Modern history



Cy git cet Ecossais célèbre,

Ce calculateur sans égal,

Qui par les règles de l’algèbre,

A mis la France à l’hôpital.

Here lies this famous Scot,

This peerless calculator,

Who by the rules of algebra

Has put France in the poorhouse.


Paris (1720)

AMID THE MURKY INTERIOR OF JONATHAN’ S COFFEE-house in London’s Royal Exchange people gather to gossip, intrigue, bargain, or perhaps to gape at a new print strung on the wall before them. The image is profoundly disturbing. A billowing curtain is drawn back by Harlequin and Scaramouch—two well-known figures from the commedia dell’arte—to reveal hell on earth, the rue Quincampoix, in which a heaving tangle of anxious investors, arms flailing, eyes wild, mouths beseeching, wave serpentine banknotes overhead. Amid the mêlée, oblivious to the madness, three men, representing English, French, and German investors, stand complacently on a dais of paper. A supplicant figure—John Law—squats obscenely at their feet and allows them to pour coins in his gaping mouth, while from bared buttocks he excretes paper notes that are snatched by one of the frenzied figures in the mire below. In the foreground a caged figure of Mercury—symbolic of commercial prosperity and, in this case, of ruined speculators—weeps as a man in front performs various gambling tricks. The message, of venality, folly, degradation, chaos, is explicit and sickening—deliberately so. But by the time this engraving, from a famous series published in Holland in 1720 entitled The Mirror of Folly,was printed, disseminated, grasped, and gawped at in scores of similarly unsavory interiors, it was far from unique.

Anti-Law venom enveloped Europe. There were scores more equally scathing compositions, mostly dwelling on the imagery of windmills, whirligigs, bubbles, bladders, cabbages, corruption, folly, and cruelty. Elsewhere satire surfaced in hundreds of ferocious poems, medals, pamphlets, plays, novels, and playing cards that circulated in the cabarets, taverns, coffeehouses, and meeting places of every town and city in Europe. Ironically, a series of silver coins was produced in Gotha, immortalizing Law in the very substance he had tried so hard to banish.

Law could avert his gaze from such vitriol, but he could not ignore its existence, nor that it sprang from a crystallization of public hatred. For a man whose intentions had always been benevolent, who had cherished dreams of bringing contentment to all, mass condemnation was deeply wounding. His behavior became increasingly erratic. One day he was full of the old bravura, attending a concert at the home of the financier Crozat with the regent and Katherine, convincing others, and himself, that the economy was improving, that he was in control, and telling friends that “what has been his is still, and that he would always be the master of all the money in Europe.” The next he was beset with doubt, unusually short-tempered and high-handed with members of the council, introducing ever harsher legislation to bring the system back on course. Occasionally, as if overburdened by responsibility, he withdrew totally. Remembering such a day spent in solitude in his apartment at the Palais Royal, when members of the royal family were out of town and staff had been instructed to admit no one, he wrote, “The idea came to me then, that one would be less unhappy to be enclosed in a town infested, like Marseille, than to be in Paris overwhelmed with people—as I usually was.”

He threw himself frenetically into work. Six hundred workmen were employed to build a new mint—presumably in the expectation that by the time it was complete there would be metal enough to make coin. The share market, which had reopened in the Place Vendôme, was now moved to the gardens of the Hôtel de Soissons, which was renamed the Bourse. The official opening took place on August 1, to a musical accompaniment of kettledrums and trumpets. As at some latter-day Field of the Cloth of Gold, the dealers, food sellers, jugglers, fire eaters, tricksters, prostitutes, pickpockets, and throngs of investors glided through a forest of streamered pavilions, embodying not royal puissance but the waning power of paper.

To bolster his reputation he published an anonymous defense of his system. When he came to France, he said, the country had been 2 billion livres in debt. Now, thanks to the Mississippi Company and other reforms, France was far stronger financially. But readers of this slickly argued pamphlet were infuriated by the fact that it skirted the current economic problems. Inflation, the fall in value of banknotes and shares, the shortage of coin, and the damage to investors were completely ignored. In short, said Pulteney, it was “very ill-timed as it pretends to show that people are richer and happier, while they complain with reason of want and ruin.”

