The most interesting person in Western history who most people have never heard of is John Law, the inventor of the concept of paper money. Born in Scotland, Law began by killing a man in a duel over the affections of Elizabeth Hamilton, former mistress of King William III. Law fled to the continent, and ultimately — and improbably — became Finance Minister to King Louis XV of France in 1716.
Law believed that money is only a means of exchange that doesn’t constitute wealth in itself, and that wealth flows from trade. As such, Law proposed and implemented paper money issued by the French government, and banned gold and silver currency. Contemporary economists screamed in protest, and yet the paper money plan worked. French economy roared to life.
Sadly, Law’s other project — the Mississippi Company — spectacularly imploded. Law fled France and died broke in Venice in 1729. Law was right. The international monetary system finally fully dropped the gold standard in 1971, 300 yrs after Law was born. We live in John Law’s world.
Schumpeter later wrote: “Law is in a class by himself. Brilliant and profound, placed in the front ranks of monetary theorists of all time.” I am willing to lay odds that Satoshi Nakamoto is John Law’s great-great-great-great-great-great-great-great-great-grandson.
- Millionaire : The Philanderer, Gambler, and Duelist Who Invented Modern Finance – Excellent book on John Law’s life by Janet Gleeson
- John Law (Economist)
- Law of Easy Money
- From John Law to John Maynard Keynes