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Just before the Lights Went Up

Adam Smith trumps his rival and some knowledge is lost

Posted in 2007-08 Financial Crisis, History of economics, Uncategorized Tagged with: , , ,

Douglas, Heron and Co., popularly known as the Ayr Bank, had closed its doors amidst a run in June 1772.  A handful of local noblemen and gentry, mostly large landowners, had founded it a few years before to fund improvements in southwest Scotland’s booming linen industry and tobacco trade. But they had been foolish in their lending. News that the bank’s London agent had been caught short speculating in East India Company shares and had fled to Europe now started a run that had turned into a nationwide panic.  The failure of the Ayr Bank was threatening to drag down