Was John Law Really the Son of Aeolus? John Law: Monetary Stability and the Monarchy Subservient to the Banque Générale (1704-1719)

“ On an island near the Orkneys, a child was born whose father was Aeolus, god of the winds1.” It was with these lines that Montesquieu described John Law of Lauriston (subsequently Law), accused of having built his system on baseless promises.This interpretation, often repeated by commentators, nevertheless contradicts Law's theoretical principles as well as part of the organization of his financial system created under the Regency prior to 1720.We will therefore show that contrary to the commonly accepted interpretation, Law's system was built on various real collateral – and not on wind or hot air – helping to make the French monarchy subservient to the General Bank, later becoming the Royal Bank. First though, we should recall that Law was a very firm supporter of monetary stability.CURRENCY STABILITY AND MONEY SUPPLY GROWTH AS…