Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance (6 page)

The unidentified person who placed the notice ensured that the description of the handsome fugitive was wildly inaccurate. John Law was not a captain, nor was his face pockmarked, nor was his voice “broad and loud.” If anything, the unattractive picture it painted helped his successful escape.

Public interest, already avid at the time of the trial, was whipped up further by the drama and romance of Law’s flight. Everyone expected that he would make for his native Scotland, and attention focused on roads to the north. There was at least one false alarm. Narcissus Luttrell noted a writ of habeas corpus issued “for bringing up hither Mr. Lawes, who killed Mr. Wilson, he being apprehended in Leicestershire as he was riding post for Scotland.” Then, a few days later, on January 26, he disappointedly recorded the latest installment: “The report of Lawes being taken in Leicestershire proves a mistake; ’twas another person.”

Even years later the details of the duel and escape were still picked over. Most agreed that there was more to the matter than evidence in court had suggested, and that the origins of Wilson’s money lay at the root of the matter. Many bizarre theories were put forward to make sense of the scant facts. John Evelyn wrote, “It did not appear that he was kept by women, play, coining, padding, or dealing in chemistry; but he would sometimes say that if he should live ever so long, he had wherewith to maintain himself in the same manner.”
The Unknown Lady’s Pacquet of Letters
published in 1707 offered one solution. According to their author, Wilson had accidentally met a masked woman in Kensington Gardens and, without knowing who she was, embarked on an illicit affair with her. The woman forced Wilson to agree that he would never attempt to find out her identity and in return paid him a generous retainer. But the temptation for Wilson was too great. When he discovered that the woman was Elizabeth Villiers, the king’s boss-eyed, unattractive mistress, she was furious that he had broken his word and enlisted the help of her friend Law, whom she knew to be already embroiled in a quarrel with Wilson, to avenge them both. Villiers assured Law that with her royal connections, he would escape the usual punishment.

This extraordinarily far-fetched account was countered a decade or so later by another outlandish and recently rediscovered theory. A pamphlet thought to have been published around 1723, entitled
Love Letters Between a Certain Late Nobleman and the Famous Mr. Wilson: Discovering the True History of the Rise and Surprising Grandeur of That Celebrated Beau,
suggested that Wilson’s money came secretly from a homosexual lover and that Law had been involved in the intrigue and had fallen out with Wilson over it. But by the time this version of events was published, Law was an internationally famous figure who had rocked the financial structure of the Western world. Europe was full of satirical and slanderous attacks on his character and background—and this, in all probability, was one of them.

The truth remains enigmatic.

What is not in doubt is that the duel and the events surrounding it formed a template for the rest of John Law’s life. His blinkered high principles and refusal to compromise, his willingness to wager everything—life itself—in a matter of honor landed him in similar dire predicaments, when he had to rely on prominent friends to propel him to safety. It is possible, too, that while it was the dueling convention as much as reckless courage that induced him to respond to Wilson’s challenge in the first place, the violence of the encounter, his brush with death, and the horrific experience of prison unsettled him more than he revealed. Years afterward, it may have been these disturbing memories that spurred the loss of control that surfaced in similarly stressful situations.

Certainly, too, the inscrutable John Law had resolved that the duel’s full story should be left untold. As he stood on the deck of the packet ship crossing to the Continent and savored his freedom, he forgot his past and prepared for a new life.

T
HE
E
XILE

Flushed with success and skill at all manner of play, he goes from Genoa to Venice, where his good fortune continues so, that he was worth twenty thousand pounds sterling.

With this foundation he began to look about him, and consider how to improve this stock in a solid way of trade . . . having made himself entirely master of these things he frames a paper scheme of his own, and resolves with it to make himself happy and great in his own native country.

