The Darien Scheme

Podcast Transcript

During the 17th century, European nations dominated the world by aggressively establishing colonies across the globe.

Late that century, Scotland sought to join the ranks of these colonial powers with an ambitious effort to seize control of the Darien region in Panama.

This attempt to gain a colonial foothold in the Americas began with tremendous national optimism and unified the country as no prior venture had.

….aaaaand it was a total disaster.

Learn more about the Darien Scheme and Scotland’s failed attempt at becoming a colonial power on this episode of Everything Everywhere Daily.

In the 17th-century, the world’s powers were establishing lucrative overseas colonial holdings under the banner of Mercantilism.

Mercantilism, which will be the subject of a future episode, held that trade was a zero-sum contest. The easiest way to achieve that was for a nation to have a favorable balance of trade, which it gained by accumulating natural resources through the establishment of overseas colonies.

For Scotland, this became an important objective in 1661, when its neighbor and burgeoning colonial power, England, passed the Navigation Acts.

The Navigation Acts were created to promote English trade over other nations. The Navigation Acts forbade foreign nations from trading in English ports within the growing English colonial empire.

This was especially problematic for Scotland in the 17th century, as it had been part of a complicated relationship with England since the death of Queen Elizabeth in 1603. The Scottish King James VI became the English King James II.

Although England and Scotland shared the same monarch, they remained two separate countries at this time.

Scotland’s economy was smaller and more fragile. It faced periodic harvest failures, limited capital, and, now, restricted access to the expanding English imperial trading system.

English Navigation Acts and wartime priorities often meant Scottish merchants could not freely participate in the most lucrative routes. A persistent Scottish hope was that a bold commercial venture could leapfrog these constraints, building national wealth and strategic leverage.

The Scottish hatched a risky plan. They were going to establish their own colony.

However, maritime expansion and colonialism were exceedingly expensive. It required technology and capital, both in short supply in Scotland.

The world’s most powerful colonial empires of the day achieved their empires with a blend of luck and skill.

The Dutch had gained control over lucrative spice-producing regions, thanks in large part to the Dutch East India Company.

The Portuguese developed a trading-post empire in the Indian Ocean, owing to favorable settlement rights granted by the Pope in the Treaty of Tordesillas and their early lead in maritime exploration.

Thanks to Columbus and his voyages, the Spanish gained great mineral wealth from their holdings in the Americas.

Scotland was poised to join this club, or so they thought.

Late 17th-century Scotland was in an economic crisis. In the 1690s, Scotland suffered a severe blow in a series of failed harvests that led to a devastating famine. Scotland saw as much as 15% of the population die in what became known as the Seven Ill Years.

Many who did not die were cast into poverty and homelessness.

Scotland saw a path out of its struggles by establishing a lucrative trading colony. Scotland had a brief period of overseas colonization in the early 17th century, when King James, himself a Scot, granted William Alexander a charter for Nova Scotia.

Nova Scotia is Latin for New Scotland.

As a colony, Nova Scotia initially failed. The first arrivals were ill-equipped to cope with the region’s climate and farming challenges. Like many other early 17th-century colonies in North America, the death toll during the first winter was too high to continue the colony as a viable enterprise.

The Anglo-French war of the late 1620’s prevented Scotland from supplying the colony, and in 1632 the colony was ceded back to France.

While Scottish religious groups, such as the Presbyterians, and individual Scotsmen had held influence throughout North American Colonial history, there was no lucrative Scottish colony to speak of.

The Scots hoped that the Darien venture would propel Scotland toward becoming a global power.

The “Darién” region refers broadly to the Panama isthmus and nearby coasts. Ever since it had been mapped, it had attracted the attention of imperial strategists. The geography invited a seductive idea: control a narrow land bridge, and you can tax, facilitate, or dominate the movement of goods between oceans.

In an era before canals, even a rough portage could be lucrative if it sat astride the world’s largest oceans.

In 1693, the Scottish Parliament laid the groundwork for the Darien scheme by passing the Scottish Act of Encouraging Foreign Trade. The act legalized and encouraged the formation of mercantile groups who sought to build trade relationships with any country or region not at war with the crown.

In essence, Scotland sought to emulate the highly successful Dutch East India Company.

However, Scotland in 1693 had very little in common with their Dutch counterparts.

The Dutch had cosmopolitan cities, a long-storied banking history, a rich maritime exploration history, and a history of public stock exchanges.

Scotland was poised to pursue its colonial ambitions without the same background as the Dutch.

The inspiration behind the venture was the Scottish Banker William Paterson. Paterson had co-founded the Bank of England, bringing experience to the newly created organization, the Scottish Company.

Paterson, a geography student, had developed a profound interest in modern-day Panama. Paterson believed that this region held the “keys to the universe”. Paterson’s vision centered on Panama’s narrow isthmus between the Atlantic and Pacific Oceans.

Portugal and Spain rose to prominence by establishing maritime empires that controlled the world’s primary shipping lanes. To get to the Indian Ocean, you had to go around the Cape of Good Hope, while in the Atlantic, you couldn’t get to the Pacific without going through Spanish control of the Cape of Horn.

If Scotland could control this narrow strip where the Atlantic and Pacific were so close, Scotland could become a world power.

