Fifteen years after the Global Financial Crisis: Recessions and Business Cycles in the History of Economic Thought

John Law’s idea of bank and his contemporaries’

Ito Seiichiro, Ohtsuki City College

John Law is known as the failed projector of the Mississippi System which ended with a disaster. In the history of economic thought his name has always been mentioned as representing the classical example of financial crisis. However, as it is also known, the idea of his project had its origin in his pamphlet of 1705, Money and Trade, and a manuscript entitled ‘Essay on a land bank’, which was written around the same time but edited and published by Antoin Murphy in 1994. Law’s idea of land bank in those writings was a part of the product of long discussion about money and banking in seventeenth century England. In the discussion about money he referred to John Locke, but it was, above all, land bank projectors of 1690s who provided the context of Law’s discourse on paper money. In Money and Trade Law gave a chapter for the analysis of the proposal of Hugh Chamberlen who was the most active and prolific proposal-writers of land bank. Law examined not only the system of land bank but also the functions and qualifications of money with the same vocabulary and logic as those of the land bank proposers in 1690s, including Chamberlen. Besides, around 1720 a number of pamphleteers on money and credit, such as John Cary, mentioned and examined Law’s project and theory. Neither Law nor those pamphleteers were simple inflationists, but they all seriously considered how to control their issue of bank notes under a well-organised management. With such a context of discussions on money and credit Law’s intention in his economic reflection will be more appropriately understood.

Area: Eshet Conference

Keywords: John Law, banking, eighteenth-century

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