WILLIAM PATERSON (1658-1719), founder of the Bank of England, projector of the Darien scheme, and a voluminous writer on subjects connected with finance, 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 a wish to find a wider field for his energies than a poor district of a poor country afforded, led him southward. He went through England with a pedlar's pack ("wherof 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 to have been a buccaneer. The truth is that his intellectual and moral superiority to the majority of the British settlers naturally caused his selection as their spiritual guide, whilst his intense eagerness for information led to intercourse with the buccaneers, from whom alone much of the information he wanted could be had. 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 in Hamburg, Amsterdam, and Berlin, but unsuccessfully. A countryman of his own talks of him as a well-known figure "in the coffee-houses of Amsterdam" in 1687, and gives us some idea of the strange impression that this thoughtful-looking foreigner produced, as with fluent speech he unfolded to his astonished hearers a scheme which seemed wild and dazzling as a dream of Eastern romance. On his return to London he engaged in trade and rapidly amassed a considerable fortune. His activity was not confined to private business. About 1690 he was occupied in the formation of the Hampstead Water Company, and in 1694 he founded the Bank of England. The Government of the day 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 the Government to adopt it is certainly due to Paterson. He was one of the original directors, but in less than a year, in consequence of some dispute with his colleagues, he 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). This, they feared, might prove a dangerous rival to their own undertaking, and besides they looked with considerable suspicion and dislike on this Scotsman whose brain teemed with new plans in constant succession.
At that time the people of the northern kingdom were engaged in considering how they might share in the benefits of that trade which was so rapidly enriching their southern neighbours. Paterson embraced the opportunity thus offered. He removed to Edinburgh, unfolded his Darien scheme, and soon had the whole nation in favour of it. He, it is supposed, drew up 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 to be made nothing of ; 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 one of the poorest to one of 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 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 thereof." One who knew him in this evil time tells us "he hath 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 some of his strength, and immediately his fertile and eager mind was at work on new schemes. First he did all he could to prevent the Darien scheme already engaged in from being finally abandoned, then he prepared an elaborate plan for developing Scottish resources by means of a council of trade, and then he tried to induce King William to enter on a new Darien expedition. About the beginning of the century he removed to London, and here by conferences with statesmen, by writing, and by personal persuasion helped on the Union, of which his far-reaching mind enabled him, perhaps better than any other man then living, to see the advantages. At the Union one of the last acts of the Scottish parliament was to recommend him to the consideration of Her Majesty Queen Anne for all he had done and suffered. The united parliament, to which he was returned as a member for the Dumfries burghs, though he never took his seat, decided that his claim should be attended to, but it was not till 1715 that an indemnity of £18,241 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 his house, though probably to some other part of London, shortly before his death, which happened 22d January 1719.
As many as twenty-two works, all of them anonymous, are attri-buted 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 set the Darien scheme going again, 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, it was to remove monopolies, it was 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 was to be kept up to its nominal standard. All export duties were to be abolished and import regulated on a new plan. By means like these Paterson believed the disasters lately under-gone 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 America to allnations (1701). This was a proposal to King William to establish 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 derive great profits. (3) Wednesday Club dialogues upon the Union (Loudon, 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. The result of the discussion is that till the Darien busi-ness all Scots were for the Union, and that 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 consequences 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 tin? national debt,a subject which occupied a great deal of Pater-son's attention during the later years of his life.
Paterson's plans were vast and magnificent, but it is a great mistake to suppose that he was a mere dreamer. Every one of his designs was worked out into minute detail, and every one 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, whose history was shadowed by the memory of no wrong. Paterson was a zealous almost a fanatic free-trader long before Adam Smith was born, and his remarks on finance and his argument against an inconvertible paper-currency, though then novel, now hold the place of economic axioms. In his description of the "merchants in an extended sense" Paterson has drawn his own character for us. They are those " whose education, genius, general scope of knowledge of the laws, governments, polity, and management of the several countries of the world allow them suffi-cient room and opportunity not only to understand trade as ab-stractly taken but in its greatest extent, and who accordingly are zealous promoters of free and open trade, and consequently of liberty of conscience, general naturalization, unions, and annexions."
Paterson's works are well written, and the form as well as the matter are excellent. As already noticed, they are all anonymous, and they are quite impersonal, for few men who have written so much ever 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. Paterson was not rewarded for his labours. The Bank of England was a great success, but he lost rather than gained by it. In the Darien scheme he was ruined, and this ruin he never quite retrieved. The credit of his other schemes has been usually ascribed to other and inferior men. There is thus singular fitness in the motto "sic vos non vobis" inscribed under the only portrait of him that we possess.
See Life of W. Paterson, by S. Bannister (Edinburgh, 1858): Paterson's Works, 3 vols., by S. Bannister (London, 1859); The Birthplace and Parentage of W. Paterson, by W. Pagan (Edinburgh, 1865). The brilliant account 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. A list of a number of fugitive writings on Paterson will be found in Poole's Mag. Index. (F. WA.)
The books of the Darien company were kept after a new and very much improved plan, which it is believed was an invention of Paterson's (Burton's Hist. Scot., vol. viii. p. 36, note).
The revival of the Darien scheme in our own day is a signal proof of Paterson's foresight. Of a canal he says : " From Venta Crucis to Panama upon the South Sea there is by land about eight short French leagues, six whereof is so level that a canal might easily be cut through, and the other two leagues are not so very high and im-practicable ground, but that a cut might likewise be made were it in these places of the world, but considering the present circumstances of things in those it would not be so easy" (Works, Bannister's ed., vol. i. p. 140).
The above article was written by: Francis Watt, M.A.