Darien Scheme: A king who preferred his English to Scottish subjects

I am doing so because I believe there is a great deal of ignorance among Scots about the Darien Scheme, caused by the suppression of the truth over centuries – it wasn’t until the 1960s that the first major book on the Scheme was published: The Darien Disaster by John Prebble.

While acknowledging the many faults of the Scheme, I aim to show how Scotland’s foreign colony was mainly squeezed out of existence by two empires, those of Spain and England, and a king who preferred his English subjects to his Scottish ones.

There had been previous failed attempts by Scots to establish colonies in the Americas, but the French ousted them from Nova Scotia in the 1620s, while East Jersey was never adequately established and eventually merged with West Jersey to form a colony. In the 1680s, Stuarts Town in the Carolinas lasted only a couple of years before it was vanquished by the Spanish. Meanwhile, England got its colonies going and they overcame many initial problems to thrive.

Last week I showed how Bank of England co-founder William Paterson came up with the idea of a colony on the Darien Isthmus in the 1680s but King William II (III of England) turned it down as did other European leaders before Paterson returned to his native Scotland and persuaded its politicians in 1695 to pass an Act the following year to found the Company of Scotland Trading to Africa and the Indies.

To put this Act in context, the Scottish economy had been suffering from repeated harvest failures and restraints on trade to England and the Continent, and the country was at a low ebb. So for the Scottish Parliament to declare its desire for expansion was positively revolutionary.

The Company of Scotland was granted a monopoly on all Scottish trade to India, Africa and the Americas and was given exemption from taxes for 21 years as well as other rights. Its first directors soon argued among themselves over the Company’s forward direction – trade links to Africa and Asia or going “all in” on William Paterson’s Darien Scheme.

Paterson showed how the colony on the narrowest piece of land between the Atlantic and Pacific Oceans could be the “door of the seas and the key of the universe” and people believed him utterly. The Company really had wanted to trade with Africa and the Americas – its coat of arms features what are recognisably an American Indian and a black African as well as an elephant and a camel – but its sole venture became the Darien Scheme.

By that time Scottish merchants had been trading profitably for years with the English colonies in America, but the English Parliament, aided and abetted by King William, made that trade illegal and used the Royal Navy to suppress it. Then in 1696, Westminster passed the latest Navigation Act which effectively made it a criminal offence for any colonist in America to trade with Scots.

Even as that Act was going through the English Parliament, in February 1696, the Company of Scotland opened its subscription book in Edinburgh. It is my belief that, knowing what was coming down the road with the Navigation Act, the people of Scotland became caught up in a fever of speculation that was at least partially driven by sheer patriotism and a desire for Scotland to have an empire as England did.

We know that the Company of Scotland was conceived as a colonial and mercantile project – mercantilists believed you made wealth by taking profits, land and assets from existing businesses – with a capitalisation of £800,000, half of which was to be raised in England. Paterson used his contacts in England and on the Continent to raise investment, but then the East India Company intervened, fearful of a competitor north of the Border, and the loss of investment from English sources.

The first serious attempt to derail the Darien Scheme was definitely English. The East India Company had a monopoly on trade to India and Asia which was granted to them by Queen Elizabeth in 1600 and they were aghast at the thought of a Scottish competitor.

They used their powerful lobbying forces in the English Parliament to turn MPs against the Scottish upstart, and directly approached King William to force him to change tack on the Company of Scotland.

As King of Scotland, William had allowed the Act forming the Company to go through the Scottish Parliament. But now he let it be known that he was against the Darien Scheme and English investment disappeared.

William also had strategic concerns. His wars against France were ongoing and he very much needed the Spanish Empire to not join in on the French side. As the Company became focused on Darien, William was well aware that the area was claimed by Spain as part of its New Grenada province. It therefore made double sense to him to not annoy Spain and favour his East India Company over the Company of Scotland.

With so many Williamite loyalists in Scotland, you might think the Company of Scotland was doomed. Far from it, as Scots flocked to subscribe for the Darien project.

The list of subscribers still maintained by the Royal Bank of Scotland shows the extraordinary range of Scots who joined the rush to invest. The minimum investment was £100, and many noble and wealthy families took out four-figure subscriptions, but what is really impressive is the names and numbers of “ordinary” people who got involved, forming syndicates to invest at least the minimum “ton”.

On the first day alone some 69 subscriptions were recorded, raising £54,000. Even after the king’s disapproval, the £400,000 sterling needed to fund the Darien Scheme was raised within five months.