For the past three months, I have worked on-and-off on a third history paper for my Latin American history series, covering the years from 1650 to 1830. Over the weekend, while waiting out Hurricane Irene, I learned about this interesting episode, an unsuccessful Scottish attempt to colonize Panama. It’s too long for a footnote, so I will give it a whole section in the upcoming paper. For my readers, here’s a preview.
The Darien Scheme
In the 1690s, Scotland made its only colonial venture in Latin America, and while it did not affect the New World, it changed the course of history for the mother country. Through an act by the Scottish parliament, the Company of Scotland was established in 1695, and it was given extraordinary privileges. For thirty years the Company would have a monopoly on all trade between Scotland and the world beyond Europe; it was authorized to establish colonies where no European colonies existed already; Company ships would not have to pay any customs duties for twenty-one years. The Company’s directors decided to raise a sum of £400,000 for their plans, and by appealing to the patriotism of the Scots, they did it in six months. The money came not only from the rich and famous, but also from very ordinary people in all walks of life; we estimate that nearly 1,500 Scots contributed. In today’s world, £400,000 does not sound like much to a government or major corporation, but it was one fifth of all the money circulating in Scotland at the time. Keep in mind that Scotland was a poor country, the amount raised was 2.5 times the estimated value of Scotland’s annual exports, and the Bank of Scotland (also founded in 1695) was doing its own fundraising at the same time. By the standards of the 1690s, Bernie Madoff would have been a piker, compared with the Company!
So what would they do with the money? The first plan was to build outposts in Africa and the Indies, the way other European nations had done, and thereby get a share of the lucrative trade in gold, slaves, ivory and spices. However, one of the Company’s directors, William Paterson, had a different plan. He persuasively argued that if the Company wanted to go to Asia, the best way to do it was to go west, like Columbus did. Of course they would have to cross the Americas at some point, so Paterson told them to build a colony in the Isthmus of Panama, where the overland crossing between the Atlantic and Pacific was only a few dozen miles. According to this reasoning, whoever had a colony in Panama would control the richest east-west trade route in the world.
Only the Scots thought this was a good idea. The part of Panama where they planned to build the colony was the Darien Gap, and though it was uninhabited, it was close to two critical Spanish ports, Porto Bello and Cartagena. We saw in the previous chapter that Peru’s silver was sent to Porto Bello before it was shipped to Spain; likewise, Cartagena was the shipping point for the gold and emeralds of Columbia. Whoever built a colony in that neighborhood was sure to make an enemy of Spain, and no other European power wanted to do that, while the succession to the throne of Spain was up in the air. England’s King William III was upset most of all, and he ordered all English colonies in the New World to give no support to the Scots.
Scotland went ahead with the “Darien Scheme” anyway. Paterson paid less attention to the reaction of other Europeans, and more attention to the fact that Spain wasn’t as strong as it used to be (remember the buccaneer raids on Panama, just a few years earlier). In 1698 the Company of Scotland sent its first expedition across the Atlantic, bringing 1,200 colonists to a part of eastern Panama they would call “Caledonia Bay.” They built a settlement named New Edinburgh and a fort named Fort St. Andrew. However, the colony only lasted for seven months. They ran out of food quickly, and the Scots hadn’t taken the jungle climate into account; Spain had a warmer climate than Scotland to begin with, so naturally the Spaniards did not suffer as much as the Scots in a place like this. A disease epidemic killed more than 300 colonists, including Paterson’s wife, and their bodies were buried in mass graves. Paterson himself was so sick from the fever that he had to be carried onto the ship, when the decision was made to abandon the colony. After further loss of life, one of their four ships made it back to Scotland.
Unfortunately, that ship did not come back with the bad news before the second expedition left, with another thousand colonists (June 1699). It arrived to find a deserted settlement at Caledonia Bay. Despite this, the settlers decided to try their luck. They were encouraged when they defeated the nearest Spanish army unit in early 1700, but that only made the Spaniards angry, and one week later they sent a much larger force. Against this, the Scots were hopelessly outnumbered, and they surrendered after a two-week siege.
The Darien Scheme had been a colossal failure. The money spent gained nothing in return, ten of the thirteen ships committed had been lost, and a lot of lives had been wasted; many of the casualties had starved before they could return to Europe, thanks to King William’s decree. Because of the fiasco, and a major fire in Edinburgh in February 1700, the Presbyterian Church suggested that God was mad at Scotland, and called for days of prayer and fasting. Indeed, one of the reasons why Scotland accepted the 1707 Act of Union, which merged England and Scotland to form the United Kingdom, was because the treaty called for compensating the Darien investors with an “equivalent” of nearly £400,000, plus 5 percent interest over a nine year period to cover the rest. Moreover, the Scots realized that their nation could not go it alone, nor could they count on England’s support, though a Scottish king had ruled England as recently as 1688. Henceforth, in this narrative we will not be referring to the citizens of Great Britain as English, Scots or Welsh, but as British, or simply Brits.