Merryn Talks Money: John Law, The Gambler Who Invented Modern Money (Part 1)

Summary

Odd Lots x Merryn Talks Money:

John Law, The Gambler Who Invented Modern Money (Part 1)

Original Air Date: December 26, 2025
Hosts: Merryn Somerset Webb & John Stepek
Podcast: Merryn Talks Money [Featured on Odd Lots feed]

---

Episode Overview

The episode kicks off a special two-part exploration of the extraordinary, chaotic, and foundational life of John Law—a 17th-18th century Scottish gambler, fugitive, and visionary whose experiments in monetary theory laid the groundwork for many modern ideas about money and finance. Hosts Merryn Somerset Webb and John Stepek delve into Law’s tumultuous biography, tracing how his early life shaped his approach to risk, banking, and the creation of new financial systems. Along the way, they explore the contexts of European finance, Law’s scandalous personal life, and the dramatic events that forced him to invent and implement unprecedented monetary reforms in France.

---

Key Discussion Points & Insights

1. Setting the Stage: Why John Law?

• The duo highlights Law’s pivotal but controversial legacy, positioning him as a more influential figure than many realize.
• Quote: "John Law, he might not be as respected as the likes of Adam Smith, but he pretty much laid the foundation for the monetary system that we use today."
  — Merryn Somerset Webb (04:14)

2. Early Life and Scottish Roots

• Born in Edinburgh, 1671, to a prosperous goldsmith family; learned about money, credit, and the duality of gold as both object and abstract value.

• Quote: "One of the core things about being a goldsmith son is that he's used to that world where gold is an object... but it's also got a separate financial function."
  — John Stepek (08:08)

• The family business straddled goldsmithing and early banking, setting young John up to understand both physical wealth and emerging finance.

• Noted: No strict fractional reserve yet, but goldsmiths lending more than they held—an embryonic form of banking (06:59–07:47).

3. Adolescence & Character Formation

• Law’s wild, risk-inclined youth: clashing with his mother over gambling, nightlife, and waywardness; a court dispute over his inheritance.

• Quote: "He's already someone who's very much pushing the boundaries... someone who kind of enjoys taking risks and actually probably isn't that careful with money, despite his upbringing."
  — John Stepek (09:43)

• Moves to London at 21, quickly adopts dandy "Beau Law" persona, becoming known largely for gambling and extravagant living.

4. The Duel & Becoming a Fugitive (12:09–18:54)

• The pivotal event: At 23, Law kills Edward “Beau” Wilson in a duel in Bloomsbury Square.

• Sensational rumors about the reason; most likely an argument involving Wilson’s sister and Law’s mistress.

• The judicial outcome turns on whether it was murder or manslaughter; Law is sentenced to hang but is spared by royal reprieve thanks to political maneuvering.

• Quote: "If this hadn't happened, John Law might just have ended up as another London society man... Instead, he's about to embark on a path that will put him in a position to play financial alchemist with one of the biggest economies in Europe."
  — John Stepek (12:09)

• Delays in royal pardon and pressure from both supporters and enemies leave Law to languish in prison (albeit comfortably), until, with tacit kingly approval, he finally escapes and goes on the run.

5. Wandering Europe & Personal Life (22:35–28:06)

• Law lives as a fugitive across Europe for a decade, making a living by organizing high-society gambling games and learning about advanced finance in Amsterdam and other centers.
• Becomes involved with Catherine Knowles, never marries, displays notable religious and ideological flexibility for the age.
• Quote: "He never gets married... he's born a Protestant, but he converts to Catholicism purely for political purposes when he moves to France... what a kind of unusually free-thinking individual he seems to be."
  — John Stepek (23:36)

6. The Financial Context: War, Debt, and the Birth of Modern Banking (24:43–28:21)

• Both England and France deeply indebted due to constant warfare.
• England creates the Bank of England in 1694 as an innovative way to fund public debt independent of the Crown’s whim.
• France’s system remains older, more corrupt, and less efficient: taxes are largely regressive, collection is corrupt, reforms lagging behind England.

7. Law’s Monetary Theories and Proposals (28:21–38:56)

• Law tries to pitch “land banks”—currency backed by mortgages on land—in England, France, Scotland, and Savoy.

• Publishes his treatise "Money and Trade Considered," arguing for a functional, abstract understanding of money.

  • Notable Quote: "'Money is not the value for which goods are exchanged, but the value by which they are exchanged.'"
    — John Stepek, quoting Law (31:56)

• Law’s key insight: Money is a financial technology, not merely a commodity.

• Hosts emphasize that Law’s critique of tying currency to limited commodity (gold/silver) showed real-world awareness of monetary constraints under precious metal standards.

• Host debate: Was Law an “improver” driven by ideas more than by personal wealth or power?

  • Both settle on his ideological passion and intellectual ambition.

8. Scotland’s Financial Woes & the Act of Union (34:53–36:21)

• Law’s proposal for monetary reform gets a hearing in Scottish Parliament, but ultimately fails amid the collapse of the Darien Scheme and leads to the Act of Union with England in 1707.
• Fears for Law’s safety now that Scotland and England are merging drive him back into exile.

9. Success Abroad & Prelude to French Experiment (36:21–38:56)

• By 1711, Law is successful and well-connected, with significant wealth built up from gambling and provisioning armies.
• Still, he shops monetary reform schemes around Europe, nearly gets traction in Turin and elsewhere.
• France, crippled by debt after the War of Spanish Succession, becomes ripe for radical ideas—setting up Law’s transformative (and infamous) experiments in French finance.

