John Law (economist)
| John Law | |
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John Law, by Casimir Balthazar
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| Born |
21 April 1671 Edinburgh Scotland |
| Died | 21 March 1729 (aged 57) Venice Republic of Venice |
| Occupation | Economist, Banker, Financier, Author, Controller-General of Finances. |
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John Law (baptised 21 April 1671 – 21 March 1729) was a Scottish economist who believed that money was only a means of exchange that did not constitute wealth in itself and that national wealth depended on trade. He was appointed Controller General of Finances of France under the Duke of Orleans, regent for the youthful king, Louis XV.
In 1716 Law established the Banque Générale in France, a private bank, but three-quarters of the capital consisted of government bills and government-accepted notes, effectively making it the first central bank of the nation. He was responsible for the Mississippi Company bubble and a chaotic economic collapse in France, which has been compared to the early-17th century tulip mania in Holland. The Mississippi Bubble was contemporaneous with the South Sea Company bubble of England.
Law was a gambler and a brilliant mental calculator. He was known to win card games by mentally calculating the odds. He originated economic ideas such as "The Scarcity Theory of Value" and the "real bills doctrine". Law's views held that money creation will stimulate the economy, that paper money is preferable to metallic money, and that shares are a superior form of money since they pay dividends.
Law was born into a family of bankers and goldsmiths from Fife; his father had purchased Lauriston Castle, a landed estate at Cramond on the Firth of Forth and was known as Law of Lauriston. Law joined the family business at age fourteen and studied the banking business until his father died in 1688. Law subsequently neglected the firm in favour of more extravagant pursuits and travelled to London to live the "British Dandy" lifestyle. He subsequently lost large sums of money in gambling.
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