Company of Scotland Trading to Africa and the Indies

The Company of Scotland Trading to Africa and the Indies (1695-1707) was an overseas trading company connected with the history of the Royal Bank of Scotland. Its archives are inscribed on UNESCO’s UK Memory of the World Register, in recognition of their importance to our shared cultural heritage.

Background history

The context

The origins of the Company of Scotland trading to Africa and the Indies lie in Scotland’s political and economic discontent over many preceding decades. Since 1603, Scotland and England had shared a monarch, although both countries kept their own parliaments. From 1685 it was King James – VII of Scotland and II of England – who ruled both nations. He was unpopular, both for his Roman Catholic faith and for his highly autocratic behaviour, and a revolution in 1688 forced him to flee to France while his Dutch son-in-law, William of Orange, took over the throne of both England and Scotland.

King James and his descendants still had supporters in France and Scotland who called themselves ‘Jacobites’ (derived from the Latin version of his name). They became the focus in Scotland for opposition to English rule. In 1689 the Jacobites, resentful of the declaration of William as King of Scotland, fought the royal army at Killiecrankie. Their rising failed, but the Jacobite threat remained. Determined to impose order on the clan chiefs, King William ordered a military fort to be built in the Scottish Highlands, at what became Fort William. In 1692 the crown punished the recalcitrance of the Chief of the MacDonalds at the infamous Massacre of Glencoe.

In addition to political discontent, there was also widespread resentment about economic affairs in Scotland. Since the Union of the Crowns, Scotland had become progressively poorer, neglected by its King in London and dragged unwillingly into England’s wars. In 1632 Scotland lost her only colony – Nova Scotia in Canada – as a result of an English war against France. England’s Dutch wars subsequently compromised valuable trading privileges upon which Scottish merchants had previously relied.

Scottish overseas trading activity was further frustrated by the Navigation Act which cut Scottish ships out of international trade by forbidding the import of goods into England or her colonies unless carried in English ships or ships from the goods’ country of origin. To make matters worse two powerful English trading companies, the East India Company and Royal African Company, claimed monopolies on the rich trades with the East Indies and Africa.

The plan

What became the Company of Scotland Trading to Africa and the Indies was the idea of William Paterson, a prolific ‘projector’ or promoter of speculative money-making schemes. He had been instrumental in the foundation of the Bank of England in 1694, but his new plan aimed to bring financial prosperity to Scotland, his homeland. He proposed that the Scottish Parliament, following the passing of 'An Act for Incourageing Forraign Trade' in 1693, should grant a Scottish monopoly on trade with Africa and the Indies to a trading company, enabling it to harness the lucrative Far Eastern trade.

A key part of the plan was the establishment of a Scottish colony in Central America, at a place called Darien (now part of Panama), so that merchant ships could reach the Pacific more easily, without having to make the long and perilous journey around Cape Horn or the Cape of Good Hope. Instead, goods would be transported to the colony at Darien, on the Atlantic side of the Isthmus of Panama, and carried across to a port on the Pacific side, where ships with exchange cargoes from the East Indies and Asia would be waiting.

The fact that Paterson had never actually been to Darien did not deter him. ‘The time and expense of navigation to China, Japan, the Spice Islands, and the far greatest part of the East Indies will be lessened more than half ... ’, he wrote. ‘Trade will increase trade, and money will beget money ... Thus this door to the seas, and the key of the universe ... will of course enable its proprietors to give laws to both oceans, and to become arbitrators to the commercial world.’

Formation and early operation of the Company

On 26 June 1695 the Scottish Parliament passed an act establishing the Company of Scotland Trading to Africa and the Indies. Its capital was to be £600,000 sterling, half to be subscribed in London and half in Scotland. English investors soon raised their share, but the powerful directors of the East India Company, fearing that their monopoly would be broken and their business ruined, used their influence to turn King William and the English Parliament against the venture. Indeed, the King did not need much persuading; he was anxious to be on good terms with Spain, and was conscious that the proposed Scottish colony would be located on Spanish-claimed land. The directors of the Company of Scotland were threatened with impeachment and English investors quickly withdrew their money.

