In April 1694, 23-year-old John Law killed Edmund Wilson in a London duel, ostensibly over Betty Villiers, the king’s mistress. An alternative theory suggests Wilson was the lover of Charles Spencer, 3rd Earl of Sunderland, and that Law may have been hired to carry it out. Law escaped prison with government assistance and spent a decade gambling across Europe, amassing a fortune using mathematical probability.

Law developed a new monetary theory: He argued that new money supply drives economic growth by creating its own demand through increased business activity. In 1704, he proposed a land-backed paper currency to England’s Lord Godolphin, who rejected it. After Louis XIV’s death in 1715 left France nearly bankrupt, regent Philippe II, Duke of Orléans, listened to Law’s plan. Law established the General Bank in May 1716 to issue paper money, with himself and the regent as largest shareholders.

To address France’s debt crisis, Law engineered a massive debt-for-equity swap. In August 1717, he took over the Company of the West, which held a Louisiana trade monopoly, allowing government debt holders to exchange their securities for company shares at a discount. As share prices soared and gossip spread, the parent Mississippi Company’s stock rose from 500 livres in May 1719 to 10,000 livres by December. Law introduced installment payments to broaden participation. In 1718, the nationalized General Bank became the Royal Bank, and the treasury fell under Law’s control.

Britain imitated France in January 1720 when Charles Spencer, now First Lord of the Treasury, backed the South Sea Company’s similar debt scheme, sparking Exchange Alley speculation. In February 1720, the Mississippi market wobbled and collapsed as panic replaced euphoria and investors demanded gold over paper promises. Law fled France in December 1720. Spencer faced bribery charges in Britain but was acquitted. Despite the failure, Law’s innovations helped lay the foundations of modern fiat money, showing that currency need not be tied to gold—a legacy Joseph Schumpeter praised as brilliant.

Charles-Maurice de Talleyrand-Périgord, whom Napoleon famously insulted, survived as a political chameleon through multiple French regimes. The bishop, politician, and financier—nicknamed “the limping devil” by former allies—served king, revolution, Napoleon, and restored monarchy while amassing personal wealth.

After John Law’s 1720 collapse, France stagnated financially while Britain innovated, fueling its industrial revolution with deep capital markets. France’s inefficient tax system, associated with Jean-Baptiste Colbert’s maxim about extracting the most revenue with minimal resistance, drove revolutionary unrest. The French Revolution had a crucial monetary dimension: Having declared old taxes illegal in June 1789, revolutionaries faced a dilemma with no tax revenue and no foreign credit.

Talleyrand, born aristocratic but forced into priesthood due to his limp, became Bishop of Autun and Agent-General of the Clergy, gaining detailed knowledge of Church wealth. He learned finance from Charles Alexandre de Calonne and economic theory from Enlightenment thinkers including Vincent de Gournay, François Quesnay, Condorcet, Roederer, and Turgot in a Freemasons’ Lodge. In October 1789, Talleyrand proposed confiscating all Church property to erase the national debt. Comte de Mirabeau seconded the motion, and the National Assembly approved it in November 1789.

In December 1789, the government issued the assignat, initially a bond paying 5% interest backed by Church land. Buyers received the right to purchase Church property when available, creating a new landowning class supporting the revolution. As war approached, radicals converted the assignat from debt instrument to daily-expense currency, contrary to Talleyrand’s wishes. Sensing escalating violence, he fled to London ahead of the king’s January 1793 execution.

Under Robespierre, the Jacobin government combatted hyperinflation (reaching 12% monthly by late 1792) with price controls in September 1793, but caps created shortages and a flourishing black market. The government guillotined hoarders, linking economic crisis to the Terror. Printing continued until February 1796; currency in circulation reached 40 billion livres, far exceeding the pre-revolution GDP of 6.5 billion livres. Scottish writer William Playfair orchestrated British counterfeiting of assignats, with tacit approval from Home Secretary Henry Dundas and Prime Minister William Pitt the Younger.

From London, Talleyrand went to the United States in 1794 with an introduction from Angelica Church, Alexander Hamilton’s sister-in-law, and befriended Hamilton. He returned to France in 1796 to position himself for Napoleon’s rise, was laicized by Pope Pius VII in 1802, and served as foreign minister before switching sides again. Despite the assignat’s ultimate failure, Talleyrand’s scheme provided the revolution’s financial launchpad.

On July 11, 1804, Vice President Aaron Burr fatally shot former Treasury Secretary Alexander Hamilton in a Weehawken, New Jersey, duel. Talleyrand, who had befriended Hamilton during his 1794-1796 American exile, later snubbed Burr, keeping Hamilton’s portrait prominently displayed in his study. He later wrote of Hamilton with unusual admiration, even ranking him above Napoleon and British statesman Charles James Fox.

Twelve years earlier, the Coinage Act of April 2, 1792, established the dollar, tying it to the Spanish silver dollar. Hamilton learned from France’s assignat disaster and his own experience with the Continental, the revolutionary paper currency rendered worthless by overprinting and British forgery. Born poor on Nevis and orphaned at a young age, Hamilton fought alongside George Washington and rose through intellect and bravery to become the first Treasury Secretary.

Post-independence, Federalist Hamilton envisioned a capitalist, commercially engaged America, while Anti-Federalist Thomas Jefferson, joined by James Madison and Samuel Adams, preferred an agrarian, more isolated republic. At the May 1787 Constitutional Convention in Philadelphia, attended by Washington and Benjamin Franklin, the Connecticut Compromise established equal Senate representation while the House reflected population. The Three-Fifths Compromise counted enslaved people as three-fifths of a person for representation, enhancing the power of pro-slavery states. Hamilton, Madison, and John Jay wrote The Federalist Papers in 1787, persuading public opinion to ratify the Constitution.

As Treasury Secretary, Hamilton’s 1791 whiskey tax sparked the Whiskey Rebellion in western Pennsylvania. In 1794, he convinced a reluctant Washington to lead federal troops against the militias, establishing central authority. Hamilton then built federal financial architecture around the dollar. Because America lacked domestic gold and silver, he tied the currency to the ubiquitous Spanish silver dollar, establishing a mint to melt and restamp Spanish coins, preserving their unusual 371.5-grain silver content. Spanish dollars continued circulating until around 1850.

Hamilton made two major debt moves: consolidating all 13 states’ $75 million in debts into federal debt and repaying these debts in full despite no legal obligation. He established the Bank of the United States (80% privately owned) and a sinking fund to manage national debt and act as lender of last resort. These structures supported rapid growth; within 40 years, US income per head surpassed imperial Britain’s. French observer Alexis de Tocqueville noted this focus on wealth in 1831, remarking on the American tendency to measure the value of everything by its potential monetary return.

Hamilton’s presidential ambitions crumbled when he was outmaneuvered by Federalist colleague John Adams, who excluded him from the 1796 ticket. In 1797, Hamilton’s affair with a married woman, Maria Reynolds, and subsequent blackmail by her husband became America’s first major sex scandal. In 1804, after Hamilton wrote pamphlets denouncing Burr during a New York gubernatorial race, Burr challenged him to a duel. Hamilton aimed to miss; Burr shot to kill.