10. Cliffhanger for Part II

• France faces “reform or crisis”; Law is positioned at the center of Europe's greatest monetary drama.
• Quote: "France is desperate for fresh ideas on how to deal with its lack of money. And John Law is desperate to see his ideas put into practice... We'll find out how that went in the next episode."
  — John Stepek (39:06, 39:35)

---

Notable Quotes by Segment

• On John Law’s influence:
  “His story is the story of basically how a fugitive Scotsman… briefly became the most powerful man in France. And the richest.”
  — John Stepek (03:51)

• On the difference between gold as object and gold as money:
  “There's this thing called moneyness… an abstract property of the gold… There's a difference between the gold object and gold as money.”
  — John Stepek (08:08)

• On Law’s personal drive:
  “It's not the money that he was basically interested in, it was his ideas. He's basically a world improver.”
  — John Stepek (32:52)

• On the innovation of money:
  “Money is… not a thing in itself. It's the financial technology that makes everything else work.”
  — John Stepek (31:56)

---

Timestamps for Key Segments

• Law’s Scottish upbringing & early banking context: 05:28–09:02
• Move to London, gambling, social reputation: 09:43–12:07
• The duel & its legal/biographical impact: 12:07–18:54
• Life on the run, European travels, Catherine Knowles: 22:35–24:43
• Contemporary financial systems & birth of Bank of England: 24:43–28:21
• Financial innovation & Law’s theories (“Money and Trade Considered”): 28:21–32:33
• Was Law motivated by money, power, or ideas?: 32:33–34:53
• Failed Scottish monetary reform & Act of Union: 34:53–36:21
• Pivot to France, set up for Part II: 36:21–39:39

---

Memorable Moments & Color

• Merryn jokes about whether Law would have been “just another London society man” if not for the duel.
• The hosts riff about Law’s risk-taking—a “naughty boy” even by modern Edinburgh standards.
• The “training montage” analogy: instead of boxing, Law’s spending his fugitive years learning probability and financial engineering across Europe (28:21).
• “Save us from the improvers, eh?” quips Merryn, sparking a conversation about the dangers and boons of radical monetary reformers (34:53).

---

Takeaway

This episode sets up Part 2 by casting John Law as a flawed genius marked by outsized ambition, scandal, and deep-rooted belief in innovation. His experience straddles crime, exile, romance, and relentless intellectual curiosity, painting him as the ultimate proto-modern financial adventurer. The stage is set for his fateful rendezvous with France—a country in crisis, ready (perhaps unwisely) for Law’s most ambitious and consequential monetary experiments.

---

Don’t miss Part 2, where the real test of Law’s ideas unfolds amidst the post-Louis XIV French financial maelstrom.

Transcript

[Palantir Advertiser]

You're being sold an AI future where you're obsolete or irrelevant. That vision is wrong. At Palantir, they're building AI that helps workers and unlocks their full potential. American workers are our nation's greatest strength. AI shouldn't eliminate them, it should elevate them. Palantir is here to tell their stories. From factories to hospitals, AI is freeing people from drudgery, letting them do what humans do. Create, solve, build Palantir. Making Americans irreplaceable.

[John Stepek]

So you're telling me that the AI that's meant to make everyone's job easier to manage just adds more to manage on top of the thousands of apps the IT department already manages? Funny how that works. Any business can add AI. IBM helps you scale and manage AI to change how you do business. Create Smile to business. IBM.

[Palantir Advertiser]

Running a business is hard enough. Don't make it harder with a dozen apps that don't talk to each other. One for sales, another for inventory. A separate one for accounting. That's software overload. Odoo is the all in one platform that replaces them all. CRM, Accounting, Inventory, E Commerce, hr. Fully integrated, easy to use and built to grow with your business. Thousands have already made the switch. Why not you try Odoo Odoo for free at o d o o.com that's.

[John Stepek]

Odoo.Com oral health goes beyond just aesthetics. It's deeply connected to your general health and well being. That's why preventing oral health problems before they start is so important. When you use the Colgate Total Active Prevention system, you're not just helping to prevent oral health problems like cavities and gingivitis. You're laying the groundwork for overall wellness. Colgate Total's three product routine includes a reformulated toothpaste, an innovative toothbrush, and a refreshing antibacterial mouthwash that all support a health healthy mouth. In fact, the three products were designed to work together to be 15 times more effective at reducing bacteria buildup in six weeks starting from week one compared to a non antibacterial fluoride toothpaste and flat trimmed toothbrush. Take control of your oral health and get the Colgate Total Active Prevention system today so you can be dentist ready. Visit shop.colgate.com Totally hello odd lots listeners. I'm Joe Weisenthal. And I'm Tracy Alloway. We hope you're enjoying your your holiday.

[Palantir Advertiser]

Season and we're taking a little break.

[John Stepek]

Ourselves, so we wanted to bring you an episode from one of our fellow podcasts here at Bloomberg A Special holiday present, if you will. This is from the Marin Talks Money podcast, which is hosted by Marin Somerset.

[Marin Somerset]

Webb and John Stepek.

[John Stepek]

And it is all about one of the most interesting historical economic figures. It's John Law. Yeah, that's right.

