Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance

by Janet Gleeson

  Although he had been granted a modest pension by the regent, and London bankers restored limited credit to his accounts, he still battled for settlement of debts incurred on the company’s behalf, for which many held him personally responsible. He was distraught that his brother’s friend, the London banker George Middleton, had been forced into bankruptcy as a result of his losses on Law’s account, and had already tried to speed up the settlement of these debts from Venice: “I would have you get the Marquis de Lassay and my brother to meet with you, to concert what can be done to satisfy M. Middleton, I have wrote to M. le Duc, who will speak to the Regent about what is due by the King, his R.H. had agreed to have a million per month given out of the 15 millions the company was to pay,” he had written to Katherine. But the regent had seemingly forgotten his promises, and despite numerous letters to Bourbon, Dubois (the French first minister), Lassay, and others, nothing was done.

  Little by little Law was welcomed back into fashionable London society. People were fascinated by his reputation, longed for the opportunity to meet him—and were invariably charmed by him when they did. Writing to the Earl of Oxford, William Stratford noted,

  I was fetched from the Audit House yesterday to three gentlemen who had brought me a letter from Dr. Cheyney. I was once thinking not to have gone home, but when I did, the gentlemen proved to be the famous Mr. Law and his son, and Lord Sommerville, a young Scotch lord. Though I was no stranger to Law’s character, yet I did not grudge a bottle of wine, for the sake of a little conversation with one who has made so much noise in the world.

  In the new year of 1722 he was a regular visitor at court. He spoke frequently with the king—presumably in German, since George spoke little English—and mingled with the prince of Wales and other royal offspring. To Katherine he described the royal children as “handsome, genteel, and well fashioned. If my daughter was here I believe [she] would be liked by them.” In between the social rounds he spent his time quietly, enjoying a regular ride with his son on the horses they had acquired; he told Katherine that he felt much revived by the exercise.

  But the passing months brought little real improvement. His financial affairs were still unresolved; the company debts remained unsettled. One creditor, a moneylender called Mendez to whom Middleton had been forced to turn to raise money against Law’s debts, had now taken out a writ against him and could have him arrested at any time. Despite repeated applications for a passport, Katherine was still refused permission to leave France. “I own to you these reflections animate me sometimes to that degree, that I’m not master of my passion,” he wrote helplessly, valiantly trying to rekindle her hope that they would soon be reunited with the suggestion that yet another refusal to grant her passport might mean he would soon be recalled to France. “I’m in hopes to hear the regent will allow you to come out of France; if not, I suppose his intention may be to have me go over, for I hear the people of that country are much changed in their way of thinking upon my subject.” At other times, when his sense of desperation was overwhelming, he vented his wretchedness in letters to Orléans or Bourbon. “I am aware of the treatment I have had from France. The imprisonment of my brother and of those who showed some attachment to me, the retention of Mme. Law and my daughter, but above all the indifference that Your Royal Highness has shown on my subject has hurt me more than the state to which I am reduced,” he wrote to the regent, who as usual failed to respond.

  Added to concerns about his financial affairs and Katherine, his relationship with his brother William had become severely strained. As soon as Law had left France, William had written long, grumbling letters to him in Venice, to which Law had sternly replied, “I would have you reflect that what you have had has been by my means, and if I have engaged you in measures that you don’t now approve, I have followed these measures for myself and children, reproaches are not proper at present, you should propose expedients.” The divide widened after William’s arrest, when he had recklessly sent his wife Rebecca to Venice to beg for help. Rebecca was pregnant and Law referred to the journey as “la sottise,” foolishness. Nonetheless he provided her with statements detailing his involvement and shared what little money he had—borrowed from Las say—with her. Since Law’s return to Britain the rancor between the brothers had deepened further over outstanding debts and disagreements about property bought by Middleton. At first Law had felt that the hardship of his incarceration excused his brother: “My brother must have gone mad; perhaps prison has turned his head,” he suggested to a friend. Middleton had tried to intervene, telling William of “some conversation I have had lately with your brother. I find him a little disobliged with you, which I believe proceeds in some measure from your writing him in a way or manner not altogether agreeable to him.” Middleton urged William to make up his differences with Law. “Now as he was by far the most valuable friend you possibly could have, and still expressed himself with much concern for you, ’till of very late, I humbly think you would do well to consider sedately, how far it may be proper for you to disoblige him, as well as how much the world will blame you.” But Middleton’s letter seems to have had little if any effect, and Law was infuriated to discover that some of the malicious and unfounded rumors concerning his supposed secret funds outside France had originated from William. “What must my enemies think when they see the conduct of my brother?” he wondered. Even when the situation in France improved slightly and his brother’s release was imminent, a frostiness remained, and compared with letters to other friends, Law’s tone in letters to William was markedly detached. “I have wrote several times to the Regent, and to the Cardinal [Dubois] about your enlargement; and I expect to have heard of your being at liberty. I suppose you will soon, his R.H. having promised to do me and you justice.”

