[2][4] Douglas, Heron & Company relied for credit on the London bank Neal, James, Fordyce and Down, which collapsed in the crisis of 1772.
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.
[1] 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.
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.