Who Is This Fordyce of Which You Speak? The Exchange Alley speculator with an unfortunately pun-friendly name would be the poster boy together with the “Ayr Bank” for the 1772-73 financial crisis and was one of many aspirational Scots attracted to London. With trading in an emerging financial market in full swing, you could make enormous fortunes if you could only correctly time the rise and fall of the major instruments — the stocks of the Bank of England and the East India Company (EIC) as well as the 3 percent consol, the perpetuity that constituted most government debt at the time.

Fordyce quickly abandoned his career as an apprentice in the stocking business and began working as an outdoor clerk to London banks and lenders. In 1759 he made partner in the bank (Neale, James, Fordyce and Down) whose ruin in 1772 — much like Lehman Brothers 236 years later — would trigger a credit crunch and financial collapse. For more than a decade before that, Fordyce had successfully weathered the ups and downs of the stock market and made himself a wealthy man.

The fundamental story was there: bullish investors seemed to have vastly exaggerated the company’s future earnings. So Fordyce shorted EIC stock — first on his own, then with funds in the bank he was managing. In May-June 1772 the share price quickly advanced 6 percent after a long period of moving sideways, which proved enough to break Fordyce’s massive short position. He absconded to France, and the subsequent evaporation of liquidity associated with his default caused other businesses to fall — of which the Ayr Bank was only the most famous.

we can surmise that his qualitative assessment was right; the stock returned to levels around its pre-boom average. In hindsight, the 1765-72 period looks like the bubble Fordyce foresaw.