King James VI of Scotland became King James I of England in 1603. This united the kingdoms of England and Scotland in a way, but the union wasn't official. Many people in both countries continued to work toward a more common monarchy, and this was achieved 104 years after James assumed both thrones.

England's monarch in the early 18th Century was Queen Anne, who had succeeded to the throne in 1702 after the death of her brother-in-law, King William III. Just a year before, England had gotten involved in the War of the Spanish Succession, which involved most of the major countries in Europe.

Since the Glorious Revolution that had resulted in England's being ruled by William and Mary, Scotland had been ruled by those co-monarchs as well. King James II of England had also been King James VII of Scotland and had, after his ouster by William (who happened to be his son-in-law), offered the crown of both kingdoms to William and his wife. William and Mary then became William III of England (and William II of Scotland) and Mary II of England.

Despite all of this political "sameness," the two countries remained quite different and suspicious of each other. England had absorbed Wales, and Scotland feared being absorbed as well. Scotland, for several centuries, had been part of the Auld Alliance, a sort of mutual defense and/or attack agreement with France, the goal of which was to keep England from becoming too dominant in the affairs of other countries.

Just near the end of the 17th Century, many people in Scotland had thrown in their fortunes, literally, with the Darien Scheme, a plan to establish a Scottish colony in Panama. That endeavor fell through utterly and disastrously, taking the life savings of many a Scot with it. For many in Scotland in the first decade of the 18th Century, uniting with England would seem an attractive financial proposition.

On January 16, 1707, the Scottish Parliament voted to accept the Act of Union, which would create the Kingdom of Great Britain out of a political coming together of the Kingdom of England and the Kingdom of Scotland. England's Parliament debated the issue as well and approved it on March 6. And so it was that on May 1, 1707, the two kingdoms became one.

Under the terms of the Act of Union 1707:

• The Scottish Parliament and the English Parliament were dissolved. In practice, many members of both Parliaments became members of the first Parliament of Great Britain.
• Coinage, taxation, and trade were to be conducted by the one united government.
• Scotland's legal and religious systems were still its own, as were England's.
• A new flag was created, by melding the red cross of St. George and the blue cross of St. Andrew (after the patron saints of the two countries). The result was what is called the "old Union flag." The Union flag that is familiar today has added to it the red cross of Ireland's patron saint, Patrick, and that flag began to be used after the Act of Union 1800 created the Kingdom of Great Britain and Ireland.