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Thursday, February 26, 2009

Does history repeat itself ?

The gloomy news in the United Kingdom is presently dominated by the tale of the effective collapse of two Scottish Banks: the Bank of Scotland and The Royal Bank of Scotland.

Blame seems to be presntly heaped on one Scottish banker in particular.

This of course is not the first time that Scottish bankers have caused problems on a large scale.

Sir William Paterson (born April, 1658 in Tinwald, Dumfries and Galloway, Scotland - died in Westminster, London, on 22 January 1719) after helping to found The Bank of Scotland and The Bank of England led Scotland into theinfamous Darien scheme, which in effect bankrupted the then Scottish economy,leading to the Act and Treaty of Union of 1707.

Even more famous or infamous, is John Law (bap. 21 April 1671 – 21 March 1729)

In August 1717, he bought the Mississippi Company, to help the French colony in Louisiana.He helped found the Compagnie Perpetuelle des Indes on 23 May 1719 and eventually became head of effectively the Central bank of France. In 1720 the bank and company were united and Law was appointed Controller General of Finances to attract capital. Speculation in the shares and lack of proper capitalisation caused the company's two branches, the trading arm and the bank arm, to collapse simultaneously. The economic crisis not only affected France but the whole of WEstern Europe.

By the end of 1720 he was dismissed and eventually died in poverty in Venice in 1729.