The Scots, enraged by the duplicity of the King and English Parliament and carried along on a tide of national pride, resolved to raise all the capital alone. By August 1696 the revised target of £400,000 sterling had been subscribed in Scotland. This was an enormous sum, amounting to about half the country’s available capital. The company’s directors began to lay plans for the colony and in the meantime effectively used the subscribed capital, of which £34,000 was held in coin, to operate as a bank by making loans and issuing notes. These initiatives were not a success and, indeed, much of the subscribed capital was embezzled and never recovered.

The Company’s first expedition

Although the proposed location of the Company’s first colony was a closely-guarded secret, preparations for the expedition were public and extensive. Ships, provisions and trading stock were bought in cities across Europe, crews were recruited and the expedition’s five ships assembled in the Firth of Forth. Apart from the former French vessel Dolphin, their names – Caledonia, St Andrew, Unicorn and Endeavour – reflected Scots patriotism and hope. On 18 July 1698 this first expedition left the port of Leith with around 1,200 people, including William Paterson, on board. At a time when the total Scottish population amounted to only about one million, the amount of manpower committed to the venture was every bit as staggering as the financial commitment.

Even as they departed from Leith, the people on the expedition still did not know where they were going. It was not until the ships had passed Madeira that their captains were allowed to open their sealed orders which revealed the ultimate destination of the expedition. They were ‘to proceed to the Bay of Darien, and make the Isle called the Golden Island ... some few leagues to the leeward of the mouth of the great River of Darien ... and there make a settlement on the mainland’.

The Darien colony

The colonists reached Darien, which they called New Caledonia, in November 1698. There they built Fort St Andrew and began to erect the huts of what they hoped would become their permanent town, New Edinburgh. They also cleared land for growing yams and maize, but successful agriculture proved difficult. The local indigenous people proved unwilling to buy the combs and other trinkets offered by the colonists. Worse still, no fleets of merchant ships arrived to initiate the envisaged entrepôt trade with Asia and India. Meanwhile, the King had instructed his colonies in America not to deal with the Scots settlement. Inadequate provisions, combined with the unfamiliar hot and humid climate, soon caused fever to spread among the settlers. Many died, and in July 1699 the colony was abandoned.

Back in Scotland some bad news had been received from Darien, but nobody knew that the colony had collapsed entirely. A second expedition, with a further 1,300 settlers on board and the newly-built ship The Rising Sun at its head, set sail in August 1699. The second expedition arrived at Darien in November to find the huts of New Edinburgh in disrepair and the jungle reclaiming the land. Nonetheless, the colonists decided to rebuild the settlement. Some survivors of the first expedition returned from English colonies such as New York, where they had sought refuge, to try again at Darien.

The Spanish, although not interested in settling on the unhealthy coast of Darien themselves, were by now determined to prevent other European colonists claiming their territory. Learning of this enmity, the exhausted and hungry Scots launched a pre-emptive attack on the Spanish fort at Toubacanti in January 1700. The Scots settlers subsequently held out bravely against blockade at Fort St Andrew for more than a month before surrendering. Their population devastated by disease, the colonists left Darien for the last time in April 1700.

The Company of Scotland after Darien

After the failure of the Darien colony the Company of Scotland struggled on, attempting to establish trading links in Africa and the Far East. However, the capture of one of the company’s ships, Annandale, at the instigation of the East India Company in 1704 led to an outbreak of ill feeling in Scotland towards England. Later that year the English ship Worcester was captured in a reprisal raid and its crew accused of being the pirates who had sunk another company ship, Speedy Return, in 1703. The crew, who were clearly innocent, were executed. Popular ballads of the time make it clear that this was seen as direct revenge for the role of England in the failure of the Darien scheme.

