Millionaire: The Philanderer, Gambler, and Duelist Who Invented Modern Finance Read online

  They retaliated dramatically, issuing an “Appeal of Murder,” an ancient legal procedure that allowed the heir to a murder victim to oppose a royal pardon. If they succeeded, the king could have no further jurisdiction over the outcome. They would be able to demand Law’s death, and not even a royal pardon would save him.

  The case was now a civil one and came under the jurisdiction of the Court of the King’s Bench at Westminster Hall. Without tasting freedom, Law was transferred from Newgate to the King’s Bench prison in Southwark—from one grim hellhole to another—to await this second trial. Opinion had swung markedly in Wilson’s favor. Even Warriston privately admitted the worst: “Mr. Law’s case is very doubtful, all indifferent men are against him; and I never had so many reproaches for any business since I knew England, as for concerning myself for him: my Lord Chief Justice is earnest to have his life, the Archbishop owns to me that he himself pressed the King not to pardon him, as being a thing of an odious nature, and which would give great offence,” he wrote gloomily.

  On June 22, almost two months after the first trial, Law came before the King’s Bench. To his relief, he found Chief Justice Sir John Holt officiating. Unlike Lovell, Holt is remembered for his fair-mindedness, his humanity—he ended the practice of bringing defendants to the dock in irons—and for the exceptionally profligate and debauched friends he made while at Oxford. Years later one of them came before him on a charge of felony. Holt inquired after the rest of the circle, only to be told, “Ah, my lord, they are all hanged but myself and your lordship.”

  Since this was a civil action, Law was now entitled to his own defense and enlisted some of the most eminent lawyers of the day: Sir William Thompson and Sir Creswell Levinz with Thomas Carthew as junior. As soon as the case opened it became apparent that even with this support, his prospects were even worse than everyone had feared. Wilson’s legal team had prepared a damning case, claiming that Law had committed murder “violently, feloniously, wilfully, and of his malice aforethought,” and furthermore that he had cowardly attempted to evade arrest. Robert Wilson said he had been forced to give chase “from vill to vill into the four nearest vills and further.” If we bear in mind that this is the only mention of Law’s attempt to evade justice, Wilson’s version of events rings hollow and was probably just another malicious attempt to manipulate the court and make the case against Law even blacker.

  Law’s defense team opted to use technical quibbles to demolish the Wilson case. There were serious discrepancies in the writ against their client, they complained: the time and place of the incident had not been precisely given; the charge against Law was indirect and thus there was “no necessity, nor is he [Law] bound by the law of the land to answer” the Wilson appeal. Clearly the argument carried weight, because Holt and his learned colleagues needed time to consider the complexities raised and deferred judgment for a week. But by late June, Trinity term was drawing to a close and the hearing was postponed until the following autumn.

  Law now faced the prospect of several months in the King’s Bench prison, a loathsome penal establishment. But unlike the fortress Newgate, where the turnkey locked the prison gates and did not reappear till morning, King’s Bench was notoriously insecure. Ever since he was moved there, friends had urged him to try to escape. Even Warriston, pillar of the establishment though he was, whispered that Law was “a blockhead if he make not his escape which he may easily do considering the nature of that prison.” So far Law had resisted, hoping that he would be legally released. Now, faced with what seemed an interminable wait and a doubtful outcome, he listened. Friends offered to smuggle in tools, and by mid-October he was surreptitiously filing down the bars of his prison cell, dreaming of freedom.

  It was a short-lived illusion. On October 20 the diarist Narcissus Luttrell noted that Law’s filed bars had been discovered by one of his guards. To prevent any further attempts he was put in handcuffs and leg irons. Even the stalwart Warriston now despaired. “I am afraid Mr. Law shall be hanged at last, for I am in a manner resolved to meddle no more in the matter; had he had his senses about him, he had been out of danger long before now,” he wrote despondently. A tragic conclusion seemed even more certain when Judge Holt decided that Law’s legal objections had failed. He would face the Wilson appeal as charged in the new year of 1695.

  So much for the record. At this point traditional legend and probable fact diverge. According to the usual story, which Law did nothing to discourage, somehow he laid his hands on powerful opiates and more tools. Shortly before his trial, he broke free of his irons, drugged his guards, filed down the bars of his cell, scaled the prison wall—and suffered no more than a sprained ankle in the process. A waiting carriage then whisked him to the coast, where he sailed to safety on the Continent.

  The truth was almost certainly rather more complex and much more astonishing. By autumn of 1694, Law had given up hope of legally escaping the death sentence, but his friends had not forgotten him and his case was still debated in court circles. The king remained irresolute, but eventually, with royal blessing, the Duke of Shrewsbury announced to Warriston that the only satisfactory conclusion would be for Law to be saved, “provided it can be done in such a manner, as that his majesty did not appear in it, nor must I [Shrewsbury].”

  Warriston reacted quickly. Assuring them “that nothing was more easy than to give a verbal order to the keeper to let him make his escape, as had been done in many a thousand cases,” he began to plot Law’s escape himself. Secrecy was paramount: if either the king, the duke, or Warriston was known to have sanctioned the escape of an already notorious convicted felon, a huge public scandal might result. This time the plan succeeded. Warriston, having witnessed the bungled first attempt, knew that Law would need help to escape successfully. He found two underkeepers “to offer . . . services to Mr. Laws.” One night, soon after New Year’s, the underkeepers drugged the guards on the door, took turns to file down Law’s manacles, and released him from his cell. A few days later Warriston met the duke, who “whispered to me in a crowd, that my friend was at liberty . . . and prayed me to keep his secret.” Warriston was as good as his word and never spoke of the matter “till King William’s death, or at least that the duke was out of all business.”

  To Law the freedom of which he had dreamed and despaired came as a shock. He did not expect to be pushed to liberty, and fearful that the open door and sleeping guards were merely another example of Wilson chicanery, was bemused when it happened. Years later he would own that “though he knew nothing nor does yet know of the truth . . . that he himself was surprised with the zeal and forwardness of the underkeepers who relieved one another in sawing off his irons.” The truth was that Law was happy for the world to believe what it liked of his escape, because even he did not fully know how it had happened.

  The escape, announced a few days later in court, aroused the Wilson family’s outrage. They immediately ensured that Law was declared a fugitive from justice, and a reward for his apprehension was offered in the London Gazette of Monday, January 7, 1695. But here, too, their attempts to recapture Law were thwarted. The publication was produced under the auspices of the Secretary of State—none other than the Duke of Shrewsbury. Doubtless with his connivance, the advertisement was worded as follows: “Captain John Lawe, a Scotchman, lately a prisoner in the King’s Bench for murder, aged 26, a very tall, black, lean man, well shaped, above six foot high, large pock holes in his face, big high nosed, speaks broad and loud, made his escape from the said prison. Whoever secures him, so as he may be delivered at the said prison, shall have fifty pounds paid immediately by the Marshall of the King’s Bench.”

  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 tria
l, 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.

  6

  THE EXILE

  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)

  WHAT EXACTLY LAW DID AFTER LEAVING LONDON 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.