One of the reasons always cited for the Bostonians getting a bit uppity and for our losing the 13 colonies is the introduction of the Tea Act with its infamous levy on our national drink. If that is the case, then much of the opprobrium can be heaped upon the head of Alexander Fordyce, a stock jobber and partner in Neal, James, Fordyce and Neal.
Our Alexander was no stranger to the riches that can be untapped from a successful career in what we now know as the financial services. He made a mint having gained early intelligence on the signing of the preliminaries to the peace of Paris in 1763 and on the substantial increase in stock prices in the East India Company in 1764-5. He was wealthy enough to build a stately pile in leafy Surrey in Roehampton and an estate in Scotland, the land of his birth. He ran, unsuccessfully, for parliament for the borough of Colchester spending £14,000 on his campaign, only to lose by twenty-four votes.
But it was the East India Company that proved to be his undoing. He gambled astronomical sums on the expectation that the price of shares in the East India Company would take a tumble, something that didn’t happen. Rather like an eighteenth century Nick Leeson he chased his losses, using the funds of his depositors to cover his losses. But the end was inevitable.
On 9th June 1772 Fordyce returned home with a wild, deranged look in his eyes, shouting “I always told the wary ones and the wise ones, with heads of a chicken and claws of a corbie (Scottish for a crow) 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 champagne. And butler, Burgundy below! Let tonight live for ever. Alexander is a man”. The next day, hopefully, with a hangover, he scarpered to France to leave others to clear up the mess he had caused.
And it was quite a mess. The bank had to close and two days later three other London banking firms with Scottish connections collapsed. By the 21st June 22 significant banks and many smaller ones had stopped making payments, never to resume trading. The Bank of England was forced by the government to intervene and provide the London based banks with sufficient cash to survive the storm. But those banks north of the border were not so lucky.
The Scottish banks, especially those in Edinburgh, had been borrowing from the Ayr Bank aka Douglas, Heron & Co, one of the 22 to bite the dust, partly to fund the development of the New Town. The financial stability of Scotland was seriously undermined and many public amusements and theatrical performances were cancelled as the acting fraternity had invested heavily in Fordyce’s ventures. The architect, John Adams and his brothers, engaged in the development of the Adelphi Theatre in London, were so strapped for cash that they had to lay off 2,000 workers.
The contagion spread to Amsterdam where only the formation of a co-operative fund steadied the financial system. Ironically, the financial crisis so weakened the East India Company that they lobbied successfully the government to pass the Tea Act.
As for Fordyce, he returned to Blighty in September 1772 and with debts of around £100,000. But he was irrepressible, standing again for parliament for Colchester where he was once more unsuccessful. He died in 1789, his fall described in a sermon in 1775 as “the fall of a towering structure which overwhelms numbers with its ruin”.