W. Gray,
The Memoirs, Life and Character of the

Great Mr. Law and His Brother at Paris
(1721)

W
HAT EXACTLY
L
AW DID AFTER LEAVING
L
ONDON REMAINS
mysterious. As if deliberately to separate himself from his past, the trail of documentary evidence he has left of his life during the next two decades is sparsely and confusingly scattered throughout Europe. He appears in France, where predictably the gambling salons of Paris prove a magnet. He is noted in prison in Caen—his papers were apparently not in order. There was also a lengthy stay in Holland and visits to various cities in Italy. Everywhere he went, his life followed a familiar pattern, with gaming and perilous romance recurring themes. But there are also signs that the lure of the gaming salon and boudoir were not alone in absorbing him: John Law quickly rekindled his fascination with economics.

His growing obsession is underlined by the places he visited: Amsterdam, Venice, Genoa, and Turin offered tantalizing cultural and social attractions. All were cities well stocked with rich tourists and residents, where a gamester of Law’s superior ability knew that there would be ample scope to supplement his income. More tellingly, all were key financial centers. Amsterdam, his home for several years, offered idyllic countryside resembling “a large garden, the roads all well paved, shaded on each side with rows of trees and bordered with large canals full of boats”; it had fine civic buildings, immaculate houses, and women “more nicely clean” than their English counterparts. But Law was attracted to it chiefly because the city was the commercial capital of Europe, and its success was due to a bank.

Amid the monetary confusion of the time, the Bank of Amsterdam had achieved the seemingly impossible: it had brought economic stability to the country, boosted trade, and, for a time, made the Netherlands the commercial superpower of the world. Founded in 1609, the bank had simple governing principles. Adulterated coins were the same scourge in mainland Europe as they were in England, and a vast variety—some eight hundred different denominations of gold and silver coins—circulated. Currency could be exchanged in every town and at every fair throughout Europe, but in Amsterdam the bank took deposits in local and foreign coinage, weighed and assessed them for their purity, and in return issued credit notes or bank money—a form of paper money—representing the
intrinsic
value of the metal content of the coins rather than their nominal face value. The bank money, Law astutely observed, provided hefty benefits: “Besides the convenience of easier and quicker payments . . . the bank save[s] the expense of cashiers, the expense of bags and carriage, losses by bad money, and the money is safer than in the merchants’ houses, for ’tis less liable to fire or robbery.” The bank guaranteed credit notes and in its turn was endorsed by the state. Since the value of the notes was assured, the public preferred them to conventional coins, and they usually changed hands for more than face value.

Amsterdam’s bank was not the first to turn to paper as a substitute form of money. Paper notes were invented, like so many ingenious artifacts, by the ancient Chinese, who are known to have used them in the seventh century. In Europe, nearly a thousand years later, tentative trials had been made in 1656 in Sweden, where a Livonian, Johan Palmstruch, was given a royal charter to found a private bank, provided that half of his profits were paid to the Crown. Sweden was rich in copper but poor in silver and gold, and its currency included massive copper sheets, of equivalent worth to silver coin, but so heavy—as much as fifteen kilograms—that people carried them lashed to their backs or needed a horse and cart to transport them. In 1661 Palmstruch and his Stockholm Banco overcame this inconvenience by printing paper notes that represented the value of the metal currency, the first true circulating European banknotes as we understand them today. The project blossomed initially, but the temptation to overissue notes proved irresistible. Six years later, unable to redeem the notes it had produced, the bank foundered and Palmstruch landed in prison, only narrowly escaping execution.

Three decades later in America, there was a further foray into paper money. In 1690 the Massachusetts Bay Colony was forced to use banknotes to pay its soldiers after the failure of a military incursion into Quebec, which had been expected to yield enough plunder to pay them. In place of gold and silver salaries the men were given paper notes that would be redeemed, they were promised, as soon as taxes were paid by the local community. Predictably the shortage of hard cash continued to beset the colony, and two years later, citing “the present poverty and calamities of this country, and through scarcity of money, the want of an adequate measure of commerce,” the paper was made legal tender. Other colonies, beset by similar cash shortages, soon followed suit.

