Image: Equivalent Company dividend warrant in the name of the economist Adam Smith, 1736 © RBS 2018
The Equivalent Company (1721-1851) was a company of debenture-holders. It was connected with the history of the Royal Bank of Scotland.
Article 15 of the Treaty of the Act of Union of 1707 stipulated that Scotland would be paid a lump sum of £398,085 10s - known as the Equivalent - which was to compensate Scotland for taking on a share in England’s national debt. This sum was also to be used to cover, among other items, losses ‘privat persons may sustain by reducing the coin of Scotland to the standard and value of the coin of England’ and to repay dividends on stock held in the Company of Scotland Trading to Africa and the Indies which became defunct at the time of the Union.
Distribution of the Equivalent was entrusted to 25 commissioners and was paid in notes, coin and exchequer bills. The distribution proved controversial, with the Commissioners being accused of favouring themselves and the wealthiest creditors. There was no annual subsidy for woollen and other manufactories as promised, while payments due to a variety of creditors including salaries owed to army officers, state officials and tradesmen remained unpaid.
To placate these claimants an Act of Parliament was passed to issue debentures with an interest of five per cent from June 1708. However, the debentures carried vague details about the date of paying interest and remained unpaid for the next six years when they were called in by Parliament. Further attempts to meet the debts were piecemeal and, amid rising discontent, one of the Commissioners, Patrick Campbell of Monzie, was sent to London to put the Commissioners’ case to Parliament. His mission was unsuccessful and it was not until 1719 that an Act was passed for making provision of a yearly fund of £10,000 to be paid out of Scotland’s customs and excise as interest on £248,550 worth of debentures. By this time over £170,000 worth of these debentures were in the hands of English debenture holders, who quickly formed themselves into a society, based in London, to facilitate the collection and distribution of interest payments, which previously were made only in Edinburgh. The society also aimed to purchase further debenture stock and granted loans on the security of its debenture holdings. Among its first directors were William Paterson and Patrick Campbell of Monzie. Soon after, a similar society was established in Edinburgh, promoted by many notable men including the Earl of Ilay, Sir Hew Dalrymple, Duncan Forbes of Culloden and, once again, Patrick Campbell of Monzie.
In the years following the formation of these two societies, several attempts were made to increase the scope of the debenture holders’ activities. Initially it was proposed that they should be incorporated as a company, but this idea met with considerable opposition from the Bank of England, who rightfully feared that this new company would consequently try to carry out banking operations. This idea being temporarily thwarted, the debenture holders next made overtures to the Bank of Scotland, which were all rebuffed, in an attempt to bring about an amalgamation between themselves and the bank.
Eventually the situation resolved itself, when, in 1724, both the English and Scottish debenture holders’ societies were wound up following the establishment of a new ‘Equivalent Company’ by royal charter. This company had a capital of £248,550 and was based in London, although it also had a subordinate office in Edinburgh. It had a total of thirteen directors, two of whom had to be resident in Edinburgh and these directors were elected every two years by the proprietors of the company. The first directors of the company were James Campbell, Paul D’Aranda, John Drummond, Edward Harrison, Daniel Hays, Benjamin Longuet, John Merill, Bulstrode Peachy, Christopher Tilson, Robert Williamson, Patrick Crawford, Sir Hew Dalrymple, Lord President of the Court of Session and Patrick Campbell of Monzie. The company was managed by a court of directors, consisting of any five or more of these directors. In addition the two directors who were resident in Edinburgh formed a separate committee of management controlling the affairs of the Equivalent Company there, assisted by the company’s Edinburgh agent.
In addition to receiving the £10,000 annual interest payment established by the 1719 Act, which was now to be given out as a dividend to the debenture holders, the company also received £600 per annum to cover the costs of its administration. It was, however, still keen to extend its powers, which remained the same as those of the earlier debenture holders’ societies, and in 1727 the Equivalent Company received a charter which granted banking powers in Scotland to a new company to be known as The Royal Bank of Scotland. By 29 September 1727 around £110,000 of the stock of the Equivalent Company had been subscribed and transferred to the capital of The Royal Bank of Scotland and in 1770 a third charter gave the Royal Bank free use and command of this £110,000 subscribed Equivalent stock.