[Palantir Advertiser]

So John Law, 18th century gambler, murderer, economic visionary. Like I think people say he, like.

[John Stepek]

Is sort of the.

[Palantir Advertiser]

The mind behind fiat currency as we know it today.

[John Stepek]

So his influence is still felt. And check out the episode we hope you enjoy.

[Marin Somerset]

Bloomberg Audio Studios Podcasts, Radio news. Okay, look back through the history of money, and quite often it seems like nothing is happening. Long, long bits of calm and then suddenly there's a catalyst of some kind. Stuff changes, right? Everything exploding, things flipping, a period of chaos, and then everything seems to reinvent itself. Now, John Law. John, you know all about John Law. His history reflects exactly that. So what we're trying to do here over this holiday and over two episodes is tell his story, which tells us a lot about money, right?

[John Stepek]

Yeah. And we need to take two whole episodes to do it. This is, this is a special series, folks. John Law story is the story of basically how a fugitive Scotsman clearly identify with that quite closely, briefly became the most powerful man in France.

[Marin Somerset]

And the richest.

[John Stepek]

And the richest. Yeah. Which is even more important. And in doing so, he changed both monetary and arguably European history forever. Wow.

[Marin Somerset]

It's a big story. So stay with us for it, because his rise and his fall is not just about history, is it? It's about the monarchy system that we live in today. Okay. John Law, he might not be as respected as the likes of Adam Smith, but he pretty much laid the foundation for the monetary system that we use today. Right. So you could arguably say that his thinking is more important than a lot of that academic muck.

[John Stepek]

Yeah, you could. And whatever else he was, he was a gambler and sometime murderer. He was also a practitioner. He did what he believed. And of course, as we'll find out, that didn't necessarily work to his advantage all the time.

[Marin Somerset]

Yeah, I think, you know, you're already giving away the fact that despite the fact he's a murderer gambler, the beginning of the end of monetary systems and all sorts of other appalling things. John rather likes John Law.

[John Stepek]

I think I'm really quite fond of.

[Marin Somerset]

Pulls for charisma every time.

[John Stepek]

Well, yes, yes, perhaps. Chapter one, the beginning.

[Marin Somerset]

Where was this horrible person born?

[John Stepek]

Well, let's wind back all the way back to April 1671. And John Law is born in Edinburgh. He was one of 12 children, four of whom died in childhood. His dad, William Law, was a goldsmith and his mum, Jean Campbell, was William's second wife and she had three sisters and they'd all married well. So he's basically from a kind of upper merchant class background. So in 1683, when John Law is 12, his father William goes to France because he's got a kidney stone. He has to get an operation. The chances are that he'll die under the knife, but it's his only chance. And there happens to be a company of barber surgeons of great reputation in France who do this kind of thing all the time. So before he leaves, he puts his affairs in order, says goodbye to his eight kids and his wife and then heads off to France. And as it turns out, unfortunately he does die on the operating table.

[Marin Somerset]

Leaving behind eight kids.

[John Stepek]

Leaving behind eight kids. And so Jean takes over the family business and she also avoids getting married again so as not to have to sign the business over to her husband. And at this point, goldsmiths are already in banking, so one of John's brothers takes over the kind of goldsmith side of things, actually making stuff out of gold. But Gene and John sort of jointly kind of operate the banking side of the business. So lending money, this is already something that goldsmiths are starting to do.

[Marin Somerset]

So we're not into fractional reserve banking at this point, not quite yet, well.

[John Stepek]

Not formally, but actually goldsmiths really are lending out money. It's not like they have to have a one to one correspondence. It's not 100% reserve requirements. People know that people need credit and there's no way you could do that and have all the gold still sitting there in the bank on demand at any time. I mean, there's actually an interesting thing called bailment, and this is where if you want your goldsmith to look after your gold, you put it in a bag and you give it to them and that means that you want that gold back. But if you give them loose coins, there's an understanding that that money can be lent out and it's not necessarily the same gold coins, et cetera, that you're going to get back. So basically, if everyone came in, the goldsmiths up once and wanted all their money back, it wouldn't be there immediate that day.

[Marin Somerset]

I reckon I would want my own gold coins back.

[John Stepek]

I mean, I think you probably would at this time because a lot of them are debased.

[Marin Somerset]

Well, other people's may be chipped and clipped, etc. I want mine.

[John Stepek]

Yeah. So I mean, you kind of maybe want to use the bailment so as.

[Marin Somerset]

A child, he's already learned about gouging interest rates, monopolies, gold.

[John Stepek]

Yeah.

[Marin Somerset]

He's kind of off before he says.

[John Stepek]

He'S brought up in that, because I suppose the other interesting sort of one of the core things about being a goldsmith son is that he's used to that world where gold is an object. So it's jewelry, it's plates, it's things like that, but it's also got a separate financial function. There's this thing called moneyness somewhere that is an abstract property of the gold. And he appreciates that there's a difference between the gold object and gold as money. And that's probably already kicking around in his brain. I would have thought a lot of things. He has a tear away. His mum actually sends him off to a boarding school in a little village called Eaglesham, which is still about an hour and a half's drive from Edinburgh. And at least part of it, according to sources at the time, is to keep him away from the temptations at the big city. He's interested in things like gambling. And it does get to a point where he comes back, he's 16, boring.

[Marin Somerset]

School went bust because of the VAT.

