To:                 John Campbell Esq., Agent to the Equivalent Company, at Edinburgh.

From:             James Mathias, London.

Dated:            18th July 1747.

                                                                               

Sir,

 

I had the pleasure of writing to you last post, sending you a power from Mr John Samuel Longuet to receive his dividend on £1,000 Royal Bank Stock. I have now to enclose you another from W. Merrill to receive the dividend on £2,000....which when in Cash please with the rest to place to the Credit of the Equivalent Company's Account.

 

I am Sir,

 

Your most humble servant,

 

James Mathias.

 

 

The Royal Bank of Scotland was founded in 1727 and is frequently confused with the Equivalent Company with these two entities thought to be one in the same.  Whilst they certainly had close links, particularly in the early years of the Royal Bank, they were in fact separate institutions.

To understand the Equivalent Company it is necessary to understand a bit of history of Scotland and in particular the Darien Scheme and the Act of Union of 1707.

The Darien Scheme.  The originator of the Darien Scheme was William Paterson (also the founder of the Bank of England), a man born in Scotland; a missionary in the Indies, and a buccaneer among the West India islands.

During his roving life he had visited the isthmus of Panama (then known as Darien) with this the narrow strip of land that links North and South America.  He planned to set up a colony in America with the intention of handling the trade of the Indies and the South seas with this considered a great (shorter and cheaper) alternative to the rounding the Cape of Good Hope.  He believed Darien to be a “paradise” and that it should be colonized. 

He considered that if Scotland would occupy Darien she would become the one great free port, the one great warehouse for the wealth that the soil of Darien and would rival her near neighbour - England.  His notions for Scotland were perhaps not all they were made out to be as Scotland was invited to participate as Paterson could not raise capital in England.

Five ships were prepared and equipped, and on 18 July 1698 the expedition of some 1,200 people left the port of Leith. They arrived at Darien (which was patriotically renamed 'New Caledonia’) in November.  Darien turned out to be little more than a hot, fever-ridden swamp, and the weakness of Scottish manufacturing meant that the colonists had very little to trade, only woolen cloth, linen, wigs and Bibles. Hundreds of settlers died of fever, and in 1699 the colony was abandoned.

A second expedition was already being prepared, and left from the River Clyde in August 1699 with another 1,300 would-be colonists. They arrived to discover the settlement deserted and overgrown, but quickly set about rebuilding it.  However, their fear of being driven out by the Spaniards, who regarded the territory as theirs, led them to attack the Spanish fort at Toubacanti in January 1700.  The Scots were then subjected to sustained Spanish attacks at Fort St. Andrew for a month before surrendering, and were afterwards allowed to leave.

Over 2,000 colonists died in the venture, and the financial loss to Scotland amounted to some £153,000 sterling, nearly a quarter of its liquid capital.  When discussions commenced with a view to England and Scotland forming a Union, Scotland was virtually bankrupt and had no ability to negotiate.  This led directly to the Union of Scotland and England in 1707.

In the Treaty of Union the English government offered the Scots an ‘Equivalent’, a sum of £398,085 and 10 shillings to compensate them in a number of ways. The bulk however was used to repay the losses suffered by the Darien investors.  Many of the investors who received this payment joined to form the Equivalent Society.

A great number of the Equivalent Society members wished to see their dividends invested in banking in Scotland and these investors formed the Royal Bank of Scotland in 1727.  It should be understood that the Equivalent Company continued to operate for many years thereafter with this perhaps best illustrated by this letter which is dated some 20 years after the founding of the Royal Bank of Scotland.

 

John Campbell was the Cashier for Royal Bank of Scotland from 1745 until his death in 1777. 

James Mathias was the Secretary of the Equivalent Company.