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History of Banking in Scotland
Chapter II - The Darien Company

IT is a curious fact in the history of Scotland, that the first considerable effort at joint-stock enterprise made there was at once the most ambitious and the most unfortunate, was accompanied by the largest amount of patriotic enthusiasm, and was the most unsuited to the national circumstances, of any in which the nation has been engaged. The fortunes of the Company of Scotland Trading to Africa and the Indies were for long, and to some extent are yet, a sadly-remembered episode in the annals of the kingdom. But, grievous as was the blow inflicted on the nation by the ruin of their darling Darien scheme, and culpable as the English authorities, from their Sovereign downwards, were in their conduct towards the company, it may be doubted if the enterprise possessed in itself the elements necessary to success, and if the national enthusiasm did not get diverted into an entirely wrong channel. Now that the lapse of time permits an unbiassed judgment, it appears almost an absurdity that a nation who had never been able to secure the blessings of peace and prosperity within their own borders should, while so much remained to be done at home, have tried to imitate their wealthy neighbours in the creation of a colonial empire. The amount of capital sunk, and the number of human lives lost in that deplorable attempt might, if saved and utilised at home, have greatly antedated the advent of national prosperity.

In fairness, however, to our courageous ancestors, it must be admitted that the means of utilising the national energies were then in a very deficient state. The accessories necessary to the production of commodities on such a scale, and of such quality, as successfully to compete with foreign markets, were not possessed by the people; the motive power of industry—capital—was not within their reach. What they could do with the limited powers at their command they did, toiling at their linen and other manufactures, protected by their Parliament's prohibitions against the use of the superior fabrics of foreign nations. But, from the time when they got the aid of a banking system and a sufficient currency, they made great strides, not without stumbles, it is true, yet more rapidly and more surely than any other nation before them.

When the Scottish leaders got personal experience of the power of English commerce, and of the influence of trading associations in promoting wealth, they were not slow to evince a desire to procure the same advantages for their native country. The troublous times appear, however, to have interfered with practical action; and it was not until late in the seventeenth century that the Legislature began systematically to make special provision for the encouragement of trade. One of the most important of the measures passed was the Act, William and Mary, 1693, chapter 32, "for the encouraging of Foreign Trade," in which "our Sovereign Lord and Lady, the King and Queen's Majesties, Considering how much the Improvement of Trade concerns the Wealth and Welfare of the Kingdom, and that nothing hath been found more effectual for the improving and enlarging thereof than the Erecting and Encouraging of Companies, whereby the same may be carried on by Undertakings to the remotest Parts, which it is not possible for single Persons to undergo," proceeded to authorise the association of merchants and others for commercial enterprises in all parts of the world "where Trade is in Use to be followed," with promise of protection and encouragement.

It would not seem, however, that much practical result immediately followed this measure; but it paved the way for two important Acts of the session 1695, incorporating the commonly-called Darien Company, and the Bank of Scotland. The former was the product of the fertile genius of William Paterson, whose character and abilities have been variously estimated. It is evident that he was a man of great energy and perseverance, and had powers of perception and organisation of a high order. Driven, at an early age, from his native Dumfriesshire by adverse circumstances, he passed into England and engaged in trade, apparently with much success. There he took an active and influential part in financial and commercial discussions, in which he shows that, although not entirely free from the erroneous views prevalent at that time on such subjects, he was very far in advance of his contemporaries. He projected the Bank of England, and succeeded, in spite of considerable opposition, in getting it established in 1694, and was one of its original directors. But, owing to disagreements with his colleagues, he did not retain his seat at the board many months, and he does not seem subsequently to have taken any part in the management of the bank.

After directing his energies to the establishment of an "Orphan Bank" and other schemes, Paterson conceived his great project of establishing a colony on the Isthmus of Darien for trading purposes. It was expected that this colony would become the entrepot of the trade of Europe with Asia, as well as with the West Indies. In one of his letters to the Darien Company, Paterson says: "The time and expense of navigation to China, Japan, the spice islands, and the far greater parte of the East Indies, will be lessened more than half, and the consumption of European commodityes and manufactories will soon be more than doubled. . . . Thus the door of the seas, and the key of the universe, with anything of a reasonable management, will enable its proprietors to give laws to both oceans, and to become arbitrators of the commercial world." [Memoirs of Great Britain and Ireland, Dalrymple, London, 1771-88, vol. iii. p. 93.]

At first Paterson endeavoured to launch his project in England; but it was treated with indifference or disfavour by those he consulted. He then went to Holland, in the hope that Dutch and Hamburg merchants would favour the idea; but no more success attended him there. Returning to England, it is said that Fletcher of Saltoun "persuaded him to trust the fate of his project to his own countrymen alone, and to let them have the sole benefit, glory, and danger of it." It would seem, however, that although the scheme was to be a Scotch one, English and Dutch support was still sought, and it was obtained when Scotch enthusiasm seemed to promise success. In his scheme he appears to have had influential associates both in Scotland and London. An Act authorising and incorporating a company for carrying out the proposal was obtained from the Scots Parliament on 26th June 1695. In the words of Paterson's biographer, "the original plan was to share the hazards of the design, in reasonable proportion, between the Scots and the English; and foreigners were to be invited to join them both. . . . The original leaders of it, whose names are inserted in the Act, were nine [ten] residents in Scotland, with Lord Belhaven and the Lord Provost of Edinburgh, Sir Robert Chiesley, at their head; and eleven residents in London, merchants, with William Paterson and Thomas Coutts at their head. . . . Mr. Paterson is found to be a subscriber for £3000, and his servant for £100."  [William Paterson: His Life and Trials, S. Bannister, Edinburgh, 1858, p. 129.]