Paterson had high hopes that the Scottish Company could become the next Dutch East India Company or British East India Company.

Securing the funds required for the colonial effort was a severe challenge for Paterson and the Scottish company. Initially, the venture received English support, which was vital to the project’s success.

That support did not last, as leaders from Europe’s two most powerful companies, the Dutch and British East India Companies, urged Parliament to withdraw their financial support. Without the support of the English government, the funding for the effort became the responsibility of the Scottish nation.

Records from the Scottish Company archives tout a national public contribution of £500,000. It is estimated that this was nearly half of the nation’s liquid wealth at the time. For a country in dire straits like Scotland, this was an extraordinary effort. Any Scot who had a few pounds to share contributed to the effort during a time of great poverty and famine.

But raising the money was only the beginning.

Thousands of hopeful Scots volunteered to be part of the first wave, and in July 1698, five ships packed with settlers finally departed their homeland for the shores of Panama. Paterson’s grand vision was in place; it had come with great struggle and had taken all of the Scottish support he could muster.

Unfortunately, Paterson had failed to consider several essential realities.

The Darien Gap region of Panama, where the Scottish hoped to settle, is remarkable for its geography. The Scots thought they’d find a tranquil landscape to build their colonial bridge between the oceans.

The Scots found the Darien Gap to be incredibly hospitable. The Darien Gap is so inhospitable that it is the only break in the Pan-American Highway.

There is no road traversing this 60-mile (97 km) gap between Yaviza, Panama and Turbo, Colombia. Roads are not possible because the terrain in the Darien Gap is too inhospitable.

The dense rainforest and the region’s steep mountains make it impossible to build roads, or, as the Scots foundout, impossible to build settlements and live.

The region is also among the wettest in the world, with some years seeing a staggering 9,000 mm of rain per year.

While the region’s geography posed insurmountable challenges, the Scots also failed to consider the indigenous population in their grand design.

It should have been a clue to Paterson and the Scots that Spain had not asserted control over the region. They were well aware of the Isthmus’s economic potential. The Spanish also knew of the remarkable difficulties in sailing through the Drake Passage around Cape Horn, some of the world’s most dangerous waters.

Standing in the way of the Spanish domination of the region were the Kuna and Embera-Wounan peoples. The Scots soon learned what the Spanish already knew: the local tribes fiercely guarded their independence and did not tolerate any encroachment.

The advantage of European weaponry was of little importance in a dense jungle environment with which they were hopelessly unfamiliar.

The first settlers landed in October of 1698 after an arduous four-month journey and began building Fort Andrew.

The troubles began immediately. Under Spanish pressure, English colonies in the region refused to trade much-needed supplies to the fledgling Scottish community..

The first wave of Scottish colonists in 1698 was also completely unprepared for the region’s tropical diseases. The lack of immunity to diseases, such as malaria and yellow fever, proved catastrophic to the venture. Scottish colonial hopes in Panama seemed doomed to fail.

Seven months into the founding of the colony, they had lost more than 1/3 of their original settlers, and the remaining Scots were in dire straits due to disease and food shortages.

Unaware of the impending disaster, the second group of settlers set off for Panama in 1699. Due to the immense distances, communication was delayed, leaving the new arrivals unaware of what was happening.

They arrived to find Fort Andrew in ruins.

The first Scottish settlers on the coast not only had to deal with starvation, diseases, and indigenous peoples, but also with the Spanish. The Spanish had launched a campaign against the Scottish colony, while Spanish ships blockaded the settlement to prevent escape.

After several weeks of a demoralizing and starving siege, Fort Andrew surrendered on March 31, 1700. Though the Scottish survivors were permitted to return home, most did not survive the subsequent journey.

The cost of the Darien Scheme for Scotland was catastrophic. Not only did they lose more than 2,000 people to starvation, warfare, and disease, but they lost their entire initial investment. The loss of the investment put the country on the edge of bankruptcy.

In this case, the bankruptcy did not affect just a joint-stock enterprise; it was borne by the Scottish government and the people of Scotland…and the people of Scotland blamed the English for the disaster, as it was the English who pulled their support.

By the time of the Darien disaster, England and Scotland’s shared king was James’s great-grandson, William III. By siding with Spain during the Darien scheme, Scottish critics accused King William III of prioritizing English interests over Scotland’s.

The anger had reached a fever pitch as the Scottish parliament passed the Act of Security, which threatened to split the monarchy.

However, it was acts passed in the English Parliament sealed Scotland’s fate.

The Alien Act of 1705 was an English law that threatened to treat Scots as aliens and to cut off their access to English trade and property rights unless Scotland accepted the Hanoverian succession or entered into negotiations for political union.

Scotland was staring at a collapse. By 1706, the Scottish economy was effectively insolvent, and the only option available to repay their debts was to sell them to England.

The Act of Union created the United Kingdom in 1707, uniting England and Scotland and providing £398,085 to repay the debt owed to thousands of Scotsmen who contributed to the Darien scheme.

History works in mysterious ways.

The United Kingdom became the world’s largest empire in the 19th century. Yet, the reason why the country was founded was directly related to a failed colony in Central America that bankrupted the nation of Scotland.