by Tom Phillips
This was during the early peak of Europe’s wild colonial expansion, and Scotland wanted in on the action. By the 1690s, the Spanish and the Portuguese had been absolutely coining it for the best part of two centuries on the resources they’d extracted from their American colonies; more recently, the English and the Dutch had joined the game to great success. The European scramble for global empires now covered Asia, Africa and the Americas, as the general strategy of “turn up with guns and take all their stuff” continued to promise untold riches, with no sign of slowing down.
The age of empire was also the age of financial revolution: as a result, much of the sharp end of colonialism was enacted not just directly by the states, but also by state-backed, publicly traded “joint-stock” companies that blurred the lines between mercantile business and geopolitics. These included infamous behemoths like the English East India Company and the Dutch East India Company, and it was this model that Paterson sought to broadly replicate for his Darien venture. These companies had a global reach, tremendous wealth and a level of power that outstripped that of many states. Indeed, the companies often acted like states in their own right, and wielded incredible influence over the government of their own countries. (So very unlike today.)
Additionally, the 1690s was also a time of uncertainty and doubt for Scotland. Ever since the Bible-commissioning witch-botherer James VI had gone south in 1603 and united the crowns of Scotland, England and Ireland into one, the Scots had been feeling restive. They were part of a union, yes, but still a politically independent nation: they had their own parliament, passed their own laws and still retained their own currency. However, the suspicion was growing among some segments of Scottish society that they were getting a raw deal from the whole business. The union of the crown, they believed (with some justification) was a stitch-up that acted only in the interests of the English; Scotland would always be the poorer cousin, and the diktats that were passed down from London would always favor the English capital to the detriment of Edinburgh.
These feelings were only increased by the fact that others were actively pushing for an ever closer union with England. And the heightened atmosphere was stoked even further by the financial turmoil of the 1690s—a monetary crisis in England, a king trying to pay for foreign wars and the “seven ill years” of recession, harvest failures and famine in Scotland that saw widespread starvation and the impoverishment of many. This economic crisis, rather than making the people of Scotland risk-averse, instead provided fertile ground for anybody with a promise to shake up the status quo. So when Paterson’s Darien scheme came along, it was seized on with patriotic fervor as a way for Scotland to reassert its independence, break free of the binds of the union and take control of its future.
Paterson didn’t actually conceive his scheme as a matter of national pride—in fact, he’d been trying to convince other countries to back it before he turned to his homeland. And even once it had become fixed as a Scottish venture in 1695 (as “The Company of Scotland Trading to Africa and the Indies,” backed by an act of the Scottish parliament that gave it a wide remit and ridiculously generous terms), he still began his efforts at raising funds for it in London. This is where it all started to go wrong—and where its founders first started to ignore the warning signs.
To begin with, though, things didn’t go wrong; in fact, they went very right. Too right, it turned out. Paterson’s reputation in London and his skills as a salesman, added to the unrestrained enthusiasm for joint-stock companies with global ambitions, meant that the Company of Scotland had no trouble finding backers, attracting pledges of investment totaling around £300,000—a vast sum. Unfortunately for them, such was the interest in their scheme that it couldn’t fail to attract the attention of the East India Company.
To put it mildly, the East India Company were not wild about the prospect of competition. They, along with much of the rest of London’s mercantile community, had been spooked as hell by the financial troubles of the decade, and had recorded massive losses that year. At this point, the Company of Scotland hadn’t settled on Panama as their goal and (in the entirely vain hope of keeping things supersecret) hadn’t even mentioned the idea of an American expedition publicly. Instead, as the full name of the company suggested, they were selling the scheme as one that would focus on Africa or the East Indies. To which the East India Company’s predictable response was, to roughly paraphrase, “Not on your fucking life.”
And so the company whose wealth and power was inextricably tied up with the success of the English imperial project put their influence into action. This was the Company of Scotland’s first lesson in the brutal realpolitik of global trade: that just because you say, “We want to do lots of international trade,” and furthermore that you want to do it on your own wish list of terms, doesn’t mean that the rest of the world is simply going to agree with you.
The English parliament was outraged about the terms of the Scottish act, which had shot itself in the foot by granting the Company a free-trade pipe dream: complete exemption from customs and import tariffs and taxes for twenty-one years. How would this affect the customs and trade relationship between England and Scotland, the English MPs wanted to know, and how had the Scottish parliament been allowed to pass it? Lacking a hard border between the countries, they warned that “the said Commodities will unavoidably be brought by the Scotch into England by Stealth...to the great detriment of Your Majesty in Your Customs.”
The English parliament held inquiries and ordered reports and threatened to impeach just about anybody who’d been involved in the Company. King William, taking the side of the English (to nobody’s great surprise), let it be known that he was royally pissed off. At which point, all of those pledges of investment from London mysteriously vanished into nothingness.
The story was the same when the Company tried to raise funds overseas, in the trading capitals of Amsterdam and Hamburg. The Dutch East India Company was no happier about this state of affairs than their English counterparts, and their efforts—combined with a wily English diplomat who executed a superlative whisper campaign against the venture—ensured that Paterson and his colleagues had lots of coffee meetings where they were pumped for information on their plans, but left with little in the way of actual cash.