[John Stepek]

Was that? Yeah, exactly, yes. Class war even then. But he comes back and they have a falling out, him and his mum. There actually is a kind of court case over it. It sounds like he's almost like trying to divorce her and get his inheritance so that he can be free. And she says in the court documents that actually the true cause of his deserting of my family was because of my motherly reprehending him for biding late out at night and going to the lottery and other games. So basically he's just a naughty boy and she's kind of fed up at this point. He's 16, 16, 17.

[Marin Somerset]

There's a lot of mothers in Edinburgh today who might have similar feelings.

[John Stepek]

Yes, I can imagine. Anyway, there's a lot of push and pull, but it doesn't ever fully go to court and it does eventually get settled by the time he's 21 in 1692. But the point is, I think this illustrates that A, he's already someone who's very much pushing the boundaries and excited about getting out from under and making his name in the world. And also that he's someone who kind of enjoys taking risks and actually probably isn't that careful with money, despite his upbringing. So 1692, John Law is 21 and he's finished his education, he's inherited the money that he's owed from his mother. And he goes down to London in the company of a chap called John Campbell, who's a fellow Scot who wants to set up a goldsmiths in London. Now he does this and that actually eventually becomes Coot's bank. And John Law himself ends up living in St. Martin's in the field, which for anyone who's not based in London is pretty much where Charing Cross Station is today. At that point it actually was a field.

[Marin Somerset]

It's quite a brave move even as a young man to move from Edinburgh to London. Quite a journey.

[John Stepek]

Yeah.

[Marin Somerset]

Alien place to Scots then as it is today.

[John Stepek]

If I remember, I went to London for the first time when I was 21. Thinking about it, I think it's a brave move. I think he is clearly ambitious at this point. I would say he's more reckless than anything else for reasons we'll see in a moment. I think basically he just wants to have fun because he spends a lot of his time gambling to the point where he actually has to write back to his mum and hand over a chunky his inheritance in exchange for more cash, basically.

[Marin Somerset]

God, you must have been fed up by that point.

[John Stepek]

You would think, wouldn't you? But actually it's weird. Throughout their lives they don't have a major falling out again and she doesn't disinherit him or anything like that. So Louis leading a somewhat, possibly dissolute life and he's kind of known as a dandy and a ladies man and he does like gambling and partying and all the rest of it. She doesn't ever actually cut him off.

[Marin Somerset]

Maybe the other kids are worse.

[John Stepek]

I mean possibly, possibly. They'd have to try quite hard. So down in London he gets known as Beau Law. A beau is a dandy, a kind of it boy, a kind of man about town.

[Marin Somerset]

Beau as in B A, U, right?

[John Stepek]

B E A, U. Yes, as in, well, beautiful I guess. And then we come to a massive turning point. It's fair to say that if this hadn't happened, John Law might just have ended up as another London society man, maybe dabbling in politics, maybe pushing money making schemes around Exchange Alley with the other stock jobbers. Instead, he's about to embark on a path that will put him in a position to play financial alchemist with one of the biggest economies in Europe. Chapter 2 the Duel. In April 1694, John Law is 23 and he gets involved in the life of a fellow dandy called Edward Bo Wilson. Edward Bo Wilson is just another. It Boy like John Law, another dandy. And people are really intrigued by him because he's spending an awful lot of money down in London, even though the family that he comes from is not well off. They're sort of gentry, but they're lower end of the gentry. So for perspective, he's thought to be spending something in the region of about 4,000 pounds a year. Year, which in current money is about 675,000 pounds a year. And in terms of what people were saying about him at the time, there's the equivalent of a local gossip columnist who writes to his employers in Devon who like to be kept up to date on the news in London. And he tells them that Wilson is the subject of the general chat of the town. He is no gamester, neither is he known to keep women company. And it cannot be yet discovered how he came to live. It's so prodigious an extravagancy. We never get to find out where Wilson's money comes from, because on the 9th of April, 1694, he and John fight at Bloomsbury Square. And John stabs him in the stomach with an iron and steel sword of a value of 5 shillings, which is about 40 pounds today and to a depth of 2 inches. That's all according to court documents. And he dies immediately, which strikes me as a tiny bit odd, but I don't know anything about anatomy.

[Marin Somerset]

Okay, so this is really unlucky.

[John Stepek]

