Page:Dictionary of National Biography volume 32.djvu/237

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Law
Law
231

anonymously, at Edinburgh, Law's second pamphlet, 'Money and Trade considered, with a Proposal for Supplying the Nation with Money.' Law starts here with the assertion that the trade of a country depends on its possession of a supply of money equal in quantity to the demand for it in all departments of industry. Law maintained that paper-money, as yet unknown in Scotland, was not only in itself a much more convenient currency than specie, with which the country was scantily supplied, but could be easily and safely issued in quantities adequate to the demand if it represented not gold and silver, but non-metallic objects possessing real value, especially land. By such an issue the rate of interest would fall, and production of all kinds would flourish. In the year of the publication of this pamphlet he appears to have submitted to the Scottish parliament a scheme for the establishment of a state bank, which was to issue paper-money on the security of land. There is no mention of Law's name in the parliamentary records, though they contain several references to Hugh Chamberlen the elder [q. v.], who was then renewing his proposals for the establishment of a Scottish land bank, and who charged Law with plagiarism (Money and Trade considered, p. 65). Probably it was Law's scheme which the Scottish parliament had been considering when it resolved, 27 July 1705 (Acts of Parliament of Scotland, xi. 218), that 'the forcing of any paper-credit by an act of parliament is unfit for this nation.' According to Lockhart of Carnwath (Memoirs, i. 117), Law was at the time very intimate with the Duke of Argyll and other great Scottish nobles, and his scheme was rejected by the parliament, not on economic grounds, but because it was 'so contrived that in process of time it' would have 'brought all the estates of the kingdom to depend on the government.' At the same time Law communicated some of his projects to Godolphin, then prime minister in England, and thus acquired in London a reputation for financial ability (Murray Graham, i. 264).

From 1708 to 1715 Law appears to have been roaming over the continent, dividing his time between the gaming-table and unsuccessful attempts at persuading European potentates to try some of his financial projects. He was both a skilful and a lucky gambler, and is represented as having been on this account expelled by the authorities from more than one continental city. Through his gains at the gaming-table and otherwise he is said to have been in 1715 worth 114,000l. During visits to Paris before the death of Louis XIV he communicated to the government projects for the restoration of the shattered French finances. They were not accepted, but Law made a very favourable impression on the Duke of Orleans, afterwards regent. In February 1715 Lord Stair, in a letter from Paris (ib. i. 265), told Stanhope that 'the King of Sicily,' Victor Amadeus, afterwards king of Sardinia, was urging Law to undertake the management of his finances. Stair suggested that Law might be useful in devising some scheme for paying off the national debt of England, and described him as 'a man of very good sense and who has a head for calculations of all kinds to an extent beyond anybody.'

After the death of Louis XIV (September 1715), Law plied the Duke of Orleans, on becoming regent, with proposals for the establishment of a state bank. The regent was favourable to them, but the opposition of his advisers and of experts procured their rejection. He, however, allowed Law and some associates to found a bank of their own, the first of any kind, apparently, founded in France. Letters patent for the establishment of a Banque Générale, one of issue and deposit, were granted them 20 May 1716. It was speedily successful. Law was able to try his pet scheme of a paper-currency under circumstances peculiarly favourable. The metallic currency of France was then subject, at the caprice of the government, to frequent alterations of value. Law made his notes payable on demand in coin of the same standard and weight as at the date of issue. Having thus a fixed value they were preferred to the fluctuating French coinage, and rose to a premium. Their reputation and that of the bank was increased when, 10 April 1717, a decree ordered them to be accepted in payment of taxes. His paper-money being thus preferred to specie, Law freely advanced money on loan at a low rate of interest, and the immediate result was an expansion of French industry of all kinds. 'If,' says Thiers, 'Law had confined himself to this establishment, he would be considered one of the benefactors of the country and the creator of a superb system of credit' (see Nicholson, Money and Monetary Problems, pp. 146 sq.). But Law now had in view a scheme of colonisation by means of a company, which he hoped would rival or surpass the East India Company of England, and he persuaded the regent to make over to him and his associates Louisiana, which at that time included the vast territory drained by the Mississippi, the Ohio, and the Missouri. From the first-named river Law's enterprise became known as 'The Mississippi Scheme,' but it was also called 'The