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131.: From DAVID HUME - Adam Smith, Glasgow Edition of the Works and Correspondence Vol. 6 Correspondence of Adam Smith 
Correspondence of Adam Smith, ed. E. C. Mossner and I. S. Ross, vol. VI of the Glasgow Edition of the Works and Correspondence of Adam Smith (Indianapolis: Liberty Fund, 1987).
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From DAVID HUME
MS., RSE ii. 48; HL ii. 262–4.
St Andrews Square, 27 June 1772
Done ere you bade: I receivd a Letter from Clason1 himself, and immediately wrote to Lord Chesterfield.2 Baron Mure told me of the good Behaviour of Mr Clason, in attending Sir Thomas Wallace, of which I also informd his Lordship. I hope the young Man will meet with Success.
We are here in a very melancholy Situation: Continual Bankruptcies, universal Loss of Credit, and endless Suspicions.3 There are but two standing Houses in this Place, Mansfield’s4 and the Couttses: For I comprehend not Cummin,5 whose dealings were always very narrow. Mansfield has pay’d away 40.000 pounds in a few days; but it is apprehended, that neither he nor any of them can hold out till the End of next Week, if no Alteration happen.6 The Case is little better in London. It is thought, that Sir George Colebroke7 must soon stop; and even the Bank of England is not entirely free from Suspicion. Those of Newcastle, Norwich and Bristol are said to be stopp’d: The Thistle Bank8 has been reported to be in the same Condition: The Carron Company9 is reeling, which is one of the greatest Calamities of the whole; as they gave Employment to near 10.000 People. Do these Events any–wise affect your Theory? Or will it occasion the Revisal of any Chapters?
Of all the Sufferers I am the most concern’d for the Adams, particularly John. But their Undertakings were so vast that nothing coud support them:10 They must dismiss 3000 Workmen, who, comprehending the Materials, must have expended above 100.000 a Year. They have great Funds; but if these must be dispos’d of, in a hurry and to disadvantage, I am afraid the Remainder will amount to little or nothing. People’s [Compa]ssion, I see, was exhausted for John in his last Calamity,11 and every body asks why he incurr’d any more hazards. But his Friendship for his Brothers is an Apology; tho’ I believe he has a projecting Turn of his own. To me, the Scheme of the Adelphi always appeared so imprudent, that my wonder is, how they cou’d have gone on so long.
If Sir George Colebroke stop, it will probably disconcert all the Plans of our Friends, as it will diminish their Patron’s Influence; which is a new Misfortune.
On the whole, I believe, that the Check given to our exorbitant and ill grounded Credit will prove of Advantage in the long run, as it will reduce people to more solid and less sanguine Projects, and at the same time introduce Frugality among the Merchants and Manufacturers:12 What say you? Here is Food for your Speculation.
Shall we see you again this Summer?
[1 ]Patrick Clason; see Letter 85, n. 4: his letter to Hume has not been found, but see Letter 144 from Clason, dated 25 Feb. 1775.
[2 ]Chesterfield was supervising the education of his godson, Philip Stanhope, who succeeded him as 5th Earl in 1773. Probably Clason was seeking a post as tutor. In the end Adam Ferguson became Chesterfield’s tutor and travelled with him on the Continent for two years: see Letter 139, n. 2.
[3 ]At the end of the 1760s there was considerable economic development in Scotland coupled with problems over shortage of capital and banking facilities. To increase the supply of finance, a new bank was established, Douglas, Heron & Co., better known as the Ayr Bank, with landowners prominent among the shareholders, which commenced business on 6 Nov. 1769. Principally to support land improvement schemes, it adopted policies that proved ruinous: ‘This bank was more liberal than any other had ever been, both in granting cash accounts, and in discounting bills of exchange’ (WN II.ii.73). As the bank got going, there was an economic crisis in Scotland caused through investments outrunning savings, a fall in prices of such commodities as linen, and a ‘spirit of overtrading’. The years 1772–4 saw a movement towards a depression. In June 1772 the failure of a London banking house that had extensive dealings with the Ayr Bank resulted in a financial panic in Edinburgh, and a run on the Ayr Bank for specie forced it to suspend payments on the 25th of that month. See Letter 132 addressed to Sir William Pulteney, dated 3 Sept. 1772, and Letter 133 from Hume, dated Oct. 1772; also Hamilton 317–25.
[4 ]Edinburgh banking house, founded in 1738, known as Mansfield, Ramsay & Co.
[5 ]William Cuming & Sons, private bank founded in Edinburgh between 1750 and 1760.
[6 ]Only four private banks in Edinburgh survived the crisis: Mansfields’ and Cumings’ among them.
[7 ]Head of a London bank, and in 1769 chairman of the Directors of the East India Company.
[8 ]A Glasgow bank founded in 1761, which lasted until 1836 then merged with the Glasgow Union Bank.
[9 ]Founded in 1760 by Dr. Roebuck and by this time the largest industrial operation in Scotland. For some years it had suffered from a shortage of capital, and during the crisis of 1772 several partners faced bankruptcy, but the Company survived.
[10 ]The Adam brothers, Robert, James, and William, were heavily involved in the Adelphi, an imaginative scheme to embank the Thames at Durham House and combine warehouse facilities with low–cost housing. The scheme failed financially, and the Adams escaped bankruptcy by resorting to the device of a lottery: see John Summerson, Georgian London (revised edn. 1962), 138–40.
[11 ]The failure of John Adam and Thomas Fairholme in 1764.
[12 ]These sentiments of Hume’s are echoed in WN II.ii.72, and the lesson of the Ayr Bank’s history was recorded in The Precipitation and Fall of Messrs. Douglas, Heron and Company, late Bankers in Air with the Causes of their Distress and Ruin investigated and considered by a Committee of Inquiry appointed by the Proprietors (Edinburgh, 1778).