Clan Paterson · 1698
Paterson and the Darien Scheme
On the fourteenth of July 1698, on the deep-water anchorage of Leith Roads outside Edinburgh, five Scottish-built ships of the Company of Scotland Trading to Africa and the Indies (the *Caledonia*, *Saint Andrew*, *Unicorn*, *Dolphin* and *Endeavour*) sailed for the Isthmus of Panama with about twelve hundred settlers and the Scottish capital of about four hundred thousand pounds (about one-quarter of the total liquid capital of Scotland). The architect of the venture was William Paterson, forty years old, the Tinwald-Dumfriesshire-born founder (with Charles Montagu) of the Bank of England in 1694, who had spent the previous two years organising the Company's prospectus, capital-raising, and ship-fitting. The Darien colony at New Edinburgh on the Caribbean coast of Panama was meant to establish a trans-Isthmus trading entrepôt between the Atlantic and the Pacific economies. The colony collapsed within fourteen months: about a thousand of the twelve hundred settlers died of malaria, yellow fever and dysentery; the Spanish-imperial military authority refused to recognise the Scottish-Company territorial-claim; the English government, under William III's political pressure from the East India Company, refused all trading support. A second expedition of about thirteen hundred fresh Scottish settlers in 1699 produced the same outcome. The Company of Scotland lost its entire capital. The Scottish economy of the early eighteenth century was severely damaged. The Darien failure is, by every careful judgment of the historians of the Anglo-Scottish Union (T. M. Devine, Christopher Whatley), the foundational economic-political-cause of the Acts of Union of 1707: Scotland needed English economic assistance, and the English Crown needed Scottish political consent for the Hanoverian succession.
It is twenty past five on the afternoon of Thursday the fourteenth of July 1698, on the quay at the south end of Leith harbour just north of Edinburgh, in summer light off the Forth estuary. He is forty years old. He is William Paterson, born at Skipmyre near Tinwald in Dumfriesshire on the April of 1658, son of John Paterson the small farmer and Bethia Patterson, schooled at the Dumfries grammar school and (by the Paterson family-tradition of the 1670s) at a Mennonite trading-house at Bristol from sixteen, in his eighteenth year of the international trading career that has taken him to the West Indies (1675–80), Amsterdam (1680–88), and London (1688 onward, where he was the co-founder with Charles Montagu of the Bank of England in 1694).
On the quayside in front of him are the five Company of Scotland ships, fitted-out at the Leith-yards over the previous eighteen months and provisioned for the ten-month outward voyage: the flagship Caledonia (350 tons, thirty-six guns, Captain Robert Pennycook), the Saint Andrew (350 tons), the Unicorn (310 tons), and the smaller cargo-vessels Dolphin and Endeavour. The twelve hundred settlers (Lowland-Scottish men, mostly young, mostly Edinburgh-and-Borders, with about two hundred wives and forty children, the women-and-children mostly intended to come out on the second expedition due in the spring of 1699) are coming aboard at the Leith quayside in groups of about thirty.
He thinks: the Company has raised four hundred thousand pounds in subscriptions from the Scottish public. The amount is about one quarter of the Scottish national liquid capital. The Company's prospectus has promised the shareholders a fifteen-per-cent annual return on the trans-Isthmus trading entrepôt.
He thinks: the Isthmus of Panama, by the Spanish-Atlantic-Pacific trading geography, is the natural choke-point of the Atlantic-Pacific commerce. The Spanish trans-Pacific silver trade from Manila to Acapulco carries the Asian goods to Acapulco; the Atlantic trade carries them onwards to Cádiz. The trans-Isthmus transit at Panama is the bottleneck. A Scottish trading entrepôt at Darien on the Caribbean side would, by the Company prospectus, secure about a quarter of the Atlantic-Pacific trade.
He thinks: the Spanish-imperial military authority will, on the evidence of the 1695 Madrid letter from the Council of the Indies, refuse to recognise the Scottish-Company territorial-claim. The Spanish will, in plain reading, send a Cartagena garrison force against the colony within twelve months of the landing.
He thinks: the English government, on the Crown-William-Three political-economy, will refuse to give the Company any trading-fleet assistance. The East India Company is opposed to the Scottish venture on the competitive-trade-monopoly grounds. The William-Three Crown is, on the East-India-Company political-pressure, hostile to the Company of Scotland.
He thinks: the venture is, in plain reading, very high-risk. The Company-shareholders have invested on the prospectus that I and the Directors wrote. The prospectus understated the risks. The shareholders will, on the failure of the venture, lose their capital.
He thinks: I am sailing with the first expedition as a director. I will lose my own family if the Darien fevers take me, as the evidence of the Caribbean medical-statistics suggests is the probable outcome.
The Company of Scotland's first expedition sailed from Leith Roads at six in the evening on the fourteenth of July 1698 and reached the Caribbean coast of Panama at the Bay of Darien on the second of November 1698. The settlers founded New Edinburgh (the fort, the town, and the trading-quay) at the Bay of Caledonia on the third of November. By the spring of 1699, about half of the twelve hundred settlers were dead of malaria, yellow fever and dysentery (the Caribbean rainy-season had begun in October 1698 and the mosquito-borne fevers were at the summer peak; the Company's medical-supply, mostly opium and rum, was useless against the fevers). The Spanish military authority at Cartagena, on the news of the Scottish colony, ordered a military expedition under General Juan Pimienta against New Edinburgh in February 1700.
The colony was evacuated under Spanish-military-pressure in April 1700. About three hundred of the second-expedition settlers (who had arrived in September 1699 with thirteen hundred fresh settlers) survived to be repatriated; the rest died on the return voyage. William Paterson himself, who had been on the first expedition, survived (his wife and son had both died of yellow fever at New Edinburgh in December 1698) and returned to Scotland in April 1700. He testified before the Scottish Parliament Inquiry into the Darien failure in November 1700.
The Company of Scotland lost its entire capital of four hundred thousand pounds. The Scottish economy of the early eighteenth century was severely damaged. The Acts of Union of 1707, which the Westminster government negotiated on the Scottish-economic-distress political-leverage, included a compensation-clause (the Equivalent) of three hundred and ninety-eight thousand pounds paid to the Company-of-Scotland shareholders as a political-compensation for the Darien losses, in exchange for the Scottish-Parliament's ratification of the Union. The Darien failure is, by every careful judgment of T. M. Devine and Christopher Whatley, the foundational economic-political-cause of the Acts of Union.
William Paterson continued his career as a Scottish political-economist and financial advisor. He sat in the Scottish Parliament of 1706 as a supporter of the Union (an irony that has not been lost on Scottish historians). He died at his Westminster lodging on the twenty-second of January 1719, sixty years old. He is buried at Sweetheart Abbey near Dumfries (the Paterson family-ancestral burial ground). The Bank of England (which Paterson had founded in 1694) celebrated its tercentenary in 1994; the bank's permanent Paterson exhibit at the Bank Museum on the Threadneedle Street site, opened in 1994, contains the original Bank-of-England charter of 1694, the Company of Scotland charter of 1695, and a 1698 Leith-Caledonia ship-model of the Darien Scheme flagship.