Millionaire summary

John Law came from a Scottish clerical family. They were a liberal family unsuited to rural living and eventually moved to Edinburgh, which at that time was a poor city.

Having struggled through a life of poverty, John Law's grandfather encouraged his sons to learn a trade and become goldsmiths. John’s father, William, heeded his own father’s advice and became a successful smith; his marriage to the daughter of a prosperous merchant only expanded his wealth and horizons. William would eventually come to purchase his own castle near the Firth of Forth.

The hustle and bustle of seventeenth-century London was not without its dangers – it was a world of fops and dandies challenging each other to duels. In 1694, Law found himself in this very situation with Edward Wilson, an infamous dandy, for reasons we still don't know.

Wilson was killed and his influential family pressed for a murder charge, even though Law, who was attacked first, should technically only have been charged with manslaughter at most. He was nonetheless found guilty of murder, sentenced to death and imprisoned in Newgate prison to await execution. At a second attempt, Law managed to escape to Amsterdam.

The year was 1705 and Law had set his sights on France as a suitable country upon which to test his ideas. There was just one problem: Britain was at war with France, and Law, stuck in Holland, could not reach Paris.

Undeterred, Law sent his ideas to Nicolas Desmarets, the King’s finance minister. Law had chosen France for good reason; the country was in an extraordinary amount of debt, about 2 billion livres – that’s roughly $11.7 billion in today’s money.

The introduction of paper money to France was an unmitigated success, but Law wanted to push his economic ideas further. In particular, he looked to France's possession in North America, Louisiana, a district which stretched from the mouth of the Mississippi River deep into modern-day Canada.

All of France’s costly overseas endeavors had met with little success. Law identified the root of this problem as persistent underinvestment, and began formulating a plan to generate funds. Law set about transforming his private bank into a state bank, the Banque Royale, and obtained funds by issuing billets, a type of state bond. The money rolled in and, soon enough, Law had enough funds to invest across the Atlantic.

By 1719, Law had created in the Mississippi Company what seemed like an unstoppable wealth-creating machine. He was a celebrated figure and stories of successful investors abounded, many of whom became celebrities in their own right. But paired with this success was a certain amount of speculation, and prices ballooned. For example, at the time in France, just one chick could cost as much as half the average monthly salary of a craftsman.

In the midst of this madness, the term “millionaire” was first coined to describe those who had enriched themselves through the Mississippi Company. Law then started to branch out and encourage foreign investment. This was particularly important, as the system of paper money needed to be supported by real coinage kept in banks. More foreign coinage would mean more French banknotes could be printed. However, this strategy was heavily criticized: it led to ever-increasing amounts of credit being issued.

At the start of 1720, Law was on top of the world and the prospect of further enrichment through the Mississippi Company’s success seemed assured.

Investors had flocked to invest in the company’s putative accruement of wealth in Louisiana – but the scheme turned out to be no more than snake oil. The expected rich seams of gold and silver ores were never found, the land was infertile and the indigenous peoples remained resistant.

Within a matter of months, John Law’s life had been turned upside down – but his house arrest did not last long. Upon his release, he formulated a fresh plan to stabilize the economy and was reinstated as Controller-General of Finances.

But it was too late. Confidence in the local economy had been lost and people were rushing to the banks to exchange paper money for coins. There was nothing Law could do to salvage the situation.