John and Henry Drummond, contractors to the Treasury as Paymaster to His Majesty's Forces in North America, 1767-83

After the fall of Quebec in 1759 and with increasing unrest amongst American colonists, the British maintained a considerable force in North America amounting to about 10,000 men. The supply and payment of men was at first effected by the commander-in-chief drawing bills of exchange directly upon the paymaster general in England. This proved both cumbersome and unviable as it resulted in the depression of the exchange rate. To obviate such losses a contract was entered into in 1767 by the commissioners of the Treasury with John Drummond (1723-74), banker, and Sir Samuel Fludyer (1705-68), deputy governor of the Bank of England, acting jointly as Messrs Fludyer & Drummond.

Under the contract the partners would deliver all monies issued from the Treasury for remittance to America. These monies were converted into Spanish and Portuguese coin and paid over, as called for, to the deputy paymasters in the colonies. The Crown received all interest and profits and it paid all charges. Messrs Fludyer & Drummond received a commission of one per cent of all monies delivered to them. It was hoped by this arrangement that the exchange would be stabilised and the necessity for remittance of specie avoided by the contractors’ agents raising funds from the sale of bills of exchange drawn on the contractors. In 1768 when Samuel Fludyer died his share of the contract was taken by Thomas Harley (1730-1804), merchant, banker and Lord Mayor of London, and in 1772 Henry Drummond (c.1730-95), banker, became involved to assist his cousin, John Drummond, due to the latter’s poor health.

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