11장
The Final Act: Exile and Legacy
With over 2.6 billion livres in banknotes issued by May 1720, Law made his most desperate move-announcing that shares would be reduced from 9,000 to 5,000 livres by December, and banknotes would gradually lose 50% of their value. The public saw this as confirmation he was a charlatan. Riots erupted for three days as crowds pelted the bank with stones. Katherine Law and her daughter were threatened by mobs and forced to seek refuge. The regent, pressured by Law's enemies and fearing for his own rule, capitulated to the Parliament's demands to revoke the edict. Law offered his resignation, which the regent initially rejected, but a week later Orleans reversed the legislation reducing paper values. Investors scrambled to sell shares, causing prices to plummet to 4,000 livres. By month's end, Law was dismissed as controller general and placed under house arrest, fearing execution.
Despite his dismissal, Law overcame his dread through gambling strategies-masking emotion and following a plan. Though publicly humiliated when the regent initially refused to see him, Law was secretly summoned to the Palais Royal that night. The regent, who had not truly abandoned Law's system, greeted him warmly and listened to his ideas. Within days, Law returned to high office as intendant general du commerce and managing director of the bank and Mississippi Company, shocking his adversaries. D'Argenson was dismissed, and the Paris brothers were banished. An investigation into the bank's accounts found no irregularities, though unauthorized notes had been discovered but concealed to protect the regent.
In Paris, Law found hordes attempting to exchange banknotes for coins, with only 2% of money in circulation remaining as silver and gold. He implemented rationing, allowing only one 10-livre note per person to be exchanged. To restore stability, Law orchestrated public bonfires where thousands of shares and notes were burned in iron cages. At the bank, coin supplies couldn't keep pace despite copper coins being minted. On July 17, a crowd of 15,000 gathered outside the bank at 3 A.M., resulting in a deadly riot where dozens were crushed to death. Mobs carried bodies to the Palais Royal and attacked Law's carriage, forcing him to seek refuge. For protection, Law moved into the Palais Royal, remaining "white as a sheet" for weeks. Meanwhile, plague erupted in Marseille, eventually killing 100,000 people and devastating trade, dealing the final blow to Law's economic system.
With the Mississippi Company foundering and the bank closed, Law's position became untenable. He resigned and repeatedly requested permission to leave France, but the regent delayed responding as pressure mounted from Law's enemies. Law departed Paris with his son on December 14, 1720, for his country estate at Guermande, planning to await passports to leave the country. Katherine and Kate remained in Paris to settle debts. Two days later, the Parlement was recalled, and the persecution of Law began in earnest.
Law fled France on December 17, traveling incognito in Bourbon's carriages with his son, three valets, and guards. Despite careful planning, they were stopped at Valenciennes by d'Argenson's son, who confiscated Law's money and documents before eventually releasing him. In Brussels, Law's identity was quickly discovered, and he received a hero's welcome before continuing his journey across the treacherous winter Alps toward Italy.
Law spent his final years in Venice, where he found solace in the city's beauty while facing mounting financial pressures from creditors. He began investing in art and dealing pictures, assembling a collection of nearly 500 works by masters like Titian, Raphael, and Leonardo. When Montesquieu visited in 1728, Law remained argumentative about his system's collapse, blaming it on the revocation of his decree dividing the notes. He fell ill with pneumonia in February 1729, and died on March 21 at age fifty-seven, having left his estate to Katherine in a deed of gift.
With John Law's death, Europe could finally reflect on his meteoric rise and fall. He had arrived in France wealthy and charismatic, convinced he could revitalize the economy. In his own assessment, his failure stemmed not from flawed ideas but from his impatience: "I do not pretend that I have not made mistakes... If I could start again I would go more slowly but more carefully."
Yet Law's fundamental blindspot was his idealism. In pursuing his economic utopia, he overlooked human nature-people's desire for easy wealth, their herd mentality, tendency to hoard when threatened, and propensity to panic when confidence wavers. These uncontrollable human traits, combined with establishment opposition and the plague's outbreak, ultimately caused his downfall.
Despite the collapse of his paper-money system, Law's impact remained indelible. He created inflation that devalued Crown debt by two-thirds, relieving taxation pressure and leaving France with a viable economy. By democratizing share ownership, he planted seeds of financial equality that survived beyond the ancien regime. Three centuries later, in our age of credit cards and digital transactions, Law's vision has been achieved-but the same inherent weakness remains: financial systems based on credit still hinge entirely on public confidence.