  Watching developments closely was Sir Robert Walpole, the first lord of the Treasury and chancellor of the Exchequer, who, having risen to power in the aftermath of the South Sea debacle, was now Britain’s prime minister in all but name. Despite Law’s financial vulnerability, Walpole felt that he might soon be invited back to France. “If the Duke of Orleans is disposed to recall him [Law] as Mr. Law’s friends here are very sanguine in hoping,” he wrote to the diplomat Sir Luke Schaub,

  it is not our business to obstruct it. . . . If Mr. Law does not return there can be no doubt but that the power might fall into worse hands; and if any who are neither Englishmen by birth or affection should prevail, we should have a less chance than by admitting one who has sundry ties to wish well to his native country.

  The conviction that he would soon be back in power also helped buy time from Law’s creditors. Some moneylenders had enough confidence in his prospects to offer him primes option loans: for a £10 loan he would repay £100, but only if he returned to France. He admitted he would be tempted by the offer “if they wanted to give me enough to settle my commitments.”

  The pace of progress was excruciatingly slow. Eventually, in October 1723, almost two years after his arrival in London, Law’s departure for Paris, accompanied by Walpole’s brother, seemed imminent. “I have so ordered my brother’s journey to Paris with him that he thinks Horace goes with his advice,” wrote Walpole. But it was not to be. Preparations were under way and Law was awaiting final instructions from Paris when, on December 2, inauspicious news reached London. Orléans, worn out by debauchery and the pressures of government, had suffered a massive heart attack at the age of forty-nine and collapsed and died in the arms of one of his mistresses, the Duchesse Marie Thérèse de Falaris.

  Law’s hopes of return to France died with him. Bourbon took over the reins of power, but his ambitious and scheming mistress, Madame de Prie, who had lent Law her coach when he escaped from France, had grown hostile to him. The recall for which he had hoped never came, and payment of his pension was suspended. The charity of friends and wins at the tables were again his only means of support. Profound humiliation shines through his letter to the Countess of Suffolk: “Can you not prevail on the
Duke to help me something more than the half year? Or is there nobody that could have the good nature enough to lend me one thousand pounds? I beg that, if nothing of this can be done, that it may only be betwixt us two, as I take you as my great friend.”

  A poignant letter to Bourbon from the following summer of 1724 resounds with turmoil at his circumstances: “There is scarcely an example, perhaps not one instance, of a foreigner like him [Law], who acquired in so high a degree the confidence of the Prince, who made so large a fortune in so upright a manner, and who, on leaving France, reserved nothing for himself and his family, not even what he had brought into the kingdom with him.” As time passed, rancor at this injustice yielded to a sense of remorse at the opportunities he had let slip:

  I have sacrificed everything, even my property and my credit, being now bankrupt not only in France but also in all other countries. For them I have sacrificed the interests of my children, whom I tenderly love, and who are deserving of all my affection; these children, once courted by the most considerable families in France, are now destitute of fortune and of assets. I had it in my power to have settled my daughter in marriage in the first houses of Italy, Germany, and England; but I refused all offers of that nature, thinking it inconsistent with my duty.

  Desperate for money, worried that he might be thrown into debtor’s prison at any moment, and hopeful that if he were employed by the English authorities they might take up his case with France, Law now turned to Walpole for a diplomatic post. Although as a Catholic he was barred from holding an official diplomatic position, Walpole agreed. Law was delighted: “I will do all I can so that his majesty and his ministers are satisfied with my services,” he wrote a few days before leaving.

  Having received his first payment from the government, presumably with much relief, John Law crossed the channel on August 9, 1725, accompanied by his nephew. He had been instructed to head for the spa of Aix-la-Chapelle, and take the waters while awaiting further orders. His role was to be far from orthodox: he was to journey through Europe, pretending to be a traveler but in reality acting as an undercover agent, reporting anything of interest he noticed. France’s “meteor” was poised at the age of fifty-four to embark on a new career as a spy.

  18

  VENETIAN SUNSET

  I stood in Venice, on the Bridge of Sighs;

  A palace and a prison on each hand:

  I saw from out the waves her structures rise

  As from the stroke of the enchanter’s wand:

  A thousand years their cloudy wings expand

  Around me, and a dying Glory smiles

  O’er the far times, when many a subject land

  Look’d to the winged Lion’s marble piles,

  Where Venice sate in state, throned on her hundred isles!

  Byron, Childe Harold’s Pilgrimage,

  canto the fourth

  LAW ALWAYS RELISHED PLAYING THE MAN OF MYSTERY. Relieved to have a distraction from his problems in France, he threw himself into the subterfuge with typical enthusiasm. He arrived, as planned, in the German resort of Aix-la-Chapelle in early September to await orders. Aix-la-Chapelle—or Aachen, as it was also known—was one of Europe’s most famous spas, where the fashionable congregated to take the sulfur waters, socialize, and happily for Law, to gamble. He made no attempt to conceal his identity, and visitors to the chic watering hole were enchanted to meet and quiz the international celebrity—little suspecting that while they were trying to extract snippets about his system he was pumping them for political insights. The elector of Cologne and Prince Theodore, his brother, were passing through incognito when they heard Law was in town and immediately sent word to his lodging inviting him to wait on them. Law was still in bed when his valet informed him that the elector desired to see him, but conscious of his duties as a secret agent, he dressed hastily and rushed to pay his respects, then reported the encounter back to Whitehall.

