William Paterson

William Paterson (1658-1719), British writer on finance, founder of the Bank of England and projector of the Darien scheme, was born in April 1658 at the farmhouse of Skipmyre, parish of Tinwald, Dumfriesshire. His parents occupied the farm there, and with them he resided till he was about seventeen. A desire to escape the religious persecution then raging in Scotland, and the immemorial ambition of his race, led him southward. He went through England with a pedlar's pack ("whereof the print may be seen, if he be alive," says a pamphleteer in 1700), settled for some time in Bristol, and then proceeded to America. There he lived chiefly in the Bahamas, and is said by some to have been a predicant or preacher, and by others a buccaneer. In truth his intellectual and moral superiority to his fellow-settlers caused his selection as their spiritual guide, whilst his thirst for knowledge led to intercourse with the buccaneers. It was here he formed that vast design which is known in history as the Darien scheme. On his return to England he was unable to induce the government of James II. to engage in his plan. He went to the continent and pressed it to no purpose in Hamburg, Amsterdam and Berlin, and on his return to London he engaged in trade and rapidly amassed a considerable fortune. About 1690 he was occupied in the formation in the Hampstead Water Company, and in 1694 he founded the Bank of England. The government required money, and the country, rapidly increasing in wealth, required a bank. The subscribers lent their money to the nation, and this debt became the bank stock. The credit of having formulated the scheme and persuaded its adoption is due to Paterson. He was one of the original directors, but in less than a year he fell out with his colleagues, and withdrew from the management. He had already propounded a new plan for an orphan bank (so called because the debt due to the city orphans by the corporation of London was to form the stock). They feared a dangerous rival to their own undertaking, and they felt some distrust for this eager Scotsman whose brain teemed with new plans in endless succession.

At that time the people of the northern kingdom were considering how best to share in that trade which was so rapidly enriching their southern neighbours. Paterson saw his opportunity. He removed to Edinburgh, unfolded his Darien (q.v.) scheme, and soon had the whole nation with him. He is the supposed author of the act of 1695 which formed the "Company of Scotland trading to Africa and the Indies." This company, he arranged, should establish a settlement on the Isthmus of Darien, and "thus hold the key of the commerce of the world." There was to be free trade, the ships of all nations were to find shelter in this harbour not yet erected, differences of race or religion were neglected; but a small tribute was to be paid to the company, and this and other advantages would so act that, at one supreme stroke, Scotland was to be changed from the poorest to the richest of nations.

On the 26th of July 1698 the first ships of the expedition set sail "amidst the tears and prayers and praises of relatives and friends and countrymen." Some financial transactions in which Paterson was concerned, and in which, though he had acted with perfect honesty, the company had lost, prevented his nomination to a post of importance. He accompanied the expedition as a private individual, and was obliged to look idly on whilst what his enemies called his "golden dream" faded away indeed like the "baseless fabric of a vision" before his eyes. His wife and child died, and he was seized with a dangerous illness, "of which, as I afterwards found," he says, "trouble of mind was not the least cause." It was noted that "he bath been so mightily concerned in this sad disaster, so that he looks now more like a skeleton than a man." Still weak and helpless, and yet protesting to the last against the abandonment of Darien, he was carried on board ship, and, after a stormy and terrible voyage, he and the remnant of the ill-fated band reached home in December 1699.

In his native air Paterson soon recovered his strength, and immediately his fertile and eager mind was at work on new schemes. He prepared an elaborate plan for developing Scottish resources by means of a council of trade, and then tried to induce King William, with whom he had frequent interviews, to enter on a new Darien expedition. In 1701 he removed to London, and here by conferences with statesmen, by writing, and by personal persuasion helped on the union. He was much employed in settling the financial relations of the two countries. One of the last acts of the Scots parliament was to recommend him to the consideration of Queen Anne for all he had done and suffered. The United Parliament, to which he was returned as a mem er for the Dumfries burghs, though he never took his seat, decided that his claim should be settled, but it was not till 1715 that an indemnity of D8,241 was ordered to be paid him. Even then he found considerable difficulty in obtaining his due. His last years were spent in Queen Square, Westminster, but he removed from there shortly before his death on the 22nd of January 1719.

