The partnership between John Dick Peddie (born 1824) and Charles George Hood Kinnear (born 1830) was officially formed on 1 January 1856, although Kinnear's RIBA nomination form gives 1855, probably the date of the partnership agreement. Peddie had been running a successful independent practice in Edinburgh since 1845, and it was the rapid expansion of this in the mid-1850s, especially with regard to Royal Bank work, that induced him to take a partner. Prior to the formation of the partnership, Kinnear, who had served his articles with William Burn & David Bryce (latterly with David Bryce practising on his own), appears to have worked for Peddie on a part-time basis from late 1853 or early 1854. He briefly practised on his own in 1855 following several study trips abroad, although his practice seems to have consisted only of improvements on the Kinnear and Kinloch estates. In selecting a partner, Peddie had sought a candidate who both had capital to inject into the business and was skilled in 'Old Scots', the latter due to his involvement in proposals for the formation of Cockburn Street in the Old Town, for which the Improvement Act of 1827 had set the precedent of 'Old Scots or Flemish'. He had also sought a candidate who had some capital to inject into the business, and Kinnear, a member of the banking family Thomas Kinnear & Company, had become well-off at his coming of age in 1852. Following the formation of the partnership, Kinnear appears to have taken charge of the drawing office, Burn & Bryce drawing office methods being consistently adopted with nearly all the drawings signed in Kinnear's handwriting.
By the time the partnership had been formed, Kinnear had become deeply interested in photography, perhaps through his former master David Bryce, who was also a pioneer photographer. Together with the architect David MacGibbon and Sir David Brewster, Bryce and Kinnear co-founded the Photographic Society of Scotland in 1856, Brewster being president and Kinnear secretary. In the same year Kinnear made a photographic study tour which embraced Milan; and in the following year, 1857, he invented the first bellows camera, which was made for him by a Mr Bell of Potterrow. He took it on a study tour of northern France, followed by another in Germany.
Kinnear was able to make these study tours through inheritance. When he came of age in 1852 he fell heir to a large number of Edinburgh properties from his Greenshields grandfather, and on the death of his grandmother in 1856 he also came into full possession of 125 Princes Street and the estate of Drum. One of these houses, 12 Howe Street, provided the larger premises the partnership required. Family connections were reinforced by volunteer connections from 1859 onwards when he joined the First Midlothian County (Midlothian Coast) Artillery Volunteer Brigade. He was commissioned as a lieutenant in July 1860 and quickly rose to become captain of the Portobello battery, then second major, and as senior major one of the three officers who financed the building of the regimental headquarters in Grindlay Street in 1866.
From the very beginning the partnership was hugely successful as commissions for major public buildings and churches flowed in: Dublin Street Baptist Church in Edinburgh in 1856; the Scottish Provident Institute in Edinburgh, where Donald Smith Peddie was on the board, in 1858; Morrison's Academy in Crieff in 1859; and Morgan's Hospital in Dundee in 1860. They also had considerable success in competitions, winning that for Sydney Place UP Church in Glasgow in 1857 and coming second for the Wallace Monument and St Mary's Free Church, Edinburgh in 1858, the design for the latter being realised at Pilrig Free Church in the same city in 1860. In 1861 they won that for Aberdeen Sheriff Court, which grew into the much larger municipal buildings project in the following year. The single major disappointment was the reconstruction and enlargement of the Bank of Scotland Head Office in Edinburgh, commissioned by the Treasurer Alexander Blair in the autumn of 1859 but retrieved by David Bryce from his successor after Kinnear was instructed to seek his opinion on their designs. Peddie & Kinnear were, however, given all of the bank's provincial branch business, and after initially building some relatively simple Italianate structures, Kinnear followed David MacGibbon's lead in adopting a Scots vernacular idiom as the bank's house style for new construction. This greatly increased volume of business required a larger office, 3 South Charlotte Street being bought for the purpose in 1866. It also led to a marked increase in Peddie's social standing, expressed first in a large terrace house at 21 Claremont Crescent, built in 1860 and then in a much grander one at 33 Buckingham Terrace, built along with number 34 in 1866. Not long thereafter he also rented from the Countess of Seafield the estate of Muckrach in Inverness-shire, primarily for the fishing. Election as ARSA followed in 1868, and full academician and treasurer only two years later. The Academy was to become a showcase for his ambitious proposals for Princes Street, an interest which seems to have stemmed from his North British Station and Waverley Market competition designs of 1866 and the unbuilt Caledonian Hotel scheme of 1868, the biggest disappointment of Peddie's career.
To keep their office continuously employed, Peddie & Kinnear began building speculatively in Edinburgh from the mid-1860s, taking over the Grosvenor Crescent section of Robert Matheson's West Coates development and extending it into Palmerston Place. This sold well and with a relative dearth of commissions for public buildings, now increasingly determined by open competition, the partners set about creating new business through property, hydropathic and hotel companies in which they and a select circle of business associates were the major shareholders, a tactic made less hazardous by the Limited Liability Act of 1855 and the Companies Act of 1862. The first of these were the Heritable Securities Association and the Scottish Lands and Buildings Company, founded in 1862 and 1864 respectively, followed by the Craiglockhart Estates Company in 1873 and a number of smaller companies. Nearly all of these were managed by the Edinburgh chartered accountant Alexander Thomas Niven. Their authorised capital was not fully paid up, the balance being met by advertising for funds on deposit at interest rates of 3 ½ to 4 ½ %. Initially these companies were primarily concerned with housing developments, but when the Caledonian Railway moved the site of its proposed Central Station to the eastern side of Hope Street, the Blythswoodholm Building Company, backed by the Scottish Lands and Buildings Company, took over the original site on the west side for a major hotel and shopping arcade development. In this project Peddie realised some of the ideas in the unbuilt schemes for St Enoch Station in Glasgow and the North British and Caledonian Hotels in Edinburgh, but with Alexander Thomson-based elevations. By 1877 the Scottish Lands and Buildings Company had become overstretched as costs escalated and disposed of its interest to the Scottish Heritable Securities Company. Further capital was raised but in 1878 the City of Glasgow Bank crashed. This provoked a prolonged recession and in 1879 the Caledonian Railway decided to convert its offices into an hotel, bringing about the liquidation of the Blythswood Building Company and of the Scottish Heritable Securities Company in 1882 when a £70,000 bond was called in. Kinnear's Scottish Lands and Buildings Company also went into liquidation, but it was a voluntary one and it somehow managed to remain solvent. Peddie & Kinnear's other property companies fared no better as a result of the recession and the withdrawal of loan capital: calls for capital from companies which no longer had a value were to plague both partners to the end of their lives.
The partners similarly incurred heavy losses in their two large hydropathic developments: Dunblane, where the company was formed in 1874, and Craiglockhart, a by-product of the Craiglockhart Estates Company, formed in 1877. At Callander, where they acted as consultants to the Stirling architect and civil engineer Francis Mackison in 1878-80, they were careful to avoid subscribing any capital. All three hydropathics failed in 1884 and were sold to hoteliers: the only one to survive was Shandon where the capital cost had been kept low by buying the existing mansion by John Thomas Rochead for a fraction of its original cost.
In 1878 the Peddie & Kinnear practice briefly became Peddie, Kinnear & Peddie following the return to the office of Peddie's son John More Dick Peddie (born 1853), who had served a short articled apprenticeship with the firm and had subsequently worked for George Gilbert Scott before returning to his father's firm as an assistant in 1875.
(See separate entries on Peddie, Kinnear & Peddie and on the individual partners for later practice history.)