William Paterson (1658-1719) was a merchant and banking projector. He was also a director of the Company of Scotland Trading to Africa and the Indies from 1695 until 1707.
Background and early life
William Paterson was born in Skipmyre, Dumfriesshire, in April 1658, the son of John Paterson and his wife Elizabeth. He had at least one sister. Little is known about his early education, but it is believed that he attended a local parish school in Dumfries before moving to Bristol to live with a relative of his mother.
On the death of his relative in 1674, it is thought that Paterson was left a small property which he sold to pay his passage to Jamaica. However his passage was paid for, he certainly spent around seven or eight years in the West Indies gaining mercantile experience, before spending time as a merchant and projector in Europe.
The first reliable evidence of William Paterson’s early career dates from 16 November 1681, when he became a member of the Merchant Taylors’ Company in London. He was then admitted to the livery of the Company on 21 October 1689.
In 1691 William Paterson came into the public eye for the first time when he submitted a proposal to the English government for the formation of a national bank as a way of bolstering the public finances. This proposal, submitted along with his friend Michael Godfrey and a number of other London merchants, led to the foundation of the Bank of England on 27 July 1694. Paterson became one of the original directors of the bank, but voluntarily withdrew from the corporation in February 1695 following a dispute with his fellow directors over his proposal for an interest-bearing fund to help orphans in the City of London.
Later that year Paterson moved to Edinburgh to try to persuade the Scottish people that they also needed a national bank to support commercial trading abroad. He was successful, and the Bank of Scotland was founded in 1695.
In 1696 William Paterson was made a burgess of the city of Edinburgh.
The Company of Scotland
In 1693 the Scottish Parliament passed ‘An Act for Incourageing Forraign Trade’. William Paterson believed that under the terms of the Act a new trading company should be founded to harness the lucrative trade with the Far East and Africa. Following his successful proposal to the Scottish parliament, on 26 June 1695 an Act was passed establishing The Company of Scotland Trading to Africa and the Indies. In the Act, William Paterson was named as one of ten founding London-based directors. Following opposition from the English East India Company, William Paterson withdrew from the scheme and proposed an entirely Scottish venture instead, to which he subscribed for £3,000 stock.
Ever since his time in the West Indies, William Paterson had been interested in the possibility of founding a trading colony on the Isthmus of Darien (modern-day Panama). He had been trying to gain support for such a scheme since at least his time in Amsterdam in the late 1680s. He used his influence within the Company of Scotland to persuade his fellow directors to create a free trading post on the isthmus. They agreed, and William Paterson sailed to Hamburg to encourage foreign subscriptions and to procure ships for the expedition.
Paterson accompanied the first expedition of the Company of Scotland to Darien in July 1698, along with his wife Hannah and their child, both of whom were among the many settlers who died of fever as the expedition tried to set up the trading post. Paterson himself became dangerously ill. When the first colony was abandoned in 1699 William Paterson returned to Scotland a broken man.
Following the collapse of the Company of Scotland William Paterson worked tirelessly to try to obtain compensation for the financial losses he had incurred. Under the terms of the Act of Union in 1707, provision was made for the repayment of the capital stock of the Company of Scotland, with interest, although William Paterson’s claim was omitted from the list of the company’s debts. In 1715 he was eventually awarded £18,241 in debentures of the Equivalent Company.
Later career and other interests
Following his return from Darien Paterson turned his mind to other pursuits. He was a staunch supported of free trade, and whilst living in London in 1701 he proposed the establishment of an interventionist council of trade to control the ailing Scottish economy. This was followed by further proposals on the future of the Darien colony and on the Union between England and Scotland.
William Paterson was an advocate of universal education, freedom from imprisonment for honest debtors and the useful employment of criminals. He was one of the first to propose the formation of public libraries; and, in 1703, he offered his own valuable collection of books and pamphlets on economic subjects, in English, French, German and Dutch, to form the nucleus of a public library for the study of trade and finance.
By 1705 William Paterson had returned to Edinburgh to participate in calculating the ‘Equivalent’, a sum of money paid by England to Scotland as compensation for Scotland being subjected to English customs and excise rates after the Union. He was also an observer of the Scottish parliamentary debates about the Union, and acted as a pro-Union propagandist for the government of Robert Harley. At the last session of the Scottish Parliament in 1707 William Paterson was recommended by them to Queen Anne ‘for his good service’.
Following the dissolution of the Scottish Parliament William Paterson was elected a Member of Parliament for Dumfriesshire in the new Parliament, although he was denied his seat on a technicality.
William Paterson was a trusted counsellor of the government ministers of his day thanks to his expert knowledge of finance. In 1710 he proposed a series of measures to the government which became the basis of Walpole’s Sinking Fund of 1716, and he later also proposed a scheme for the consolidation and conversion of the National Debt.
During his later life William Paterson is also said to have taught both mathematics and navigation, as well as working for the South Sea Company. He also sold shares in the Hampstead Water Company, a scheme to supply North London with water from the reservoirs south of Hampstead and Highgate.
William Paterson was married twice; first to Elizabeth Turner, the widow of a minister in New England, and second to Hannah Kemp, the widow of Samuel South. Elizabeth Turner died in New England, whilst Hannah Kemp died with their child in Darien.
William Paterson had no surviving children of his own, but did have a number of step-children from his marriages. He lived in Queen Square, Westminster, following his return from the Americas.
William Paterson died in 1719. He was buried in Sweetheart Abbey, Dumfries and Galloway.
Related publications and online sources
- ‘William Paterson’ in Oxford Dictionary of National Biography
- J S Barbour, William Paterson and the Darien Company (Edinburgh: William Blackwell and Sons, 1907)
- Andrew Forrester, The Man who saw the Future (London: TEXERE, 2004)
- John Prebble, The Darien Disaster (Edinburgh: Mainstream Publishing, 1978)
- Douglas Watt, The Price of Scotland: Darien, Union and the Wealth of Nations (Edinburgh: Luath Press Ltd, 2007)