In November 1769, the Ayr Bank was established, under the
designation of Douglas, Heron & Co., with a capital of £150,000; and,
numbering among its shareholders some of the most wealthy and
influential men in the country, the concern began business under the
happiest auspices, and with the fairest prospects of success.
Its career, however, was short and its effects ruinous. In the
history of banking scarcely an instance is to be found of greater
mismanagement. In little more than two years the company was under the
necessity of suspending payments (June 1772); and though a farther
advance was at that time obtained from the proprietors, the bank finally
closed its transactions on 12th August 1773, having thus scarcely
completed three full years from the date of its commencement.
Many families of Ayrshire were buried in the fall of Douglas, Heron &
Co., and among these unhappily was the laird of Dalfram. “In an evil
hour,” says Cunningham, “when the love of making ‘meikle mair’ came upon
him, he purchased shares in what Burns called ‘that villainous
bubble the Ayr bank,’ and was involved in its ruin.”
Though true in the main particular, this is not altogether a correct
statement. Lapraik, we believe, never was a shareholder, but what was
equally ruinous, he became a victim to the mania for speculation created
by the lavish credits of the bank. He not only obtained discounts
himself, but guaranteed others to a heavy amount; and when the “bubble
burst” he found himself involved beyond the possibility of extrication.
A poem, written apparently at this juncture, or shortly afterwards,
embodies the author’s sentiments, somewhat quaintly expressed, relative
to the Douglas and Heron Bank, and the wide-spread ruin occasioned by
IN the year Sixty-nine and Sev'nty,
The Notes amongst men were too plenty:
They took their glass and were right canty;
They little thought,
That plenty, when 'tis misimproven,
Brings men to nought.
The cry went through from poleto pole,
There's credit here for ev'ry soul;
If he's well back'd, without control,
He shall have Money:
'Tis bitter sauce to each one now,
That then was honey.
This credit went o'er all the County;
It was as ready as King's Bounty:
But now there is not one of twenty
That can get rest;
Hornings are going every day,
They're so opprest.
If I might pick some men by name,
Wha did lay out a decent scheme:
They're foolish folk wha those men blame;
For their intention.
Was to ev'ry crown a pound
By this invention.
In midst of their industr'ous scheme,
Their money is requir'd again:
He now is fad wha then was fain;
The secret's kent;
His profits he has not got in,
And's money's spent.
And then what Creditors he has
Come running on him with a blaze;
Each telling that he must have his,
Or caution get;
Then diligence against him goes;
Syne he's laid flat!
The mismanagement on the part of the company chiefly existed in the
lavish manner in which their notes were thrown into circulation, and the
granting of loan on long credits, whereby the capital was withdrawn from
the immediate use of the bank.
This evil, proceeding partly from ignorance, was augmented by the
circumstance of a number of adventurers having found their way into the
directorship, who, at once needy and imprudent, set at defiance all the
regulations of the establishment.
(This was particularly the case at the office in Ayr. The Report of a
Committee of Inquiry, published in 1778, states that “at Air, which was
the principal office, and where the business commenced the 6th of
November 1769, it was unfortunate that a variety of enterprising
companies, engaged in different kinds of foreign and domestic t6rade,
had, about this time, been established in that place, under different
firms indeed, but all of them closely connected and linked together; and
that the members which composed these several trading companies became
all of them partners of Douglas Heron and Company. It was still more
unfortunate, that the cashier and most of the directors, chosen for the
management of the Air office, were deeply connected with, and concerned
in, one or more of these trading companies; and thus the wise and
salutary regulation of the general meeting, November 1769, prohibiting
above one member of any trading company from being in the direction at
any of the offices at one and the same time, was disregarded in the very
first proceeding. Such were the companies under the firms of Oliphant
and Company – Whiteside and Company – Maclure and Maccree – Campbell and
Company – Montgomery and Company – Campbell, Crawford and Company, and
some others. The same connections, and, in general, the same
individuals, composed those trading societies. They were a set of the
partners of Douglas, Heron and Company associated together; and four or
fie of the chief acting directors of this office were deeply engaged in
those commercial schemes.
The common desire and necessity of promoting mutual credit could not
fail to unite this confederacy in the closest manner; and the access to
credit being rendered easy, the conseque4nces were such as might have
been expected, - Most exorbitant and profuse credits were immediately
given out, in various forms to the individual members of those trading
companies, and to the companies themselves, under their respective
firms, - The same set of people became securities for each other; and,
in the granting of cash accounts in particular, this abuse immediately
became so great with respect to the Board of Directors, and was so
evidently inconsistent with the proper rules of management, that, so
early as the 20th November 1769, a regulation was made, ‘That none of
the directors who had already been bound should afterwards be received
as securities in any cash-account; and thereafter, on the 8th January
1770, the abuse having been complained of by the other offices, it was
further resolved, ‘That no person whatever should be received as
cautioner in more than three cash-accounts.’” These resolutions,
however, had little effect, the mismanagement they were intended to
check continuing, according to the Report, nearly to an equal extent.