It is unlucky. We don't know why they fought. A later theory claimed that Elizabeth Villiers, who was King William's mistress, was involved, but there's no evidence for that and it likely originated a century afterwards. And there's also a scandalous pamphlet from the 1720s, and this suggests that Wilson was actually having an affair with a nobleman who was the person paying for his lifestyle, and that Law killed Wilson to silence him. So effectively he was acting as a kind of 18th century hitman. But that seems to just be pure gossip meant to damage Law's reputation at the time. And a more plausible, if somewhat less dramatic account mentions a Mrs. Lawrence, and she was a friend of Law's, and she was the landlady of a house where Wilson's sister lived. Wilson then discovered that Law was keeping a mistress there and he told his sister to leave and Mrs. Laurens took offence, probably because, like, oh, what are you accusing me of running some kind of, you know, brothel or something? An argument followed and that's where the jewel came. So basically, Law might have been defending his friend's honor, which I think is probably quite believable because he's clearly still quite hot headed and reckless. But I mean, ultimately we don't know the real reason. After the fight, Law is arrested. And the key legal question is whether it was a planned duel or a spontaneous fight. Duels were common but illegal. And I mean, this will seem a bit weird actually. Premeditation is what made it murder and therefore punishable by hanging, whereas a kind of heat of the moment impulse fight meant it was manslaughter. And basically in those days you got away with manslaughter. So Law claimed that Wilson attacked him suddenly in Bloomsbury Square and that would have made it self defense. The prosecutors argued that it was prearranged and they showed letters and things to show that they had an ongoing feud. So it was kind of cut and dried from that point of view. So the jury agreed. They convicted him murder and they sentenced him to hang. Now the King reprieved him because although jewels were technically illegal, they were also sort of seen as a way that young men let off steam. So no one was actually keen to execute people for them. But Wilson's family appealed and that left John Law kind of rotting in prison. The jails then were privately run, so he was able to pay for better quarters. So in certain parts of the prison, poor people were kept and they were awful, whereas the bit that he was in was probably a little bit more pleasant, maybe like a kind of three star B and B. So he remained there for nine months while the appeals dragged on and on. And in the background, because he was quite well connected or from a well connected family, Scottish politicians were lobbying the King for his release, while at the same time Wilson's side was lobbying for him to be hung. And the King was kind of stuck in the middle. And you get the sense that the King just wished the problem would go away. And as early as kind of May that year, you've got officials hinting in documents that Law could easily escape from this prison. And it was kind of stupid of him. He'd just be hanging around waiting to see whether he'd get a pardon or not. But I think that's a little bit unfair because obviously he's a society guy, he's a gentleman, and if he does escape from prison, that's going to make him a fugitive. So you can see why he may have thought, well, look, I'd rather wait for this pardon, which is surely forthcoming at any minute. But in the end the appeal doesn't go his way. He sent to be hung. There's a Quote in Johnson's Recollections, in which he recalls that one of the King's right hand men told him that the King wouldn't pardon Law without the consent of Wilson's brother. But he also said that I think the King is willing he should be saved, provided it can be done in such a manner as that His Majesty did not appear in it. And then at that point, reading between the lines, King William tacitly gives permission for him to be bailed out.

[Marin Somerset]

Fascinating that the King is so interested in this case. Right.

[John Stepek]

It is interesting. But I suppose we need to remember that Law is basically a foreign national who's under threat of execution in a foreign country. So the Scottish League legal authorities were almost bound to say something, even if Law wasn't as well connected. And he actually, you know, he is quite well connected.

[Marin Somerset]

So he gets out.

[John Stepek]

So Law makes his escape, or rather by the sounds of it, he's rescued. Johnston, that's the Scottish Secretary of State. We mentioned earlier reports that the King's right hand man came up to him and whispered to me in a crowd that my friend was at liberty, but had been very slow to understand matters and prayed me to keep the secret, which I did until King William's death. And from that point, we don't know exactly where Law goes.

[Marin Somerset]

That's the point, isn't it, John? Really?

[John Stepek]

Well, it is, yes, yes, when you go on the run. But yes, this is a major turning point in his life. Probably the major turning point because it's his fugitive status that will eventually drive him to France, which is where he will create monetary history.

[Palantir Advertiser]

Silicon Valley is selling you a future where you're obsolete or worse, identical. At Palantir, they're witnessing something different and revolutionary. From re industrializing the nation's defense base to shipyard workers building faster and frontline workers, boosting productivity. AI is transforming work across the nation. AI is not replacing American workers or flattening them into conformity. It's unleashing what makes each one irreplaceable. Their judgment, their craft, their creativity. When American workers become more powerfully themselves, they own the future. Palantir, making Americans irreplaceable.

[John Stepek]

So let me get this straight. Your company has data here, there and everywhere, but your AI can't use the data because it's here, there and everywhere. Seems like something's missing. Every business has unique data. IBM helps your AI access your data wherever it lives. To change how you do business, let's create smarter business. IBM.

[Palantir Advertiser]

Running a business is hard enough, so why make it harder with a dozen different apps that don't talk to each other. One for sales, another for invoice inventory, a separate one for accounting. Before you know it, you are drowning in software Instead of growing your business. This is where Odoo comes in. Odoo is the only business software you'll ever need. It's an all in one fully integrated platform that handles everything CRM, accounting, inventory, E commerce, HR and more. No more app overload, no more juggling logins, just one seamless system that makes work easier. And the best part? Odoo replaces multiple expensive platforms for a fraction of the cost. It's built to grow with your whether you are just starting out or already scaling up. Plus, it's easy to use, customizable and designed to streamline every process so you can focus on what really matters running your business. Thousands of businesses have made the switch, so why not you? Try Odoo for [e-mail] that's o d o o.com take control of your digital life with Webroot Essentials Every day there's a new scam, data breach or phishing attempt making headlines. But with Webroot Essentials you don't have to live in fear. You can stay one step ahead. Webroot Essentials is powerful cloud based antivirus that scans six times faster and uses 33 times less space than bloated security software like Norton or McAfee. It's lightweight, efficient and protects your devices without slowing you down so you can stream, work and browse with total confidence. With Webroot Essentials you also get built in Password Manager and Web Threat Shield to keep your personal info, logins and devices secure. 24 sec protect up to five devices from PCs, Macs, tablets and even smartphones with one simple Webroot Essentials subscription for a limited time. Get 60% [e-mail] promo. That's powerful cloud based antivirus for over half off, but only when you visit webroot.com promo. Stop worrying about what's out there. Get your confidence back with Webroot and live a better digital Life today.

