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A History of William Paterson and the Darien Company
Chapter I. William Paterson and the passing of the Darien Company's Act

The material available for a narrative of the early life of William Paterson, the founder of the Bank of England and projector of the ill-fated Darien Company, is very limited. It is only after he reaches manhood that we possess details of his career. For long the whereabouts of his birthplace remained in doubt; and as regards the place of his burial, "no man knoweth of his sepulchre unto this day." Hill Burton, the historian, as well as Saxe Bannister, Paterson's sympathetic biographer, had both to confess ignorance on these points. On the authority of William Pagan ('Birthplace and Parentage of William Paterson'), we now know that Paterson was of Scottish birth, his father having been John Paterson, farmer in Skipmyre, in the parish of Tinwald, Dumfriesshire. The farmhouse where he was born (presumably in 1658) was pulled down in 1864.

Of Paterson's early education, also, little is known; but from his ready pen, and the able manner in which he expressed himself in his numerous writings, it may justly be inferred that the superior elementary education provided by the parish school of his day laid the foundation of his future intellectual attainments.

Eliot Warburton, in 'Darien, or the Merchant Prince,' informs us that he saw it stated in an old pamphlet in the Bodleian Library that Paterson, when about seventeen years of age, on account of being suspected of intercommunins: with certain Covenanters who were sheltering in his neighbourhood, was forced to leave his home in Dumfriesshire and take refuge in Bristol with an aged kinswoman of his mother. This lady dying shortly afterwards, it is conjectured that he then left England for Amsterdam, and in his visits to the coffee-houses there he became acquainted with several of the leading merchants of that town. From this Dutch port he is believed to have made his first voyage to the West Indies, where he spent some years. It has been stated that he became first a missionary, and afterwards a buccaneer, but this is unsupported by any reliable evidence. The latter suggestion—that he attached himself to the Brethren of the Coast—is one which is quite at variance with Paterson's high-toned life. It may have had its origin in the circumstance that, while resident in Jamaica, it is understood that he got acquainted with the two well-known buccaneers, William Dampier and Lionel Wafer, from whom he derived much of his information respecting Central America and the Spanish Main. The probability is that, while in the West Indies, Paterson was engaged wholly in mercantile pursuits.

After acquiring a moderate fortune and considerable business experience, he returned to Europe with a Scheme of Foreign Trade which he had matured, the result of long study of questions of commerce and finance, and which he hoped to carry into execution under the auspices of some foreign Power. With this in view, about the year 1686 he visited several Continental towns, when he took occasion to offer his Scheme to Frederick William, Elector of Brandenburg, and to the cities of Emden and Bremen; but meeting with little encouragement, he returned to England and settled down in London as a merchant.

Putting his Scheme of Trade aside for a time, Paterson, along with his friend Michael Godfrey and a few other London merchants, brought forward another important project, with which his name has ever since been honourably associated. This was his proposal for the formation of a National Bank, first submitted to the Government in 1691, and which finally led to the establishment of the Bank of England in 1694. Paterson's claims as "chief projector" of that great institution have never been seriously questioned. He was one of the original directors of the Bank,1and he saw it fairly started; but owing to a difference of opinion with the majority of his colleagues, when he was outvoted, he voluntarily withdrew from the Corporation in 1695 by selling out his qualification of 2000 stock. In a petition to Queen Anne some years afterwards (dated Westminster, 4th April 1709), he says—

"Your Petitioner first formed and proposed the scheme for relieving the public credit by establishing the Bank of England; but that, notwithstanding the signal success of that institution for the public service, and his unwearied endeavours in promoting the same through all manner of opposition from 1691 to the full establishment thereof in 1694, your Petitioner never had any recompense for his great pains and expense therein."

Paterson's career now turned in the direction of Scotland and the Darien Company.

With the Revolution of 1688, the religious and political troubles of Scotland had begun to subside and a spirit of trade and adventure had arisen in their place. The people were envious of England's lucrative colonial trade, and longed to enjoy similar economic advantages. This desire for commercial expansion was accentuated by a succession of bad harvests, which had reduced many thousands of the population to destitution. In order to remedy this unfortunate state of matters and give effect to the commercial aspirations of the nation, the Scottish Parliament devoted itself to passing several Acts fitted to stimulate home industries and foreign trade. Notably, on 14th June 1693, it passed an important measure, entitled an Act for Encouraging Foreign

Trade, wherein it was declared that Scottish companies might be formed to trade "with any country not at war with their majesties— to the East and West Indies, the Straits and Mediterranean, Africa and the northern parts"; and such companies were promised Letters Patent and the Great Seal.

The passing of this wide trading Act paved the way for the Parliamentary incorporation of Paterson's great scheme, the Darien Company, which came about in this wise.

The monopoly of Indian trade, enjoyed by the London East India Company, had long been encroached upon by "interlopers," or ships sent out by private traders, a number of which were owned by Scots merchants in London. These gentlemen hoped to have a free trade to India, or to obtain a Charter for a rival Company. They were disappointed in this, as the old Company not only frustrated their efforts in that direction, but also secured a renewal of their own Charter for other twenty-one years. This was the position of affairs when the session of the Scottish Parliament was opened on 9th May 1695. King William expressed his regret that important engagements abroad prevented him from meeting with them, but he sent the Marquis of Tweeddale down to Scotland as his Commissioner, with instructions to gratify the ancient kingdom as far as possible. In his opening address, after the king's letter had been read, Tweeddale, among other assurances of the royal regard for Scotland, informed the House that

"If they found it would tend to the advancement of trade that an Act be passed for the encouragement of such as should acquire and establish a plantation in Africa or America, or any other part of the world where plantations might lawfully be acquired, his Majesty was willing to declare that he would grant to his subjects in Scotland, in favour of their plantations, such rights and privileges as he was accustomed to grant to the subjects of his other dominions."

