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John Law: Financial genius or charlatan?
16.01.2021 Museum of the National Bank of Belgium
Economy
John Law

What have Dutch tulips, the Mississippi Company of France, the English South Sea Company, dotcom and American real estate got in common? They are all examples of financial ’bubbles’: initial euphoria gives way to the realisation of exaggeration and disillusionment, followed eventually by the bursting of the bubble.

In the National Bank’s museum there are two old banknotes: paper inscribed with black letters and numbers on a simple white background. Made by the Imprimerie Royale, watermarked Billet de Banque.

However, the story behind this banknote contrasts with its simplicity: it is a fascinating, surprisingly topical story which also shows that people are not very quick to learn from earlier mistakes.

This month’s object concerns Law’s banknotes.

John Law was a Scot, born in Edinburgh in 1671, son of a goldsmith who was also involved in banking, not unusual in those days. After completing his studies, Law moved to London.

He was evidently a good-looking man, sporty, eloquent, a “dandy” who was attractive to the ladies. He aspired to a wealthy lifestyle, but because he could not afford it he started gambling. And he did it with panache : he had a very good memory, and thanks to his exceptional talent for figures and mathematics he made a lot of money.

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