How John Law’s Wild Gamble Created the First Millionaires and Crashed an Empire

John Law’s journey from a Scottish goldsmith’s son to the architect of France’s first paper money system is a tale of brilliance and risk. Early on, Law mastered probability and risk management through gambling, which shaped his revolutionary ideas about money as credit rather than mere metal. His flight from London after a fatal duel led him across Europe, where he absorbed lessons from Amsterdam’s prudent banking system and Venice’s credit innovations.

In Paris, backed by the regent Philippe d’Orléans, Law founded the Banque Générale, issuing paper notes convertible to coin—a bold innovation in a society skeptical of anything but gold and silver. This bank laid the foundation for the Mississippi Company, which secured trade monopolies in French Louisiana and absorbed national debt. Shares in the company soared from 150 to over 10,000 livres, creating the world’s first millionaires and sparking a frenzy of speculation across Europe.

But the bubble’s rapid inflation was unsustainable. Confidence waned, share prices collapsed, and the crash wiped out fortunes, igniting social unrest and long-lasting distrust of paper money in France. Law’s residence was attacked, and his legacy became a cautionary tale about the risks of speculation and the fragile nature of financial confidence.

Why John Law’s Story Still Matters Today

Financial bubbles have recurred throughout history, from the South Sea Bubble to the 2008 crisis. Law’s experiment teaches timeless lessons about innovation, risk, and the central role of trust in money. His vision of money as credit underpins modern banking, while the Mississippi Bubble warns of the dangers when speculation outruns reality.

Understanding John Law’s rise and fall is not just history; it’s a guide to navigating today’s complex financial world with wisdom and caution.

Sources: mshistorynow.mdah.ms.gov, managementstudyguide.com, edelweisscapital.substack.com, greyrabbitfinance.substack.com