Douglas, Heron & Company, also known as the Ayr Bank, was a Scottish bank with its head office at Ayr. It opened in November 1769 and folded in 1772 during the crisis of 1772. 
The nominal capital of the company was £150,000 or £160,000, of which £96,000 was immediately subscribed.  However, no more than 80% of the capital was ever subscribed. There were 131 original partners, including Patrick Heron of Kirroughtree, the Earl of Dumfries, the Earl of March, and Sir Adam Fergusson of Kilkerran. Many of the partners were substantial landowners, such as the Duke of Buccleuch, the Duke of Queensberry,  and Archibald Douglas, 1st Baron Douglas. The bank was established under a contract of co-partnery, so the partners were not protected by limited liability. This made the bank seem very secure, because its deposits were backed by the partners' land as collateral.
The bank granted many loans to favoured customers and soon had to issue bank notes to cover its position.  By June 1772 the bank had issued £1.2 million through advances and bills of exchange, around two thirds of the currency of Scotland.  
Douglas, Heron & Company relied for credit on the London bank Neal, James, Fordyce and Down, which collapsed in the crisis of 1772. Heavily in debt and unable to meet demands for cash on its banknotes, the bank was forced to close on 25 June 1772. The Dukes of Queensberry and Buccleuch, along with the Earl of Douglas and the Earl of Heron approached the Bank of England to try to secure loans on the security of their lands. The Bank of England offered £300,000, but the terms were considered extortionate.  Subsequent approaches to the Bank of Scotland and the Royal Bank were rejected. The bank managed to reopen for a brief period between September 1772 and August 1773, but a general meeting of the partners held on 12 August decided to dissolve the Company permanently.
In July 1776, the partners of the Ayr Bank met to form a committee to conduct an inquiry into the Company's failure. Their report, Precipitation and Fall of Messrs Douglas, Heron and Company, Late Bankers in Air with the Causes of their Distress and Ruin, was completed in August 1777 and published in 1778. Key reasons for the Bank's collapse included excessive granting of credit, and a lack of central control. Each branch was effectively independent of head office and had its own board of directors.  The report also cited gross misconduct: "open disregard, not only of the principles of the Copartnery, but of the express and positive rules and regulations laid down for the conduct of Managers".
In his History of Banking in Scotland, William Kerr says:
The essential errors of the Ayr Bank were 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 iniquity of officers. 
The bank took twenty years to be wound up, starting in 1773 (some say it took 60 years).  The partners' lands were sold to meet the bank's huge losses. The collapse of the bank was thus a major blow to the great Scottish landowning families. Those who could not cover their debts went to prison. Among the lairds partially or totally ruined were:
Adam Smith mentions the failed bank in The Wealth of Nations : "the design was generous, but the execution was imprudent, and the nature and causes of the distress which it meant to relieve were not, perhaps, well understood. This bank was far more liberal than any other had been, both in granting cash accounts, and in discounting bills of exchange" (II.ii.73). The Duke of Buccleuch was Smith's patron and former pupil.
The impacts also filtered to the common people and the disastrous results of the "spirit of overtrading" resulted in widespread poverty which in turn led to civil unrest such as the Tayside Meal Riots of 1772 and 1773. 
Once the bank was wound up, its records were transferred to the British Linen Company. They were "still in the vaults" when John Buchanan compiled his list of Scottish banks in 1862, but were later lost.[ citation needed ]
Marquess of Queensberry is a title in the Peerage of Scotland. The title has been held since its creation in 1682 by a member of the Douglas family. The Marquesses also held the title of Duke of Queensberry from 1684 to 1810, when it was inherited by the Duke of Buccleuch.
The title Duke of Buccleuch, formerly also spelt Duke of Buccleugh, is a title in the Peerage of Scotland created twice on 20 April 1663, first for James Scott, 1st Duke of Monmouth and second suo jure for his wife Anne Scott, 4th Countess of Buccleuch. Monmouth, the eldest illegitimate son of Charles II was attainted on his 20 Apr 1663 marriage, but his wife's title was unaffected and passed on to their descendants, who have successively borne the surnames Scott, Montagu-Scott, Montagu Douglas Scott and Scott again. In 1810, the 3rd Duke of Buccleuch inherited the Dukedom of Queensberry, also in the Peerage of Scotland, thus separating that title from the Marquessate of Queensberry.
