Law’s paper wealth had saved France.īut his theory neglected the impact of continued money printing had on supply and on inflation. Riches were created overnight and the word “millionaire” was born. When one share issue was oversubscribed, another was issued at twice, the ten times, the original price.
Shares in the company were in great demand as aristocracy and workers alike beat a path to Law’s door for their piece of the action. His most ambitious project, the Mississippi Company, created a total trade monopoly and eventually combined all of France’s worldwide assets and sovereign debt into one entity. John Law went on to assume the status of de facto ruler of France as controller of its finances. The public bought the scheme and began trading the banknotes at a premium. The metal-based currency circulating in France was “restrictive”, he claimed, and his new bank notes could be backed by gold coins frequently “clipped”, or shaved off, by authorities. Law proposed to expand the money supply with bank notes issued by his Banque Generale. While Law’s proposals to issue paper currency backed by nation’s land fell on deaf ears in Scotland and Saxony, the new ruler of France was desperate for a solution to the fiscal nightmare thrust upon him. The Duke had met John Law years earlier, before Law’s exile from Paris, and was fascinated with his mathematical mind and grasp of the new science of probability. Upon Louis’ death, the Duke of Orleans assumed the powers of the throne as the new king was only five. Tax revenues were a meager 142 million livres, a 20:1 discrepancy. In the process, he had racked up a tab of three billion livers. Louis had spent lavishly on his palace at Versailles, and fought numerous wars across Europe. The year is 1720 and the bad boy of finance and mathematics (he managed to escape a prison sentence after killing a romantic rival in a duel) was making off for Belgium with an enormous diamond – his last worldly possession after personally bankrupting France.įive years earlier in 1715, Louix XIV, the “Sun King” ordained by God to rule the kingdom, passed away. John Law was lucky to escape with his life.
0 kommentar(er)