Law meanwhile turned quietly for help to the one man whose financial acumen he deeply respected: his old friend Richard Cantillon. Since Cantillon had been banished from France under threat of incarceration in the Bastille, the two men had patched up their differences, and Law had been using Cantillon’s brokering services in Amsterdam to buy copper, probably with the intention of minting it into coins to help the ailing French economy. Now, with his system crumbling, Law tempted Cantillon, “with great offers of preferment,” to come and help him sort out the financial morass. The precise nature of the carrot Law tendered remains mysterious, but it was alluring enough for Cantillon to weigh it up carefully and ask his friends’ advice. Eventually, realizing the precariousness of Law’s situation, he refused. Law was not at first put off by the rebuff. More persuasive letters were dispatched to Holland, but when Cantillon declined to change his mind, Law’s amiability changed to an overtly threatening tone: “If he [Cantillon] does not comply with the offers they will not pay some bills to the value of £20,000 which he had drawn for copper he bought in Holland by commission for the company and has sent here,” reported Pulteney. It is a measure of the pressure Law was under in France that he felt impelled to act with such uncustomary lack of scruple. In fact, menacing a wily bird like Cantillon was self-defeating—if anything, it only made him even more determined to keep well away.

Law was rapidly becoming an embarrassment Orléans could ill-afford. He too was tainted by Law’s bad press and he felt uncharacteristically sensitive to the deluge of criticism and malice. Death threats and accusations of incest and of murder had been directed against him; his mother had been threatened and advised to poison her own son. In the past he had shrugged off the slanders. Now they began to hit home. The anonymous publication of one particularly vicious play riled him so much that he offered a reward of 100,000 livres for the name of the culprit. The only response this elicited was another cheeky couplet:

Tu promets beaucoup, O Régent.

Est-ce en papier ou en argent?

You promise much, O Regent.

Is it in paper or in silver?

Real economic recovery, the regent now felt, would never take place while the people were determined that Law and his paper system were untrustworthy, and while the Parlement, the financiers, and the wealthy elite were so determined to oppose him. Behind the scenes he began to make discreet overtures for assistance, appealing to private bankers and financiers in the hope they would offer his stranded regime hard money. Their response was not what he hoped. Though keen to ingratiate themselves with the Crown, they were aware that any loan might help save Law. They volunteered no tangible assistance, only the well-worn advice that all the problems would be swiftly solved with a return to the old metallic system of money and the abandonment of paper credit. The seed that had been scattered many times before now began to take root.

On September 15 Law’s career plunged to new depths with the publication of one of his most detested edicts. “The pen falls from one’s hands and words fail to explain the measures of this decree, which withdrew all the horrors of the dying system. Poison was in its tail,” wrote the lawyer Marais as he mulled over the new regulations, which stipulated that high-denomination notes would soon cease to be legal currency; that, with immediate effect, all banknotes could only be used if 50 percent of the payment was in coin; that bank accounts, compulsory since August, were to be reduced to a quarter of their present value, and shares were to be pegged at 2,000 livres. In sum, said Marais, painfully picking over each clause, it was a bankruptcy of three-quarters of the bank and five-sixths of the Mississippi Company.

Economic historians still quibble over whether the edict was in fact the brainchild of Law or whether, as seems likely, it was the outcome of the regent’s consultations with the private financiers. What is not in doubt is that the public perceived the ideas as Law’s and blamed him for their suffering. “The desolation,” wrote Marais, “is in every family. They have to pay for half of everything in coins and there aren’t any; and moreover everything is going up in price instead of coming down.”

