Long before Locke's time, states piled up debt and went bust with monotonous regularity, impoverishing their lenders in the process. In their own lifetimes both Hume and Smith saw examples of debt financing going awry. Smith lived though the trauma of the collapse of Ayr Bank, a debt-financed Scottish bank that threatened the solvency of Smith's main benefactor, the Earl of Buccleuch. In his writings Hume reflected on the earlier attempt by John Law, another Scot, to discharge the national debt of France by issuing shares in a giant trading company that used the bank of France as its fiscal agent. By 1721, when the resulting bubble popped, France went bankrupt—again.

Mark Blyth, Austerity, loc. 306