[John Stepek]

Chapter 3 Law on the Lamb.

[Marin Somerset]

There's a gap before he arrives in France where Brazil starts to refine his monetary and fiscal thinking.

[John Stepek]

Yes, this is when he does that. Also while he's in jail. This is probably when he meets his long term partner Catherine Knowles, who is oddly enough, a great great granddaughter of Mary Boleyn, who was Anne Boleyn's big sister, the one who got away from Henry viii and that actually introduces the tantalizing prospect that just maybe John Law's children had chewed their blood in them, depending on exactly who was the father of Mary's kids. But anyway, Catherine's brother Charles, who's a sort of dissolute upper class scoundrel, is in jail at the same time as Law for murdering his brother in law. And so you have to assume that this is how they meet because she just sort of appears in his life in the historical record otherwise. And this is something I find really interesting about law in general. He never gets married, so they're happily living together, kind of like essentially out of wedlock. He's born a Protestant, but he converts to Catholicism purely for political purposes when he moves to France. But it's so interesting how there's wars being fought over religion all over the place at this point. And I just find it fascinating what a kind of unusually free thinking individual he seems to be. And I don't know necessarily where that comes from. And perhaps there were a lot more people like that in Scotland and England and France of the time than we traditionally think. But to my mind, it's interesting because.

[Marin Somerset]

When you say if he changing religion between Protestant and Catholic back then it shows a kind of open mindedness and a lack of being, well, not being wedded to an ideology of any type. Although you could say that they're more or less the same, but we won't go there on this podcast. You know, you're not wedded to a particular ideology, you're open minded, you're thinking freely. You've escaped from prison.

[John Stepek]

Yes.

[Marin Somerset]

Got your girl with you, left prison, Catherine's with him. We don't know where he's gone, but he turns up in Genoa.

[John Stepek]

Well, he turns up in Genoa, but I think the other thing, he kind of contextualized stuff a little bit at this point. So 1694, while he's in jail, this is also when the bank of England gets established. So England and France are basically both skins because they've spent so much money on either being at war with each other or with other European powers. So England's fiscal problem dates back to Charles ii. So he'd been borrowing money from the goldsmiths and they would lend the money deposited with them to the Crown and it would be secured against tax revenues coming due in the near future. So it's basically an early but very, very primitive form of government debt. But by 1672, a combination of war and good living means that Charles is out of money. And so he suspends interest payments to the goldsmiths in an event which is known as the stop of the Exchequer. And as it turns out, the payments are never fully made and there are run in court cases right up until the 1700s. But in the immediate term, it bankrupts several big goldsmiths and also means that many wealthy families lose their money because they had been depositing it with the goldsmiths and that had been lent to the King. So anyway, that casts a big shadow over the Crown's credit worthiness. And so come 1693, the king's changed. It's King William now. We're in the middle of the Nine Years War, which is a big European war, which is basically France versus everyone else. And England's at war again, and William needs to raise money to rebuild the navy after a defeat. But of course, the remaining goldsmiths have no interest in financing the Crown anymore. But at the same time, the London financial sector, if you like, is buzzing. People have got lots of ideas about how to raise money. There's talk of lotteries, there's talks about lots of other kinds of schemes. But the scheme that does eventually get support is the idea to set up the bank of England. So the idea is to establish a bank that will sell shares to raise £1.2 million in that money. So, 1.2 million, a lot more than that in today's money from shareholders. And in exchange, they'll get an 8% annual interest rate, which is backed by tax revenues raised on excise duties from ships coming up and down the Thames, basically. And that's the start of a kind of more formal way of raising debt for the country in a way that doesn't purely rely on the whims of the Crown.

[Marin Somerset]

Oh, boy, has that been overused since?

[John Stepek]

It has a bit. It has a bit. But as you're getting your institutionalized and your institutions are starting to get built, whereas in France, you've still got this very kind of old system. Louis XIV has already experimented with paper money and then banned it because he didn't trust it. The tax is raised largely from the poor. Nobles and the clergy are exempt from the tax. Raising powers are sold to people who then pay for the right to raise the taxes. But then when they're collecting them, obviously there's massive scope for corruption involved in that. And so you get a much older, less efficient, more corrupt and also more vested interests can assist them of financing the country in France. So that's kind of where we are at that point. So I think that's just useful for thinking about what happens Next, if you.

[Marin Somerset]

See an organization set up out with the crown, supposedly independent, or a separate organization, but also allowed to raise money with the power of the state behind it, I would definitely start thinking, okay.

[John Stepek]

So that's the state of the public finances in England and France. And that's a very rough idea who they differ. So now let's get back to John Law of an escape from prison. Okay, so if this was a film, this is the point at which we'd break into a training montage. Except rather than having Rocky punching bits of meat, we'd have John Law darting about Europe with his wife Catherine. Not his wife, his lady partner. And so between about 1695 and 1705, they spend 10 years going around Europe, they spend a lot of time in France, they spend some time in Holland, there's various other places they may or may not have been. And most of the time he's basically funding their lifestyle by hosting high end society gambling games. He's very good with statistics, he's very good with understanding probability, which, I mean, to be honest, when you read some of the things that people were getting excited about at the time, they're talking about like he's calculating the odds of rolling a seven with two dice and you're kind of like thinking, how did no one else know how to do that? But it's that sort of thing. And he also wants to and to.

