The bank traces its origin to the Society of the Subscribed Equivalent Debt, which was set up by investors in the failed Company of Scotland to protect the compensation they received as part of the arrangements of the 1707 Acts of Union. The "Equivalent Society" became the "Equivalent Company" in 1724, and the new company wished to move into banking. The British government received the request favourably as the "Old Bank", the Bank of Scotland, was suspected of having Jacobite sympathies. Accordingly, the "New Bank" was chartered in 1727 as the Royal Bank of Scotland, with Archibald Campbell, Lord Ilay, appointed its first governor. In 1728, the Royal Bank of Scotland became the first bank in the world to offer an overdraft facility. [edit]Competition with the Bank of Scotland Competition between the Old and New Banks was fierce and centred on the issue of banknotes. The policy of the Royal Bank was to either drive the Bank of Scotland out of business or take it over on favourable terms. The Royal Bank built up large holdings of the Bank of Scotland's notes, which it acquired in exchange for its own notes, then suddenly presented to the Bank of Scotland for payment. To pay these notes, the Bank of Scotland was forced to call in its loans and, in March, 1728, to suspend payments. The suspension relieved the immediate pressure on the Bank of Scotland at the cost of substantial damage to its reputation, and gave the Royal Bank a clear space to expand its own business -- although the Royal Bank's increased note issue also made it more vulnerable to the same tactics. Despite talk of a merger with the Bank of Scotland, the Royal Bank did not possess the wherewithal to complete the deal. By September, 1728, the Bank of Scotland was able to start redeeming its notes again, with interest, and in March, 1729, it resumed lending. To prevent similar attacks in the future, the Bank of Scotland put an "option clause" on its notes, giving it the right to make the notes interest-bearing while delaying payment for six months; the Royal Bank followed suit. Both banks eventually decided that the policy they had followed was mutually self-destructive and a truce was arranged, but it still took until 1751 before the two banks agreed to accept each other's notes.