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April 30, 1729 - World’s First Overdraft
For More Events on This Day in Scottish History - https://bagtownclans.com/index.php/thisday/april-30
Welcome back to This Day in Scottish History. I'm your host, Colin MacDonald. Today, we turn the clock back to a crisp April morning in 1728, when a quiet but revolutionary event changed the world of finance forever. It was on this day that the Royal Bank of Scotland, a fledgling institution at the time, granted the very first overdraft in history—£1,000 to a bold Edinburgh merchant named William Hog. And if you’re curious about other fascinating events that happened on this day in history, be sure to check out my blog at bagtownclans.com/thisday. The link will be in the description!
The early 18th century was a time of enormous change in Scotland. Following the 1707 Union with England, Scotland's economy was trying to find its footing within a larger British framework. Trade was expanding, cities were growing, and new financial institutions were popping up to meet the demands of a more dynamic economy. The Royal Bank of Scotland had been founded just one year earlier, in 1727, as a rival to the Bank of Scotland. It was determined to attract new business by offering innovative services.
Enter William Hog, an enterprising Edinburgh merchant. Like many businessmen of his day, Hog faced the constant challenge of balancing incoming payments with outgoing expenses. Ships laden with goods could be delayed. Debtors could be late. Opportunities could arise that demanded immediate cash, even when the coffers were temporarily dry. Traditionally, if a merchant didn’t have ready money, he was simply out of luck—or worse, driven into ruin. But the Royal Bank of Scotland saw an opportunity to offer a lifeline.
On April 30, 1728, the bank agreed to let Hog withdraw up to £1,000 more than he actually had in his account. It was a staggering amount at the time, equivalent to hundreds of thousands of pounds today. The idea was revolutionary: instead of requiring Hog to have every penny upfront, the bank trusted him to repay the excess in due course. It was a bold move, a calculated risk that recognized the realities of doing business in a fast-changing world.
This first overdraft was not just about helping a single merchant. It signaled a fundamental shift in banking philosophy. No longer were banks merely vaults for storing wealth; they became active partners in commerce, supporting growth and innovation. The ability to extend credit based on trust and reputation became one of the cornerstones of modern finance.
The implications of that decision rippled outward. Overdrafts soon became a standard offering, first across Scotland and then throughout the British Isles. They allowed businesses to weather short-term cash shortages, fund new ventures, and seize opportunities that would have otherwise been out of reach. Without overdrafts and similar credit instruments, the Industrial Revolution itself might have looked very different.
William Hog's overdraft might seem modest compared to the enormous financial tools available today, but it opened the door to a new era where ambition wasn’t chained to immediate cash on hand. It showed that banking could be about enabling the future, not just safeguarding the past.
The Royal Bank of Scotland continued to innovate over the centuries, becoming one of the major players in global finance. Although it has faced its share of ups and downs—including the financial crisis of 2008—its legacy as a pioneer was secured on that spring day in 1728.
Today, when you swipe a card, apply for a loan, or simply rely on a line of credit to bridge a gap, you’re benefiting from a concept that started with a handshake between a Scottish banker and an Edinburgh merchant nearly three centuries ago.
Thank you for joining me today on This Day in Scottish History. I hope you’ve enjoyed this story of financial innovation, bold ideas, and a little bit of trust. Don't forget to check out my blog for more historical events at bagtownclans.com/thisday. Tune in tomorrow for another journey through Scotland’s remarkable past. I'm Colin MacDonald—Haste Ye Back!
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit bagtown.substack.com
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By Bagtown ClansFor More Events on This Day in Scottish History - https://bagtownclans.com/index.php/thisday/april-30
Welcome back to This Day in Scottish History. I'm your host, Colin MacDonald. Today, we turn the clock back to a crisp April morning in 1728, when a quiet but revolutionary event changed the world of finance forever. It was on this day that the Royal Bank of Scotland, a fledgling institution at the time, granted the very first overdraft in history—£1,000 to a bold Edinburgh merchant named William Hog. And if you’re curious about other fascinating events that happened on this day in history, be sure to check out my blog at bagtownclans.com/thisday. The link will be in the description!
The early 18th century was a time of enormous change in Scotland. Following the 1707 Union with England, Scotland's economy was trying to find its footing within a larger British framework. Trade was expanding, cities were growing, and new financial institutions were popping up to meet the demands of a more dynamic economy. The Royal Bank of Scotland had been founded just one year earlier, in 1727, as a rival to the Bank of Scotland. It was determined to attract new business by offering innovative services.
Enter William Hog, an enterprising Edinburgh merchant. Like many businessmen of his day, Hog faced the constant challenge of balancing incoming payments with outgoing expenses. Ships laden with goods could be delayed. Debtors could be late. Opportunities could arise that demanded immediate cash, even when the coffers were temporarily dry. Traditionally, if a merchant didn’t have ready money, he was simply out of luck—or worse, driven into ruin. But the Royal Bank of Scotland saw an opportunity to offer a lifeline.
On April 30, 1728, the bank agreed to let Hog withdraw up to £1,000 more than he actually had in his account. It was a staggering amount at the time, equivalent to hundreds of thousands of pounds today. The idea was revolutionary: instead of requiring Hog to have every penny upfront, the bank trusted him to repay the excess in due course. It was a bold move, a calculated risk that recognized the realities of doing business in a fast-changing world.
This first overdraft was not just about helping a single merchant. It signaled a fundamental shift in banking philosophy. No longer were banks merely vaults for storing wealth; they became active partners in commerce, supporting growth and innovation. The ability to extend credit based on trust and reputation became one of the cornerstones of modern finance.
The implications of that decision rippled outward. Overdrafts soon became a standard offering, first across Scotland and then throughout the British Isles. They allowed businesses to weather short-term cash shortages, fund new ventures, and seize opportunities that would have otherwise been out of reach. Without overdrafts and similar credit instruments, the Industrial Revolution itself might have looked very different.
William Hog's overdraft might seem modest compared to the enormous financial tools available today, but it opened the door to a new era where ambition wasn’t chained to immediate cash on hand. It showed that banking could be about enabling the future, not just safeguarding the past.
The Royal Bank of Scotland continued to innovate over the centuries, becoming one of the major players in global finance. Although it has faced its share of ups and downs—including the financial crisis of 2008—its legacy as a pioneer was secured on that spring day in 1728.
Today, when you swipe a card, apply for a loan, or simply rely on a line of credit to bridge a gap, you’re benefiting from a concept that started with a handshake between a Scottish banker and an Edinburgh merchant nearly three centuries ago.
Thank you for joining me today on This Day in Scottish History. I hope you’ve enjoyed this story of financial innovation, bold ideas, and a little bit of trust. Don't forget to check out my blog for more historical events at bagtownclans.com/thisday. Tune in tomorrow for another journey through Scotland’s remarkable past. I'm Colin MacDonald—Haste Ye Back!
This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit bagtown.substack.com