For King William and his successor, Queen Anne, the lessons of the Darien affair were clear. They were anxious to avoid war with Scotland, and also wanted to prevent the Scottish Parliament from granting conflicting privileges and interfering in England’s foreign policy. They thus pressed for union of the Scottish and English Parliaments. After lengthy negotiations this was finally achieved by the Acts of Union of 1707.

Many Scots supported the Union because the Darien disaster, coupled with a series of bad harvests after 1695, had caused huge distress in Scotland. To its supporters, the Union seemed vital to Scotland’s economic survival, with its provisions for free trade and navigation and its payment of £398,000 (known as ‘the Equivalent’) as compensation for Darien and to support Scottish industries. The last Scottish Parliament met on 25 March 1707 and was not to be re-established in Edinburgh until 1999, almost 300 years after the failure of Darien.

The men appointed to distribute the compensation money were known as Commissioners of the Equivalent. They set up in the Company of Scotland’s old offices in Milne's Close, Edinburgh. Only part of the Equivalent had been paid in cash; the rest was issued to creditors in the form of debentures. Two societies of debenture-holders were formed – one in Edinburgh and one in London – but in 1724 these two united to create the Equivalent Company. Three years later this company sought a royal charter to allow it to offer banking services outside its own membership. When the charter was granted, the new bank it created was the Royal Bank of Scotland.

Related publications

  • ‘The Darien Company’, Three Banks Review, March 1950, vol.5, pp.31-37
  • D Armitage, ‘The Scottish vision of empire: intellectual origins of the Darien venture’ in J Robertson (ed.), A Union for Empire: Political Thought and the British Union of 1707 (Cambridge: Cambridge University Press, 1995)
  • JS Barbour, A History of William Paterson and the Darien Company (Edinburgh: William Blackwood & Sons, 1907)
  • HS Bingham, ‘The early history of the Darien Company’, Scottish Historical Review, 1906, vol.3, pp.210-217, 316-326, 437-448
  • SG Checkland, Scottish Banking. A History, 1695-1973 (Glasgow: Collins, 1975)
  • E Cullen, Isthmus of Darien Ship Canal; with a Full History of the Scotch Colony of Darien, Several Maps, Views of the Country, and Original Documents (London: Wilson, 1853)
  • F Cundall, The Darien Venture (New York: Hispanic Society of America, 1926)
  • G Donaldson, The Scots Overseas (Hale, 1861)
  • TM Devine, Scotland's Empire 1600-1815 (London, Penguin, 2004)
  • N Edwards, Caledonia's Last Stand: In Search of the Lost Scots of Darien (Edinburgh: Luath Press, 2007)
  • W Ferguson, Scotland’s Relations with England: a Survey to 1707 (1st edition. Edinburgh: Donald, 1977)
  • M Fry, The Scottish Empire (Edinburgh: Tuckwell Press, 2001)
  • FR Hart, The Disaster of Darien: the Story of the Scots Settlement and the Causes of its Failure, 1699-1701 (Boston and New York: Houghton Mifflin company, 1929)
  • DR Hidalgo, ‘To get rich for our homeland: The Company of Scotland and the colonization of the Darién’, Colonial Latin American Historical Review, 10:3, Summer 2001
  • GP Insh, Historian's Odyssey; the Romance of the Quest for the Records of the Darien Company (Edinburgh, London: the Moray Press, 1938)
  • GP Insh (ed.), The Company of Scotland Trading to Africa and the Indies 1696-1707 (London: C Scribner’s Sons, 1932)
  • N Munro, The History of the Royal Bank of Scotland 1727-1927 (Edinburgh: privately published by the Royal Bank of Scotland, 1928)
  • J Prebble, The Darien Disaster (1st edition. London: Martin, Secker & Warburg, 1968)
  • R Saville, Bank of Scotland: A History, 1695-1995 (Edinburgh: Edinburgh University Press, 1996)
  • PH Scott, The Union of 1707: Why and How (Edinburgh: The Saltire Society, 2006)
  • J Scott, & G P Johnston, A Bibliography of Printed Documents and Books Relating to the Darien Company (Edinburgh : Edinburgh Bibliographical Society, 1906)
  • TC Smout, Scottish Trade on the Eve of the Union, 1660-1707 (Edinburgh: Oliver & Boyd, 1963)
  • GE Vaughan, The Story of the Scottish Settlement in the Darien (1698-1700) and its Importance in British History (Panama: 1962)
  • LA Wafer, A New Voyage and Description of the Isthmus of America (Oxford: Hakluyt Society, 1934)
  • D Watt, The Price of Scotland: Darien, Union and the Wealth of Nations (Edinburgh: Luath Press, 2007)

