The Humbugs of the World · Chapter
XXVII explained
This chapter details John Law's Mississippi Scheme, a massive financial bubble in 18th-century France.
What happens
This chapter details John Law's Mississippi Scheme, a massive financial bubble in 18th-century France. It describes how Law, a Scottish financier, gained the favor of the Duke of Orleans (Regent of France) and established a bank and the Mississippi Company, which promised vast wealth from American territories. The scheme led to rampant speculation, inflation, and eventual collapse, ruining thousands and causing widespread economic distress.
Themes in this chapter
Gullibility and Human Nature
The chapter illustrates how greed and credulity drove people to invest in a scheme with no real basis, leading to mass delusion and ruin.
Cultural and Historical Context
The Mississippi Scheme is presented as a product of its time, reflecting the financial naivete and speculative mania of 18th-century Europe.
Characters to notice
- John Law
Scottish financier who conceived and executed the Mississippi Scheme, initially successful but ultimately ruinous.
- Prince de Conti
Aristocrat who triggered the bubble's burst by demanding specie payment for his banknotes.
Key passages
“Law was a Scotchman, shrewd and able, a really good financier for those days, but vicious, a gambler, unprincipled, and liable to wild schemes.”
John Law was a clever but unscrupulous Scottish financier prone to risky ventures.
Describes Law's character as both capable and morally flawed.
“The Regent became firmly convinced, that if a certain quantity of bank bills could do so much good, a hundred thousand times as many bills would surely do a hundred thousand times as much.”
The Regent mistakenly believed that printing more money would multiply its benefits proportionally.
Highlights the fundamental misunderstanding of monetary policy that fueled the bubble.