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Government equity and money: John Law’s system in 1720 France

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  • Francois R. Velde

Abstract

John Law?s System was a radical restructuring of French public finances, carried out from 1716 to 1720. It involved on the one hand a conversion of the existing French public debt into something like government equity, on the other hand the replacement of commodity money with fiat money. For strategic reasons, Law supported the equity at too high a level, resulting in uncontrolled money creation. The System ended with the recreation of a public debt at, surprisingly, the same level as before.

Suggested Citation

  • Francois R. Velde, 2003. "Government equity and money: John Law’s system in 1720 France," Working Paper Series WP-03-31, Federal Reserve Bank of Chicago.
    • Handle: RePEc:fip:fedhwp:wp-03-31
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    Cited by:

    1. François R. Velde, 2009. "Chronicle of a Deflation Unforetold," Journal of Political Economy, University of Chicago Press, vol. 117(4), pages 591-634, August.
    2. Quinn, William & Turner, John D., 2020. "Bubbles in history," QUCEH Working Paper Series 2020-07, Queen's University Belfast, Queen's University Centre for Economic History.
    3. Bignon, Vincent & Flandreau, Marc, 2018. "The Other Way: A Narrative History of the Bank of France," CEPR Discussion Papers 13138, C.E.P.R. Discussion Papers.
    4. Yang Hu & Les Oxley, 2017. "Exuberance in Historical Stock Prices during the Mississippi and South Seas Bubble Episodes," Working Papers in Economics 17/08, University of Waikato.
    5. William Quinn & John D. Turner, 2023. "Bubbles in history," Business History, Taylor & Francis Journals, vol. 65(4), pages 636-655, May.
    6. James Harold, 2010. "Comment on "Immigrant Entrepreneurs in U.S. Financial History, 1775-1914" (by Thomas K. McCraw)," Capitalism and Society, De Gruyter, vol. 5(1), pages 1-6, July.

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    Keywords

    France; Debts; Public; Money;
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