ABSTRACT
The Mississippi Company and the Royal Bank effectively acted as a single entity. In a specie-money economy without depository institutions, such as banks, the money stock consists of the coins in circulation. The credibility of the bank eroded as economic circumstances deteriorated during the Fourth Anglo-Dutch War in 1780, and the City of Amsterdam began to ask for loans. In Amsterdam John Law observed the operations of the Bank of Amsterdam and the Dutch East India Company, Europe's largest bank and joint-stock company respectively. Law bought the Senegal Trading Company for cash in December 1718 and acquired the East Indies and China trade Companies. The apparent success of the conglomerate advanced Law's fortunes, and on January 5, 1720, he was appointed France's Controller General and Superintendent General of Finance. Clearing houses established by banks in the United States (US) performed this function locally with mixed success in the nineteenth century, before the establishment of the Federal Reserve System.
