Douglas, Heron & Company
Douglas, Heron & Company, with its head office at Ayr, was opened in 1769. It traded as the Ayr bank. Soon afterwards, branches were opened in Edinburgh and Dumfries, and agencies were established in Glasgow, Inverness, Kelso, Montrose and Campbeltown, among other places. The branches operated separately under their own boards. The original shareholders included eminent men like the Governor, the Duke of Queensberry, the Duke of Buccleuch, the Earl of Dumfries, the Earl of March, Sir Adam Fergusson of Kilkerran, Patrick Heron of Heron and the Honourable Archibald Douglas. But there were no bankers on any of the boards.
Almost from the beginning, the bank emptied their coffers by giving privileged customers excessive loans, later striving to make good the position by making paper money.
In May 1772, the directors, realising their error, tried to retrench: but in June of that year, the London Banking House of Neale, James, Fordyce and Doune failed, putting several Scottish Banks in difficulties. The Ayr Bank struggled for just over a year to retain confidence, but the Bank of Scotland, the Royal and the British Linen Company refused to accept the Ayr Bank's notes. In August 1773 a general meeting of the partners resolved on liquidation. The total loss to the partners, of whom there were 225, was £663,396 18s. 6d., and the shock was felt throughout Scotland.
According to Kerr's History of Banking, the downfall of the Ayr bank was brought about by 'trading beyond their means; divided control by permitting branches to act independently; forcing the circulation of their notes; giving credit too easily; ignorance of the principles of business; and carelessness or inquity of officers.'