Soaring inflation was worsened by profiteering merchants and members of the aristocracy who formed cartels, stockpiled staples, and then charged extortionate rates for them. Some of the worst offenders were Law’s supporters: “The distress people are under by the excessive prices of all things is very much increased by certain monopolies which some of the great favourites of the system have got; the Maréchal d’Estrées has the coffee, Mr. William Law the lead, others have the sugars, the Duc de la Force has the wax and tallow,” wrote Pulteney. Law must have known that racketeering was going on but, terrified to risk losing his few remaining allies, turned a blind eye. The regent was similarly partisan, volubly intolerant of outsiders’ scams, mute when it came to his favorites’ ruses. When a deputation of merchants came to grumble about the reduction of their bank accounts, the regent denounced them coldly as charlatans who had charged exorbitant sums for the past year. He told one scornfully, “My friend, are you so stupid as not to understand that this quarter you have is worth more than the total?” The man replied that his business would be destroyed, to which Orléans answered, “So much the better, I am delighted.”

The edict was painful not only to French citizens but also to countless foreigners who traded with France. There were deputations from merchants of Savoy, Piedmont, and Brussels, who supplied vast quantities of silk and lace and, having been paid in French banknotes of diminishing value and desirability, were particularly badly affected. For English investors, developments were even more tragic. London was by now reeling from the effects of the collapse in South Sea shares which, from a June high of £1,050, had plummeted at the end of August, and by mid-September were trading at £380. Investors who had borrowed heavily to invest in South Sea stock at high prices, expecting that the value would continue to rise, were now forced to sell other investments to repay outstanding loans. European markets in France, Holland, and elsewhere buckled from the effect of the London stock-market collapse.

Throughout the tangle of confusion, anger, and distress, Law and his family were viewed ever more stonily. The oncefeted celebrities who had danced at Versailles and had their hands kissed by international dignitaries now lived in the perpetual shadow of danger. The lawyer Barbier, strolling in the Étoile, saw Law’s wife and ten-year-old daughter Kate returning from the fair in Bezons in a carriage drawn by six horses. Law’s livery was recognized and the carriage was surrounded by a mob screeching obscenities at Law’s refusal to pay out for banknotes and pelting the women with manure and stones. Before the coachman could whip up the terrified horses and drive away, Kate was struck by a missile and injured.

In the malicious ferment anyone who vaguely resembled a member of the Law family could find themselves in grave peril. Madame de Torcy, wife of the foreign secretary, was mistaken for Katherine and half drowned in a pond before she convinced her assailants that she was not the person they believed her to be. During an argument between two coachmen over right of way in the rue St. Antoine, one untruthfully alleged that the passenger inside the other’s coach was Law, knowing that this would cause a distraction in which he might triumph. Within minutes a mob had descended and attacked the innocent passenger, who escaped with his life by sprinting for sanctuary to a nearby church.

There is frustratingly little to tell us of how Katherine reacted to the dramatic reversal in Law’s fortune. We can only surmise, from the affectionate reassurances that Law later wrote to her, that she remained supportive but increasingly frightened by the volatile political situation that threatened her family’s safety. After the scare with her daughter she rarely went out, and then often disguised as a pregnant woman—a significant come-down for a woman who had always been noted for her elegance. Social calls were not only hazardous but could often be humiliating. Growing numbers of doors closed in her face. When she visited the Duchesse de Lauzun, an aging courtesan famous for her sarcasm, she was callously mocked. “My God, Madame, you have done us a great favor with this visit. We know the risks you run exposing yourself to a populace who is mutinying against you for no reason.” A few friends remained steadfast. The Duc de Bourbon continued to offer the family refuge at his country residence in St. Maur when it was feared the mob might invade their home. The artist Rosalba Carriera still visited long after most fashionable callers had left and, unlike her relative Pellegrini, who had been part paid for the ceiling of the bank but wanted more, Rosalba never hounded the Laws for money.

