John Law was a man of contradictions. He was a Scotsman who was sentenced to death in England for killing a man, yet became one of the most powerful men in Paris. He created France’s first national bank, saving the country from bankruptcy yet was responsible for one of the biggest economic disasters in history. He was a gambler who lost his biggest ever bet. He was literally the person for whom the term “millionaire” was coined, but he died penniless in Venice.
John Law was born in Edinburgh in 1671, into a family of wealthy bankers and goldsmiths. After his father died in 1688, Law moved to London where he lived life to the full and gambled away large sums.
On 9 April 1694, Edward “Beau” Wilson challenged Law to a duel over the affections of Elizabeth Villiers, who was also the reputed mistress of King William III. Law stabbed Wilson to death with a single thrust of his sword and was sentenced to death. The sentence was later commuted to manslaughter and Law managed to flee to Amsterdam.
In 1705 Law advocated for a Scottish national bank in his book, Money and Trade Considered: With a Proposal for Supplying the Nation with Money. He advocated the transition to paper money that would not be backed by gold or silver.
The idea was rejected, but Law continued to develop his economic theory and soon was able to put it into practice. In 1715 French King Louis XIV died after 72 years on the throne (the longest of any European monarch). Following the War of the Spanish Succession, and facing huge interest payments on loans the country was virtually bankrupt and lacked enough precious metals to mint enough coins. The economy was in decline.
Law had spent years cultivating a friendship with Philippe II, Duke of Orléans, Louis XIV’s nephew, who, following the death of the king, became regent for five-year-old Louis XV.
With Philippe’s backing, Law was authorized to set up Banque Générale, which began issuing banknotes in exchange for government bonds, effectively transforming the country’s debt into liquid currency.
Law had explained his theory in his book, writing:
Money is not the value for which goods are exchanged, but the value by which they are exchanged.
In 1720 Law was appointed Controller General of Finances, which effectively meant he now had control of both internal and external commerce. He instituted many reforms, and the French economy grew rapidly. Industry increased 60 percent within two years, and exports increased enormously. However, the boom also led to huge speculation and stock prices swelled to over 60 times their original value.
In 1717, Law’s Banque Générale bought the Mississippi Company which had a monopoly on everything produced in the French colonies in North America. Law wanted to reap the natural resources from Louisiana (named after King Louis XIV) to pay off France’s debt. He began selling shares in the company. But his brilliant marketing efforts led to a massive increase in the share price, with speculators so keen to invest that Law’s bank had to print more money to keep up with demand.
In 1718 there were only 700 Europeans in Louisiana, and Law needed to increase the population so that he could take advantage of the country’s wealth and prove the shares were not overvalued.
But Law struggled to find willing emigrants to settle the new land. So he started rounding up vagrants, vagabonds and anyone who looked out of place.
William Harrison Ainsworth wrote in his book, John Law, the Projector:
Two companies of archers were formed, whose business it was to arrest all persons unable to give a satisfactory account of themselves. From their costume and equipments, these archers were denominated “Bandoliers of the Mississippi.” They wore long blue coats, broad crossbelts, and hats laced with silver, and were armed with swords, muskets, and pistols. Marching about in detachments of a dozen, with an officer at their head, the bandoliers performed their task with so much zeal, that five thousand persons were carried off by them in ten days. Many of these were artisans and workmen, but a large proportion consisted of young women. These unjust arrests, and the shocking treatment to which the captives were subjected, roused the popular indignation.
But Law still needed to ship more people to Louisiana, so he went to the jails and offered the prisoners a deal they could not refuse (though later, many of them wished they had). They would be granted their freedom on the condition that they married a prostitute (who had already been rounded up) and left on the next boat to America.
It would have been unseemly for unmarried men and women to travel together, so he let the ladies each choose one of the men, and arranged a group wedding.
Jean Buvat and Émile Campardon described what happened on September 18, 1719 (Journal de la Regence, I, 438-9)
In the priory of the church of Saint-Martin-des-Champs, in Paris, were married 184 young ladies, with as many boys, ones that had been taken from the prisons of the Priory and other prisons of the town, after having allowed the poor girls to choose their husbands from a large number of boys. After the ceremony, they were chained two by two, the husband with his wife, followed by three carts with their clothes and provisions, or in order to carry the sick, escorted by twenty archers to take them to La Rochelle to be transported to Mississippi…
Unfortunately, this cunning plan to take convicts and send them across the ocean without any preparation, training or desire, did not suddenly turn them into farmers, builders, miners or give them any of the skills they needed to survive in the new land. Many of them didn’t even make it to the boat. And almost all of them had an annoying habit of dying.
