upon him ever since." Despite the usual medical ministrations of emetics and bleeding, his condition worsened. Everyone who saw him knew that his life was drawing to a close.

Death held no fears for him. On the contrary, he was "very desirous to die; believing his death would be of greater service to his family at this juncture than any other." Only then, he confided to Burges, did he believe that the hounding of him and his family would end: "They will be more inclined to do him justice in France when they shall know how poor he dies, and that he has nothing in any part of the world but in that country and in the King's hands." Pragmatic to the last, he instructed his twenty-two-year-old son to go to France immediately after his death and throw himself on the king's mercy.

Both Burges and the French amba.s.sador, Gergy, realizing that the end was near, hovered around him, anxious that the minute his life was over they should be the first to examine his papers. He had mentioned in earlier letters to France that he was working on writing a history of his system, and they presumed that this doc.u.ment would be found among his papers. The French feared that if details of the system's intricacies fell into the wrong hands, Bourbon and other powerful members of the French establishment might be embarra.s.sed. It was also thought that the papers would include details of the secret fortune with which everyone still believed he had escaped. Gergy enlisted Jesuits to administer the last sacrament and keep vigil over the invalid. Despite a slight rally at the beginning of March, which gave "some sort of hope of Mr. Law's recovery," his strength continued to wane, and two weeks later Burges reported him "so ill that n.o.body expects his recovery."

Nonetheless, he remained mentally alert and well enough to make a will in which he left his entire estate to Katherine. Although the fact that they had never married could not have been entirely secret, the elopement had been generally forgotten. The world at large believed Katherine to be his wife. Because she was not, and presumably to spare her embarra.s.sment, Law made the bequest to her in the form of a deed of gift to Lady Katherine Knowles. There was no mention in the doc.u.ment of their children, nor of the fact that she was his common-law wife.

Two days later, on March 21, 1729, a month before his fifty-eighth birthday, the end came peacefully. "Mr. Law is dead, after struggling seven or eight and twenty days with his distemper, which was judged mortal by his physicians from the very beginning; he died with great calmness and constancy and is spoke of here with much esteem," recorded Burges, whose affection for the colorful exile had grown over the past years. The epitaph in the March edition of the State of Europe State of Europe was less decisive in its tribute, describing him as "a gentleman who has made himself so famous in the world by the enchanted project of the Mississippi and other fatal schemes that were copied after it, that his name . . . will be remembered to the end of the world." was less decisive in its tribute, describing him as "a gentleman who has made himself so famous in the world by the enchanted project of the Mississippi and other fatal schemes that were copied after it, that his name . . . will be remembered to the end of the world."

For young John Law, who had been at his father's bedside when he died, the sorrow of bereavement was profound. He wrote poignantly to his mother, describing Law as both father and friend and outlining his bequest. "He departed this life on Monday last 21st of this month, giving us all his blessing; and has made a general gift to your ladys.h.i.+p of all he had and all pretensions whatsoever, with full power of disposing, acting, contracting, etc., in short doing what you think proper of all."

To spare young John the pain of remaining in the house in which his beloved father had died, Gergy sympathetically invited him to stay. In truth he was more concerned about "the secret papers which 'tis reported Mr. Law has lodged in the hands of a friend" and the contents of the will than the boy's suffering, and hoped that with John close he would soon get a chance to examine them. John voluntarily handed over to him several of his father's letter books, one of which survives in the Bibliotheque de Mejanes in Aix-en-Provence, but anxious that the French might try to appropriate the art collection, he tried to keep the contents of the deed-of-gift doc.u.ment secret. As soon as he was installed in Gergy's residence and safely out of the way, Gergy found and copied the will and sent it to the French minister of foreign affairs: "I wished to be informed surrept.i.tiously concerning the testament which everyone said the deceased had made, there fell into my hands a copy (which I take the liberty of sending you) of a deed of gift executed on the 19th of this month, of all M. Law possessed in favour of her who pa.s.ses as his wife, although, as you will see he does not describe her as such in this deed."

