|
Unlike the Act of the Bank of Scotland, passed
about three weeks later, the Act constituting the Darien Company did not
limit the amount of capital to be raised for carrying on the undertaking. It
merely spoke in general terms of "the fund or capital stock that shall be
agreed to be advanced and employed by the said undertakers and their
co-partners." It was stipulated, however, that the amount of capital which
might ultimately be agreed upon was to be subscribed not later than the 1st
day of August 1696; that at least half was to be set aside for Scotsmen
resident in the kingdom; and that the shares originally so subscribed could
be transferred only to other Scotsmen similarly resident there. Failing half
the stock being quite taken up by resident Scotsmen, then Scotsmen living
abroad and foreigners were to be allowed to subscribe for the residue. No
one could hold less stock than £100 nor more than £3000 sterling.
At first Paterson and his associates proposed to
fix the total capital at £360,000, but ultimately the amount was raised to
£600,000 sterling—one half, as stated, to be reserved for Scotland, and the
remaining £300,000 to be offered in London. From his previous experience of
the remarkable success which had attended the subscriptions of the Bank of
England, Paterson anticipated little difficulty in raising the moiety
assigned to London. He therefore addressed himself to quickening the
speculative interest of his countrymen in the proposed enterprise, and in
this connection it is interesting to read the correspondence which passed
between Paterson and the Right Honourable Sir Robert Chiesly, the Lord
Provost of Edinburgh, who represented the Scottish portion of Directors
appointed by the Act. Paterson's letters are dated from London, and in the
correspondence he stands out as a financial expert far ahead of his
time—being, in fact, quite abreast of the astute company promoters of our
own day. In his letter of 4th July 1695 he suggests that the information
about to be furnished to the people of Scotland should not be too detailed.
"And for Reasons, we ought to give none but that it is a Fund for the
African and Indian Company. For if we are not able to raise the Fund by our
Reputation, we shall hardly do it by our Reasons." This method of floating a
company on the reputation of the promoters is in keeping with some of the
prospectuses of the numerous bubble companies launched a few years
afterwards (in 1720), one of which stated that the company about to be
promoted was "for an object to be hereafter revealed."
On the 9th July Paterson urges that a limited
time only should be allowed to the public for giving in their subscriptions.
He writes: "The Bank of England had but six weeks' time from the opening of
the books, and was finished in nine days, and in all subscriptions here it's
always limited to a short day. For if a thing go not on with the first heat,
the raising of a Fund seldom or never succeeds, the multitude being commonly
led more by example than reason." Continuing, he says: "They" (the gentlemen
promoters in London) "hope, all things considered, that this, as it's
designed, is one of the most beneficial and best grounded pieces of trade at
this day in Christendom, and we must engage some of the best heads and
purses for trade in Europe therein, or we can never do it as it ought to
be."
Paterson several times complained of Lord
Provost Chiesly's delay in forwarding to him an authentic copy of the
Company's Act "as it passed the Seals," his aim being to get the Company
established before the English Parliament met. On the 6th of August he
writes somewhat warmly: "The life of all commerce depends upon a punctual
correspondence, and we shall not fail at any time to return our thoughts
upon your demands, so we hope you will keep up to the exactness of
correspondence on your part." A week later Paterson intimated to the Lord
Provost that it was proposed to convene a General Meeting of the
Corporation, to be held in London, for the purpose of making the
arrangements necessary for opening the subscriptions there. At the same time
he drew attention to two errors that had crept into the Act—viz., Mr James
Smith, merchant, London, being misnamed John Smith, and Mr Joseph Cohen
D'Azevedo's name being printed as if it represented two separate
individuals. It would therefore be necessary—in fact, it was urgent —that
three from among the Scotch promoters named in the Act should be present at
the proposed meeting in London, so as to make a majority and quorum, and
have the errors referred to rectified. Paterson had to repeat this request
several times; and in compliance therewith, although somewhat tardily, Lord
Belhaven, with Mr Robert Blackwood and Mr James
Balfour, proceeded as a deputation to London and attended several meetings
there, commencing on 9th November. The London subscription book was opened
on 13th November 1695, and was closed on the 22nd—the day on which the
English Parliament met. Thus in nine days the entire issue of £300,000 stock
was subscribed, of which one-fourth— £75,000 — was paid up at the time of
subscription. In point of fact, the stock was over-applied for, and the
applications had to be cut down. Included in the list of subscribers was
Paterson's own name for £3000, and that of his servitor for £100 stock. The
English promoters proceeded to business at once, not waiting until the
Scotch subscriptions were taken. One of their first deeds was to pass a
resolution that the Court of Directors, besides those named in the Act of
Parliament, should be increased by thirty additional Directors — making
fifty in all. The qualification for each of these additional Directors was
fixed at £1000 stock or more, along with proxies from other proprietors
amounting to £20,000, including the new Director's own holding. Under this
rule several new Directors got seats on the London board during the month of
November. On 4th December they passed a resolution — "That one or more ships
be fitted out for the East Indies from Scotland with all convenient speed."
This resolution, however, was not given effect to, as it was ultimately
thought better to delay sending out ships until the Scottish subscriptions
were taken.
