Paterson, William

Name: William Paterson

Achievements: Founded Bank of England

Born: April 1658; Tinwald, Dumfries, Scotland

Died: January 1719; London (Aged 61)

Field & Discipline: Business; Colonialization; Banker

Language: English

Father: John Paterson

Mother: Elizabeth

Siblings: Unknown

Spouse: 1) Elizabeth Turner; 2) Hannah Kemp

Children: 1 son

Education: Unknown

Life & Times:

In the 1770s Paterson was operating as a merchant and became well-known in the coffee houses of Amsterdam as someone who was liable to latch on to acquaintances and bore them with his dream of initiating a settlement on Darien Peninsula in the Panama isthmus.

Either Paterson had been out to the Caribbean,  as some stories maintain, or through his trading activities he had met some of the British buccaneers who sailed in the Caribbean and off the South American coast.  He had certainly heard about Darien,  where the buccaneer and surgeon [influenced by] Wafer* had been stranded and spent time with the Darien Indians.

Paterson’s dream was that a colony on Darien would provide a great trading opportunity for Britain and save ships from making the long dangerous journey to the East round the tip of Africa.

By 1686, Paterson had made enough money, either in the Caribbean or in Europe, to establish himself in London. He was a member of the Merchant Taylors Company and also had business links with Newfoundland.

He became involved in London finance,  and supported the Revolution of 1688 when James II was deposed and [a supporter of] William of Orange* and his wife Mary came to the throne. Paterson was now a rich man and a prominent member of the mercantile establishment. In 1691 he led a group of merchants who proposed to the government that a Bank of England should be set up.

Merchants had long wanted a bank which would offer credit,  on Parliamentary security. Paterson also put forward a scheme for restoring coinage to its proper value. The idea of a bank was accepted and Paterson conducted the negotiations between the government and the merchants about raising a capital sum.  In 1694 the Bank of England was established and Paterson became a director.

He resigned the following year after he was outvoted on bank policy. Throughout this time, he had never given up his dream of establishing a free-trading colony on Darien.  For almost two years, Scottish merchants in London had been lobbying for the right to set up a trading company in the same way that the [work related to] East India Company*, the Africa Company, and others had been established by London merchants.

Trade and industry in Scotland was almost non-existent and what little there was suffered from English competition. Scots shipping was restricted to trading around the coast of Scotland and no goods could be brought to Britain from overseas colonies except in ships from other parts of the kingdom or in ships where the master and three-quarters of the crew were English.

Scotland relied largely on English imports, and almost everything from beer, spice and sugar to leather saddles, metal goods and woollen cloths was either imported by English ships or manufactured in England. Either way the goods were sold across the border, paid for in sterling, and made the English a great deal of money.

In May 1695 Paterson heard the news that King William had agreed in principle to grant Scottish subjects the right to found a colony abroad. Paterson had always thought it should be a joint Anglo-Scots venture and there were plenty of English merchants who were jealous of the profits made by the East India Company.

They joined with the Scots merchants and after a few months of hectic lobbying

got an Act passed in the Scottish Parliament to set up a company trading to Africa

and the Indies.  Paterson was one of twenty men named in the Act as promoters and patentees with the authority to issue stock and decide the rules and constitution of the company.

He raised money by subscription in England, Scotland and overseas. As soon as the Act was passed, the Scots merchants recruited more Scots as members of the company and claimed the right to set up  a Court of Directors in Edinburgh.  The Scots saw the company (which had the right to arm settlers, build forts and establish navies) as a way of gaining freedom from the political and commercial control of England. 

The East India Company flexed its muscles and most of the London merchants withdrew their backing. In the House of Lords the Surveyor-General of the Plantations announced that the settlement of Scots colonies in America would be very detrimental to England and suggested that all planters and proprietors in settlements abroad should be told that giving aid to the Scots would be treason. Paterson lost his position in the company after being accused of being involved in loss of company funds ­ a charge which was never proved.

He left London for Scotland and despite having lost much of his own money remained faithful to the idea of a settlement in Darien. The Scots merchants, pleased to be rid of English interference, raised money by subscription and in 1698, Paterson together with his wife and child, accompanied the expedition to Darien as a private individual.

He had no power in Darien,  where the councillors quarrelled amongst themselves and the settlement failed.  Paterson’s wife and child died, and he became very ill himself on the voyage to New York after the colony was abandoned.

He arrived back in Scotland in 1699 and when he returned to London was received by the king in 1701. Although Paterson advised the government on finance and was active in financial matters he continued to press for new expeditions to South America and the Caribbean. 

In 1715 he was at last paid by the government for the losses he had suffered over the Darien expedition.

Extra Connections: Rob Roy [turned down by] MacGregor* refused to invest in his Darien scheme.

[lost money for] James Graham Duke of Montrose* lost money on the Darien scheme

He influenced [influenced] Law*

Assessment: Paterson is recognised as the founder of the Bank of England.

Oneliner:  William Paterson, founder of the Bank of England

Bibliography:

• Prebble, John, The Darien Disaster, Secker & Warburg, London, 1968.