The bankruptcy of the Law system

The bankruptcy of the Law system

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Title: Monument dedicated to posterity in memory of the incredible madness of the XXe year of XVIIIe century.

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Technique and other indications: Engraving

Storage place: Franco-American Museum of the Château de Blérancourt (Blérancourt) website

Contact copyright: © Photo RMN-Grand Palais (Château de Blérancourt) / Gérard Blot

Picture reference: 05-518583 / CFAb152

Monument dedicated to posterity in memory of the incredible madness of the XXe year of XVIIIe century.

© Photo RMN-Grand Palais (Château de Blérancourt) / Gérard Blot

Publication date: September 2013

Professor of modern history at the University of Nice-Sophia Antipolis.

Historical context

Speculative bubble, financial crisis and stock market panic

While the day after the death of Louis XIV, bankruptcy threatens, the regent Philippe d'Orléans follows the ideas of the Scottish John Law (1672-1729), for whom exchanges and trust are the crux of the financial crisis , not the debt itself. Created by Law on May 2, 1716, the General Bank became a royal bank by the declaration of December 4, 1718. The Compagnie d'Occident, or Mississippi Company, which Law founded was the second pillar of his "system". We are in the middle of a speculative bubble.

As can be seen in this engraving, the crowd of speculators and curious people flock to rue Vivienne and rue Quincampoix, alleys where bearer shares are negotiated and where, in an indescribable crowd, one meets the most distinguished aristocrats as well. than more modest people who have invested their savings or borrowed to invest. Below right, three figures are leaning over a piece of wood which bears the words "Power of attorney for HOORN ". Horn will ultimately be condemned to the infamous torture of the wheel.

In 1720, reality finally caught up with rampant speculation: the announcement of very low dividends quickly cooled investors. The result is a vast corpus of engravings from which emerges this Monument dedicated to posterity in memory of the incredible madness of the XXe year of XVIIIe century which will know a wide distribution thanks to high prints. We find the same phenomenon with the Jansenist politico-religious crisis.

Image Analysis

The mad chariot race of speculation

This engraving benefits from a long caption that allows the reader to identify actors and episodes of the Law system and individual tragedies. While Law is not mentioned in the title, the reader of the time was in no doubt as to the identification of the scene.

Quincampoix Street where the offices of the Mississippi Company were located and where speculators gathered is clearly marked. The Wheel of Fortune crushes true commerce in its path and leads those who have let themselves be deceived by the intoxication of financial profit straight to the house of the sick, the house of the beggars and the hospital of the beggars. In the sky, the Trumpet of Fame has a lot to do with the soap bubbles - symbol of the speculative bubble, both volatile and vain - that a mystifying devil blows in the direction of the followers of the system. Representatives from each of the major joint-stock companies pull the tank, while speculators fight to wrest the bonds from the carriers.

Men and women of all ages and all conditions participate in this madness that generates the most contradictory feelings - the immoderate joy bordering on regret, despair, sadness -, insomnia and illness ...hybris - the excessiveness of the Ancients - which drives mad seizes men here and crushes everything in its path.


Moral condemnation of a disease and its vector

The Law system is at the origin of an intense production of engravings but also of songs and jokes which immediately appeal to public opinion or which, more elaborate as in the case of Monument dedicated to posterity in memory of the incredible madness of the XXe year of XVIIIe century, seek to put the event in perspective. It is therefore understandable that the collectors of time are as much interested in the sheets and the pamphlets as in these engravings which offer as many readings of the crises of time.

We note here the moral condemnation of the lure of profit which encompasses all joint-stock companies and particularly targets the circulation of bearer notes and paper money, a sort of new golden calf to which speculators devote a disastrous cult that will inevitably lead them to their punishment. Speculation is therefore well presented as a disease with its "transport to the brain" and its vector, paper, be it that of stocks or that of banknotes.

To readers of the day, the wave of violence and suicide that followed the bankruptcy of this "pernicious game" may have seemed to prove the author of the engraving right. A more distanced reading of this "insane system" notably made it possible to show that it had contributed to deleveraging the monarchy.

  • finances
  • Paris


Pierre-Yves BEAUREPAIRE, France of the Enlightenment, 1715-1789, Paris, Belin, coll. “History of France”, 2011.

Edgar FAURE, The Bankruptcy of Law, July 17, 1720, Paris, Gallimard, coll. “Thirty days that made France”, 1977.

Antoin E. MURPHY, John Law: Economic Theorist and Policy-Maker, Oxford, Oxford University Press, 1997.

To cite this article

Pierre-Yves BEAUREPAIRE, "The bankruptcy of the Law system"

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