My new novel 'Devil Money' exposes the massive financial fraud at the heart of the foundation of the city of New Orleans. The city was first settled by the French, lured by the promise of riches under a scheme set up by a fugitive murderer who became the most powerful finance minister in Europe.
John Law was given exclusive rights to found settlements in Louisiana which, in the early 1700s, was part of the French empire. At the time Louisiana – named after French King Louis XIV – stretched all the way to Chicago.
And it was while John Law was selling shares in his Mississippi Company that New Orleans got its name and was first settled – the name refers not just to the city in France but also to the Regent, Phillip of Orleans, who was running the country at the time for the five-year-old King Louis XV.
The price of shares in Law’s company soared, attracting money from all over Europe. By 1720, a share was worth 40 times its original price and the word ‘millionaire’ was first coined to describe people who made their fortunes speculating the stock.
Then the share price collapsed and John Law was forced to flee France in fear of his life, leaving a trail of financial devastation behind him.
Louisiana was described in France as a land of plenty, with gold and silver mines, a wonderful climate a friendly native Americans. John Law even took to displaying gold bars in the shop windows of Paris claiming they were from Louisiana.
In 1718, he sent his servant Billy Barnett to find out the truth. During that trip, New Orleans was founded as the French capital in Louisiana was moved from Biloxi. But when Billy got back to France and reported on the absence of gold, silver, diamonds or treasure of any kind, John Law didn’t want to know.
The shares were booming and he wasn’t going to let a small matter like the true state of affairs get in the way. Sadly, this sort of financial trickery still goes on – it’s just that John Law and his Mississippi scheme were among the first to dupe investors and rip them off.
Law, who founded the Bank of France, was the Bitcoin entrepreneur of his day. He printed paper money to boost his scheme, paid off the Government’s debts and caused run-away inflation. These days, such an economic policy is called quantitative easing. In early 18th century France, they called it ‘le diable d’argent’ – Devil Money.
Law (1671-1729) arrived in Paris in 1715 having fled England to avoid execution for murder and knocked around Europe making his living as a gambler before becoming one of the world’s first economists.
He was befriended by the Duke of Orleans and became the greatest financier in Europe, controller of the entire French economy – from tax-collecting to boat-building – lord of Louisiana and founder of New Orleans. Thanks to soaring share prices, he was probably as rich in his day as Elon Musk is now.
‘Devil Money’ follows his remarkable career through the eyes of stable-boy Billy Barnett.
For Billy, John Law was father-figure, mentor, friend and meal-ticket – until a financial black hole threatened to swallow everyone up.
Theft, lies and Ponzi schemes, insider-dealing, price-fixing, money-printing, fraud, gambling, reckless speculation, tax avoidance, market-rigging – they were all in a day’s work for Billy Barnett.
When it came to treason – John Law started plotting to depose King George I – even Billy had to draw a line. But could he turn paper money back into gold before it was too late?
John Law created the Mississippi bubble which was closely followed by Britain’s South Sea bubble – these financial disasters almost bankrupted two nations and had profound consequences for decades to come.
It’s doubtful whether many of today’s politicians have heard of John Law, let alone learned the lessons of his career. We can but hope they are willing to learn from history.
The financial crash caused by Law’s scheme was so devastating that over the course of the next 70 years it played a part in American independence and the French revolution.
