The Bank of Scotland, 1695

August 4, 2009

In 1695 the Dutch and English had established a system of barter to import foods they needed in exchange for manufactured goods. On the other side Scots found themselves caught in a vicious circle. They had after some deliberation come to realize that it was necessary for them to compete with the English.

So with that in mind the Scottish ruling class assembled in Parliament in Edinburgh passing legislation believed to be the answer to a new economy in Scotland. They established a Bank of Scotland, with starting capital of 100,000 pounds sterling. The Bank of Scotland was closely modeled after the much larger Bank of England. The following year Parliament authorized a public chartered corporation to create Scottish trading.

William Peterson, from Dumfriesshire, Scotland, who had drawn up the plan for the very successful Bank of England came up with what he thought was a brilliant idea for Scottish trade. With the help of Andrew Fletcher, a Member of Parliament, Patterson convinced his fellow Scots to invest in a public joint stock company sweepstakes that was financially successful in England. On May 26th, 1695 Parliament duly granted Patterson’s company a permanent monopoly for Scottish trade with Africa and Asia, and with a thirty-one year monopoly with America.
This outraged English merchants. Although King William was petitioned not to sign the bill he did anyway. The situation in London was so hostile the Scottish company’s success was not as great as Patterson had expected. However, he had another plan in mind for the company. Patterson believed the door to the sea and the key of the Universe was to be found on the isthmus of Darien, Panama. He submitted his proposal to Parliament’s committee on Foreign Trade and on July 23, 1696, they agreed to use the company to found a Scottish colony there. Spain and England had claimed ownership of this area and now Scotland was preparing to settle it and it as their own.

The English did everything within their means to prevent this happening. London notified everyone that favorable dealings with them would cease if they contributed money to the Darien plan. Scots were now determined to see it through. They were convinced that England did not want to see them succeed. It was now a matter of hon our. So in a huge outpouring of anti-English resentment and a rallying of patriotic sentiment Scots rallied to the cause raising the money themselves. The entire amount of 400,000 pounds, amounting to half the total money in circulation in Scotland, was raised in just months.
On July 17, 1698, William Patterson, his wife, and children along with approximately 1, 200 people in five ships set out on the Darien mission. They landed on the shores of the New World on November 3, 1698.

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