Important acquisitions

States of the affairs of Messrs Douglas, Heron, and company, at August 1773, when they finally gave up business.

Author [Anon]
Title States of the affairs of Messrs Douglas, Heron, and company, at August 1773, when they finally gave up business.
Imprint [Edinburgh: s.n.]
Date of Publication 1780
Language English
Notes This is an unrecorded broadside of 1780, presumably printed in Edinburgh, which summarises the financial state of the failed Ayr Bank, one of the most dramatic crashes in the history of early Scottish, indeed European, banking. The bank had been founded in 1769 by the firm of Douglas, Heron & Co. with the motto "Pro bon publico", as a response to a rapidly growing demand in Scotland for banking facilities. Credit was tight among the existing banks and there was a general belief that a new bank could unleash the potential of land ownership in Scotland. The bank was supported by some of the leading aristocratic landowners in Scotland, its credit backed by the collateral of large tracts of land. However, in order to support land improvement schemes, the Ayr Bank adopted policies that proved to be far too risky. Adam Smith, would later comment in his 'Wealth of Nations', "this bank was far more liberal than any other had been, both in granting cash accounts, and in discounting bills of exchange" (II.ii.73). By June 1772 the bank had issued 1.2 million through advances and bills of exchange, around two thirds of the currency of the country. In the same month, news of the collapse of a London bank, which had extensive dealings with the Ayr Bank, reached Scotland; a financial crisis ensued which led to the eventual collapse of all but three of the country's 30 private banks. There was a run on the Ayr Bank forcing it to suspend payments on June 25. To shore up the loan book of the bank its partners had to put up the collateral of their lands; these lands were gradually sold over the following years to meet the bank's huge losses. The collapse of the bank was thus a major blow to the great Scottish landowning families, including Adam Smith's patron and former pupil, the Duke of Buccleuch, who was a major shareholder in it.
Shelfmark RB.l.251
Reference Sources Antoin E. Murphy, 'The Genesis of Macroeconomics', Oxford, 2009.
Acquired on 18/06/09
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