THE PRECIPITATION AND FALL OF MESS. DOUGLAS, HERON, AND COMPANY, LATE BANKERS IN AIR, WITH THE CAUSES OF THEIR DISTRESS AND RUIN, INVESTIGATED AND CONSIDERED, BY A COMMITTEE OF ENQUIRY, APPOINTED BY THE PROPRIETORS.

[Messrs Douglas, Heron & Co.]

Edité par Edinburgh, 1778

Quarto; , xiv, 167, 133, 31, 34. Collated complete. Contemporary half calf, modern respine with black lettering piece, corners repaired. Bookplate of James T. Farquahar. With some additional material loosely inserted : 1. Typed copy of "Excerpt from A Contract of Copartnery of the Banking Company under the Firm of Douglas Heron & Co, regarding The names, designations and respective amounts subscribed by the individual partners thereof. Registered 31 January 1772. Copies 1932. 2. Notes taken in 1932 in the Nat Library of Scotland regarding the manuscript list of shareholders in their copy of the book, with two letters from the Keeper of Printed Books. 3. A 1932 newspaper clipping on the affair. Douglas Heron & Co, more commonly known as The Ayr Bank, opened in 1769 but folded in spectacular fashion in 1772, playing a central role in the British credit crisis of 1772-73. In June 1772, Alexander Fordyce, a partner in the London banking house of Neale, James, Fordyce, & Down, had been issued with a bankruptcy notice after racking up a staggering £300,000 in trading losses. Fordyce had been for some time shorting some £1,000,000 (circa £120 millions today) of East India Company stock, but East India share prices remained flat, and facing an additional margin call, Fordyce absconded to France, leaving his partners liable for £243,000 in debts. Days earlier, in reply to a desperate plea from Fordyce for emergency credit, one London banker had replied, ?Friend Fordyce, I have known many men ruined by two dice, but I will not be ruined by Four-dice.? Realizing the extent of their liability, the remaining partners immediately suspended payments in a futile attempt to safeguard creditors from a disorderly liquidation, yet the damage was already done. Runs occurred on several banks and within a week no fewer than ten London banks had failed, with even Drummonds and Coutts coming under severe pressure. This was the ?Lehmann crisis? of the day. Up in Ayr, the bank?s creditors panicked, doubting that the bank could meet liabilities which, thanks to its reckless lending, had ballooned to almost £1.3 million. As one Scottish banker put it, Fordyce?s downfall merely ?set fire to the mine,? blowing up ?the whole traffic of circulation? of Scottish bills in which the City had for some years been keenly invested, with the result that all the London banks which had accepted Scottish bills were instantly compelled to stop payment. Of eighteen private banks in Edinburgh, only four remained standing as the contagion spread. Horace Walpole wrote at the time that ?it is now thought Fordyce was rather the handle than the cause of this ruin,? and that he ?only advanced the crash,? which ?would have happened without his interference, for the Scotch bankers have been pursuing so deep a game by remitting bills and drawing cash from hence.? David Hume wrote to Adam Smith ?To Day news arriv?d in town that the Air Bank had shut up; and as many people think forever.? The events of 1772 caused Smith to revise at least one chapter of his still incomplete Wealth of Nations. Several of his close associates were casualties of the Ayr Bank?s demise. Smith later wrote that, ultimately, ?This bank increased the real distress of the country which it meant to relieve,? saying that it was a stark reminder that ?the commerce and industry of the country ? cannot be altogether so secure, when they are thus, as it were, suspended upon the Daedalian wings of paper money, as when they travel about upon the solid ground of gold and silver.? ***** An extremely rare work in commerce. Only two copies traced at auction, one of which this copy. N° de réf. du vendeur 028270

Détails bibliographiques

Titre : THE PRECIPITATION AND FALL OF MESS. DOUGLAS,...
Éditeur : Edinburgh
Date d'édition : 1778
Reliure : Full-Leather
Etat : Very Good
Edition : 1st Edition