The Moneymaker
Janet Gleeson
(Bantam Press --- 1999)
Money: power at its most liquid.
                         --- Mason Cooley

First came sex.

Then came money.

And sex never again came first.

Money showed up about 3,000 years ago, give or take a few centuries. In the beginning, money itself was worth something --- because it was often gold and silver coins. Later, paper currency was introduced --- something that symbolized something else. Currency had no intrinsic value, but as long as everyone agreed that it was a trustworthy symbol of value, and agreed on the amount of its value, it worked. When there was disagreement, things got complicated, sometimes disastrous. Money later brought with it banking, credit, interest (money making money), inflation, devaluation, and people like John Law (1671 - 1729), a man who understood money and how to manipulate it, and manipulate people with it, as good or better as any person who's walked the earth since.

Law was a financial genius, a staggeringly successful gambler (he didn't rely on luck), a murderer (he killed a man in a duel), the man who first introduced paper currency to France, and the founder of the Mississippi Company, which so enriched its shareholders a new word was invented to describe them: "millionaire." The company's monumental collapse has been compared to 17th century Holland's Tulipomania, another financial bubble that burst with devastating impact.

If you love money (admit it, you do) and the history of money at its most fascinating, this is your book. Janet Gleeson's impressively researched volume tells Law's long and winding story at a fast pace, but with a mass of detail. She explains the complexity of Law's undertakings, so that even I could understand them (mostly), and along the way weaves in his loves, his friendships, his enemies . . . and his relationship with his devoted, indefatigable wife, Katherine.

Law was gifted with a brain built for high-speed numerical calculations, abundant charm, determination, tenaciousness, preternatural self confidence, and the insatiable hunger of a business animal. He also dressed very nicely. A Scot, he had to flee England after the duel and proceeded to take his talents in all the corners of Europe --- where he gambled his way into the hearts and minds of high society, the aristocracy and royalty. While emptying their purses.

"Gambling provided his entrée to society," Gleeson writes,

    women a refuge from its demands and disappointments. Both were to lead him astray . . . The pastime was almost de riguer in polite society and provided a sociable beau such as Law with an easy way to infiltrate the glamorous circles to which he was drawn. To reduce the risk, without losing the frisson, he began to search for ways of loading the chances of success in his favor. He became circumspect, almost academic in his approach to gambling.

Law became a student of probability theory and could figure the odds in cards and dice throwing faster than the game was moving.

Whenever possible, he also took the role of banker, "where the odds where stacked heavily in his favor." In 1721, his first biographer, W. Gray, said of Law, "No man understood calculation and numbers better than he; he was the first man in England that was at the pains to find out why seven to four or ten was two to one at hazard, seven to eight six to five, and so on in all the other chances of the dice, which he bringing to demonstration, was received amongst the most eminent gamesters, and grew a noted man in that way." And not merely noted, but enormously wealthy.

And yet Law's voracious intellect craved something more demanding. His "study of probability must have reawakened his natural mathematical talent," writes Gleeson, "and the urge to use it drew him to one of the new obsessions of the age: the science of economics."

As a fugitive from justice, Law couldn't return to England (the family of the man he'd killed, Edward Wilson, dogged him and blocked his attempts to do so for years), but

    What exactly Law did after leaving London remains mysterious. As if to deliberately separate himself from his past, the trail of documentary evidence he has left of his life during the next two decades is sparsely and confusingly scattered throughout Europe.

What is known is that, thanks to Law's gambling prowess, charm and silver tongue, over the years, he gained access to various governments at the highest levels. In 1706 he was able to get a "... four part memorandum to Chamillard, Louis XIV's incompetent and overworked controller general, who headed the ministries of finance and war." The document outlined Law's vision for bringing currency to France. The country was virtually bankrupt at the time, thanks to Louis's military misadventures and other over-indulgences, and most of its people were living in poverty. Law was convinced that his idea, a precursor to modern banking, could save the nation, but Chamillard "did not understand and only laughed at Law's vision," Gleeson writes. His memorandum never reached the king. But "Law did not give up hope. He based himself in Holland from where he continued the roving quest for a ruler willing to listen."

By 1713,

    his luck had begun to turn. . . . Louis XIV, now seventy-five and still in remarkably robust health, brooded over the ruins of his kingdom. . . Louis' sorrow promised opportunity for Law.

Still, years passed, and on September 1715, the king died. He'd ruled for 72 years. But Law's idea, and his passion for it, lived on, as did his luck --- the Regent, who ruled the country after the king's death (Louis XV was still a child) was Law's friend, the Duc d'Orleans. By 1716, Law's Banque Générale was open for business and issuing currency. Two years later the government acquired it, and gave it the name Banque Royale.

A great story of a visionary's unbridled success, right? Well, not quite, not exactly; actually, not at all. Because in 1721 . . . no, that would be telling. I don't want to rob you of the dark pleasure of reading Gleeson's fine account of how it all went to pieces, for Law and for France. Let's leave it at this: When it came to calculating the odds in this complex effort --- what was then an economic experiment --- Law seems to have over-estimated his abilities, under-counted his enemies, and utterly failed to anticipate what Charles Mackay's 1841 classic on money would call "Extraordinary Popular Delusions and the Madness of Crowds."

The beneficiaries are those of us who invest in The Moneymaker. The ROI is satisfying indeed.

--- Douglas Cruickshank
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