(1658-1719)

William Paterson

William Paterson was a merchant, financier and venture capitalist from Dumfries, Scotland who is best remembered for his ill fated Darien Scheme. Despite that terrific failure, Paterson also accomplished a great deal during his lifetime including the establishment of the Bank of England. (As fate would have it, an Englishman, John Holland, created the Bank of Scotland).

William Paterson was born in Tinwald, Dumfries, Scotland in April, 1658, and very little is known about his family. At a young age, the Patersons moved to England in the vicinity of London. After his education, William apparently moved into the merchant business and was quite successful in London. He became a member of the Merchant Taylors' Company in 1686.

Over the next three years, William became a supporter of the "Glorious Revolution". This was the effort to depose the King James II, a Catholic, and replace him with William of Orange. This was successful in 1689 and the alliances made during the venture allowed William to make a great deal of money in the export and import business through trading in the West Indies.

In 1691, William Paterson helped to propose the Bank of England, an institution long wanted by the merchants of London. After three years, efforts to establish the Bank were successful and William became its new director and a financier. This was done through an exchange of sorts, as William Paterson loaned 1.2 million pounds to William III of Orange to use in his war against France, in return, he was granted the charter for the Bank. He withdrew from the Bank early in 1695, after a dispute over Bank policy in which the Board overruled him.

Over the next year, William was involved in several schemes for making money. The most notables of these were an attempt to start a bank to compete against the Bank of England and the Darien Scheme. Both of these ideas would prove to be disasters for William as the Bank idea quickly failed. The Darien Scheme would last much longer, however, taking with it a large portion of William's fortune.

William successfully lobbied for a bill to establish a Scottish Trading company that was established in 1695. The next year however, he was removed as a Board member because of a scandal concerning funds. Although no blame personally fell his way, he was considered indirectly responsible.

Efforts continued to establish a Scottish Colony, and in 1698 William left for the New World as a regular member of the Expedition along with his wife. But his continued support for the expedition was only to cost him continually more. He lost his wife and child in Panama and returned to England in 1699 gravely ill. The venture failed completely by the following year.

William continued to try and raise support for further expeditions to Panama, but there were no takers. Although he had lost most of his fortune, William still had quite a bit of influence in government and finance. He proposed the Sinking fund method of eliminating the national debt, which was later adopted, and also was a strong proponent of the Union of Scotland and England.

A large portion of his fortune was recovered after the Union in 1707, at which time he was compensated for his losses in the Darien Scheme. William was in his fifties by this time and did very little of note after this. He soon died on January 22nd, 1719.

William appears to have suffered from a great deal of luck, both good and bad, during his lifetime. He successfully started the Bank of England, only to let it fall into other hands. The same process repeated itself during the ill-fated Darien Scheme, which was a brilliant idea that floundered due to bad planning and lack of English support. These events gave William a reputation as an idea man, but one who was not capable of finishing them off. Because of this William was respected and listened to during the remainder of his life, but no one dared get involved in any of his schemes.

BW, April 2000