The floating of the Indian and African Company of Scotland met with great opposition from interested parties in London; its promoters were threatened with impeachment, and the English, Dutch, and Hamburg subscriptions, which had been obtained to the extent of £500,000, were withdrawn at the command of the king, who was pressed to such action by the English Parliament. After in vain seeking renewed countenance in Holland, the promoters appealed to Scotland alone. The appeal was strikingly successful. "The frenzy of the Scots nation to sign the Solemn League and Covenant never exceeded the rapidity with which they ran to subscribe to the Darien Company. The nobility, the gentry, the merchants, the people, the royal burghs, and most of the other public bodies, subscribed." The national spirit was raised to a high pitch of enthusiasm by the jealous opposition of the English, and by the hope of great profit from the adventure. Although at that time the country was so poor that its total currency did not exceed £800,000 (according to authoritative estimates), a capital of £400,000, of which more than half was paid up, was eagerly subscribed.

Much time was occupied in preparation for the departure of the expedition, in the course of which Paterson was unfortunate enough to get involved in the loss of several thousand pounds of the company's money. An investigation at the time cleared his personal character, but from that time his influence in the enterprise was greatly diminished. From being the prospective leader he became a mere supernumerary. At last all was ready, and, "on the 26th day of July, of the year 1698," says Sir John Dalrymple, "the whole city of Edinburgh poured down upon Leith to see the colony depart, amidst the tears and prayers and praises of relations and friends, and of their countrymen. Many seamen and soldiers, whose services had been refused, because more had offered themselves than were needed, were found hid in the ships, and, when ordered ashore, clung to the ropes and timbers, imploring [to be allowed] to go, without reward, with their countrymen."

The expedition consisted of five well-armed ships, laden with merchandise, and having twelve hundred men on board. They arrived at their destination with but small loss, and the colony was formally established as New Caledonia, with New Edinburgh as its chief town. But difficulties and hardships were soon encountered, and severely tried the colonists. English opposition was carried to so great an extent, that the West Indian and American colonies were forbidden to sell food to the Scottish expedition, or to give them any assistance. Relying on obtaining from the neighbouring colonies such supplies as they might need, the Scots had brought with them little more than they required for the voyage. They were therefore reduced to depend for sustenance on the produce of the country, and that was both scanty and bad. Disease broke out, and many of the colonists died. Divided command among the leaders led to serious dissensions, and, encouraged by the openly manifested opposition of the English authorities, the Spaniards became menacing. Denied any assistance from the neighbouring colonies, the adventurers endured great miseries, under which their spirit was broken. At last, to avoid starvation, they abandoned the colony.

Eight weeks afterwards a second expedition arrived. These suffered as severely as their predecessors, and in one respect were even worse circumstanced. Four Presbyterian clergymen, who had been entrusted with the spiritual oversight, began to lecture and denounce them for their sins, continuing their services for hours without intermission, relieving each other by turns, while their heart-broken and wearied flock sat dumb before them. When they had been three months in the colony, they were joined by another party. Though apparently small in numbers, they brought a great accession of strength in the person of the able soldier, Colonel Campbell of Finab. The Spaniards soon advanced a strong force against the colony both by sea and land. Campbell gallantly defeated the land force, and maintained a brave defence against the ships. After enduring great privations, to which many of the colonists succumbed, they were obliged to submit. A third expedition, consisting of about thirteen hundred men, did not fare better than their predecessors, and were forced to abandon the enterprise. After having capitulated to a large Spanish force, on honourable terms, the Scots finally evacuated the colony in April 1700. Of the original expedition, only thirty persons are reported to have returned to Scotland ; and, according to an account published in 1787, "from first to last, two thousand Scotsmen lost their lives in this unfortunate adventure." [History of Edinburgh, Alex. Kincaid, Edinburgh, 1787, p. 284.]

The effects of this catastrophe on the Scottish nation were very marked. The great loss of life and property which had been sustained was felt throughout the land and among all classes, for the movement had been a national, not a party one. The people might, however, have mourned their dead, and borne their pecuniary losses, with that equanimity which they had so often displayed on other trying occasions, had it not been for the knowledge that their griefs were due to the neglect of their Sovereign and the jealousy of his English subjects. As it was, their vexation broke out in wrath. "Nothing," says Sir Walter Scott, "could be heard throughout Scotland but the language of grief and of resentment. Indemnification, redress, revenge, were demanded by every mouth, and each hand seemed ready to vouch for the justice of the claim. For many years no such universal feeling had occupied the Scottish people."

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