Copyright
James Samuel Barbour.

A history of William Paterson and the Darien company online

. (page 1 of 22)
Online LibraryJames Samuel BarbourA history of William Paterson and the Darien company → online text (page 1 of 22)
Font size
QR-code for this ebook


,-?:•;, ;fl^> ■'■.■■■■■ ■



/■^^■"V-



^'r':::^m



'<;*



■ *.






\, " .-:


' -A • .;. .


'^%. ■


» ,* *"', !


^^,^.-


■- ^'' : ?^. .;'


f- ■ . " t


;,' ■■'■■;"• y




■ ' .''■>":■.■• < J.' '


Hn


!•£«%*





iM^m




A HISTORY OF

WILLIAM PATERSON AND THE

DARIEN COMPANY




WILLIAM PATERSON,
Founder of the Bank of England and Projector

OF THE DARIEN COMPANY.



Facsiinili: oj a Pen-and-ink Drawing in MS. in the British Museum.



A HISTORY



OF



WILLIAM PATERSON



AND THE



DARIEN COMPANY



WITH
ILLUSTRATIONS AND APPENDICES



BY

JAMES SAMUEL BARBOUR

FORMERLY ACCOUNTANT OF THK BANK OF SCOTLAND



WILLIAM BLACKWOOD AND SONS

EDINBURGH AND LONDON

M C M V 1 1



A^l l^ights rcse>~!'ed



'^ ^ ^ ' UNIVERSITY OF CALIFOSNIA^

D J Q O SANTA BARBARA



Inscribed

WITH EVERY SENTIMENT OP
RESPECT AND ESTEEM

TO

Sir GEORGE ANDERSON, Kt.,

TREASURER OF THE BANK OF SCOTLAND,
BY

THE AUTHOR.



PEEFACE.



The printed documents and books concerning
the Darien Company and the relations to it of
its projector William Paterson, while numerous,
are widely scattered, and in the following pages
an endeavour has been made for the first time to
focus their chief information in narrative form.

The story of the flotation of the ill-starred
Darien Company, its multiplied disasters, and
its tragic collapse, along with that of the
chequered career of its projector, forms an
interesting episode in Scottish history which
should not be allowed to sink into oblivion.

Among the numerous authorities consulted
and drawn upon, the following may be partic-
ularly named : —

1. ' A Defence of the Scots Abdicating Darien ;
Inchiding an Answer to the Defence of the
Scots Settlement there.' Printed in the year
1700.

The writer of this tract is understood to



Vlll PREFACE.

have been one Walter Herries, a surgeon
on board the first expedition to Darien.

2. 'The History of Darien.' By the Eev. Francis

Borland, "sometime Minister of the Gospel at
Glassford, and one of the Ministers who went
along with the last Colony to Darien. Written
mostly in the year 1700, while the Author
was in the American regions." 2nd edition.
Glasgow, 1779.

3. 'History of the Union.' By Daniel De Foe.

London, 1786.

4. ' The Darien Papers.' Edited by Dr Hill Burton

for the Bannatyne Club. Edinburgh, 1849.

5. 'The Writings of William Paterson.' By Saxe

Bannister, M.A. 2nd edition. 3 vols. London,
1859.

6. ' The Early History of the Scots Darien Company.'

By Hiram Bingham, Curator of South American
History and Literature at the Library of
Harvard University. Three papers in 'The
Scottish Historical Eeview,' January, April,
and July 1906.

Edinburgh, April 1907.



CONTENTS.



CHAP.

I. WILLIAM PATERSON AND THE PASSING OP THE
DARIEN company's ACT .
II. THE CAPITAL OP THE DARIEN COMPANY

III. THE DARIEN COMPANY AND ITS BANK-NOTE ISSUE

IV. THE company's PREPARATIONS FOR THE FIRST EX-

PEDITION TO DARIEN
V. THE EXPEDITIONS TO DARIEN : FIRST EXPEDITION
VL THE EXPEDITIONS TO DARIEN : FIRST EXPEDITION —

continued ...... 91

VII. THE EXPEDITIONS TO DARIEN : SECOND EXPEDITION 133

VIII. RESTITUTION OF THE CAPITAL, WITH INTEREST, TO

THE SUBSCRIBERS OF THE DARIEN COMPANY . 156
IX. WILLIAM PATERSON's INDEMNITY AND HIS LAST

WILL ...... 186



1

13

28

37

54



APPENDICES.

A. ACT OF THE DARIEN COMPANY — JUNE 26, 1695 . 201

B. DECLARATION BY THE COUNCIL OF CALEDONIA —

DECEMBER 28, 1698 .... 211



CONTENTS.

