Merryn Talks Money John Law: The Gambler Who Invented Modern Money (Part 2)
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Jan 2, 2026 In this second part, John Stepek, a journalist and storyteller, delves into the tumultuous life of John Law, a Scottish gambler who reshaped France's financial landscape. They explore Law's rise as Controller-General, the founding of the Banque Générale, and the thrilling trading frenzy on Rue Quincampoix. The conversation reveals the precarious bubble of paper money and its spectacular collapse, linking historical context to modern monetary theory, highlighting the necessity of strong institutions for fiat currency to thrive.
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France's Fragile Fiscal Starting Point
- France entered 1714 economically exhausted with debt near 100% of GDP and a narrow, regressive tax base.
- John Stepek explains this fragile fiscal setup set the stage for Law's radical monetary experiments.
Banknotes Harder Than Coin
- John Law set up the Banque Générale offering banknotes redeemable in silver coins, restoring confidence in Parisian money.
- The bank ran reserves around 25% and made substantial profits, enriching early shareholders, says John Stepek.
Swapping IOUs For Colonial Equity
- Law swapped discounted state IOUs for equity in the Mississippi Company to consolidate national debt into one long-term obligation.
- This converted many small doubtful claims into a single company-backed annuity paid from new tax revenues.