But if the efforts of the English state to crush Scottish dreams worked wonders at choking off outside investment, they had precisely the opposite effect inside Scotland. Fueled by the justified sense of unfairness over their treatment, the people of Scotland embraced the Company not just as a financial opportunity but as an expression of national identity. Paterson may not have intended the Darien scheme as a flag-waving exercise—he was only really interested in putting his theories about trade into practice—but ever the salesman, he knew when to ride a wave of public sentiment, and so happily yoked his economic experiment to the surge of patriotic fervor and nationalist resentment.
When the subscription book for the Company was opened in Edinburgh on February 26, 1696, it attracted major crowds, which wasn’t exactly normal for what was in effect Accountancy: Live! Scots absolutely poured money into the scheme. Scotland was not a wealthy country at the time, but even during the seven ill years it was not quite a poor one, either. Like much of the rest of Europe, it had a burgeoning middle class, and they were among the scheme’s most enthusiastic backers—unlike other joint-stock companies such as the East India Company, whose investors tended to be limited to the nobility and wealthy merchants. According to historian and author Douglas Watt, who examined the Company’s records for his book The Price of Scotland, it was small landowners outside the nobility who were the largest single group of backers. But it didn’t stop there. A remarkable cross-section of Scottish society pledged their money to the Company—from the titled great and the good to lawyers, doctors, ministers of the church, teachers, tailors, soldiers, watchmakers, at least one “soap-boiler” and even some of the wealthier servants. The enthusiasm
was infectious. Tales of the awesome riches waiting in the colonies were the talk of the town; songs and poems were written in praise of the Company, and prayers were said for its good fortune.
It’s hard to be precise, given the vagaries of history and the fact that there were two currencies operating in the country, but Watt estimates that somewhere between one sixth and an entire half of the total monetary wealth in Scotland at the time was paid into the Company’s coffers. When you include the full amount pledged (as only part of the cash was required to be paid up front), it’s possible that the promised funds actually exceeded the total value of coins in the country.
This is, just to be clear, not a good thing.
Paterson seems to have understood well how financial manias could be fueled, and used this to his advantage. In fact, he discussed it in terms that seem eerily like our modern understanding of “going viral.” He wrote in a 1695 letter that “if a thing goe not on with the first heat, the raising of a Fund seldom or never succeeds, the multitude being commonly ledd more by example than Reason.” One key factor may have been that the subscription book for the Company was not private, but public, and indeed was deliberately published by the Company so everybody could see who the investors were. And Paterson deliberately targeted prominent public figures (“influencers,” if you will) to be early supporters, in the hope that they would be the example to others that would lead them more powerfully than reason. Like some sort of seventeenth-century Kickstarter or GoFundMe page, this turned the act of backing the Company from a personal financial choice into a public declaration of allegiance—and it made those not backing it conspicuous by their absence.
Naturally this all led to a self-reinforcing spiral of social pressure, and created an atmosphere in which opposing or skeptical voices were aggressively drowned out. In 1696, John Holland (the Englishman who founded the Bank of Scotland) recorded unhappily that when he tried to criticize the scheme, he was accused of being a spy for the East India Company. “Such is the zeal of the nation to the Indian and African Trade,” he wrote, “that many are thereby prejudiced against me; and because they cannot answer what I have argued against their design, they tell one another, we must not believe what Mr. Holland sayeth, for he is an English man...it is become dangerous for a man to express his thoughts freely of this matter, people being under more awe and fear of giving their opinion...”
The combination of outrage over English actions, surging patriotic self-belief, lofty promises and a compelling vision, the trick of turning support into a performative act and the good old-fashioned lure of making a quick buck created just about the most fertile possible environment for a runaway mania. And so it was that on July 14, 1698, as cheering crowds waved them off, five vessels set sail from Leith, carrying aboard them William Paterson and 1,200 other hopeful souls, all bound for a Central American destination that Paterson had never been to.
Oh yeah, had we not mentioned that bit? WILLIAM PATERSON HAD NEVER EVEN BEEN TO DARIEN.
Quite why our boy became so fixated on Darien as the site of his grand trade experiment remains to this day a bit of a mystery. He had certainly spent a lot of time in the Caribbean as a merchant, but there’s no evidence in his biography or his public writings that he ever came anywhere close to the Panamanian isthmus. Instead, he seems to have heard tales of it from, in all probability, pirates. (This was during the Golden Age of Piracy, when the real-life, non-CGI Pirates of the Caribbean were doing their thing, either as true rogue elements or often with the nod-and-a-wink backing of governments who wanted them to harass their colonial rivals.)
It’s also not clear quite how Paterson so consistently persuaded his fellow directors of the Company of Scotland to back his vision of Darien as the hub of Scotland’s global empire, based on little more than hearsay. Certainly they had plenty of opportunities to change course—in 1697, a year before the fleet set sail, they actually came close to abandoning the Darien scheme entirely and focusing instead on more modest goals.
