Credit Crisis of 1772
- When
- 1772–1773
- Where
- London banking house of Neale, James, Fordyce and Down; City of London; Scottish banking network, including the Ayr bank; Amsterdam, Dutch Republic; Bank of England and London commercial community; Thirteen American colonies
- Episodes
- 6
The credit crisis of 1772 began in London when Alexander Fordyce's failed speculation triggered a bank run on Neale, James, Fordyce and Down, spreading to Scotland and the Dutch Republic, straining the Bank of England, and souring debtor-creditor relations with the American colonies.
Episodes
- Strain on the Bank of England and rising bankruptcies
The Bank of England's reserves were strained until late 1773, while London bankruptcies rose sharply above their pre-crisis average.
- Deterioration of colonial debtor-creditor relations
The crisis greatly worsened debtor-creditor relations between the thirteen American colonies and Britain, especially in the South.
- Bank failures in Scotland
The panic spread from London to Scotland, where banks—most notably the Ayr bank—failed or came under severe strain.
- Fordyce's failure and the bank run on Neale, James, Fordyce and Down
Alexander Fordyce lost £300,000 shorting East India Company stock; his partners were left liable for roughly £243,000 in debts.
- Fordyce declared bankrupt and his assets seized
On 24 June 1772 the Crown seized Fordyce's goods, stocks, and country house, and the City of London was in uproar at his bankruptcy.
- Contagion to the Dutch Republic
The crisis extended to Amsterdam, where plantation-loan portfolios failed and trade between London and Amsterdam halted.
Background and detail
Background. The period from 1770 to 1772 was regarded as prosperous and politically calm in Britain and the American colonies until the outbreak of the crisis. In the Dutch Republic, mortgaging became widespread around 1770, the same year the Van Aerssen van Sommelsdijck family sold its Suriname share to the city of Amsterdam. In July 1770 Fordyce had borrowed 240,000 guilders in bearer bonds from Hope & Co. in Amsterdam, backed by Harman and Co. and Sir William Pulteney.
Fordyce's Speculation and Failure. Alexander Fordyce, a Scottish banker centrally involved in the bank run on Neale, James, Fordyce and Down, bet heavily against East India Company share prices in 1771/1772. In May 1772 the EIC stock price rose significantly, and by Monday 8 June 1772 it became clear that Fordyce had failed, having lost £300,000 shorting EIC stock.
Aftermath and Consequences. The crisis spread from London to Scotland and the Dutch Republic. London bankruptcies rose from an average of 310 (1764–1771) to 484 in 1772 and 556 in 1773. The Bank of England's reserves were strained until late 1773, and trade between London and Amsterdam halted in early January 1773. The crisis also worsened debtor-creditor relations between the thirteen American colonies and Britain, especially in the South.
People involved
- Alexander Fordyce · Scottish banker whose failed speculation triggered the crisis
- Henry Neale · Partner left liable for debts after Fordyce's failure
- William James · Partner left liable for debts after Fordyce's failure
- Richard Down · Partner left liable for debts after Fordyce's failure
Sources
- British credit crisis of 1772–1773 Wikipedia
- Alexander Fordyce Wikipedia, revision of 2026-05-29
Machine-drafted from the cited Wikipedia passages and checked by a reviewing model, not by a human editor. Every passage cites the revision it was written from; dates and places follow those passages.