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William Paterson (banker)
Encyclopedia
Scotland
Scotland is a country that is part of the United Kingdom. Occupying the northern third of the island of Great Britain, it shares a border with England to the south and is bounded by the North Sea to the east, the Atlantic Ocean to the north and west, and the North Channel and Irish Sea to the...
trader
Merchant
A merchant is a businessperson who trades in commodities that were produced by others, in order to earn a profit.Merchants can be one of two types:# A wholesale merchant operates in the chain between producer and retail merchant...
and banker.
Early life
William Paterson was born in his parents' farmhouse in Dumfriesshire, Scotland, and lived with them until he was seventeen, when he emigrated first (briefly) to BristolBristol
Bristol is a city, unitary authority area and ceremonial county in South West England, with an estimated population of 433,100 for the unitary authority in 2009, and a surrounding Larger Urban Zone with an estimated 1,070,000 residents in 2007...
and then to the Bahamas. It was here that he first conceived the Darién scheme
Darién scheme
The Darién scheme was an unsuccessful attempt by the Kingdom of Scotland to become a world trading nation by establishing a colony called "New Caledonia" on the Isthmus of Panama in the late 1690s...
, his plan to create a colony on the isthmus of Panama
Panama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...
, facilitating trade with the Far East
Far East
The Far East is an English term mostly describing East Asia and Southeast Asia, with South Asia sometimes also included for economic and cultural reasons.The term came into use in European geopolitical discourse in the 19th century,...
. He was a co-founder of the Bank of England, and it is said that the project originated with him in 1691. On the foundation of the bank in 1694 he became a director. In 1695, owing to a disagreement with his colleagues, he withdrew from the board and devoted himself to the colony of Darien, unsuccessfully planted in 1698.
Career
Paterson returned to EuropeEurope
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
, and attempted to convince the English
England
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
government under James II
James II of England
James II & VII was King of England and King of Ireland as James II and King of Scotland as James VII, from 6 February 1685. He was the last Catholic monarch to reign over the Kingdoms of England, Scotland, and Ireland...
to undertake the Darién scheme. When they refused, he tried again to persuade the governments of the Holy Roman Empire
Holy Roman Empire
The Holy Roman Empire was a realm that existed from 962 to 1806 in Central Europe.It was ruled by the Holy Roman Emperor. Its character changed during the Middle Ages and the Early Modern period, when the power of the emperor gradually weakened in favour of the princes...
and the Dutch Republic
Dutch Republic
The Dutch Republic — officially known as the Republic of the Seven United Netherlands , the Republic of the United Netherlands, or the Republic of the Seven United Provinces — was a republic in Europe existing from 1581 to 1795, preceding the Batavian Republic and ultimately...
to establish a colony in Panama, but failed in both cases.
Paterson returned to London and made his fortune with foreign trade (primarily with the West Indies) in the Merchant Taylors' Company. In 1694, he founded the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
, described in his pamphlet A Brief Account of the Intended Bank of England, to act as the English government's banker. He proposed a loan of £1.2m to the government; in return the subscribers would be incorporated as The Governor and Company of the Bank of England with banking privileges including the issue of notes. The Royal Charter was granted on 27 July 1694.
Paterson relocated to Edinburgh
Edinburgh
Edinburgh is the capital city of Scotland, the second largest city in Scotland, and the eighth most populous in the United Kingdom. The City of Edinburgh Council governs one of Scotland's 32 local government council areas. The council area includes urban Edinburgh and a rural area...
, where he was able to convince the Scottish government
Privy Council of Scotland
The Privy Council of Scotland was a body that advised the King.In the range of its functions the council was often more important than the Estates in the running the country. Its registers include a wide range of material on the political, administrative, economic and social affairs of Scotland...
to undertake the Darién scheme. Paterson accompanied the disastrous Scottish expedition to Panama (1698), where his wife and child died and he became seriously ill. On his return to Scotland in December 1699, he became instrumental in the movement for the Union of Scotland and England, culminating in his support of the Act of Union 1707. He spent the last years of his life in Westminster
Westminster
Westminster is an area of central London, within the City of Westminster, England. It lies on the north bank of the River Thames, southwest of the City of London and southwest of Charing Cross...
, and died in January 1719. A mystery still surrounds the burial site of Paterson. Many (including officials at the Bank of England), believe he is buried in Sweetheart Abbey
Sweetheart Abbey
Sweetheart Abbey , south of Dumfries, near to the Nith in south-west Scotland, was a Cistercian monastery, founded in 1275 by Dervorguilla of Galloway, daughter of Alan, Lord of Galloway, in memory of her husband John de Balliol...
, New Abbey
New Abbey
New Abbey is a village in Dumfries and Galloway, south-west Scotland. It is around south-west of Dumfries. The summit of the prominent hill Criffel is to the south....
, Dumfries and Galloway
Dumfries and Galloway
Dumfries and Galloway is one of 32 unitary council areas of Scotland. It was one of the nine administrative 'regions' of mainland Scotland created in 1975 by the Local Government etc. Act 1973...
.
Publications
- Proposals and Reasons for Constitulating a Council of Trade (1701), a plan to create a Scottish council of Trade which would stimulate the Scottish economy and trade, partly by abolishing export duties.
- A Proposal to plant a Colony in Darién to protect the Indians against Spain, and to open the Trade of South America to all Nations (1701), a broader version of the Darién scheme intended to bring free tradeFree tradeUnder a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...
to all of Central and South America. - Wednesday Club Dialogues upon the Union (1706), a series of imaginary dialogues in which Paterson expressed his beliefs that Scotland had to be guaranteed equal taxation, freedom of trade and proportionate representation in ParliamentParliament of Great BritainThe Parliament of Great Britain was formed in 1707 following the ratification of the Acts of Union by both the Parliament of England and Parliament of Scotland...
if union with England was to succeed.
Quotations
Commonly attributed to Paterson is the tag: "The bank hath benefit of interest on all moneys which it creates out of nothing."No primary source for this
has been found.
This quotation is said to be from the prospectus for the Bank of England
Bank of England
The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
, but it does not appear in
A Brief Account of the Intended Bank of England
or elsewhere in The Writings of William Paterson. Its earliest known appearance in print dates only from 1935.
See also
- John HollandJohn Holland (banker)John Holland was a founder of the Bank of Scotland, in 1695....
, founder of the Bank of Scotland - Saxe Bannister
- Daniel DefoeDaniel DefoeDaniel Defoe , born Daniel Foe, was an English trader, writer, journalist, and pamphleteer, who gained fame for his novel Robinson Crusoe. Defoe is notable for being one of the earliest proponents of the novel, as he helped to popularise the form in Britain and along with others such as Richardson,...
- Acts of Union 1707Acts of Union 1707The Acts of Union were two Parliamentary Acts - the Union with Scotland Act passed in 1706 by the Parliament of England, and the Union with England Act passed in 1707 by the Parliament of Scotland - which put into effect the terms of the Treaty of Union that had been agreed on 22 July 1706,...
- Darién schemeDarién schemeThe Darién scheme was an unsuccessful attempt by the Kingdom of Scotland to become a world trading nation by establishing a colony called "New Caledonia" on the Isthmus of Panama in the late 1690s...
- Lionel WaferLionel WaferLionel Wafer was a Welsh explorer, buccaneer and privateer.A ship's surgeon, Wafer made several voyages to the South Seas and visited the Malay archipelago in 1676. The following year he settled in Jamaica to practise his profession...
, a buccaneer marrooned for four years on the isthmus of Darién that he hired as an adviser for the Darién Scheme.