They were becoming aware that the Company, flush with cash after its fundraising in Edinburgh, had now wildly overspent and could not guarantee funds to fully support the scheme’s ambitions. (They’d foolishly decided to purchase entirely new state-of-the-art ships on the continent, at a time when most of their rivals rented the majority of their fleet. Possibly this was an effort to big themselves up to potential Dutch and Germanic investors—kind of like a tech start-up with no revenue but swanky offices in the most expensive part of town.) The directors had multiple experts of good standing casting doubt on the viability of the expedition, urging instead that the capital raised be spent on less imperial trade missions to Asia. They were fully aware of all the pitfalls of Darien as a destination, and even considered several other locations in the Americas that might have been better suited...yet still this group of sober, well-educated and terribly respectable individuals convinced themselves that they’d been right all along, and decided to forge ahead.
Exactly what those pitfalls were started to become clear shortly after the colonists arrived, at the beginning of November 1698. Many of them hadn’t even been aware that Darien was their destination: their orders were only revealed once the ships had sailed, as part of the Company’s hopeless efforts to keep their plans secret from rivals.
To begin with, things seemed pretty great. The settlers were awestruck by the location’s natural beauty and the (to them) alien species—the land turtles and sloths and giant anteaters. The local Guna people seemed friendly, and spoke of gold mines just a few miles away. The settlers were delighted to discover a “most excellent harbor,” a naturally sheltered two-mile-long bay that one of them, Hugh Rose, believed was “capable of containing 1,000 of the best ships in the world.” Another anonymous diarist wrote that “the Soil is rich, the Air is good and temperate, and everything contributes to make it healthful and convenient.”
“Healthful” may have been an overstatement. Before long, some of the colonists began to get sick and die. William Paterson’s wife was one of the first to pass, less than two weeks after they landed. A few days after that, the colony’s last religious minister perished, as well.
But despite these tragedies, the settlers remained confident. They named the bay Caledonia, after the old name of Scotland, and immediately set about constructing their first town, which they called New Edinburgh. So delighted were they with their finds that they dispatched the expedition’s chief accountant, Alexander Hamilton (not the one from the musical), to make the return journey on a passing French pirate ship and deliver the glad tidings to home.
A fairly clear sign of how badly wrong things were actually going came when Hamilton’s ship sank as soon as it left the harbor.
At this point, it became apparent exactly why such a large natural harbor was going unused by any other colonial power. Rather like the Hotel California, getting into it was a doddle, but leaving was quite another matter. The prevailing winds blew in such a way that upon exiting the shelter of the bay, ships were immediately forced backward and assailed by huge waves. The ship carrying Hamilton was smashed to pieces in around thirty minutes, drowning almost half the crew. (Hamilton himself survived, and would eventually make it back to Scotland to tell everybody how well the expedition was going.) The Company had been warned by experienced sailors that their large, expensive ships with shallow keels were entirely unsuited to the conditions of the Caribbean, but they’d ignored that advice. For a proposed trading colony, you’d think the fact that their ships were going to be stuck in the harbor for many months of the year might have prompted second thoughts, but no.
It’s also questionable how clearly they’d thought the whole trade thing through. For a trade mission, Douglas Watt’s research suggests they’d spent a remarkably small amount of their budget on tradable goods—which mostly consisted of major stores of cloth, but also included over 200 periwigs, a sizable stock of fashionable shoes and a large number of combs.
(The last were possibly brought along in the belief that native peoples around the world universally lose their shit at the sight of a comb, and will promptly trade away their land. In the end, the Guna seem to have given not the slightest toss about combs.) On the other hand, if the mission’s goal was simply to establish a settlement, they could maybe have done with slightly fewer wigs and a couple more tools instead.
As the task of building New Edinburgh began, morale quickly began to plummet. The work was backbreaking, and taking place in entirely un-Scottish heat. When, after two months of fruitless hacking away at thick jungle that never seemed to yield, the project leaders decided they’d been building in the wrong place all along (“a mere Morass,” as Paterson described it), spirits sank even lower. Then the rains began—and the rain in Panama is not like the rain in Scotland. The diarist Rose also changed his positive opinion of the location rather quickly, now writing: “On the main and all the bay round full of mangrow and swampy ground, which is very unwholesome.”
The swamps were more than unwholesome. The sickness that had already killed Paterson’s wife started to take the colonists in ever larger numbers. It’s not clear what it was, as they merely recorded it as “the fever,” but the best bet is malaria or yellow fever thanks to mosquitoes in those nearby swamps. (Both diseases, of course, were themselves colonists, having been helpfully brought over from the Old World by Europeans.) The settlers were dying at an alarming rate.
Those who didn’t get sick from the fever were increasingly destroying their health in other ways, thanks to the fact that one major perk of the trip the Company of Scotland had decided on was a plentiful supply of liquor. The people of Caledonia started to drown their sorrows in rum and brandy, which did not make the work of building New Edinburgh go any quicker. After a while, the leaders decided to abandon construction of the town entirely and focus on the creation of a fort, as they grew increasingly wary of a large-scale Spanish attack.