[Marin Somerset]

Be able to do that instinctively. It's amazing, really. Yeah.

[John Stepek]

And also taking the interest to write it down because there are a lot of people writing about probability and gaming in particular at this point. The other thing that's interesting is that he twigs that in certain games. What you need to be is the banker. So a lot of the time he's not actually gambling so much as being the house on the behalf of a lot of rich people who probably not engaged with probability particularly. And that's the other way he's making his money. But at the same time he's not just doing that, he's learning about financial markets. So in Holland he's sort of learning about shorting, he's learning about futures options. Because the financial markets in Amsterdam are extremely sophisticated by standards at the time. He's also spent a lot of time thinking about money because obviously his goldsmithing background means that he knows a fair bit about basic banking already. I think something that's really important to point out is that none of this is coming out of the blue. The biggest driver of all this actually, and all this monetary theory stuff is the fact that England And France have been, and the rest of Europe has been in war for three or four decades. So the governments are incredibly indebted and they keep looking for schemes and ways to raise more money. And so there's all kinds of schemes going around and there's all kinds of thinking about it. So during this time, John Law actually pitches land banks to three different countries. He pitches them to England, he pitches it to France, and he also pitches it to Scotland. And Scotland is the place where in 1704 he ends up back there and he's actually up in front of Parliament or sending his ideas to Parliament because Scotland is looking for ways to raise more money because it's gone bankrupt because of an ill advised colonial scheme. Now, bear in mind, he can go back to Scotland because Scotland and England obviously are two separate countries. So the fact he's wanted in England doesn't mean that he's a fugitive in Scotland. But also by this point, he has actually reached an agreement with Robert Wilson, Wilson's brother, that he will scrap his appeal and he's no longer going to pursue him for the death penalty. So Louis hasn't got a formal pardon yet and won't receive one for quite some time. It's less of a pressing problem for him. So back in Scotland is where he publishes his monetary treatise, which is Money and Trade, which is basically his idea of how money works. So Felix Martin and Edward Chancellor, both of whom are respected financial historians and former guests on this podcast, make the point that Law's thinking does advance the concept of money. And there's one key quote that they pull out, which is this. Money is not the value for which goods are exchanged, but the value by which they are exchanged. So in other words, Law is making the point that money is not a thing in itself. It's the financial technology that makes everything else work. And overall, that's his view of the world, is that money is the problem where there isn't enough of it. Money is the kind of oil you need to make things go round.

[Marin Somerset]

John, what do you think his driver was? I mean, if the way you've just described him, he could have stayed in Amsterdam and made an absolute fortune trading. Right? Sounds like he would have been a phenomenal trader. He could have made a fortune doing that. What was his driver behind doing all this? Do you think he's after status, after power, after more money than you can ever make shorting stuff in Amsterdam?

[John Stepek]

I think that's a really interesting question, but I honestly think it's the ideas that drove him. I Mean, there is a quote, I can't remember who it's from, but one of his contemporaries points out it's not the money that he was basically into interested in, it was his ideas. He's basically a world improver. One of the problems with tying your currency to gold and it was a problem and it would be a problem, is that sometimes you run out of gold. And I think one of the things that we forget because we've had paper money for a while, so we recognize paper money's foibles relative to gold. Gold and precious metal had a lot of problems too. They were constantly being devalued and constantly having the relative values change. I mean, one of the things that John Law does is he goes back into books and looks at how much the price of silver has changed. And one of the reasons that he talks about a land bank and this is the idea basically that you issue a paper currency that is effectively a mortgage on land. It's not very practical, which is one reason why it doesn't take off. But the point is that the land is almost like the stones of Yap. It never would actually change hands. It's just a thing that backs the iou. And his idea is that, well actually we should use land because a, that's where all of the wealth of the economy actually comes from and balance. At that time the price of land was much less volatile than the price of silver. So he's actually talking about anchoring the paper currency to an asset which is a much more stable background value. So basically I think he's very much an idealist and he's excited by economic ideas and excited by theory at the same time. There are lots of people like him. So Daniel Defoe is not just the writer of Robinson Crusoe, he's also a political pamphleteer and he's also. They call them projectors. But it's guys coming up with mad ideas for raising money or not so mad. I mean, that's where the bank of England came from. It wasn't a Defoe idea, but it was the idea of the guy who would actually later go on to do Scotland's ill fated Darien scheme.

[Marin Somerset]

Yeah, save us from the improvers, eh?

[John Stepek]

Well, absolutely. So yeah, it's a time of intellectual ferment and John Law happens to be one of the flowers that grows most rapidly from that particular. What am I talking about?

[Marin Somerset]

Flower. Weed.

[John Stepek]

Weeds. Weed, yes. His proposal for this land bank, money and trade considered is published anonymously by John's Aunt Agnes, who runs a printing Business, which holds the local monopoly in printing Bibles as well, by the way. But everyone in politics knows who's behind it. And despite the fact that his reputation is obviously controversial, he does have some high profile supporters. And his scheme does get a hearing in the Scottish Parliament alongside several others. However, to cut a long and complicated story short, it's not something we need to Quentin for this podcast. Scotland doesn't go ahead with monetary reform, and instead it somewhat reluctantly agrees to unite with England in 1707. And that's partly to bail out the economy and specifically the elites who'd lost a lot of money in the Darien scheme.

