Commentary on Article XV

XV. The Equivalent

The Equivalent was negotiated at £398,000: a sum payable to Scotland out of England's money to be spent for the benefit of Scotland.<.p>

The wording is very complicated, but its essence is in the initial wording:

THAT whereas . . . the Subject of Scotland . . will be lyable to several Customs and excises now payable in England, which will be applicable towards payment of the Debts of England, contracted before the Union; it is agreed, That Scotland shall have an Equivalent for what the Subjects thereof shall be so charged towards Payment or the said Debts of England

In short, Scotland is to share in the burden part of England's national debt, and so should be compensated for it.

The payment of the Equivalent and its management for seven years was a crucial element of the union and a test of it. The wording of the Treaty contained a calculation, which came to a figure of £398,000: a huge sum in those days. The equivalent was to be paid at once, and for the period of seven years, the Equivalent was to be paid to a list of purposes, in the order:

  • Losses caused by standardising the currency
  • Compensating those who had held stock in the African and Indian Company of Scotland, plus interest at 5% a year
  • The public Debts of the Kingdom of Scotland

After these had been discharged, the money was to be paid for the benefit of Scotland:

  • Towards encouraging and promoting the Manufacture of coarse Wool within those Shires which produce the Wool
  • Towards the encouraging and promoting the Fisheries and other Manufactures and Improvements in Scotland, as may most conduce to the general good of the United Kingdom

The Acts of Union established a body of commissioners to administer the Equivalent, who were to establish their office in Scotland. In case their honesty were doubted, the Commissioners' books were to be open to public inspection – an innovation at the time.

When the morning of 1 May 1707 came, a practised rabble-rouser of the Episcopalian party, harangued a crowd that the promised money had not arrived and therefore the union was void. In fact the gold was on its way, and on 5 August it arrived in Edinburgh, born in 12 waggons guarded by dragoons, and was borne up to the Castle. The Commissioners of the Equivalent established an office in the city and set diligently to work.

One of the outcomes of the Commissioners' work was the establishment of a new bank to administer the securities issued in the course of winding up the affairs of the Indian and African Company: The Royal Bank of Scotland.

The Equivalent was calculated to take account of the contribution which Scots taxpayers would thereafter make towards servicing the prior English national debt, and it served as a transitional mitigation of the effects of higher taxes on the Scottish economy.