A day after his death, John Law's body was taken to the ancient Venetian church of San Gemignano in the Piazza San Marco. He was buried the next day following a requiem Ma.s.s sung by the papal nuncio. Nearly eight decades later, while Venice was under Napoleon's rule, the church was ordered to be demolished. By a strange quirk of fate, one of the French governors of the city was John Law's great-nephew Alexander Law. Before the church was razed he ordered that his ill.u.s.trious forebear's remains be moved to the nearby church of San Moise. His tomb remains there still-a stone's throw from Florian's and the Ridotto, where once he pa.s.sed his days-a fitting resting place for a man who spent so much of his life in sampling the city's pleasurable pursuits, and who, in the end, became a tourist attraction himself.

Even in death Law's wishes were thwarted. His brother William's resentment still burned, and the news of John Law's death and unconventional will offered a final outlet for his rancor. William disputed the deed of gift and claimed Law's estate for himself. His grounds were that Katherine had never been married to his brother, that her children were illegitimate, and that therefore he, as next of kin, was Law's legal heir. The French judiciary found against Katherine, but since William was not naturalized, declared that William's children, John Law's nephews, who had been born in France and were thus French citizens, should inherit.

One can hardly imagine Katherine's reaction to the news of Law's death and his brother's subsequent actions. Apart from the sorrow of Law's death after such a prolonged separation, she had to endure the embarra.s.sment of scrutiny of their private circ.u.mstances, exactly what Law had tried to avoid. She had visited and supported William while in prison, and helped her sister-in-law as far as she could. To be repaid in such a manner must have seemed a desperately cruel blow. There was further calamity to come. When the precious art collection was being sent by boat from Venice to Holland a few months after Law's death, a storm brewed. The boat sprang a leak and was forced back to port, by which time the paintings were so seriously damaged that they needed restoration that would take several years to complete.

In the midst of the ascendant sorrows, Katherine derived one significant advantage from Law's death and unconventional last testament. As he had predicted, his death helped his family: the authorities were at last convinced that no funds were hidden abroad and dropped all outstanding claims against him. Katherine and her daughter were issued with pa.s.sports and, with pitifully few a.s.sets, were at last able to leave France. Young John had secured a commission in an Austrian dragoon regiment, and to be near him she settled first in Brussels, then Utrecht. Tragically, only five years after his father's death, the son contracted smallpox in Maastricht and died. Having somehow managed to secure part of the art collection, Katherine sold fifteen pictures and moved into a convent, where she lived until her death in 1747.

Fate dealt more kindly with Law's beloved daughter Kate, who married her cousin Lord Wallingford and lived the life of a doyenne of London society, in a grand house in Grosvenor Street. Horace Walpole admired her good looks and remarked how similar she was to her father, whose portrait by Rosalba Carriera graced his famous picture gallery at Strawberry Hill.

EPILOGUE.

In our own day, we can devoutly wish that we may be spared the technically superlative disasters we have prepared for ourselves in order to enjoy the minor vicissitudes of the business cycle-of prosperity and depression and inflation and deflation. If we are so favored, we can count on some future period of prosperity carrying us on into a mood of exhilarant optimism and wild speculative frenzy. Instead of radio and investment trusts, uranium mines or perhaps portable reactors will be the new favorites. Or the speculative fever may strike land, oil, or even Boston.

J. K. Galbraith, The Great Crash, 1929 (1955) (1955)

WITH JOHN LAW' S DEATH EUROPE DREW BREATH. HE had come to France prosperous, captivating, br.i.m.m.i.n.g with dynamic energy and ambition, confident that he could engender an economic revival. While he had seemed set to succeed he had been the people's hero, by his own admission one of the wealthiest, and certainly among the most powerful men in Europe. had come to France prosperous, captivating, br.i.m.m.i.n.g with dynamic energy and ambition, confident that he could engender an economic revival. While he had seemed set to succeed he had been the people's hero, by his own admission one of the wealthiest, and certainly among the most powerful men in Europe.

