A Scottish gambler once ran almost the entire finances of France.
In 1719 John Law, a Scot exiled after killing a man in a duel, controlled a company that collected all of France's taxes, ran its mints, owned its central bank and held its national debt. Its shares rose twentyfold in months. Within a year it had all collapsed.
John Law founded his company in 1717 as the Compagnie d'Occident, holding a trading monopoly over Louisiana, which then covered the whole Mississippi basin and had only about 500 French colonists. People called it the Mississippi Company, but its real ambitions were at home. Shares were priced at 500 livres and paid for with government debt bills at face value, an attractive deal when those bills traded at a discount.
In 1719 Law went on an extraordinary buying spree. The company absorbed France's other colonial trading companies and became the Compagnie des Indes. It took over the tobacco monopoly, the right to run the royal mints, the collection of excise taxes and then of direct taxes. It ended up as collector of all taxes and holder of all debt owed to and by the French state, while still being a joint-stock company. In February 1720 it absorbed Law's bank, France's first central bank.
Shares traded in the open air on rue Quincampoix in Paris. Their price climbed from 500 livres to 3,000 by mid-August 1719 and eventually peaked at about 10,000. As investors cashed out, paper money flooded the economy, the money supply doubled and inflation hit 23 per cent a month in January 1720. By September 1720 shares had fallen to 2,000 livres, and a year later they were back at 500.
Law was dismissed at the end of 1720 and fled, eventually to Venice, where he lived by gambling. The company was placed in receivership and re-emerged in 1723 as a colonial trading firm, the French Indies Company. Its most lasting legacy is the city of New Orleans, founded under its direction in 1718 and named after the Regent. Its fall coincided with the bursting of Britain's South Sea Bubble.
Source: Wikipedia — John Law's Company · Text summarised from Wikipedia (CC BY-SA 4.0)
