The Darien Scheme (1698-1700)

In the same session that founded the Bank of Scotland, the Parliament of Scotland chartered the Company of Scotland Trading to Africa and the Indies, granting it a monopoly of Scottish trade with Africa and Asia and the right to plant colonies. The charter was a nationalist economic program: Scotland, locked out of England's colonial markets by the Navigation Acts and weakened by the "seven ill years" of famine, hoped to become a great mercantile power in the English manner. Capital was raised by public subscription, and the company's "Darien Chest" in Edinburgh collected the nation's savings. Scots of every class, from gentry to servants, invested in what was presented as the country's commercial future.

Location: Edinburgh, Scotland

English commercial interests and Parliament saw the Company of Scotland as a rival to English trade, and the East India Company sued it in English courts while English investors were threatened with prosecution, forcing the company to seek subscription in Amsterdam and Hamburg. English diplomatic pressure blocked those foreign subscriptions too, leaving the Scottish public to fund the entire venture alone, an estimated fifth or more of all money circulating in Scotland. King William III's government, while nominally neutral, offered the company no support and his American and Caribbean colonies were later forbidden to assist it. The hostility that would doom the colony in the field was already visible in the ledger.

Location: London, England; Amsterdam, Netherlands

On November 2, 1698, three ships carrying about 1,200 colonists landed on the coast of the Darien peninsula, on territory of the Guna people in present-day Panama, and founded the settlement of New Edinburgh. The plan promised a shortcut to the wealth of the Indies: a port on each ocean and a trade route across the isthmus, on land the Spanish Empire also claimed. The colony's provisioning was inadequate from the start, with few tools, little food suited to the tropics, and leaders divided by faction from the voyage out. Hopes were high, but the settlement began with almost nothing it needed to survive.

Location: Gulf of Darien, Panama

Within months New Edinburgh was dying of dysentery, fever, and starvation, planted on swampy ground in the rainy season with food running out. Efforts to trade with the Guna failed, the neighboring English and Dutch colonies, barred from trading with the Scots, offered nothing, and Spanish forces prepared to expel the intruders. A second supply ship arriving too late found only a few hundred survivors, who voted in July 1699 to abandon New Edinburgh and sail home; more than 80 percent of the first expedition's participants died within a year. Scotland learned of the disaster only when the starving survivors straggled into port, where they were refused charity as a national embarrassment.

Location: Gulf of Darien, Panama

Before news of the first colony's fate had fully deterred anyone, a second expedition of about 2,500 colonists sailed in November 1699, many of them religious dissidents and poor migrants seeking a fresh start. They reoccupied New Edinburgh in worsening conditions, quarreled with the remnants of the first force, and found the Guna unwilling to supply them. Provisions again failed, disease again spread, and the death rate climbed through the winter of 1699-1700. The company's directors in Edinburgh, sustained by patriotic accounting rather than returns, dispatched further ships into the same trap.

Location: Gulf of Darien, Panama

Spanish forces from Cartagena and Panama City besieged New Edinburgh and blockaded its harbor in early 1700, cutting off the colony completely. After weeks of bombardment, disease, and starvation, the remaining Scots, several hundred of the 2,500 who had come, capitulated and were allowed to leave; the settlement was formally abandoned in March 1700. Spain's claim to the isthmus, never seriously anticipated by the company's planners, had been enforced by blockade and arms. New Caledonia, Scotland's only overseas colony project, existed for barely sixteen months in total.

Location: Gulf of Darien, Panama

The Company of Scotland's capital, raised from across Scottish society, was entirely lost, and the failure wiped out the savings of hundreds of landowning families, merchants, and ordinary investors, an amount widely estimated at a fifth of the money circulating in Scotland. The Lowlands entered a decade of financial paralysis: credit contracted, banknotes lost confidence, and the company's unpaid directors and shareholders embittered public life. Pamphleteers blamed the English, the Spanish, the company's own mismanagement, and the shareholders' credulity, and all the accusations had substance. The Scottish economy, already weakened by the famine years of the 1690s, had exhausted its resources on a failed dream.

Location: Edinburgh, Scotland

The impoverishment left by Darien became an argument for union with England, whose compensation clause in the 1707 Act of Union offered the equivalent of roughly 398,085 pounds to shareholders of the Company of Scotland, over 20,000 pounds more than the company had raised. Historians debate how decisive Darien was, but the scheme's collapse stripped the Scottish political class of the confidence and the capital to pursue independence of trade, and unionist sentiment gained ground among elites whose fortunes had been sunk in the isthmus. The Act of Union of May 1707 created the Kingdom of Great Britain, dissolving the Scottish parliament. Opponents of union marked Darien as the wound that made Scotland's sovereignty sellable, and the phrase "bought and sold for English gold" entered the national song.

Location: Edinburgh, Scotland