Nevertheless, the Equivalent Company and The Royal Bank of Scotland remained distinct companies. The Royal Bank of Scotland developing its banking activities, and the Equivalent Company continuing to manage the Equivalent stock and distribute interest payments to its members. The relationship between the two was always a close one, however, and the Equivalent Company was one of the Royal Bank’s first customers. In addition, many officers of the Royal Bank also worked for the Equivalent Company - John Campbell, for example, cashier of The Royal Bank of Scotland from 1745 to 1777, also worked as the Equivalent Company’s agent in Edinburgh. In 1850 an Act of Parliament ‘to provide for the redemption of an annuity of ten thousand pounds payable to the Equivalent Company’ was passed expressing the intention that the Equivalent debentures should finally be paid off. A sum of £248,550 plus all outstanding monies relating to the annual interest payments was therefore made over to be distributed to the Equivalent Company’s members. The Equivalent Company itself was enacted to continue for the next twelve months for the purpose of winding-up its affairs, but it was formally dissolved in 1851. Upon the dissolution of the Equivalent Company in 1851 the Edinburgh records of the company were transferred to The Royal Bank of Scotland, the board noting that ‘to no establishment could the trust be with more propriety confided than to that of its eminent offspring, The Royal Bank of Scotland’.
- S G Checkland, Scottish banking. A history, 1695-1973 (Glasgow: Collins, 1975)
- N Munro, The history of the Royal Bank of Scotland 1727-1927 (Edinburgh: privately published by The Royal Bank of Scotland, 1928)
- R Saville, Bank of Scotland. A history, 1695-1995 (Edinburgh: Edinburgh University Press, 1996)
- P H Scott, The Union of 1707: why and how (Edinburgh: The Saltire Society, 2006)
Summary of our archive holdings
Our archival records of the Equivalent Company have the reference code EQ.
For help understanding words used here, check our glossary of banking record types (PDF 24KB).
- act and royal charter erecting the Equivalent Company 1718-24
- royal warrant granting banking powers in Scotland 1727
- minute and sederunt book 1717-24
- sederunt book 1832-52
- debentures with related legal papers 1695-1753
- payment receipts: military list 1695-1718, civil list 1701-15
- administrative and operative papers re financial, trading and political affairs 1702-1850
- report of the Commissioners of the Equivalent, details state of the Equivalent since the Union 1717
- letterbooks: 1707-9, 1724-8, 1763-1834, John Campbell, secretary to the Equivalent in Edinburgh 1754-66
- stock and shareholding papers 1707-1807
- books of diligences, recording ownership and transfer of debentures 1707-17
- memorandum of transfers c.1709
- register of subscriptions 1722
- dividend books: 1718-1851, London 1816-26, 1848-51
- dividend warrants 1766-1822
- letters patent conferring powers on the Commissioners of the Equivalent 1715, 1717
- stock journals 1724-1851
- stock ledgers 1725-1840
- transfer books 1724-1845
- papers re Edinburgh Society 1718-25
- ships' crews receipts for arrears of pay from Company of Scotland with associated legal documents 1698-1711
- general ledgers 1701-19, 1724-1850
- papers re losses accrued by William Paterson in Company of Scotland 1702-17
- accounts of the English Crowns and fractions subscribed in the Equivalent 1707
- papers re melting down of the Scots coinage after the Act of Union 1707-8
- first and second general accounts of the debts due to the civil and military lists, giving total cash payment and total debenture payment due 1707, 1710
- index to general ledgers 1707-19
- journal of the accounts of the Commissioners 1707-21
- Equivalent accounts statements 1708-32
- day book 1727-33
- cashier’s receipt book 1716-20
- trustee account ledger 1717-20
- cash books 1719-25, 1728, 1754-81
- accounts of Equivalent Company with their Edinburgh agent 1819-51.
- legal papers re claims made on the Equivalent incl a copy of an Act of the Parliament of Scotland detailing the hardships and losses endured by Captain Colin Campbell, Captain Charles Stewart and Lieutenant Robert Turnbull at Darien 1707-57
- letters of attorney 1808-30
- affidavits of John Ferrier and John Thomson, directors of the Equivalent Company 1840
- act to provide for the redemption of annuity of £10,000 payable to the Equivalent Company 1850
- payment certificates of Commissioners for the negotiations leading to the Act of Union 1707-8
- Equivalent expenditure accounts and staff salary papers 1707-91
- salary receipt of James Innes agent to the Commissioners 1709
Summary of archive holdings elsewhere
- National Records of Scotland: Equivalent accounts 1714-83 [Ref: E208/4]; returns to the Commissioners of the Equivalent 1716-7 (Ref: E231/2); petitions by persons claiming Equivalent debentures 1720-48 [Ref: E302/1-17]
- Glasgow University Archive Service: Report of the Commissioners nominated ‘for taking and stating the debts due and growing due to Scotland by way of Equivalent in the terms of the Union’ 1717 (Ref: UGD 60)
- National Library of Scotland: ‘Memorial concerning the opposition offered by the Bank of England to the draught of a warrant for a charter to incorporate the proprietors of the Scots Equivalent debentures’ 1719 (Ref: MS 68, Taylor Collection fo.12). Also a selection of early printed works. Contact the repository for further information