The final decisive blow to Law’s debilitated empire came on October 10 with another stinging, but by this stage predictable, ruling. In view of the still depreciated paper-money system, in which no one any longer had faith, from November 1 France would depend once again entirely upon metal coins. Holders of banknotes were obliged to convert them into annuities. Law’s rivals had finally won over the regent. On hearing the news Voltaire remarked sardonically that paper was now back to its intrinsic value, but Marais’s response was more emotional: “Thus ends the system of paper money, which has enriched a thousand beggars and impoverished a hundred thousand honest men,” he wrote. When the bank finally closed its doors on November 27, few mourned its passing.

Mississippi shareholders shuddered at news of the bank’s impending closure, and Law’s newly ascendant rivals were swift to exact vengeance against those who had earlier triumphed. Profit as a result of speculation was now deemed suspect. The sea change was heralded in mid-October with a menacing new ruling that warned of an investigation to root out anyone who had not “acted in good faith,” or who enjoyed an opulence that was “odious to the public and contrary to the good of the State.” Especially offensive to the new lawmakers were less privileged investors who had prospered—the “thousand beggars” to whom Marais had referred. The balance would now be redressed: the victors would be victimized.

So that the profiteers could be identified, investors were ordered to bring their shares to the offices of the now-defunct bank to register them; any unregistered certificates would be worthless. If no evidence of misdealing was discovered, shares would be returned after a week. Those deemed guilty of illicit moneymaking would be penalized by confiscation of large portions of their property. The process was little more than an arbitrary witch hunt.

While nemesis was thus zealously pursued, the Bourse, scathingly condemned as “a riotous assembly,” was shut down. When news of the impending closure broke, Marais visited the market. The reaction, he recalled, was one of bewilderment and utter devastation. “Faces changed. It seemed a defeat, as if a battle had been lost.” Along with thousands of others he took his shares to the bank and was alarmed at the lengthy and apparently chaotic tangle of red tape. After endless form filling and rubber stamping, he wrote, “You take away only a small unsigned slip, on which is your name, the number of your shares and the page in the register. . . . There was much outcry at this procedure, which was not mentioned in the decree, but finally all the shareholders had to go through it; it was suffocating in there and no one knows what will happen.”

Many were so fearful of investigation that they packed their bags with as much portable wealth as they could cram in and made immediate preparations to leave. At least four senior members of Law’s staff absconded, doubtless fearing that they would be subjected to extra-rigorous scrutiny. Vernezobre, one of the head clerks of the bank, fled to Holland, taking several millions belonging to him and others. Angelini, Law’s Italian secretary, appeared in mourning and informed Law that his father had died and begged leave to go to Italy to collect his inheritance. He never returned, spending his remaining years living in comfort on the income from money he had invested in buying property in the Roman campagna.

Though precipitous, this descent did not mark the end of the Mississippi Company. The anti-Law cabal that had striven for months to demolish Law’s conglomerate clamored to cherry-pick its prime assets. The lucrative rights to revenues from the mint and taxes were their first targets. Meanwhile the company, in common with every other business in the land, was short of cash. To repay various loans and continue to trade, money was urgently required and further drastic action was deemed necessary. At the end of November a new order ruled that every shareholder would be required compulsorily to lend the company 150 livres per share, two-thirds of this amount to be paid in coin, one-third in paper, which was still in limited circulation, despite legislation, because of the shortage of coin. The shares of anyone failing to pay the levy would be annulled. Again, this was news of the worst kind for investors. “It is believed that very many will not be able to pay the sums charged on them by this arrêt, having their whole subsistence in actions; and that many who are able to pay, will choose rather to sacrifice their actions,” wrote Pulteney gloomily.

Swamped by suspicion and blame, Law remained isolated and melancholy in his home, with only Katherine to alleviate his distress. Even she, however, could not distract him from the fact that now that the bank had closed and the Mississippi Company was foundering, his position was no longer tenable. He tendered his resignation and asked for permission to leave the country. The regent, playing for time, ignored him. Once again Law was a man condemned, waiting for sentence to be pronounced.

With Katherine’s help he passed his time in trying to regulate his personal financial affairs. During the past weeks these had become hopelessly entwined with those of the company. Law was still a soft touch, and whenever an investor confronted him with a hard-luck story, he invariably offered to help. Many of the financial problems that haunted him in years to come arose from the personal bills he issued at this time to impoverished investors to reimburse them for their losses.

