John Law was the Scottish economist central to France's Mississippi Bubble.
Born in Edinburgh in 1671, Law became influential in France after proposing that paper money and a state-backed bank could stimulate economic activity and help restructure the country's heavy debts. In 1716, the regent Philippe II, Duke of Orléans, approved Law's private bank; it later became the Banque royale.
Law founded the Mississippi Company in 1717 to exploit French Louisiana and other colonial interests. The company absorbed other chartered ventures and became part of a much larger financial system in which company shares, bank notes and government finances were closely connected. As enthusiasm spread, share prices surged far beyond the company's realistic trading prospects.
The system unraveled in 1720 when confidence in the notes and shares collapsed. Law became France's controller-general of finances but was dismissed and left the country after the crash. Richard Cantillon was an important contemporary observer and investor, while Hume and Smith were later Scottish thinkers; none was the architect of this bubble. The episode is called the Mississippi Bubble because of the company and its promised American trade, not because Law was American.