The title Duke of Queensberry was created in the Peerage of Scotland on 3 February 1684 along with the subsidiary title Marquess of Dumfriesshire for the 1st Marquess of Queensberry. The Dukedom was held along with the Marquessate of Queensberry until the death of the 4th Duke in 1810, when the Marquessate was inherited by Sir Charles Douglas of Kelhead, 5th Baronet, while the Dukedom was inherited by the 3rd Duke of Buccleuch. Since then the title of Duke of Queensberry has been held by the Dukes of Buccleuch.
Earl of March is a title that has been created several times in the Peerage of Scotland and the Peerage of England. The title derived from the "marches" or borderlands between England and either Wales or Scotland, and it was held by several great feudal families which owned lands in those districts. Later, however, the title came to be granted as an honorary dignity, and ceased to carry any associated power in the marches.
Walter Francis John Montagu Douglas Scott, 9th Duke of Buccleuch and 11th Duke of Queensberry, was a Scottish peer, politician and landowner. He served in the Royal Naval Volunteer Reserve in the Second World War, and represented Edinburgh North in the House of Commons for 13 years.
Clan Scott is a Scottish clan and is recognised as such by the Lord Lyon King of Arms. Historically the clan was based in the Scottish Borders.
Henry Scott, 3rd Duke of Buccleuch and 5th Duke of Queensberry KG FRSE was a Scottish nobleman and long-time friend of Sir Walter Scott. He is the paternal 3rd great-grandfather of Princess Alice, Duchess of Gloucester, and the maternal 4th great-grandfather of Prince William of Gloucester and Prince Richard, Duke of Gloucester.
Charles Douglas, 3rd Duke of Queensberry, 2nd Duke of Dover, was a Scottish nobleman, extensive landowner, Privy Counsellor and Vice Admiral of Scotland.
Charles William Henry Montagu-Scott, 4th Duke of Buccleuch and 6th Duke of Queensberry, KT, styled Earl of Dalkeith until 1812, was a British landowner, amateur cricketer and Tory politician.
Clan Douglas is an ancient clan or noble house from the Scottish Lowlands.
William Henry Walter Montagu Douglas Scott, 6th Duke of Buccleuch and 8th Duke of Queensberry was a Scottish Member of Parliament and peer. He was the paternal grandfather of Princess Alice, Duchess of Gloucester, and the maternal great-grandfather of Prince William of Gloucester and Prince Richard, Duke of Gloucester.
Richard Walter John Montagu Douglas Scott, 10th Duke of Buccleuch and 12th Duke of Queensberry,, styled as Lord Eskdaill until 1973 and as Earl of Dalkeith from 1973 until 2007, is a Scottish landholder and peer. He is the Duke of Buccleuch and Queensberry, as well as Chief of Clan Scott. He is the heir male of James, Duke of Monmouth, the eldest illegitimate son of King Charles II and his mistress, Lucy Walter.
John Charles Montagu Douglas Scott, 7th Duke of Buccleuch and 9th Duke of Queensberry,, styled The Honourable John Montagu Douglas Scott until 1884, Lord John Montagu Douglas Scott between 1884 and 1886 and Earl of Dalkeith until 1914 was a Scottish Member of Parliament and peer.
Neale, James, Fordyce and Down was a London banking house. Established in 1757, its June 1772 collapse 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 crisis of 1772, also known as the credit crisis of 1772 or the panic of 1772, was a peacetime financial crisis which originated in London and then spread to other parts of Europe, such as Scotland and the Dutch Republic. In 1770 the Great Bengal famine of 1770, which was exacerbated by the actions of the East India Company, led to massive shortfalls in expected land values for the company. As this information became public, 30 banks across Europe collapsed.
The Montagu Douglas Scott family is an aristocratic family in the United Kingdom. Founded in the 15th century as the Scott family, it has spawned numerous aristocratic titles, most notably the dukedom of Buccleuch. A prominent member of the family during the 17th century was James Scott, 1st Duke of Monmouth, of Monmouth Rebellion fame. The family name was briefly Montagu-Scott, before the 5th Duke adopted its current form. It is one of only a handful of families in the English-speaking world to have an unhyphenated triple-barrelled name.
Events from the year 1772 in Scotland.
Jane Scott, Countess of Dalkeith, formerly Lady Jane Douglas, was the first wife of Francis Scott, 2nd Duke of Buccleuch, but died prior to him succeeding in the dukedom.
Tyler Beck Goodspeed is an American economist and economic historian who was the acting chairman of the Council of Economic Advisers from June 2020 to January 2021. He resigned from his position on January 7, in the wake of the 2021 storming of the United States Capitol.
The Tayside Meal Mobs were episodes of civil unrest caused by the poverty of the people of Dundee in 1772 and 1773.