“You see 800 new carriages in Paris, and the families who have gotten rich buy new silverware, new furniture, new clothes and new equipage, so that there is a huge trade here,” wrote Daniel Defoe about the extraordinary conditions in virtually bankrupt France September 1719. The sudden boom attracted at least 200,000 people to Paris, and even the nine-year-old King Louis XV, whom Philippe Duc d’Orléans briskly represented as regent, was delighted with the new term “millionaire”. More and more of this new category of people now resided in Paris, where the lavish “Sun King” Louis XIV had died shortly before in 1715, leaving behind a fabulous national debt of almost three billion livres. All attempts by the regent to avert the impending national bankruptcy met with little success.
But then the Scot John Law of Lauriston came into play. The player and dandy known throughout Europe, who was sentenced to death in England after a duel, managed to escape from King’s Bench prison by bribery and under anesthesia by the guards. He convinced his friend d’Orléans of what at first glance appeared to be a brilliant idea: the more money there is, the more the economy is booming, from which the state easily benefits. Law had already stated this in 1705 in his “Considerations on Money and Trade, Including a Proposal for the Raising of Money for the Nation”. After his escape from England he had unsuccessfully traversed Europe from gaming table to gaming table and from one princely court to another with this idea. The basic idea: out of the coin trap of gold and silver, with paper money ideally covered by land. Paper money in the form of personal bonds had already existed on a small scale, but Law had tons of decent banknotes printed around the clock after d’Orléans had allowed him to found a “Banque Général”, which in 1718 became the powerful state bank ” Banque Royal “became.
“But the bank is not the only and greatest of my ideas. I will produce a work that will astonish all of Europe,” wrote Law in 1715 in a letter to the regent. He promised to pay off any national debt and to generate incredible fortunes from the Crown’s American possessions in the Mississippi Delta – half of America at the time. To this end, Law founded the “Compagnie D’Occident”, which led to lively stock trading. From an initial 500 livres, the share price rose to more than 9,000 in a very short time. Law was suddenly the richest man in the world. But the speculation on fabulous profits in the swampy underground of Louisiana – that is how the entire French colony of America was originally named after Louis XIV. In May 1720 the country was flooded again with paper money. But when he halved the value of the Mississippi Company’s shares to just 5,000 in the same year, people suspected evil. Based on a rumor alone that at least the ten-livre notes would be exchanged for coins, 15,000 people gathered in front of the bank, smashed the windows and trampled participants to death in the riots that lasted several days when the exchange did not take place.
From financial genius and head of an early mega-corporation, Law became a scapegoat overnight. However, his life as the son of a goldsmith in Edinburgh, who, as is customary in his branch, was also a moneylender and left him with an adequate legacy, had prepared him perfectly for this. Just like his triumphs as a banker in the Faro card game, which was widespread at the time, in which he had mastered all the tricks. He saw Faro as his real profession so much that he even had his own tokens made. At the gaming table he also learned to master the secrets of probability calculus and to always act with extraordinary persuasiveness. Unfounded promises suddenly sounded like brilliant visions from his mouth.
However, his playing nature ultimately seduced him into boundless arrogance. If he had simply stopped after the invention of paper money to counter the needs of the French crown, he might have gone down in the history of money as a great economic visionary. But his “notes”, which had meant wealth, were simply burned in 1721. At a time when one is thinking of the abolition of cash in favor of purely electronic transactions, it may be the forefather of the last secrets of abstraction Money, which is ultimately just an idea in a gigantic game of chance.
Although that is perhaps too much of an honor for the ruthless and elegant sleight of hand that he was. After his deep fall, Law just carried on as he did before his memorable first encounter with the Duc d’Orléans. He returned to the gaming tables of Europe, the majority and most splendid of which were in Venice. He was still considered a proven financial expert with the latest ideas, and he never stopped making new suggestions to Philippe von Orléans as to how the state finances could be saved – again with coins. After all, the inflation that triggered the brief bloom of slip money had reduced national debt by two-thirds. In Venice, until his death in 1729, he was surrounded by an entourage of chronically desperate admirers who hoped to get hold of secret papers from his heyday and understand why he was so certain that his new trade in works of art would one day become a profitable line of business. They played his speculator game Faro with him in the palaces of the living vision of constant doom that Venice was and is.