lawyer

John Law (usually pronounced Jean Lass by contemporary French people) (baptised 21 April 1671 – died 21 March 1729) was a Scottish economist who believed that money was only a means of exchange that did not constitute wealth in itself and that national wealth depended on trade. He was responsible for the Mississippi Bubble and a chaotic economic collapse in France.

Paper Money endorsed by John Law, 1718

Law urged the establishment of a national bank to create and increase instruments of credit and the issue of banknotes backed by land, gold. or silver. The first manifestation of Law's system came when he had returned to his homeland and contributed to the debates leading to the Treaty of Union 1707 with a text entitled Money and Trade Consider'd with a Proposal for Supplying the Nation with Money (1705). After the Union of the Scottish and English parliaments, Law's legal situation obliged him to go into exile again.

He spent ten years moving between France and the Netherlands. dealing in financial speculations, before the problems of the French economy presented the opportunity to put his system into practice.

He had the idea of abolishing minor monopolies and private farming of taxes and creating a bank for national finance and a state company for commerce and ultimately exclude all private revenue. This would create a huge monopoly of finance and trade run by the state, and its profits would pay off the national debt. The French Conseil des Finances. merchants, and financiers objected to this plan.

The wars waged by Louis XIV left the country completely wasted, both economically and financially. And the resultant shortage of precious metals led to a shortage of coins in circulation, which in turn limited the production of new coins. It was in this context that the regent, Philippe d'Orleans. appointed John Law, as Controller General of Finances.

As Controller General, Law instituted many beneficial reforms (some of which had lasting effect, others of which were soon abolished). He tried to break up large land-holdings to benefit the peasants; he abolished internal road and canal tolls; he encouraged the building of new roads, the starting of new industries (even importing artisans but mostly by offering low-interest loans), and the revival of overseas commerce—and indeed industry increased 60% in two years, and French ships engaged in export went from sixteen to three hundred. [ 1 ]

Since, following the devastating War of the Spanish Succession. France's economy was stagnant and her national debt was crippling, Law proposed to stimulate industry by replacing gold with paper credit and then increasing the supply of credit, and to reduce the national debt by replacing it with shares in economic ventures. [ 2 ] Though they ultimately failed, his theories were 300 years ahead of their time and "captured many key conceptual points which are very much a part of modern monetary theorizing". [ 3 ]

Contemporary political cartoon of Law from Het Groote Tafereel der Dwaasheid (1720); text reads "Law loquitur. The wind is my treasure, cushion, and foundation. Master of the wind, I am master of life, and my wind monopoly becomes straightway the object of idolatry. Less rapidly turn the sails of the windmill on my head than the price of shares in my foolish enterprises."