In his eyes he had failed not because of any flaw inherent in his ideas or ability but because of his own impatience: "I do not pretend that I have not made mistakes, I admit that I have made them, and if I could start again I would act otherwise. I would go more slowly but more carefully; and I would expose neither the state nor myself to the dangers which must necessarily accompany disorder of the general system." Yet this was only part of the reason for his downfall. The road to h.e.l.l, so the old proverb warns, is paved with good intentions. In Law's case the more fundamental defect he could never bear to face was his own idealism. In dreaming of utopia he ignored human frailty and never imagined that he was unleas.h.i.+ng several monstrous genies-people's desire to make as much money for as little effort as possible, their instinct to follow the herd, to h.o.a.rd when threatened, to panic if confidence was shaken. These elemental, uncontrollable human traits, together with the enmity of the establishment and the tragedy of the plague, were ultimately what toppled him.

In the aftermath of his departure and the collapse of the paper-money system, a draconian return to the coinage took place. Along with his paper money, the reactionary backlash swept away most of the tax reforms he had engineered. But the effect of his system remained indelible. He had created rampant but, for the Crown, highly beneficial inflation, which devalued Crown debt by two-thirds, and in so doing relieved the need for high taxation. France was left with a viable economy that allowed the monarchy to survive for a few more generations. The cost was to those who had held government debt in the form of bonds, annuities, or Mississippi shares, who found themselves ruined. His manipulation of finance had two further significant consequences: on the one hand profound distrust that made a state bank impossible to establish before the revolution; on the other, increasing demand for transparency. There were no published royal accounts until Necker's Comte Rendu Comte Rendu of 1781, which became a best-seller as a result. In creating a financial boom and making shares so widely accessible, Law had sown a seed of financial equality that the ancien regime could never entirely obliterate. Significantly, banknotes next returned to France eighty years later, when paper money known as of 1781, which became a best-seller as a result. In creating a financial boom and making shares so widely accessible, Law had sown a seed of financial equality that the ancien regime could never entirely obliterate. Significantly, banknotes next returned to France eighty years later, when paper money known as a.s.signats a.s.signats, based on the value of land-a scheme that echoed one of Law's earliest proposals-was issued by the French National a.s.sembly at the beginning of the revolution.

In hindsight Law captivates as much for his flaws and naivete as for his flashy brilliance. It was not always so. For years his failure overshadowed his vision. Great eighteenth-century economists such as Adam Smith and Sir James Steuart acknowledged his significance but frowned on his actions. Smith called his system "the most extravagant project both of banking and stock-jobbing that perhaps the world ever saw," and Steuart felt "the best way to guard against it [being repeated], is to be apprised of the delusion of it, and to see through the springs and motives by which the Mississippi bank was conducted." The eighteenth-century philosopher and essayist David Hume must have learned something from Law's mistakes when he wrote, "The greater or less plenty of money is of no consequence; since the prices of commodities are always proportioned to the plenty of money, and a crown in Harry VII's time served the same purpose as a pound does at present." Suspicion reverberated throughout the next two centuries. The nineteenth-century writer Charles Mackay included a vivid account of Law's life in a volume ent.i.tled Memoirs of Extraordinary Popular Delusions Memoirs of Extraordinary Popular Delusions, in which he figures alongside chapters on Tulipmania and duels. Karl Marx saw him slightly more sympathetically as "the pleasant character mixture of swindler and prophet."

In this century infamy has turned mainly to neglect, even if, in the specialist world of economic historians, respect for him has increased as time has pa.s.sed. Norman Angell, author of the famous The Story of Money, The Story of Money, published in 1930, described him "juggle[ing] like a master magician with shares, premiums, instalments and issues." J. K. Galbraith, emeritus professor of economics at Harvard, writing in the 1970s, said that Law "showed, perhaps better than any man since, what a bank could do with and to money," while his most recent and detailed a.n.a.lyst, Professor Antoin Murphy, called him an "effervescent spirit who made quantum leaps in economic theory." Beyond such specialist realms, Law, once one of the world's most famous and powerful figures, is largely forgotten. published in 1930, described him "juggle[ing] like a master magician with shares, premiums, instalments and issues." J. K. Galbraith, emeritus professor of economics at Harvard, writing in the 1970s, said that Law "showed, perhaps better than any man since, what a bank could do with and to money," while his most recent and detailed a.n.a.lyst, Professor Antoin Murphy, called him an "effervescent spirit who made quantum leaps in economic theory." Beyond such specialist realms, Law, once one of the world's most famous and powerful figures, is largely forgotten.