[Marin Somerset]

Okay, so here we are. He's still in Scotland. Is he still in Scotland for the Active union?

[John Stepek]

He's not, because what happens? Well, obviously the active union is coming up and he's still a fugitive.

[Marin Somerset]

He can't stay in Scotland.

[John Stepek]

Because it may become part of England. And so that's when he moves to. By the looks of it, that's when he moves to Genoa.

[Marin Somerset]

Jeez. Presumably his descendants still calling for independence.

[John Stepek]

That would explain something. So he goes to Genoa. During this time they've had two kids, and by 1711, he's got 140,000 lira in the bank. Now, according to James Buckin's book, a laborer earns one or two lira a day, so let's call that the minimum wage. Now, the minimum wage in the UK is about 12 quid an hour at the moment. I wasn't going to multiply that to a day, but even if you take 12 quid for an hour and you multiply that by 140,000, then you are looking at somewhere between 850 grand to about 1.7 million. So he's definitely a well off guy. He's got a lot of liquid assets and this seems to have been built up through the same sort of thing. So, like running games. Also, I think he's probably involved in supplying armies because again, there's kind of a war going on. And he's also making a lot of contacts. There's a lot of people, a lot of factions. The Jacobites in Scotland are very fond of him, even though he doesn't really doesn't seem to have very high convictions in terms of political stuff. It's like he's kind of nice to the Jacobites because they're nice to him. He's quite a loyal person, really. Somebody helps him out, then he tends to do likewise. But again, you don't get the sense that he's terribly ideological. In terms of party politics or anything like that, that he's kind of more obsessed with his ideas about monetary and economic reform, because during this time he is also trying to shop his ideas around. So he's tried in Scotland and failed. He approaches the Duke of Savoy with a similar idea for a kind of central bank type organization. He nearly gets a scheme going in Turin, but again, that doesn't happen. And so as far as we can see, France is currently engaged in the war of succession that comes to an end in 1713. And at this point he moves back to France, presumably because you can get in now, because they're not at war anymore. And it's also very clear that Louis XIV is on his last legs. There's going to be succession. France is very, very, very badly off. Debt is running at something like 100% of GDP, which reminds me of somewhere else that we can name right now. And so basically he sees the opportunity to get his ideas maybe taken up and what is actually one of the biggest economies in Europe at this point.

[Marin Somerset]

So France is kind of at. Again, this might sound familiar, but reform or crisis stage? Absolutely, when they decide to go for reform, or as we will find out later.

[John Stepek]

Yeah, a bit of both. Why not both? Exactly, sir. France is desperate for fresh ideas on how to deal with its lack of money. And John Law is desperate to see his ideas put into practice. He's been knocked back by Scotland, he's been knocked back by Savoy, but maybe he can find a home for his thoughts in France. And we'll find out how that went in the next episode.

[Marin Somerset]

At cvs, it matters that we're not just in your community, but that we're part of it.

[John Stepek]

It matters that we're here for you.

[Marin Somerset]

When you need us, day or night, and we want everyone to feel welcomed and rewarded.

[John Stepek]

It matters that CVS is here to.

[Marin Somerset]

Fill your prescriptions and here to fill.

[John Stepek]

Your craving for a tasty and, yeah, healthy snack. At cvs. At cvs, we're proud to serve your.

[Marin Somerset]

Community because we believe where you get your medicine matters.

[Palantir Advertiser]

So Visit [e-mail] or just come by our store.

[Marin Somerset]

We can't wait to meet you.

[Palantir Advertiser]

Store hours vary by location. If a Lenovo gaming computer is on your holiday list, don't shop around, just go directly to the source. Lenovo.com it's your last chance to score exclusive deals on the gaming PCs you want, like the Lenovo Legion Tower 5 Gen 10 gaming desktop and Lenovo Lock Gaming Laptop. So avoid all that shopping chaos and price comparing and just go directly to the source. Lenovo.com where PCs are up to 35% off.

[John Stepek]

That's Lenovo.com Lenovo Lenovo with Venmo Stash A taco in one hand and ordering a ride in the other means you're stacking cash back. Nice. Get up to 5% cash back with Venmo Stash on your favorite brands when you pay with your Venmo debit card. From takeout to ride shares, entertainment and more, pick a bundle with your go tos and start earning cash back at those brands. Earn more cash when you do more with Stash. Venmo Stash terms and exclusions apply. Max $100 cash back per month. See terms at Venmo Me Stashterms.

[Palantir Advertiser]

Tis the season for identity theft. This time of year most of us are checking off our holiday gift lists. But guess what? Identity thieves have lists too, and your personal information might be on them. Protect your identity with Lifelock Lifelock monitors hundreds of millions of data points every second and alerts you to threats you could miss by yourself even if you keep an eye on your bank and credit card statements. If your identity is stolen, your own US based restoration specialist will fix it, guaranteed or your money back. And all plans are backed by the million dollar protection package. The last thing you want to do this holiday season is face drained account, fraudulent loans or other financial losses from identity theft all alone. Make this season about joy, not identity theft. With Lifelock, save up to 40% your first year. Call 1-800-LIFELOCK and use promo code iheart or go to lifelock.com iheart for 40% off terms. Apply.