Between Independence and Impunity: The Theory of Proto-Central Banking After the Crisis of 1720

This article seeks to demonstrate that, in addition to his well-known experiments with paper money, John Law’s System was a project for creating a prototype of an independent central bank. His arguments, and those of his defenders, tried to establish a legitimate political role for autonomous monetary policy, while his detractors in the 1730s and 1740s argued that central banks constituted conspiracies among cosmopolitan elites, not governance. This neglected episode in the history of economic thought established the data, rhetorical practices, and concepts for later arguments over whether the monetary system can or should be within the scope of human agency.