Government Equity and Money: John Law's System in 1720 France

64 Pages Posted: 16 Mar 2004

Date Written: December 2003

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.

Keywords: ohn Law, government equity, bubble, debt conversion

JEL Classification: B31, E42, N13, N23

Suggested Citation

Velde, Francois R., Government Equity and Money: John Law's System in 1720 France (December 2003). FRB of Chicago Working Paper No. 2003-31. Available at SSRN: https://ssrn.com/abstract=486983 or http://dx.doi.org/10.2139/ssrn.486983

Francois R. Velde (Contact Author)

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Economic Research
Chicago, IL 60604-1413
United States
(312) 322-2526 (Phone)
(312) 322-2357 (Fax)

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