  A month later he was still waiting for instructions, and the suspicion that his assistance was not quite as crucial to the British authorities as he had presumed was beginning to grow. To jolt them into action he dispatched a sharp reminder that his fame in Europe was undimmed and offered entrée to the highest circles. “The work I did in France and the confidence that the Duc d’Orléans had in me excites curiosity. I see that in Vienna ministers and even the Emperor wanted to speak to me on the business that passed between my hands.” Although to English eyes the imperial court at Vienna was of particular interest—Austria had recently broken her alliance with England and France and forged new ties with Spain—Law was much too high-profile and contentious a figure to be trusted to dabble in such delicate matters. Eventually he was given the far less crucial job of visiting Munich to try to persuade the elector of Bavaria to break with Vienna and favor the English alliance.

  Leaving Aix-la-Chapelle in early December, he broke the journey in Augsburg, where he had arranged for letters from France to be sent. Again, mindful of his new position, he took every opportunity to mingle in political circles. The ambassador of Savoy to France, Monsieur de Courtance, was in town and eager to talk. Law made diligent use of the opportunity at hand: “I made him see that the Alliance of Spain and Portugal won’t be a great help to the Emperor; that his British Majesty was today the only maritime power, who could put more vessels to sea than all the other powers combined, that Spain and Portugal risk much with regards America if they enter into war with England.” Like everyone else in Europe, Courtance was hungry to find the secret of Law’s moneymaking. Law hated to be viewed as a failed conjuror, but could rarely resist an opportunity to hold forth on his pet subject. Discussions such as these meant he could justify his actions—probably to himself as much as to those listening—and gave him a sounding board for new ideas. He held forth on the subject of luxury and told Courtance that luxury was not to be feared—unless it creates a trade deficit. So long as industry and output expand, a country will prosper.

  On New Year’s Day, Law’s party left Augsburg for the short journey to Munich and the court of Elector Maximilian Emmanuel of Bavaria. Munich was generally thought to be one of the most pleasant of German courts. “The splendour and beauty of its buildings both public and private . . . surpasses anything in Germany,” wrote one eighteenth-century tourist. And as an added attraction, the carnival was in full swing. Law, still fired with commitment to his assignment, and eager at last to have the chance to get on with it, ignored the entertainments and headed straight for the electoral palace. Maximilian had been indisposed for several days with “a type of rheumatism in his neck which greatly torments him and prevents him from sleeping, and forces him to remain in bed.” Nevertheless, news of the arrival of the illustrious Law cheered him, and the following day Law was summoned to his bedchamber.

  Greeting him warmly, Maximilian questioned why, when Law had passed through Munich on his departure from France four years earlier, he had failed to visit. Law alluded vaguely to his dilemma with creditors: “I had then reasons for passing without being known.” But the fact that he was now lingering in international resorts, living the life of a well-to-do tourist, can only have added further fuel to the rumors that he had a hidden cache of funds somewhere. Maximilian, in common with most of Europe, was under the impression that Law was still fabulously wealthy, and he was as keen as everyone else to get him onto the subject of money. Bemoaning the high interest he was being forced to pay on loans, he wondered whether Law might help him out. Law replied frankly, “I took the occasion to tell him that if I was in a position to do so I would lend to His Excellency with pleasure, and at a reasonable rate of interest, but that I had nothing outside France, and that since my affairs were still undecided I had my own difficulties.”

  After promising initial discussions, Law left the ailing elector without tackling the question of the English alliance, but the intention on both sides was that the talks should continue soon. The following day the elector’s health seemed improved, but he was not well enough to rece
ive visitors. Law passed the time meticulously reporting the details of his first meeting back to London. He was still frantic for news from France, and the letter begins and ends with entreaties to the Duke of Newcastle and Walpole to intercede on his behalf with the Duc de Bourbon.

  A week later the elector’s health deteriorated. The pains spread from his neck to his stomach and were so severe that it was feared his life was endangered. More medical advice was urgently sought, and leading physicians were summoned. A French doctor pronounced the illness not life-threatening and promised to restore him to full health, but despite his confident prognosis, a fortnight later Maximilian was dead.

  Uncertain what he should do next, Law remained in Munich. Ostensibly he was still fulfilling his role as undercover agent, dispatching information about the armies of Bavaria and the neighboring state of Hesse Cassel and waiting for further instruction. His presence in Bavaria drew several influential visitors, among them Count von Sinzendorff, an Austrian minister to whom Law gave a copy of a memoir explaining his ideas, which, he said, would prove the scheme “well founded and that it would have lasted if extraordinary events had not intervened.” Despite his sufferings his idealistic approach to money remained unchanged, and when von Sinzendorff asked him about state lotteries, Law, still haunted by visions of the rue Quincampoix tumult, replied disapprovingly that they encouraged debauchery, whereas “wealth should be acquired by industry not by luck or gambling.” Bearing in mind that apart from his salary from the British government, he relied heavily on gambling for his own income, it seems Law was far from gratified or easy with the life he had been forced to lead.