Outwardly he could still, where necessary, summon something of his old élan. When told of his enemies’ rapprochement with the regent, he responded, “The Regent only follows this course to amuse himself, he takes pleasure from it.” Marais watched when Law ventured out to oversee the registration of shares. He arrived at the Company’s offices on November 21 amid the crowds who were depositing their shares. The front seemed convincing: “He was called a thief, a charlatan, a rascal. He carried his head as high as possible, and everyone wanted him to hang it low.” But ten days later, in early December, his spirit was crushed again. There were signs that the Parlement’s return loomed closer and that, as Law had feared, their agreement to cooperate was based on the understanding that he would be hunted down. Yielding to pressure from those who wanted to see Law punished, the regent continued to ignore his repeated, and increasingly urgent, requests to be allowed to leave the country. By December 10 it was murmured that Law had been arrested, or dismissed and banished to his estate at Effiat. Marais, keeping closer watch, knew that he had still not been given permission to leave the capital but saw the strain becoming clearly visible: “He is in a state of great despondency and dismay. A tremendous storm is brewing, and we will soon see the results. Everyone is getting ready to torture him, and even in the bank there is much scandalous talk against him and the Regent.”

With tensions escalating hourly, Law again asked for an audience with the regent, only to be told that he was too ill to see him, an excuse he read as meaning that dismissal and arrest were imminent. A day later the movement to bring down Law gathered still deadlier momentum: “There is no doubt that this time he will succumb, the party is well made,” said Marais, numbering not only the usual confection of the Parlement, financiers, and courtiers against Law, but also Madame de Parabère, the regent’s estranged mistress, who had said she would return to his bed only if Law was ousted. According to Marais, the regent, unable to resist such a challenge, was running after her “like a child.” Faced with such massed opposition, even Law’s most staunch supporter, the Duc de Bourbon, conceded that Law would have to go. The only remaining question was how he should be disposed of and, more crucially, whether his life could be saved.

Pressed by the duc, Orléans acknowledged at last that he would have to move, and quickly. Law was finally granted his audience and suggested that Councillor Le Pelletier de la Houssaye should be promoted to the position of controller general of finance, to help steer the country out of the economic doldrums. The regent was unconvinced, reportedly telling the council, “He did not see among the French anyone who had enough intelligence and insight to succeed him [Law] in the position with a better chance of success.” De la Houssaye agreed, reluctantly, to take office but not while Law remained in Paris, and recommended that he be sent to the Bastille. Orléans ignored this suggestion and instructed Law to prepare to leave. The British diplomat Sutton noted the sudden flurry of activity: “He [Law] goes to see those with whom he has business, he receives people at his home with as much if not more freedom than before. He works on settling his accounts, he gives all the explanations asked of him.”

When the new production of Lully’s opera Thésée opened on December 12, there was general astonishment as the assembled beau monde realized that the Duc de la Force’s party included John Law, Katherine, and their children (the children, one writer conceded, were “fairly handsomely made”). As far as observers were concerned, to appear so brazenly in public at such a moment of crisis exemplified “English impudence playing his game.” Law the suave, cocksure gambler had apparently returned.

In fact, this was Law’s farewell to Paris. Earlier that day he had had a final audience with the regent. The meeting had been highly charged. “I confess,” Law said, “I have committed many faults. I committed them because I am a man, and all men are liable to error; but I declare to you most solemnly that none of them proceeded from wicked or dishonest motives.” He left Paris with his son John on December 14, heading for his country estate Guermande, near Brie, one of the string of magnificent properties he had acquired but had rarely had time to visit. He planned to wait here for a few days until passports arrived allowing him to leave the country. Katherine and Kate stayed on in Paris, to settle outstanding debts, but he expected them to follow soon. Two days later the Parlement was recalled and the hounding of Law and his family began in earnest.

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