Of all the unpromising and disparate seeds from which the paper revolution grew, Amsterdam stood out as a shining exemplar of prudence. Loans to private individuals were offered only against deposits of silver and gold and were carefully restricted; there was no mass circulation of notes without metal reserves. The result was that everyone had faith in Amsterdam’s bank. One visitor, Sir William Temple, remarked, “Foreigners lodge here what part of their money they could transport and know no way of securing at home.” Overseas investors—including English, Spanish, and other governments—gladly used it, and their vast deposits were then advanced as loans at modest rates of interest. In this way fleets were financed and trade thrived. In 1609 the bank had 730 accounts; by the end of the century it had 2,700, with over 16 million florins held on deposit. Trust in a bank had secured an entire nation’s fortune.

In 1697, two years after Law’s life of exile began, peace temporarily descended on Europe. The treaty of Ryswick brought to a close the bitter Nine Years War between France and Austria, Holland, England, Spain, Sweden, and Savoy. France became more accessible to foreign tourists, and around this time Law made what was probably his first visit to Paris.

The city must have captivated him. During the past forty years of Louis XIV’s reign, Paris had become “one of the most beautiful and magnificent [cities] in Europe,” according to Dr. Martin Lister, who visited the same year as Law, “in which a traveller might find novelties enough for six months for daily entertainment.” It was a city of stone-paved streets and ornately carved façades replete with hidden treasure. “As the houses are magnificent without, so the finishing within and furniture answer in riches and neatness; as hangings of rich tapestry, raised with gold and silver threads, crimson damask and velvet beds or of gold and silver tissue. Cabinets and bureaus of ivory inlaid with tortoiseshell, and gold and silver plates in a 100 different manners; branches and candlesticks of crystal,” the overawed doctor reported.

For the visiting dandy, city life offered much. By day he might choose to follow the familiar tourist route, visiting the Louvre, or the King’s Library, promenading in the Tuileries, the Luxembourg, or Physic Garden, or hiring a coach to drive to “a great rendezvous of people of fashion,” the Cour de La Reine, a triple-avenued park bordering the Seine. As night fell, there was the opera at the Palais Royal or the Comédie Française or, during the season, the bustling fair of St. Germain, where stalls remained open long into the night.

Once settled, Law gravitated to the court of the erstwhile King James II. Reliant upon the generosity of Louis XIV for his subsistence, James was currently living in impoverished exile in St. Germain-en-Laye, a château outside Paris. The Jacobite court seethed with covert plots to reinstate him, and it is impossible to be certain how genuine Law’s sympathies were with his cause. He may have visited the court merely because he hankered for the company of fellow Scots; or, as he later suggested, to rejoin some of the friends who had helped him to escape from London; or, more questionably, to infiltrate the court in the hope of gathering intelligence of Jacobite schemes. Performing such a service might gain him favor with King William and help secure a pardon—which preoccupied Law throughout his years of exile.

Gaming, “a perpetual diversion here, if not one of the debauches of the town,” claimed his interest, and even more so than in London offered the easiest way to meet high society. As one visitor put it, “It is a great misfortune for a stranger not to be able to play, but yet a greater to love it. Without gaming one can’t enter into that sort of company that usurps the name of
Beau Monde,
and no other qualification but that and money are requisite to recommend to the first company in France.” Predictably, much of Law’s time was spent in stylish salons mingling with the elite, gaining their confidence with his insinuating charm and impeccable manners before fleecing them at faro and basset, two of the most fashionable and high-rolling games of the day, at which he excelled. The odds in both games are stacked heavily in favor of the banker—a role Law adopted whenever he could, possibly paying his hostess for the privilege. One acquaintance remembered that Law “never carried less than two bags filled with gold coins worth around 100,000 livres” and that the stakes were so high that his hands “were unable to contain the coins he wished to stake” and he had his own tokens minted, each worth eighteen louis d’or.

