Bluffer’s guide
Panama, 1698-1700
The Darien Scheme explained
What was it?
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.
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.