James Hardy explains in The Transportation of Convicts to Colonial Louisiana:
The attempt to colonize Louisiana with convicts and people on the rates was not very successful. In simple terms of numbers, the convicts and orphans showed an alarming tendency to die before becoming self-supporting colonists. Of the several thousand arrested, sentenced, or otherwise ticketed for Louisiana, less than nine hundred actually made the voyage. The rest died on the way to the ports, escaped somewhere along the line, or never even left the place of their arrest. Of those that sailed, half never landed… Disease took many whose ships reached Dauphine Island and the climate killed the vast majority of the convicts who survived the voyage.
The convicts were spectacularly unsuccessful in developing the land and sending back the new world wealth to prop up the finances of the old. Furthermore, the few hundred French settlers who were already living there were unhappy about the new arrivals in their neighborhood, so packed their bags. They moved to the newly built city of New Orleans (named after Law’s pal, Philippe d’Orleans) to get away from the freshly arrived starving criminals. Without any kind of support network or infrastructure, the new immigrants had virtually no chance at all. As Hardy writes:
In November of 1721, three years after the first convicts landed, only about sixty were still alive, and of these, only five had been in Louisiana for more than eighteen months.
Everything came crashing down for Law just a few months later. By May 1720, investors decided they had enough. They demanded their money back — they wanted to exchange their new banknotes for real coins. As squatters camped out in the streets outside banks, riots broke out. Just a few months later, Law fled Paris in the dead of night, leaving all his personal wealth behind.
Law traveled from city to city, gambling any money he earned. In 1729, aged only 57, he died a pauper in Venice.
Many of Law’s economic theories predated those of John Maynard Keynes by 200 years. Keynesian economics is at the heart of the Western financial system. It was not so much that Law was wrong, but that he was not only a theorist but also the man put in charge of carrying out his economic plan without any suitable checks and balances.
I’ve searched the internet unsuccessfully for any record of the few French prisoners who somehow survived being transplanted to Mississippi. It is hard to find any impact they made on the new world after their arrival.
This contrasts sharply to the major story arc that begins in this week’s Torah portion, Vayeshev.
Joseph’s brothers, jealous of his father’s favoritism and concerned about Joseph’s almost megalomaniacal dreams, sentenced him to death. But then Reuben intervened and instead of killing him outright, convinced the others to throw him into a pit to die. This was Joseph’s prison from which they never expected him to escape.
But fortuitously for the future of the Jewish people, an Egypt-bound caravan passes by and Judah persuaded the others to sell Joseph into slavery rather than leave him in his prison. They effectively give him another chance and send him to a foreign land.
There was nothing in Joseph’s life that could possibly have prepared him for life in Egypt. He had grown up spoiled by his father, not even going with his brothers to tend the flocks. He’s had no experience of the harsh labor expected of him as a slave, seemingly no knowledge of Egyptian language or culture.
Yet, somehow Joseph attracts the attention of Potiphar who purchases him. In next to no time, Joseph is running the household. Not only did he manage to survive in the strange land but he worked out how to thrive.
Of course, we all know the end of this episode — Potiphar’s wife fancies Joseph and when she fails to seduce him, she accuses him of trying to rape her and has him thrown once again into jail. For the second time in the same Torah reading, Joseph would appear to be totally unprepared for the culture of the Egyptian prison, yet very soon he has risen to the top of the heap there. This week’s portion ends with Pharaoh’s butler and baker telling Joseph their dreams, which he correctly interprets for them. All that he asks in return is that the butler mention Joseph to Pharaoh and proclaim his innocence. The very last words of the portion are, “But he forgot him.”
Yet even that setback didn’t end Joseph’s success story. We will read in the coming weeks how Joseph rose to the pinnacle of Egyptian society, second only to Pharaoh himself. And we will hear of Joseph’s economic brilliance. Unlike John Law, who bankrupt France and impacted negatively on large parts of Europe, the biblical Joseph saved Egypt, causing the country to prosper and be able to provide for all the surrounding nations.
Perhaps the difference between Joseph and the French convicts sent to Mississippi is that Joseph accepted every situation he was placed in. In that sense he was fatalistic. But he also managed to adapt and learn what was needed to succeed in each case. And unlike Law who had spent years preparing his economic theories but who lost touch with his own vision when he was given ultimate control over finances, Joseph had no training, but always remembered that it was not his own money he was earning but that of Potiphar, Pharaoh or the entire nation of Egypt.
Joseph proved he was not a deluded egotist as his brothers suspected but quite simply living in the moment with the reality around him. He knew his place but he also knew his potential and constantly strove to do the best he could, no matter what.