In an age of innovation, when one man's vision and energy could surmount any constraint and change the world, John Law did. He was what would colloquially be called a mover and shaker. Many of his ideas were avant-garde. The idea of conglomerate corporations with multiple interests and sources of income is as ordinary today as it was extraordinary then. The marketing and propaganda techniques he employed were similarly innovative then but familiar now. The realization that art represented not only status but money was also exceptional for its time. Most of all, in conceiving a paper currency that operated independently of gold, he antic.i.p.ated a development that is now taken for granted.

Often after time the message in past events is more easily read. Unraveling Law's story three centuries on, one cannot help but feel a sense of plus ca change plus c'est la meme chose plus ca change plus c'est la meme chose-nothing really has changed. Today paper and plastic are unthinkingly accepted as valuable, and at the press of a b.u.t.ton millions of dollars move around the world. But time's pa.s.sage has seemingly brought little in the way of additional invulnerability to the giant inst.i.tutions public investment has created. Even with regulators, central bank reserves, and eons of experience, stock exchanges, banks, and economies still collapse and threaten the stability of those elsewhere. The economic cycle, which our forebears probably thought of as the wheel of fortune, has in recent history resulted in the meteoric rise and collapse of the Asian economies, Russia's financial breakdown, and uncertainty surrounding the fate of China and Brazil. In the world of banking and finance the specter of financial calamity looms as intimidatingly as ever it did to investors in Regency Paris or in Georgian London. Maverick financiers can still rock governments, financial landslides on telephone-number scale still happen. The financial chicanery of junk bond guru Michael Milken dominated the speculative world of the 1980s during the boom years, but the market in junk bonds collapsed after his conviction and imprisonment. Under the direction of the Federal Reserve, the ill-fated Long-Term Capital Management was bailed out by leading investment banks in order to avert losses estimated at $14 trillion-more than enough to destabilize markets throughout the world.

Similarly, speculation contagion still periodically infects vast swaths of society. As in the days of the Mississippi, equities are no longer an elitist investment. Nowadays anyone with money invested in a pension, a tax-exempt savings plan, a mutual fund, or a savings-and-loan account is likely to have a vested interest in the stock market, and to feel, directly or indirectly, the effect of huge spikes and falls in stock prices. Recently, speculation fervor has fantastically bubbled Nasdaq Internet company shares.

Most amazingly of all, the driving force that causes the swell and burst of bubbles seems little altered. Within our high-tech information-technology universe, the hunch remains as much a part of the pundit's repertoire as ever, the herd instinct if anything more able to effect terrifying vacillations in markets. Monetary utopia, John Law would be amazed to see, remains as elusive as ever.

ACKNOWLEDGMENTS.

I would like to thank the following friends and experts, many of whom have patiently shared their knowledge and read and commented on early drafts of the book: Nicholas Carn of Alliance Capital; Antoin Murphy of Trinity College, Dublin; David Bowen; Virginia Hewitt, Lorna Goldsmith and Dr. Barrie Cook in the Coins and Medals Department at the British Museum; Dr. Francis Harris, Department of Ma.n.u.scripts at the British Library; Professor Walter Eltis, Exeter College, Oxford; Sophie Angonin, CICL; Guy Holborn, Librarian, Lincoln's Inn; Gavin Kealey QC; Christine Battle; Al Senter; staff at the Bank of England Museum, especially John Keyworth; Amanda Straw, curator of the Knowsley Estate; Jacob Simon at the National Portrait Gallery; stock market historian David Schwartz; Peter Furtado at History Today History Today; Dr. Munro Price, Department of European Studies, University of Bradford; Dr. Peter Campbell, Department of European Studies, University of Suss.e.x; staff at the Bibliotheque Mejanes, Bibliotheque Nationale, Public Record Office, West Hill Library, the London Library, the British Library, the Heinz archive at the National Portrait Gallery; my enthusiastic and encouraging publishers at Simon & Schuster, especially Airie Dekidjiev; literary agent sans pareil Chris Little; and my husband Paul Gleeson, whose career in the financial markets helped spark my fascination with John Law in the first place.

