Source: Ludwig von Mises Institute
by George Ford Smith
“John Law, the early eighteenth-century Scottish gambler and financier, thought the best way to revive an ailing economy was to remove the ‘great scarcity of money,’ as he wrote in a 1705 monetary tract. A decade after its publication, he took his ideas to the Continent and sold them to Philippe d’Orleans, the regent in charge of France’s finances, who needed a scheme more sophisticated than his failed program of coin clipping and confiscation to save the nation from bankruptcy. … In 1716, Philippe set Law up as head of the Banque Generale, the country’s central bank, giving it and him monopoly control of the note issue. Having won the nation’s trust with declarations of allegiance to sound money principles — he had promised his banknotes would be ‘payable on sight’ in unadulterated gold coin — Law proceeded to apply another element of his theory.” (10/21/24)