Neal, James, Fordyce and Down

Neal, James, Fordyce and Down was a London banking house. Established in 1757, its June 1772 collapse precipitated a major banking crisis which included the collapse of almost every private bank in Scotland, and a liquidity crisis in the two major banking centres of the world, London and Amsterdam. The bank had been speculating by shorting East India Company stock on a massive scale, and apparently using customer deposits to cover losses.

The leading figure in the speculation was agreed to be the partner Alexander Fordyce. He was Scottish, brother of James Fordyce, the distinguished clergyman and author of Sermons to Young Women, and was married to a daughter of the Earl of Balcarres. On June 9 1772, the day before he fled to France, he was reported to have come home in wild spirits, saying that he had "always told the wary ones, ‘and the wise ones, with heads of a chicken and claws of a corbie, that I would be a man or a mouse; and this night this very night the die is cast, and I am . . . am . . . A man! Bring Champaign; and Butler, Burgundy below! let tonight live for ever! . . . Alexander is a man.’"

The next day his bank had to close, and two days later, three other London banking firms with Scottish connections collapsed, and in the twelve days after Fordyce fled, 22 significant banks, notably the Scottish Douglas, Heron & Co known as the Ayr Bank, and many smaller ones all stopped payments, never to resume. In London the Bank of England was able to stabilize the situation, but attempts in London to save the situation in Scotland failed. There were one-day runs on Drummonds Bank and Coutts, which they were able to cover and survive. The Scottish banks, especially those in Edinburgh rather than Glasgow, had mostly been borrowing from the Ayr Bank, partly to finance the building of the New Town, Edinburgh. Others hit by the collapse included the Scottish architect John Adam and his younger brothers Robert and James Adam, who were in the middle of their ambitious Adelphi, London scheme, and had to lay off two thousand workmen for a week.

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