Travel, and the unfortunate affair with Mrs. Lawrence, had done nothing to blunt Law’s enthusiasm for romance. Perhaps it was after a particularly successful evening at the tables that he was introduced to Madame Katherine Seigneur, née Knowles, an expatriate outsider in the court of St. Germain who had married a Frenchman. Katherine was of noble birth, a descendant of Henry VIII’s second wife Anne Boleyn and the sister of the Earl of Banbury. Law had probably met her brother, and if not had certainly heard of him while in the King’s Bench prison in London: he, too, had been involved in a fatal duel. There are no surviving original portraits of her, although she sat at least once for her friend, the famous Italian pastelist Rosalba Carriera, but a Dutch engraving, possibly made after one of the portraits, shows an immaculately dressed woman with dainty features, a generous bosom, and a minuscule waist. Judging by descriptions of her she was not, however, an obvious target for Law’s attentions. The Duc de Saint-Simon recalled candidly that she was “rather handsome,” but that her beauty was flawed by a birthmark like a wine stain “covering one eye and the upper part of her cheek.” Katherine had another crucial distinction: among the overpowdered, overrouged, coquettish ladies of fashionable Paris, Saint-Simon noticed, “she was proud, overbearing and very impertinent in her talk and manners, seldom returning any of the polite attentions offered to her.” Although in England overtly intelligent women were not generally esteemed—most men would have tended to agree with Samuel Johnson’s later quip that “a man is in general better pleased when he has a good dinner on his table than when his wife talks Greek”—in France it was different. Amid Parisian society, women enjoyed a greater level of independence. “It is observable,” wrote one visitor, “that the French allow their women all imaginable freedoms, and are seldom troubled by jealousy; nay, a Frenchman will almost suffer you to court his wife before his face, and is even angry if you do not admire her person.” Perhaps Law, having learned to respect his mother’s formidable business acumen, had an unusual regard for clever, outspoken females, and this daunting, difficult, striking woman reminded him of his awe-inspiring mother Jean—or, accustomed as he was to easy conquests, he simply found her hauteur challenging. In any event, he pursued Katherine with determination, and she, evidently dissatisfied by her marriage, must have responded. Yet even had she not been married, such a relationship would have caused consternation: Katherine was of noble birth, while Law was a gamester whose family circumstances were shrouded in mystery. Society frowned on such alliances, and most people sympathized with Lord Sandwich, who later remarked that a father would rather see a daughter “with a pedlar’s bag at her back” than marry beneath her. To Law and Katherine, however, far from home and their families, there was little to stand in the way of their mutual attraction. Certainly, Katherine’s husband (about whom nothing is known apart from his name) seems to have offered no impediment—although the most obvious explanation for his apparent inertia is that he was absent when she and Law met. The liaison blossomed.

Meanwhile, Law’s mastery of dice and cards had unfortunate but unsurprising repercussions. No one wants to stake money against someone who hardly ever loses, and, as it had in London, Law’s knack for winning brought him enemies along with gains. Whispers of his “sharpness” at cards, his dubious past, and his possible involvement in espionage began to circulate and brought him to the attention of the authorities. Clearly the time had come for Law to move on; only Katherine held him back.

In the sophisticated world of which both Law and Katherine were habitués, discreet infidelities, however ill-advised, could be quickly forgotten—but there was a chasm between a clandestine affair and an elopement. Both must have known that the latter would cost Katherine her reputation and that there would be no turning back. It is, therefore, a mark of the usually guarded Law’s feelings that he asked Katherine to leave Paris with him. The decision cannot have been easy, but perhaps feeling that travel offered the only way for such an unconventional partnership to evade the usual social restrictions, she agreed, in Gray’s words, “to pack up her awls, leave her husband, and run away with him to Italy.” From then on Katherine Seigneur was known as Mrs. John Law even though marriage, for the time being at least, was impossible. As no doubt they had feared, the story of their flight made headlines in the Paris press and Horace Walpole later wrote of “an account in some French literary gazette, I forget which, of his [Law] having carried off the wife of another man.”