William Paterson: Founding the Bank of England, Then the Darien Disaster

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William Paterson was born in 1658 in a farmhouse at Tinwald in Dumfriesshire, Scotland, and left at about 17 for Bristol and then the Bahamas and West Indies, where he traded and mixed with buccaneers including William Dampier. Studying Spanish trade routes, he fixed on Darien on the Isthmus of Panama as a land bridge between the Atlantic and Pacific. James II, the Holy Roman Empire, the Dutch Republic and Brandenburg all turned him down. In London from 1687 he built a fortune through the Merchant Taylors Company, the Hampstead Water Company and the West Indies slave trade. In 1691 he proposed a bank that would lend the government 1.2 million pounds at about 8 percent and issue notes, and the Bank of England received its charter in July 1694 with Paterson as a founding director.

He fell out with the board and left in 1695, then took the Darien scheme to Edinburgh, where Scots poured roughly a quarter of the nation's wealth into it. He sailed with the 1698 expedition. Malaria, yellow fever, poor crops and a Spanish blockade destroyed the colony, and his wife Hannah Kemp and their child died there. He returned broken in December 1699 to a bankrupt country and became a leading advocate of union with England, publishing the Wednesday Club Dialogues Upon the Union in 1706 and calling for free trade, equal taxation and fair representation. The Act of Union passed in 1707. He died in January 1719, and his burial place is uncertain.

• Before his bank, monarchs borrowed from goldsmiths and sometimes simply refused to repay.
• Paterson's pamphlet was titled A Brief Account of the Intended Bank of England.
• The Darien settlers brought woolen blankets, wigs and Bibles to trade in the tropics.
• He proposed a Scottish Council of Trade to abolish export duties under the union.
• Many, including Bank of England officials, believe he lies at Sweetheart Abbey near his birthplace.