Besides the office at Ayr, there was one in Edinburgh and another in
The result was the speedy dissipation of the company’s funds – the
contraction of an equivalent debt, especially in London, to meet the
return of their own notes – and a commercial panic occurring at the
time, the money market suddenly became depressed, and all who were
struggling for existence were speedily overwhelmed.
At this crisis the desperate efforts made by the sale of the
redeemable annuities plunged the company into still farther
difficulties; and the attempt to save the concern from legal
bankruptcy ended a few months afterwards in a voluntary one,
the evils of which were considerably augmented by the very means adopted
to avoid such an alternative.
(At the stoppage in June 1772, the debts due to the three bank
offices amounted to nearly £700,000, £400,000 of which had been
contracted by the partners themselves. The whole amount of assets,
including debts and bills of exchange, amounted to £1,237,043, 7s. ld.
The debts due by the company exceeded this sum. In 1789, the committee
appointed to wind up the affairs of the bank, found it necessary to make
a fresh call of £1400 per share upon those partners who still continued
solvent. From the state of affairs at this time, it appeared that after
deducting the debts due to the company, the firm remained debtor in the
sum of £366,000! The whole loss upon each share was calculated to amount
to £2600, exclusive of interest.)
It now became a matter of necessity, on the part of the company, to
realize every available debt; hence the hornings and
diligence alluded to by Lapraik.
In consequence of approaching difficulties, the Poet let his own
lands of Dalfram, and retired to Muirsmill, where he remained for a few
years. From thence he removed to Netherwood a farm on the water of
Greenoak, still retaining the lease of the mill, however; and here he
continued for nine years, struggling in vain to overcome the losses he
At the end of that period he sold off his property, and again
returned to Muirs mill; but the sale of his lands having failed to rid
him of his liabilities, he still found himself the victim of legal
prosecution, and at length, to heap the full measure of wretchedness on
the devoted head of an unfortunate but honest man, he was thrown into
Douglas, Heron and Company (the 'Ayr Bank'), a joint stock bank
formed in November 1769, with numerous subscribers or shareholders, and
with a paid-up capital of £96,000, closed its doors on 25 June 1772. The
subscribers' liability amounted to more than £2,000 for each £500 share
they held, and many lost their estates in the years following the
collapse. According to Ward, 'among Ayrshire lairds totally or partially
ruined were Patrick Douglas of Cumnock,
Hugh Logan of Logan,
Robert Kennedy of Pinmore,
Archibald Craufurd of Ardmillan,
Sir John Whitefoord of Ballochmyle and Blairquhan,
John Christian of Kinning Park,
George McCrae of Pitcon, and
David McLure of Shawood.'
According to a 1770 list of the 'Proprietors of Stock' in the
company, William Logan of Camlarg was one of its directors, and he too,
a nephew of Craigengillan and son-in-law of Waterhead, faced ruin. He
had borrowed money from Craigengillan to improve his small estate, A
letter to the latter from David Limond in 1773 reveals his unsentimental
attitude to his nephew. Limond wrote, ' spoke to Mr Fergusson about your
multure Process against Camlarg, which he promisses to push on. I wish
he may be as good as his Word, & shall not fail to dunn him as much as
in my power.' Although these were Limond's words, he was confident
of the temper of the man to whom he addressed them. Logan lost his
estate, 'ruined by his merciless uncle' . Georgina McAdam, whose comment
this was, described the situation thus:
While John McAdam was making money on all hands came
the disastrous failure of the Ayr Bank - it was entirely set going by
the landed proprietors of the Counties round - and the effect was far
worse than the present state of Ireland with the encumbered estates.
Estates changed hands for nothing! They were engulfed and
wherever our Ralph Nickleby held the smallest mortgage he squeezed the
last drop of blood out of the victim, between himself and the
bankruptcy, Barbeth - where his granddaughter Mrs McAdam Cathcart now
lives - became his, Camlarg and many large estates. Uncle Gilbert's
estate went at last with this shock and meantime Mammon was silently
Patrick Heron of Kirroughtree (1736 - 1803) was a
Scottish banker and politician. From 1794 to 1803 he was a Whig member
of Parliament for Kirkcudbright Stewartry.
He married Jean Home, in 1761, daughter of Henry Home, Lord Kames,
but the couple were divorced in 1772. In 1775, he married Elizabeth
Cochrane, cousin to the diarist James Boswell.
He was a founder of a bank in Ayr, Douglas, Heron & Company,
which went bankrupt in 1773.
We would welcome biographical details for this person.
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