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Appleton's Cyclopedia of American Biography, edited by James Grant Wilson, John Fiske and Stanley L. Klos. Six volumes, New York: D. Appleton and Company, 1887-1889 and 1999. Virtualology.com warns that these 19th Century biographies contain errors and bias. We rely on volunteers to edit the historic biographies on a continual basis. If you would like to edit this biography please submit a rewritten biography in text form . If acceptable, the new biography will be published above the 19th Century Appleton's Cyclopedia Biography citing the volunteer editor





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John Law

LAW, John, Scotch financier, born in Edinburgh, Scotland, in April, 1671; died in Venice, Italy, 21 May, 1729. He inherited the estate of Lauriston, applied himself to abstruse studies, especially finance, and at the same time became skilled in games of dexterity and hazard. After squandering his property he went to London, and gained a footing in fashionable society, but killed an antagonist in a duel in 1695, and escaped to France after sentence of death had been pronounced. He investigated the financial methods of Jean Baptiste Colbert, spent some time in Holland studying the mercantile system of that republic, and about 1700 returned to Scotland and proposed a system of credit-banking and paper money for the development of the agriculture and industry of the court-try. His plan was presented in a publication entitled "Money and Trade Considered, with a Proposal for Supplying the Nation with Money" (Edinburgh, 1705). The court party favored his scheme, but parliament passed a resolution against the establishment of any kind of paper credit. He thereupon went to Paris, gained the favor of the Duke of Orleans, and sought to introduce his project to the attention of the government, but was expelled as a gambler. Then he broached the scheme in Genoa, Turin, Vienna, and at various German courts; but it was everywhere rejected. His fascinating manners gained him admission to court circles, and his success at the gaming-table supplied him with means. When the Duke of Orleans succeeded to the regency, Law returned to France with a private fortune of $500,000 that he had made by gambling and speculation. The government was on the verge of bankruptcy, and the debasement of the currency had produced disorder in mercantile business. The council of finance rejected his project of a national bank, and the replacement of the metallic currency by an irredeemable one of paper. He was authorized, however, to establish a private bank of issue, which was chartered in May, 1716, and soon obtained a vast business. Law then conceived the project of raising the credit of the state and satisfying a part of its creditors, and at the same time developing the resources of the recently explored Mississippi valley, by transferring that region to a company whose shares should be made exchangeable at par for government stock. In August, 1717, the Company of the west, , or West India company, was formed, and was endowed by the king with sovereign and proprietary rights over the Mississippi valley, with power to construct forts, raise troops, fit out ships of war, establish courts of justice, and develop mines. The regent presented the company with the vessels, forts, and factories that Antoine Crozat had constructed, and gave it a monopoly of the fur-trade with Canada for twenty-five years. The capital of the company was fixed at. 100,000,000 francs, divided into shares of 500 francs each. The government funds, which had fallen to one third of their face value, on being made exchangeable for the new stock, immediately rose to par. Subscribers were required to pay for one quarter of their stock in money, while for the remainder government bills of credit were accepted at their face value. The colonization of Louisiana was begun on a prodigal scale. Three vessels arrived with 800 emigrants on 25 August, 1718, and other bands followed; yet few could endure the climate except hardy pioneers from Canada. The capital was named New Orleans, after the regent. Large sections of rich land Were granted by the western company to corporations and individuals. Law received a prairie in Arkansas, and invested 1,500, -000 francs in the colony. The regent, on 4 December, 1718, issued a decree transforming Law's banking establishment into a state bank, and guaranteeing its circulation. Bank-notes were issued until there were 1,000,000,000 francs in circulation in December, 1719. The Company of the west in Nay, 1719, obtained the new monopoly of the commerce with Asia, Africa, and the South sea. whereupon the name was changed to the India company, and new stock was issued, the total number of shares in November, 1719, being 624,000. Law hoped to complete his system by having the company assume the financial administration of the state and pay off the public debt., and engaged with the proceeds of the new shares to lend the king 1,600,000, -000 francs at 3 per cent. The payment of the state debt with this loan, and the inflation of the currency, caused a mania for speculation to take possession of the people of Paris. Land and all commodities rose rapidly in price, and the shares of the India company at the end of November, 1719, sold for thirty-six or forty times their nominal value. The crisis lasted from the end of October, 1719, till the beginning of February, 1720. When the panic began, Law, who was appointed comptroller-general on 5 January, 1720, attempted to sustain the inflated values by edicts declaring the value of the paper money to be five per cent. above that of specie, forbidding the payment of large sums in metallic money, and requiring holders of coin in excess of a certain amount to exchange it for bills. The prices of all things rose with the emission of additional paper money, but the shares in Law's company fell in the market. On 21 Nay, 1720, he acknowledged partial bankruptcy by proclaiming the gradual reduction of the value of bank-notes to one half of their face value, which corresponded with their actual exchange value. The system of inflated currency and fictitious stock, by which he had sought to relieve the French government of its great burden of debt, finally collapsed, its author was dismissed from his ministerial post, and in December, 1720, fled from France. He lived for some time in London, a pensioner on his friends, and passed his last years in poverty in Venice. With the downfall of Law, expenditures in Louisiana ceased. But the colony survived the loss of such aid, as well as subsequent dangers and disasters. See " Histoire du systeme des financees sous la minorite de Louis XV." (the Hague, 1739); , John P. Wood's "Memoirs of the Life of John Law" (Edinburgh, 1824); "Law, son systdme et son 6poque," by Andre Cochut (Paris, 1853); and "The Mississippi Bubble," from the French of Adolphe Thiers (New York, 1859).

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