SOURCES.

Law has long attracted the attention of biographers and economic historians. Many of his most important writings have been published by Paul Harsin in Les Oeuvres completes de John Law. Les Oeuvres completes de John Law. The earliest biography of John Law was published in 1721 by W. Gray; the first detailed biography written after his death was that by J. P. Wood, written in 1824. Law's financial activities were recounted by several eighteenth-century economists, including Marmont du Hautchamp, Sir James Steuart, Du Tot, and others. The Regency period in France, John Law's career, and the social effect of his policies are vividly doc.u.mented in the numerous journals, letters, and diaries of the times, including the letters of the regent's mother Charlotte Elizabeth, the Princess Palatine; and the journals and memoirs of the Duc de Saint-Simon, Barbier, Buvat, d'Argenson, and Marais. The effect of his policies is also richly reflected in diplomatic correspondence preserved in the Public Record Office. The most poignant record of Law's escape from France and final years in exile are the letters contained in his letter book at the Bibliotheque Mejanes, Aix-en-Provence. The earliest biography of John Law was published in 1721 by W. Gray; the first detailed biography written after his death was that by J. P. Wood, written in 1824. Law's financial activities were recounted by several eighteenth-century economists, including Marmont du Hautchamp, Sir James Steuart, Du Tot, and others. The Regency period in France, John Law's career, and the social effect of his policies are vividly doc.u.mented in the numerous journals, letters, and diaries of the times, including the letters of the regent's mother Charlotte Elizabeth, the Princess Palatine; and the journals and memoirs of the Duc de Saint-Simon, Barbier, Buvat, d'Argenson, and Marais. The effect of his policies is also richly reflected in diplomatic correspondence preserved in the Public Record Office. The most poignant record of Law's escape from France and final years in exile are the letters contained in his letter book at the Bibliotheque Mejanes, Aix-en-Provence.

As this is intended as a book for the general reader I have deliberately simplified the sometimes mind-bogglingly complex financial details, and kept numbers to a minimum. The figures quoted in the text are mostly taken from those published in Professor Antoin Murphy's recent scholarly a.n.a.lysis of Law's economic theories and policies. The following notes detail the chief sources for the narrative. Fuller details of these and other relevant publications are listed in the bibliography that follows.

CHAPTER 1: A Man Apart 1: A Man Apart.

Law's gambling activities in Paris: du Hautchamp, Histoire du systeme. Histoire du systeme.

Rules of faro: Wykes, Gambling. Gambling.

D'Argenson's personality: Saint-Simon, Memoirs. Memoirs.

Expulsion from Paris because of paper-money scheme and Torcy's interest in Hamilton, John Law of Lauriston. John Law of Lauriston.

CHAPTER 2: Gilded Youth 2: Gilded Youth.

Family background: Fairley, Lauriston Castle; Lauriston Castle; Wood, Wood, Life of John Law of Lauriston. Life of John Law of Lauriston.

Edinburgh: McKean, Edinburgh; Edinburgh; Defoe, Defoe, Journey Through the Whole Island of Great Britain. Journey Through the Whole Island of Great Britain.

Goldsmith banking: Chandler, Four Centuries of Banking; Four Centuries of Banking; Williams, Williams, Money: Money: A History; A History; Galbraith, Galbraith, Money: Whence It Came, Where It Went. Money: Whence It Came, Where It Went.

Lithotomy operations: Lister, A Journey to Paris in the Year 1698; A Journey to Paris in the Year 1698; Pepys, Pepys, Diary. Diary.

Description of Law: du Hautchamp.

Law's professed dislike of work: ms. Mejanes Lockhart's reminiscence of Law: Lockhart: Memoirs. Memoirs.

Journey to London: Hibbert, The English. The English.

CHAPTER 3: London 3: London.