In the same month, May 1695, Paterson was approached by his friend Mr James Chiesly, merchant in London, who acquainted him that there was great encouragement given by the Scottish Legislature for establishing an East India Company in Scotland on a legal basis,

Although the king gave his Commissioner authority to promote any measure in the Scots Parliament for the furtherance of Scottish commerce, it was understood that any Act that might be passed was to be submitted to his Majesty for approval before it received royal assent. This formality appears to have been omitted in the case of the Darien Company's Act. At the time it was passed the king was on the Continent conducting the war against Louis XIV. of France, and was ignorant of what was being done in his name. This omission accounted for much of the hostility afterwards shown by the king to the Company, and for his significant remark that " he had been ill-served in Scotland." and he asked his assistance in the matter. In response to Chiesly's request, Paterson drew up and handed to him the draft constitution of a Bill for erecting such a Company. The draft Bill, whatever Paterson's private prepossessions may have been at the time, while giving significant prominence to an American as well as to an African and Indian trade, did not otherwise, on the face of it, suggest the Darien enterprise, with which it was ultimately solely associated. Its original and ostensible design was the establishment of an East India trade. The measure as drafted by Paterson, having been approved by his mercantile friends in London, was carried into Scotland by Mr Chiesly and Mr Coutts, who were favourably received by the chief officers of State and, it may be said, by the whole of the nobility and people of any consequence. There was therefore no fear of the passage of the proposed Act, more especially as it had the patronage of Ministers of the Crown such as the Marquis of Tweeddale and James Johnston, Secretary of State, the latter of whom got the main credit of carrying it through Parliament.

Accordingly, on 12th June 1695, the Bill was presented to the Scottish Parliament for preliminary consideration, and after being read was referred to the Committee of Trade. On

Friday the 21st the Bill was brought in from the Committee for further consideration, when it was again read, amended, and approven. Thereafter it was again remitted to the Committee of Trade, in order that the names of the patentees or promoters—of whom ten resided in Scotland and ten in England — might be inserted. On the Wednesday following—a fortnight after its introduction—the Bill was reported to the House, when it was "read, voted, and approven." Thus the great Act erecting The Company of Scotland trading to Africa and the Indies, so full of important issues for Scotland, passed the Scottish Parliament on 26th June 1695. It also became law on the same day by being carried to the Throne, where it was "touched with the Sceptre" by his Majesty's Commissioner in the usual way.

The Company was popularly known in Scotland as "The Darien Company," from its expeditions to the Isthmus of Darien, and this title has been followed here. It is frequently referred to by contemporary writers as "The African Company," but the only action on the part of the Company which justified the use of that title was their sending out to the Gold Coast of Africa, in September 1699, a ship called the African Merchant, William Bell, captain. The ship returned with a quantity of gold dust, received in barter for its cargo. This gold dust was minted into twelve- and six-pound pieces Scots, sometimes called pistoles and half-pistoles (Darien pistoles). The Company's crest, "the sun rising out of the sea," appears on the coins immediately under King William's bust, and they bear the date 1701. They are further unique in respect that they were the last gold coins issued by the Scottish Mint.

Although Paterson was responsible for the main part of the text of the Bill, and his name appears in it as heading the promoters resident in England, he personally had no hand in its receiving the imprimatur of the Scottish Parliament. When giving evidence in January 1696 before the Committee of the House of Commons, which was appointed to examine " what methods were taken for obtaining the Act of Parliament passed in Scotland for the establishing of the East India Company, and who were the promoters and advisers thereof," Paterson stated that " he did not solicit for the Act, nor knew anything of its passing, but he heard Mr Chiesly and Mr Blackwood say that they had solicited for such an Act formerly. He was induced to be concerned in the matter, because there was no encouragement for such a trade in England."

Among the large powers conferred upon the Darien Company by their Act were the following:—

1. Monopoly in Scotland of trade with Asia, Africa, or America for 31 years.

2. Goods imported by the Company during the space of 21 years to be duty free, except foreign sugar and tobacco.

3. The Company to be empowered for the space of 10 years to equip, fit out, and navigate their own or hired ships in warlike or other manner, as they shall think fit.

4. Members and servants of the Company to be privileged against impressment and arrest; and if any of them happened to be so treated, the Company were authorised to release them, and to demand the assistance both of the civil and military powers for that purpose.

5. The Company and their officers and members to be free from taxes for 21 years.

6. No part of the capital stock or of the real or personal property of the Company to be liable to any manner of confiscation or arrest; and creditors of members of the Company to have lien over their profits only, without having any further rights over the debtors' stock.

7. The Company authorised to take possession of uninhabited territories in any part of Asia, Africa, or America, or in any other place, by consent of the inhabitants, provided it was not possessed by any European sovereign; and there to plant colonies, build towns and forts; to impose taxes and provide such places with magazines, arms, &c.; to wage war and make reprisals, and to conclude treaties of peace and commerce.

8. Should any foreign State injure the Company, the king to interpose, and at the public charge obtain reparation for the damage done.

9. All persons concerned in the Company, together with those who might settle in or inhabit any of their plantations, to be declared free citizens of Scotland, and to have the privileges thereof.

10. Letters Patent, confirming the Company's Act, to be given by the king, to which the Great Seal was to be affixed.

11. In token of allegiance, the Company to pay yearly to his Majesty and his successors a hogshead of tobacco in name of blench-duty, if required.

[For full text of the Act see Appendix A.]

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