In Law’s Debt
By Howard Margot
The 2018 tricentennial of New
Orleans’s founding by the French was
observed with all due fanfare in the United
States and abroad. 2020 marks the 300th
anniversary of a closely related event: the
collapse of the Mississippi Bubble. People
are not wont to celebrate epic failures, and
history’s judgment of John Law, the Scottish
gambler and economic theorist whose
“System” created the Bubble, has not often
been kind. Still, if there is any city that
might consider honoring the architect of
capitalism’s first great economic collapse,
it is New Orleans.
Law remains largely unknown in that
city, where a Pantheon of official “founding
fathers”—Louis XIV, Orléans, Pontchartrain,
Bienville, even Crozat—enjoys
toponymical immortality. But not so
much as an alleyway bears the name of
Monsieur Law. 1 France’s ruling class put
its stamp on the place, happy to let Law’s
Trade between Mexican Indians and the French
at the Port of the Mississippi, between 1719 and
1721. This Mississippi Company propaganda
portrayed New Orleans on what looks more like
an Alpine lake—albeit one with palm trees—than
the Mississippi River.
name, cursed by myriad investors gone
broke, be forgotten.
One effort at not forgetting John Law is
being made at The Historic New Orleans
Collection, which for years has brought
together manuscripts and printed items
of the period that document Law’s career
in France. These materials, some of which
are shown here, help trace the development
of his bank, his System, the Mississippi
Bubble and their impact on the
nascent Crescent City.
Formally educated in Edinburgh, Law
chose not to follow in his family’s banking
business and moved to London. There, the
tall, handsome, charming social climber
leaped into the life of a dandy and gambler.
When in 1694, barely aged 23, he
killed a “romantic rival” in a duel, his
life’s course was fixed. Convicted of murder
and awaiting sentence, Law escaped
prison and fled to Holland. “On the lam”
in Europe over the next 10 years, he honed
his card-playing and odds-making skills
which, combined with returns on investments,
netted him some six million livres
tournois 2 .
The year of Law’s duel, the Bank of
England was founded through subscription,
its royal charter granting a noteissuing
monopoly in return for reducing
Engraving of John Law by Leonardus Schenk, 1720.
the crown’s crippling debt. Such quasinational
banks had been proposed for
many years; from abroad, Law followed
these developments keenly. While in exile,
he was introduced to Dutch and Italian
banks far older and more sophisticated
than any he had known at home: fueled
by their countries’ overseas trading companies
(whose shares were exchanged like
specie on the market), some of these
banks’ best customers were Europe’s
debt-riddled governments. Law, amassing
his millions gambling in Europe’s
financial capitals, was circulating among
(and snookering) precisely the sorts of
The Historic New Orleans Collection, 1974.25.27.499 The Historic New Orleans Collection, The L. Kemper and Leila Moore Williams Founders Collection, 1952.3
www.MoAF.org | Summer 2020 | FINANCIAL HISTORY 31