Discussion Paper 0925, "The Darien Scheme and Anglophobia in Scotland", by Helen Paul
Scottish attempts at financial innovation in the late seventeenth century included the Bank of Scotland and the Darien Scheme. The Bank is still in existence, but the Darien scheme’s mission to site a Scottish colony on the isthmus of Darien, Panama, was a disaster. It has often been cited as one of the key reasons for the Union between Scotland and England in 1707, due to its devastating effects on the Scottish economy. Like the South Sea Bubble, the Darien scheme has been thought about in broad terms rather than being considered as an attempt to introduce financial innovation into a mercantilist world. The contemporary pamphlet literature is a record of the public debates of the period. The Scottish pamphlets which are in favour of the scheme largely advertise it as an important element in Scotland’s continued survival as an independent state. After its failure, pamphleteers were quick to print Anglophobic tracts claiming an English plot to destroy Scotland’s independence. This paper attempts to reconsider the debate. It shows that arguments against the scheme were often as faulty as those in favour of it. Indeed, many of the complaints were waged against the idea of joint-stock companies as being inherently likely to fail or as being in some way immoral. Similar complaints appeared against other joint-stock companies of the period, including the South Sea Company. One of the founders of the Bank of England, William Paterson, was behind the Darien scheme. His original intention was for a British, rather than purely Scottish, undertaking.
Keynames: Darien, Financial history, Colonization, Panama, Scottish history, Anglophobia, Religion
JEL Classification: N23, N43, N46