Topic 1. The character sketch of John Law
John Law.. When we pronounce this name now, we don’t have any special associations. Over the years he was unfairly forgotten. Of course, he was rather a contradictory person: on the one hand he was a real genius, a gifted person, and a born-financier. But on the other hand he applied his abilities only for his own profit. Of course, the introduction of the system, based on paper money in France was a novelty, as nobody in Europe could imagine ordinary paper as sort of money after traditionally used gold and silver coins.
This way Law really surpassed the thought of his time. He could foresee practically our present day life, with credit cards, paper notes, shares and all things like that.
Law was an impulsive person. He wanted to reach something sooner, than it was possible, so this way his actions and laws, introduced by him in those days were mostly ill-timed. But no one can deny the fact, that he was really persistent while carrying out his experiments. He never gave in, he never retreated, he never was in despair. Of course, it seems rather strange, but he was absolutely sure of his success. This very fact was fatal in a way for him.
His anxiety for money led him astray and didn’t play in his hands. Every time fortune taught him a lesson, he never took it up, and was obstinately playing with her Majesty fortune again.
He still was a kind man,- tells us the author. And we can argue with this fact. Crowds of people, thousands of deaths, caused by his system, all that clutter and mess in the streets… One could justify him, if it had happened only once. But these, so to say, waves came over the whole country for several times. And again and again a new crisis appeared.
All his life was a result of his turbulent nature, his exile from England, his home country, where he had really acquired only enemies. Certainly, it had considerable influence on his fate.
But all the same, people remembered him again in the 20th century, as he had really done so much. And if it were not for his experience, everything could have developed quite differently, I mean the introduction of paper money in Europe much later. The mistakes, that were made by Law, were simply taken into consideration. That’s why nobody can argue, that he had influenced the world financial system.
Topic 2. The historical background of banking system.
The banking system in France, introduced by John Law, was really innovative. It was organized for the first time on the scale of the whole country. Of course, there were a lot of money-lenders before, but it was an unseen thing to organize such an institution in France.
The typical traits of the new system were shares and paper-money. Now people could pay sums from their savings to buy shares, and this way they invested their money in the development of some institution. In this particular case it was Mississippi Company.
As for paper money, they appeared for the first time in China, long before John Law’s birth. But let China be China, and Europe be Europe. It was shocking news for all: to give up traditional gold and silver coins in favor of ordinary paper. And few people actually realized the principles, on which Law’s system was based.
Time passed, and Frenchmen began to realize, that they could get nothing, they didn’t make any profit of shares, they turned out later to be just useless and worthless pieces of paper, as well as paper money itself.
Naturally, now we realize, that Law’s actions were in a way prophetic, but at the same time ill-timed. They led France into an abyss of debts, and the majority of citizens lost all their property in hope for better life.
The introduction of banking system became the reason for many strikes, rebellions, riots. The development of the system passed through several repetitive recurring stages: the first days of great hopes, then disappointment, then hope and joy again and so on until the end of it.
John Law could masterly persuade people. At the most difficult moments he insisted upon his opinion, that the system was just ready, and everything was at its height.