As many as twenty-two works, all of them anonymous, are attributed to Paterson. These are classified by Bannister under six heads, as dealing with (1) finance, (2) legislative union, (3) colonial enterprise, (4) trade, (5) administration, (6) various social and political questions. Of these the following deserve special notice: (1) Proposals and Reasons for constituting a Council of Trade (Edinburgh, 1701). 1 This was a plan to develop the resources of his country. A council, consisting of a president and twelve members, was to be appointed. It was to have a revenue collected from a duty on sales, lawsuits, successions, &c. With these funds the council was to revive the Darien scheme, to build workhouses, to employ, relieve and maintain the poor, and to encourage manufactures and fisheries. It was to give loans without interest to companies and shippers, to remove monopolies, to construct all sorts of vast public works. Encouragement was to be given to foreign Protestants and Jews to settle in the kingdom, gold and silver were to be coined free of charge, and money kept up to its nominal standard. All export duties were to be abolished and import regulated on a new plan. Paterson believed that thus the late disasters would be more than retrieved. (2) A Proposal to plant a Colony in Darien to protect the Indians against Spain, and to open the Trade of South A merica to all Nations (1701). This the Darien scheme on a new and broader basis. It points out in detail the advantages to be gained: free trade would be advanced over all the world, and Great Britain would largely profit. (3) Wednesday Club Dialogues upon the Union (London, 1706). These were imaginary conversations in a club in the city of London about the union with Scotland. Paterson's real opinions were put into the mouth of a speaker called May. Till the Darien business all Scots were for the union, and they were so still if reasonable terms were offered. Such terms ought to include an incorporating union with equal taxes, freedom of trade, and a proportionate representation in parliament. A union with Ireland, "as likewise with other dominions the queen either hath or shall have," is proposed. (4) Along with this another discussion of the same imaginary body, An Inquiry into the State of the Union of Great Britain and the Trade thereof (1717), may be taken. This was a consideration of the union, which, now "that its honeymoon was past," was not giving satisfaction in some quarters, and also a discussion as to the best means of paying off the national debt - a subject which occupied a great deal of Paterson's attention during the later years of his life.

Paterson's plans were vast and magnificent, but he was no 1 This work was attributed to John Law, who borrowed some of his ideas from it. To Law's, "system" Paterson was strongly opposed, and it was chiefly due to his influence that it made no way in Scotland.

mere dreamer. Each design was worked out in minute detail,' each was possible and practical. The Bank of England was a stupendous success. The Darien expedition failed from hostile attacks and bad arrangements. But the original design was that the English and Dutch should be partakers in it, and, if this had occurred, and the arrangements, against many of which Paterson in letter after letter in vain protested, had been different, Darien might have been to Britain another India. Paterson was a zealous almost a fanatic free-trader long before Adam Smith, and his remarks on finance and his argument against an inconvertible paper-currency, though then novel, now hold a place of economic orthodoxy. Paterson's works are excellent in form and matter; they are quite impersonal, for few men who have written so much have said so little about themselves. There is no reference to the scurrilous attacks made on him. They are the true products of a noble and disinterested as well as vigorous mind. There is singular fitness in the motto "Sic vos non vobis" inscribed under the only portrait of him we possess.

See Life of W. Paterson, by S. Bannister (Edinburgh, 1858); Paterson's Works, by S. Bannister (3 vols., London, 1859); The Birthplace and Parentage of W. Paterson, by W. Pagan (Edinburgh, 1865);; Eng. Hist. Review, xi. 260. The brilliant account of the Darien scheme in the fifth volume of Macaulay's History is incorrect and misleading; that in Burton's Hist. of Scotland (vol. viii. ch. 84) is much truer. Consult also the memoir in Paul Coq, La Monnaie de banque (Paris, 1863), and J. S. Barbour, A History of William Paterson and the Darien Company (1907). For a list of fugitive writings on Paterson see Poole's Index of Periodicals. (F. WA.)