C. HUI.E8 AND ORDINANCES BY THE PARLIAMENT OP

CALEDONIA, FOR THE GOOD GOVERNMENT OF

THE COLONY— APRIL 24, 1699 . . . 215

D. LETTER — J. 8. FLEMING, F.R.S.E., TO 'THE SCOTSMAN'

—AUGUST 5, 1880 . . . .222

E. BROCHURE — ' THE HISTORY OP CALEDONIA : OR, THE

SCOTS COLONY IN DARIEN IN THE WEST INDIES.
BY A GENTLEMAN LATELY ARRIV'd.' LONDON,

1699 ...... 227

p. LIST OF SUBSCRIBERS TO THE DARIEN COMPANY,

1696 ...... 253



ILLUSTEATIONS.



PAGE

PORTRAIT OF WILLIAM PATERSON . . . Frontispiece

DARIEN BANK-NOTES ..... 32

LEITH HARBOUR — ABOUT 1700 . . . .55

SKETCH-MAP OF ROUTE TAKEN BY FIRST EXPEDITION

AFTER LEAVING MADEIRA . . . .59

PLAN OF HARBOUR AT CALEDONIA . . .66

FACSIMILE OF SIGNATURE AND HANDWRITING OP WILLIAM

PATERSON — FEBRUARY 6, 1700 . . . 154

THE DARIEN HOUSE (sO-CALLED), BRISTO PORT, EDIN-
BURGH ....... 181

IRON LID OF TREASURE-CHEST OF DARIEN COMPANY, IN

ANTIQUARIAN MUSEUM, EDINBURGH . . . 200



A HISTORY OF

WILLIAM PATERSON AND THE

DARIEN COMPANY.



CHAPTER I.

WILLIAM PATERSON AND THE PASSING OP
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 bio-
grapher, had both to confess ignorance on

A



2 WILLIAM TATERSON AND THE

these points. On the authority of William
Pagan (' Birthplace and Parentage of William
Patcrson'), 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 pro-
vided by the parish school of his day laid
the foundation of his future intellectual at-
tainments.

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 intercom-
muning 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 after-
wards, it is conjectured that he then left Eng-
land for Amsterdam, and in his visits to the
coffee-houses there he became acquainted with



PASSING OF THE COMPANY S ACT. 6

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 sugges-
tion — 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 buc-
caneers, William Dampier and Lionel Wafer,
from whom he derived much of his informa-
tion 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 con-
siderable 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



4 WILLIAM PATERSON AND THE

of Brandenburg, and to the cities of Emden
and Bremen ; but meeting with little en-
couragement, 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,^
and 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 after-
wards (dated Westminster, 4th April 1709),
he says —

" Your Petitioner first formed and pro-

• Paterson's name appears as one of the first directors in the
copy of the Bank Charter given in the Appendix to Lawson's
' History of Banking,' first edition, 1849, p. 455.



PASSING OF THE COMPANY S ACT. 5

posed the scheme for relieving the public
credit by establishing the Bank of Eng-
land ; 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 estab-
lishment 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 Ke volution 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 advan-
tages. This desire for commercial expansion
was accentuated by a succession of bad har-
vests, which had reduced many thousands of
the population to destitution. In order to
remedy this unfortunate state of matters and
give ejQfect 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



6 WILLIAM PATERSON AND THE

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 9 th May 1695. King William
expressed his regret that important engage-
ments abroad prevented him from meeting with
them, but he sent the Marquis of Tweeddale
down to Scotland as his Commissioner, with



PASSING OF THE COMPANY S ACT. 7

instructions to gratify tlie 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 planta-
tions, 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 Parhament for the further-
ance 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 con-
ducting 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."



8 WILLIAM PATERSON AND THE

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 sig-
nificant prominence to an American as well as
to an African and Indian trade, did not other-
wise, 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 there-
fore 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



PASSING OF THE COMPANY S ACT. 9

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 Com-
mittee 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 fort-
night after its introduction — the Bill was reported
to the House, when it was "read, voted, and
approven." Thus the great Act erecting The
Co7npany 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 contemi^orary 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.



10 WILLIAM PATERSON AND THE

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 Parlia-
ment. 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 pro-
moters 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



PASSING OF THE COMPANY'S ACT. 11

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 inhabit-
ants, 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



12 WM. PATERSON AND PASSING OF CO.'s ACT.

and make reprisals, and to conclude
treaties of peace and commerce.

