He was a gambler, playboy and convicted murderer and Edinburgh-born John Law has also been dubbed as the man who ‘broke France’.
Law’s life story to may read like a potboiler studded with britches, wigs and gold but he is also credited by some as being the founding father of modern economics and the creator of paper bank notes.
Law was born in 1671 and was raised in Cramond, to the west of Edinburgh, by his goldsmith and moneylending father William and his mother Mary, a relative of the Duke of Argyll.
He moved to London aged 20, equipped with an education in mathematics, and joined the city at a time of its rapid growth and increasing imperial dominance.
In John Flynn’s Men of Wealth, Law’s lifestyle is clearly set out.
He said: “He got access to the smartest circles. He was a young man of education and culture, handsome, quick-witted, a good athlete excelling at tennis, a graceful dancer, and a redoubtable talker.
“He spent his mornings in the city, where he got a reputation for skill in speculating in government paper. He passed his afternoons in the parks, his evenings at the opera or theatre, and the later hours at the routs, balls, masquerades, and gaming houses.”
Law’s high rolling life was soon to crash after his affections for Elizabeth Villiers, later the Countess of Orkney, ended with a dual in Bloomsbury Square with “ageing dandy” Beau Wilson in 1694.
Wilson died on the spot after a single stab wound to the chest and Law was convicted of murder at Old Bailey. In true Law style, he escaped from prison and was rowed down the Thames to a waiting vessel which took him to Amsterdam.
It was while on the Continent that Law’s wheeling and dealing began on an industrial scale.
For more than a decade Law, by then married with children, embarked on “ceaseless wanderings” around Europe, according to Flynn.
After witnessing the establishment of the Dutch National Bank he returned twice to Scotland to propose a similar model, but was rejected.
Before he left Scotland again he published his book, Money and Trade considered, with a Proposal for Supplying the Nation with Money (1705).
He then spent long periods in Paris but was ultimately asked to leave by police, his gambling antics and almost guaranteed wins at the gaming table ultimately drawing suspicion. Law always maintained his success was down to a system, and ultimately down to maths.
While in Turin, he was presented to Victor Amadeus, King of Sardinia who advised him to go back to France, which - as Flynn put it - was in need of a “financial miracle worker” as Louis XiV came towards the end of his reign.
Flynn said: “Law hurried back to Paris and in an amazingly short time gained confidence of the Regent, his acquaintance, the Duc d’Orleans, and set in motion all his theories which resulted in what Law and the French then called the System and what history dubbed the Mississippi Bubble.”
He convinced the new ruler that the country’s supply of metallic coinage was restrictive and that introducing new paper currency to lend would stimulate trade, investment and wealth.
The Duke, desperate as France teetered on the edge of bankruptcy, allowed Law to experiment on a small scale and with that the Scot opened his first bank The Bank Generale in his house, with the help if his brother, in 1716,
It set the mould of today’s banks as loan-making, deposit- receiving enterprises that issue their own notes.
As wealth grew, the ruling classes were impressed but Law took the gamble higher. In 1717 he also launched the Compagnie de la Louisiane ou d’Occident which drew together most of France’s assets and commercial interests in North America and left Law in effective control of the whole of the huge Mississippi basin.
His “Mississippi Scheme” was to exploit the vast wealth he foresaw for the region which includes present states of Louisiana, Mississippi, Arkansas, Missouri, Illinois, Iowa, Wisconsin and Minnesota,
The investment proposition attracted backers from across France and the rest of Europe and three years later the enterprise was renamed Compagnie des Indes and in control of all of France’s overseas interest
Audaciously, Law struck an agreement to repay French national debt in return for control for nine years of national revenues and the French mint.
In 1720 Law’s colonial trading company merged with the Banque Royale and Law became France’s Controller General of Finances.
Shares in the Compagnie des Indes rose rapidly, from the initial 500 livres to 10,000 livres during 1719.
Its apparent success led to a style of financial mania with great fortunes made overnight. It is said that those from all backgrounds made their millions with Law’s home surrounded every morning by those buying and selling stock.
But the fragility of the scheme was exposed when share value rose to 18,000 livres with not enough capital to realise the investments/
Both the Company and the Bank went bankrupt overnight, bringing about a severe financial crisis in France that impacted right across Europe.
Stock now sold at 2000 livres a share.
Flynn noted: “The System itself, which had impoverished thousands and repeated the ruin of France, became a huge national bankruptcy. The king, who was to be liberated from the curse of debt, was now more deeply in debt than before.”
Flynn said that Law’s reign over France’s finance took the national debt from 1.5 to more than 3bn livres.
It is said Law was lucky to escape Paris with his life and one tale that continues to circulate the fallen financier is that he left for Brussells holding a large diamond, the last remnant of his fortune.
After briefly returning to Paris, Law died a poor man in Venice in 1729.
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