John Law Biography, Contribution to Economics

John Law was a British economist and social reformer. He was born to a landed family in Scotland.

As a teenager, John Law travelled to London where he engaged in gambling. He fled to Amsterdam after he killed Edward Wilson in a duel. After he studied banking operations in Holland, he returned to Scotland and wrote his book “Money and Trade…”. He submitted a banking reform plan to the Scottish government but it was rejected. Believing that his monetary ideas could work, he offered it to France which at that time, France was heavily indebted as a result of extensive wars. France accepted his suggestions and made him Controller General of Finances.

Law became very wealthy after he combined his Paris-based bank with Louisiana Company which had privileges to developed the Mississippi territory. After a few years, the so-called “Mississippi Bubble” burst due to excessive speculation and John Law lost almost all his wealth. He fled to Venice in Italy where he died a poor man.

Personal Information
Full Name : John Law
Birth Date : April 21, 1671
Died : March 21, 1729 (Age 57)
Birth Place : Edinburg, Scotland, United Kingdom

College : (London)
Degree : Mathematics, Commerce, and Political Economy
College : (Amsterdam)
Degree : Banking Operations

Career Highlights
* Founder and director of the Mississippi Company which went bankrupt
* Founder of Banque Générale which later became Banque Royale, the first Central Bank of France
* Controller General of Finances of France under the Duke of Orleans

Contribution to Economic Science
* Scarcity theory of value
* Real Bills doctrine
* Establishment of a national bank to create and increase instruments of credit and the issue of banknotes backed by land, gold, or silver
* The idea that money is a creative force in economic development and that an increase in its quantity would stimulate a larger national product and would increase national power.
* However, money was only a means of exchange which did not constitute wealth in itself.
* National wealth depended on trade.

Book (s) Published
1705 – Money and Trade Considered, with a Proposal for Supplying the Nation with Money

See also: List of Known Economists from around the World

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