John Law, of Lauriston, a British financier, born in Edinburgh in April, 1671, died in Venice, May 21, 1729. He received an excellent education, and manifested at an early age a talent for finance, but became notorious as a gambler and roue. Having killed an antagonist in a duel, he fled to France. Thence he went to Holland, where he made a special study of banking in the great bank of Amsterdam. In 1700 he returned to Scotland, and published a work advocating the establishment of a bank which should hold all the sources of revenue of the state in its own hands, and, treating them as capital, issue notes, and at the same time make a profit by discounting. The proposition was declined by government, and Law went with his scheme to Paris, where it also failed to meet approbation. He was afterward expelled from Paris and other continental cities, but not before he had obtained admission to court circles, and gained large sums by gambling. On the death of Louis XIV., and the accession of the duke of Orleans to the regency, Law reentered Paris with a fortune of more than $500,000 made by gambling.
The financial affairs of the French kingdom being at this time in the utmost embarrassment, he soon gained a hearing, and, having secured the patronage of the regent, in 1716 established a bank under royal authority. This institution was authorized to discount bills of exchange, and to issue notes redeemable in specie of fineness equal to that of the current money of the realm. As it accepted at par government bills, on which there was a discount of nearly 80 per cent., and as there was a general want of private credit, its stock was soon taken, and a very lucrative business established. Law, however, aimed higher than this. He believed that, while there was no standard of prices or of money, credit was everything, and that a state might with safety treat even possible future profits as the basis of a paper currency. With this view he established the Mississippi or West India company, based on the scheme of colonizing and drawing profit from the French possessions in North America. This company, enlarging its scope, soon absorbed the French East India company under the general title of the "Company of the Indies." It extended its capital to 624,000 shares of 550 livres each, and engaged itself to lend the king 1,600,000,000 livres at 3 per cent.
An extraordinary fever of stock gambling had been gradually excited by these financial efforts, and the result was that the shares of the company rose to 35 or 40 times their original value. Great extravagance resulted. Land near Paris rose to the value of 100 years' purchase, and most objects of commerce in the same proportion. Law was now made comptroller general of the finances, and his power was almost absolute. But the constant decrease of specie in France, and the constant issue of government notes, which by May, 1720, had reached the sum of 1,925,000,000 livres, soon undermined the company. A crash came, the shares sank in value, and Law became a fugitive. It seems, however, to be well established that he was a sincere believer in his own scheme, and that he acted honestly, and with a desire to promote the public welfare. He laid by no money, and when he left France took with him only 800 louis d'or. He travelled for some time afterward in different European countries, and at the invitation of the British ministry finally returned to his native kingdom, being presented on his arrival to George I. by Sir John Norris. On Nov. 28 he pleaded at the bar of king's bench for the royal pardon for a murder, on which occasion he was attended by the duke of Argyll and the earl of Hay. He received from France a pension of 20,000 livres until the death of the regent, and entertained till then hopes of arranging his differences with the French company of the Indies, which claimed from him the sum of 20,236,375 livres.
Little by little he sank into obscurity, and finally died in great poverty in Venice. His remains were buried in the church of San Geminiano, whence in 1808 they were transferred to the church of San Moise by Marshal Lauriston, the grandson of his brother. - Works upon Law and his system are numerous, but it is only within the present century that justice has to any degree been done to the uncommon abilities of which he was really possessed. See Thiers, Histoire de Law (published in Paris in 1858, from the Bemie progressive of 182G; English translation, New York, 1859); Kur-tzel, Geschichteder Law'schen Finanz- Operation (in Raumer's Historisches Taschenbuch, 18-46); and Charles Mackay, "Memoirs of Extraordinary Popular Delusions" (London, 1850).