The cad who invented modern finance


"Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance," by Janet Gleeson. Simon and Schuster. 303 pages. $24.

Next to "gambler" and "philanderer" the words "who invented modern finance" in this book's title fall a trifle flat. They suggest bankers in pin striped suits or bureaucrats testifying before Congress, policy wonks discussing the national debt. The subject of this elegant, short biography, though, is anything but dull.

In fact, John Law's philandering and deuling fade in interest beside his passion for finance and the drama of the public career that took him from penniless Scot fugitive to controller-general of France in the early years of the 18th century, then from multimillionaire owner of a dozen country estates and a third of the houses on Paris' newly fashionable Place Louis le Grand (now Place Vendome) to bereft refugee, eking out a living in Munich and Venice as a low-level British spy and declaring that "wealth should be acquired by industry and not by luck or gambling."

Growing up in Edinburgh and later in London, John Law had professed to disdain work and turned to gambling to support his dissolute life. Tall, seductive and impeccably dressed in the wigs and lace of the time, he was a reckless womanizer and a gambler who hated to lose.

He read widely on mathematics and probability and developed an uncanny way of winning at faro and basset and the other games of chance popular at the time. When he escaped from England having been sentenced to death (he said he had killed in self-defense, but the court saw not a duel but murder), Law's gambling gained him entree into European society.

The agile mind that was fascinated by numbers and chance soon became equally absorbed in the new field called economics. What artful gambling had accomplished for his own cash flow, Law determined, paper money, credit, international investment and national banks could do for nations.

After years of lobbying, he was able to put these concepts at the service of the desperately indebted French court. The financial boom that resulted astounded everyone and created a frenzy for investment that made the Tulipmania of the century before seem mild. The word "millionaire" was invented to describe the newly rich. Just two years later, though, the bubble burst and one observer "gleefully" predicted that Law "will be pulled to pieces."

Gleeson recounts all this with sympathy, insight and style. Her scholarship is solid but unobtrusive, her text enlivened by telling detail and delicious quotes from Montesquieu, Voltaire, Daniel Defoe and Saint-Simon and other observers less well known. Many readers will especially appreciate the clarity she brings to complicated financial questions.

As to the significance of Law's story, Gleeson is emphatic. His spectacular failure resulted not from flaws in his ideas, which were essentially sound, but because "he ignored human frailty and never imagined that he was unleashing several monstrous genies -- people's desire to make as much money for as little effort as possible, their instinct to follow the herd, to hoard when threatened, to panic if confidence was shaken."

These monstrous genies are with us still and we cannot be saved from them by policy wonks, however brilliant.

Stephanie Deutsch has worked as a writer, researcher, narrator and organizer for a dozen enterprises in Washington. She has degrees from Harvard, Brown and Lycee de Sevres, and is working on a biography of Julius Rosenwald.

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