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