‘Roguery’, ‘Stupidity’, and Permissive Regulation: Asset Speculation and Speculative Projects in 1763–72
An examination on whether the crisis was brought about by excessive speculation or whether poorly thought-out new legislation in the 1760s destabilised the economy by encouraging excessive risk-taking among market participants, especially the notorious Ayr Bank in Scotland. It is unlikely that the psychological reasons given in the traditional account (such as greed or panic) can be proven through surviving sources, but there might be some value in analysing the record under the prism of the theory of opportunism and self-restraint proposed by Mitchell Abolafia. Regulation was if anything overlax and ineffective and allowed the growth of opportunism, especially in the battles for control of the East India Company. This in turn brought about an increase of event risk through Parliamentary intervention. Though the Ayr Bank project was nowhere near as frivolous or venal as the traditional account would have it, its funding practices did encourage the creation of vectors of financial contagion.