The Darien Scheme - Panama 1698-1700

 This ambitious 17th century venture aimed to establish a Scottish colony in the Isthmus of Darien, modernday Panama.

It was argued that its position would make Scotland the broker between Atlantic and Pacific trade, and supremely wealthy as an alternative route to the dangerous voyage around South America’s Cape Horn.

 

The so-called ‘Darien Scheme’ was proposed by William Paterson, a Scot who had made a name for himself as one of the founders of the Bank of England in 1694. His plan quickly gained investment from English and Dutch financiers, but they were both forced to pull out when the English Parliament withdrew its support for the venture, under pressure from the rival East India Company.

So fierce was resentment at this treatment by the English that thousands of Scots, rich and poor, put their own money into the enterprise. Crowds even gathered at Port Leith on 12 July 1698 to cheer on the five ships of 1,200 eager settlers as they set sail for the new world.

Darien Scheme Timeline

JUNE 1695

The Scottish Parliament founds the Company of Scotland to establish trade with Africa and the Indies, but English and Dutch investors withdraw their support following pressure from the East India Company.

JULY 1698

Scottish citizens invest in the scheme and the irst expedition sets sail from Port Leith, taking 1,200 settlers to the Caribbean.

NOVEMBER 1698

Settlers land at Darien after a three-month voyage, and get to work building the foundations of their new colony, which they name Caledonia.

MARCH 1699

Disease wreaks havoc through the settlement and in the irst ive months, more than 200 colonists die – King William forbids English colonies from helping them.

What were the consequences?

The Darien Scheme was a complete disaster. The colonists quickly discovered the land they dubbed Caledonia was not suited to agriculture. Fever and dysentery spread rapidly, decimating the population. Royal decree also forbid nearby English colonies from assisting the struggling settlers, let alone to trade with them. The Spanish also considered them intruders in the region, and attacked the settlement. When a second expedition arrived in November 1699, Paterson and the few remaining survivors had already returned to Scotland. The colony was abandoned entirely in 1700.

 

The Darien Scheme had severe repercussions for Scotland’s finances. As well as ordinary Scottish citizens, public bodies and town corporations had invested in the failed venture, losing around £400,000 in total – equal to around half of the nation’s wealth. The calamity convinced many that Scotland could not survive on its own and the country conceded its independence seven years later.

Who was involved in the Darien disaster?

• William Paterson (1658-1719): Scottish financier who made his money through international trade, travelling extensively throughout the Americas.
• King William III & II (1650-1702): This monarch forbid English colonies from helping the Scottish settlers since England viewed them as a threat to trade.
• Lionel Wafer (1640-1705): Welsh explorer who lived amongst the Kuna. He wrote a book on his experiences and advised Paterson in his scheme.