Summary of our archive holdings

Our archival records of Company of Scotland Trading to Africa and The Indies have the reference code D.

For help understanding words used here, check our glossary of banking record types (PDF 24KB).

  • journals of the court of directors 1696-1707: source overview (PDF 48KB)
  • instructions of the court of directors 1696-1701: source overview (PDF 40KB)
  • acts, orders and resolutions of the council general 1696-1707: source overview (PDF 40KB)
  • lists of subscribers 1696-1700: source overview including index (PDF 200KB)
  • ships' cargo ledger 1698: source overview (PDF 41KB)
  • ship’s book of Caledonia relating to crew payments 1698-1699: source overview including index  (PDF 59KB)
  • receipts for payment of arrears to seamen on company ships 1698-1711: source overview including index (PDF 145KB)
  • legal papers re individual claims for debt repayment and compensation 1698-1711
  • proprietors’ receipt certificates and related legal papers 1699-1708
  • list of outstanding debts to the company 1700
  • list of outstanding debts owed by the company 1707
  • inventory of the company’s dead stock 1706-1707
  • company’s account with William Thomson, surgeon 1707
  • books of diligences 1707

Summary of archive holdings elsewhere

  • National Library of Scotland: subscription book 1696 with additional indices and lists of Glasgow subscribers; lists of stockholders and records of capital payments and transfers 1696-1709; journals and ledgers recording trading, stock, and cash accounts 1696-1707; journal and ledger of Glasgow directors 1699; minute book, journal and ledger of Committee of Improvements 1696-1700; minute book of Committee for Equipping Ships 1697-1698; cash books 1696-1707; stock books, lists of goods shipped on various vessels and ledgers of individual traders 1698-1699; volumes of accounts and expenses 1696-1699; letters from shareholders 1707; volumes of additional papers 1694-1709 (Ref: Adv.MSS.83.1.1-83.9.3 and Ch.A.238-242). Also various early printed works and contemporary and later maps
  • National Records of Scotland: Microfilm copy of various papers of the Company of Scotland Trading to Africa and the Indies 1696-1707, with printed guide to the microfilm 1981 (Ref: RH4/135/1-3; W651). Also material re the Company of Scotland Trading to Africa and the Indies may be found throughout the collections, e.g. minutes of the meetings of the nominees in the Act of Parliament for establishing the Company of Scotland Trading to Africa and the Indies 1696; bonds, copy petition, constitutions, etc 1695-1707 (Ref: GD103/2/4/41; RH15/33)
  • Glasgow University Library, Special Collections: Pamphlets, broadsides, maps and manuscripts re Darien scheme n.d. (Ref: Spencer Collection)
  • London University Library: Reports, memoranda, etc 1696-1707; ‘Considerationes upon the question whither the parliament of Scotland should begin nixt session with asserting their right to Caledonia and the legality of our settlement ther’ c.1699 (Ref: Ms 63, 69)
  • Lloyds Banking Group Archives: ‘The history of Darien giving a short description of that country’ by Rev Francis Borland, colonist, (1700) 1779; ‘A defence of the Scots abdicating Darien’ by Britanno sed Dunensi 1700
  • Hawick Museum: 'An enquiry into the causes of the miscarriage of the Scots colony at Darien or an answer to a libel entitled a defence of the Scots abdicating from Darien submitted to the consideration of the good people of England', 1700