8. Should any foreign State injure the Com-
pany, 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 afiixed.

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^



13



CHAPTER II.

THE CAPITAL OF THE DARIEN COMPANY.

Unlike the Act of the Bank of Scotland, passed
about three weeks later, the Act constituting
the Darien Company did not limit the amount
of capital to be raised for carrying on the under-
taking. It merely spoke in general terms of
" the fund or capital stock that shall be agreed
to be advanced and employed by the said
undertakers and their co - partners." It was
stipulated, however, that the amount of capital
which might ultimately be agreed upon was to be
subscribed not later than the 1st day of August
1696 ; that at least half was to be set aside for
Scotsmen resident in the kingdom ; and that
the shares originally so subscribed could be
transferred only to other Scotsmen similarly
resident there. Failing half the stock being
quite taken up by resident Scotsmen, then
Scotsmen living abroad and foreigners were to
be allowed to subscribe for the residue. No one



14 THE CAPITAL OF THE DARTEN COMPANY.

could hold less stock than ,£100 nor more than
£3000 sterling.

At first Paterson and his associates proposed
to fix the total capital at £360,000, but ulti-
mately the amount was raised to £600,000
sterling — one half, as stated, to be reserved
for Scotland, and the remaining £300,000 to be
offered in London. From his previous experi-
ence of the remarkable success which had
attended the subscriptions of the Bank of
England, Paterson anticipated little difficulty
in raising the moiety assigned to London. He
therefore addressed himself to quickening the
speculative interest of his countrymen in the
proposed enterprise, and in this connection it is
interesting to read the correspondence which
passed between Paterson and the Eight Honour-
able Sir Eobert Chiesly, the Lord Provost of
Edinburgh, who represented the Scottish portion
of Directors appointed by the Act. Paterson's
letters are dated from London, and in the
correspondence he stands out as a financial
expert far ahead of his time — being, in fact,
quite abreast of the astute company promoters
of our own day. In his letter of 4th July 1695
he suggests that the information about to be
furnished to the people of Scotland should not
be too detailed. " And for Eeasons, we ought
to give none but that it is a Fund for the African



THE CAPITAL OF THE DARIEN COMPANY. 15

and Indian Company. For if we are not able to
raise the Fund by our Eeputation, we shall hardly
do it by our Reasons." This method of floating a
company on the reputation of the promoters is
in keeping with some of the prospectuses of the
numerous bubble companies launched a few
years afterwards (in 1720), one of which stated
that the company about to be promoted was
"for an object to be hereafter revealed."

On the 9th July Paterson urges that a limited
time only should be allowed to the public for
giving in their subscriptions. He writes : " The
Bank of England had but six weeks' time from
the opening of the books, and was finished in
nine days, and in all subscriptions here it's
always limited to a short day. For if a thing
go not on with the first heat, the raising of a
Fund seldom or never succeeds, the multitude
being commonly led more by example than
reason." Continuing, he says: "They" (the
gentlemen promoters in London) " hope, all
things considered, that this, as it's designed, is
one of the most beneficial and best grounded
pieces of trade at this day in Christendom, and
we must engage some of the best heads and
purses for trade in Europe therein, or we can
never do it as it ought to be."

Paterson several times complained of Lord
Provost Chiesly's delay in forwarding to him



16 THE CAPITAL OF THE DAPJEN COMPANY.

an authentic copy of the Company's Act "as
it passed the Seals," his aim being to get the
Company established before the English Par-
liament met. On the 6th of August he writes
somewhat warmly : " The life of all commerce
depends upon a punctual correspondence, and
we shall not fail at any time to return our
thoughts upon your demands, so we hope you
will keep up to the exactness of correspondence
on your part." A week later Paterson inti-
mated to the Lord Provost that it was pro-
posed to convene a General Meeting of the
Corporation, to be held in London, for the
purpose of making the arrangements necessary
for opening the subscriptions there. At the
same time he drew attention to two errors
that had crept into the Act — viz., Mr James
Smith, merchant, London, being misnamed
John Smith, and Mr Joseph Cohen
D'Azevedo's name being printed as if it rep-
resented two separate individuals. It would
therefore be necessary — in fact, it was urgent
— that three from among the Scotch promoters
named in the Act should be present at the
proposed meeting in London, so as to make
a majority and quorum, and have the errors
referred to rectified. Paterson had to repeat
this request several times ; and in compliance
therewith, although somewhat tardily. Lord


1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

Online LibraryJames Samuel BarbourA history of William Paterson and the Darien company → online text (page 1 of 22)