Neale, James, Fordyce and Downe was a London banking house, established in 1757 by Henry Neale, William James,

Alexander Fordyce Alexander Fordyce (7 August 1729-8 September 1789) was an eminent Scottish banker, centrally involved in the bank run on Neale, James, Fordyce and Downe which led to the credit crisis of 1772. He used the profits from other investments to co ...

and Richard Downe. Its collapse in June 1772 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

. He was Scottish, brother of

James Fordyce James Fordyce, DD (1720–1 October 1796), was a Scottish Presbyterian minister and poet. He is best known for his collection of sermons published in 1766 as '' Sermons for Young Women'', popularly known as ''Fordyce's Sermons''. Early life H ...

, the distinguished clergyman and author of '' Sermons to Young Women'', and was married to a daughter of the

Earl of Balcarres Earl of Balcarres is a title in the Peerage of Scotland, created in 1651 for Alexander Lindsay, 2nd Lord Balcarres. Since 1848, the title has been held jointly with the Earldom of Crawford, and the holder is also the hereditary clan chief of Cla ...

. 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 Douglas, Heron & Company, also known as the Ayr Bank, was a Scotland, Scottish bank with its head office at Ayr, Scotland, Ayr. It opened in November 1769 and folded in 1772 during the crisis of 1772. History The nominal capital of the company w ...

, and many smaller ones all stopped payments, never to resume. In London the

Bank of England The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694 to act as the English Government's banker, and still one of the bankers for the Government o ...

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 Coutts & Co. is a London-headquartered private bank and wealth manager. Founded in 1692, it is the eighth oldest bank in the world. Today, Coutts forms part of NatWest Group's wealth management division. In the Channel Islands and the Isle o ...

, 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 The name Robert is an ancient Germanic given name, from Proto-Germanic "fame" and "bright" (''Hrōþiberhtaz''). Compare Old Dutch ''Robrecht'' and Old High German ''Hrodebert'' (a compound of '' Hruod'' ( non, Hróðr) "fame, glory, honou ...

and James Adam, who were in the middle of their ambitious

Adelphi, London Adelphi (; from the Greek ἀδελφοί ''adelphoi'', meaning "brothers") is a district of the City of Westminster in London.Mills, A., ''Oxford Dictionary of London Place Names'', (2001) The small district includes the streets of ''Adelphi T ...

scheme, and had to lay off two thousand workmen for a week. The liquidity crisis spread to the next most important banking centre in Europe, Amsterdam, where Clifford and Sons went bankrupt, and the Amsterdam market was only steadied by the formation of a "cooperative fund" among the other banking houses of the city. The liquidity situation continued to be a problem into 1773. The crisis has also been seen as worsening relations between Britain and the

Thirteen Colonies The Thirteen Colonies, also known as the Thirteen British Colonies, the Thirteen American Colonies, or later as the United Colonies, were a group of British colonies on the Atlantic coast of North America. Founded in the 17th and 18th centuri ...

in America. Among other stresses, the East India Company, already in financial difficulties, was further weakened by the crisis, and in 1773 managed to persuade Parliament to pass the Tea Act, exempting it from the duty all other importers in the colonies had to pay. The unpopularity of this led to the

Boston Tea Party The Boston Tea Party was an American political and mercantile protest by the Sons of Liberty in Boston, Massachusetts, on December 16, 1773. The target was the Tea Act of May 10, 1773, which allowed the British East India Company to sell tea ...

at the end of the year. According to a sermon of 1775, Alexander Fordyce:Electric Scotland
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had a mind not ill-formed for commerce, and from his early success in it was enabled, though of an obscure original, to live respectably. If his views had extended no farther, it would have been well, but his ambition was unbounded. the revenue of a kingdom would hardly have sufficed to have executed his schemes. He seemed bent on engrossing the trade of the whole world. Large sums were borrowed of one and of another. His friends advanced liberally, and so high was his reputation, that they had no doubt of their effects being secure. But the event proved that they were wretchedly deceived. His affairs were embarrassed, his difficulties increased, and at length grew inextricable; a total stoppage ensued; the issue of a commission of bankruptcy, by some chicanery, was prevented; and but a small part of his enormous debts hath been paid to this very hour. I shall not pretend to enumerate the many families which by his means sunk into distress. His fall was like the fall of a towering structure which overwhelms numbers with its ruins. It deserves, however, particular mention, that the news of his failure despatched one brother to the regions of the dead, and, which is yet more lamentable, drove another into a state of insanity.

Notes

References

{{Portal, Banks *"Memoirs" - Sir William Forbes, 6th Baronet, ''Memoirs of a Banking-House'', 1860 (written by (?) 1803)
online text, see pp. 39-44 for a detailed account
Defunct banks of the United Kingdom Financial crises Banks established in 1757 Banks disestablished in 1772 1772 in England 1772 in Scotland Financial services companies based in London 1757 establishments in England British companies disestablished in 1772 British companies established in 1757