But the progress of the Company soon sustained a
check. The powerful London East India Company took alarm, and they
petitioned the House of Commons, setting forth the encroachment in their
Indian trade. This resulted in the Lords and Commons holding a joint
conference and unanimously concurring in an Address to the King, complaining
of the establishment of the Scots East India Company with privileges which
it was apprehended would ruin the English East India trade, and
animadverting upon the action of the Scottish Minister and the Scottish
Parliament in passing the Act. The Act of the Scottish Parliament, however,
could neither be recalled nor suspended. On 17th December 1695 both Houses
waited on King William at Kensington with their Address, to which his
Majesty made the memorable reply—"That he had been ill-served in Scotland,
but he hoped some remedies might be found to prevent the inconveniences
which might arise from the Act"; and followed this up by dismissing the Lord
High Commissioner Tweeddale and Secretary Johnston. The Commons went
further. They ordered production of the London books of the Company, made a
searching inquiry into its actings, and finally threatened Paterson and his
English colleagues, along with Lord Belhaven 1 and the other two Scotch
deputies, with an impeachment, which, however, was afterwards abandoned. The
ground of the impeachment was that the Directors were guilty of a high crime
and misdemeanour in raising monies and administering an oath de Hdeli in
England under colour of a Scottish Act of Parliament.
The House of Lords, on their part, also took
extreme steps. On the 20th December they resolved to prepare a Bill to
provide remedies against the inconveniences attending the Scots Act, two of
the heads of which were—(1) That the subjects of England be discouraged,
under severe penalties, from engaging in the stock or management of the
Scots East India Company; and (2) that all seamen of England, Ireland, or
the Plantations be prohibited, under severe penalties, from navigating or
serving in the Company's merchant ships, and that the shipwrights and
builders of ships in or belonging to England, Ireland, or the Plantations be
likewise restrained, under severe penalties, from repairing to Scotland, or
from building any ships for their service within those Kingdoms or the
Plantations.
[When the summons citing Lord Belhaven to appear
at the bar of the Commons was served, "the messenger was informed at my
Lord's house that his Lordship was gone to Scotland."
Roderick Mackenzie, the Secretary of the
Company, having refused to give certain evidence, the House ordered him to
be taken into the custody of the Sergeant-at-Arms. Mackenzie eluded the
search officers, and a Government proclamation was issued for his
apprehension; but he also fled the country and escaped the storm.]
This hostile action on the part of the
Government alarmed the English subscribers, and they reluctantly withdrew
their subscriptions, and so relinquished the design. The scheme, so far as
regards an East Indian trade, was now knocked on the head. It has been
alleged that Paterson all along had been lukewarm to the East India trade,
and instead secretly hoped to carry out his long-cherished idea of
establishing a great settlement in Central America.
[In April 1697 a similar fate attended a
subscription of £200,000 offered to the merchants of Hamburg, whither
Paterson had gone to enlist subscribers in lieu of those withdrawn in
London. After the books had been opened and subscriptions promised, Sir Paul
Rycaut, the English Resident at Hamburg, and Mr Cresset, the English Envoy
to the Court of Lunenburgh, presented a Memorial in King William's name to
the Senate of Hamburg, stating that his Majesty would regard such
proceedings as an affront, which he would not fail to resent. The
Hamburgers, wishing to avert the displeasure of England, reluctantly
withdrew their promised support. The Directors of the Company addressed
several appeals and remonstrances to King William on the subject, but they
got no redress.]
In a letter (Bannister's 'Life of William
Paterson') dated 5th September 1696, from Mr Robert Douglas, a Scots
merchant in London, he says—
"I found Mr Paterson in several particulars
opposing everything that tended to promote the Scots East India trade, when
under consideration in England, and industriously bringing in some that were
concerned in the English East India Company (five of whom had taken oaths to
the said Company—were then in Committee) to be Directors of the Scots East
India trade. So I considered he must be treacherous to the interest he
seemed to espouse, ... or else, knowing his ignorance in the East India
trade, might have some West India design of his own to promote."
This allegation, as to assuming as Directors
certain proprietors who were also members of the London Company, is partly
confirmed by the evidence given by Colonel Robert Lancashire, one of the
newly assumed Directors, in his examination before the Committee of the
House of Commons in January 1696.
"Mr Lancashire, being examined, said that he was
a member of the English East India Company, and of the Scotch East India
Company, and subscribed £3000 to the stock, and gave a note for one-fourth
part to Mr Foulis and Mr Chiesly, dated 8th November. That it was proposed
to send out a ship as an interloper, but he refused to consent to it, saying
it was against his oath to the English East India Company."
Meantime, prior to the subscription books being
opened in Scotland, care had been taken to arouse the interest of the Scots
nation in the proposed foreign trade by the circulation of pamphlets on the
subject. One of these bore the title, 'Proposals for a Fond to cary on a
Plantation,' which stated that "persons of all ranks, yea, the body of the
nation, are longing to have a plantation in America." This probably was
inspired by Paterson. The "Address" of the two Houses to the Crown, which
directed special attention to the ample privileges conferred by the Scottish
Act, but without the king's damaging reply to it, was also printed and
reprinted at Edinburgh, and being widely circulated, had much influence in
moving public opinion in favour of the scheme.
The withdrawal of the London subscribers,— men
experienced in large commercial undertakings,—and the pronounced hostility
of the English Government, should have made Paterson and the Directors in
Scotland hesitate before proceeding further in the affair. But the insult
attending the opposition of the English Government, and the disavowal of the
project by the king, wounded the honest pride of the Scots, who
patriotically resolved " to stand upon their own bottom," and to pursue the
undertaking, although on different lines, with their own resources. They
aimed now at a capital increased to £400,000, in place of £300,000.
[A capital limited to £400,000, even although
the money could have been raised in Scotland, foredoomed the Darien scheme
to failure. Paterson realised this when it was too late. In his subsequent
plan to revive the Darien enterprise, given at length in Dalrymple's '
Memoirs,' he proposed a capital of two million pounds sterling, one-fifth
part to belong to Scotland and the other four-fifths to England. On 5th
February 1696 the House of Lords resolved that the English East India trade
be carried on by a company, under Act of Parliament, with a joint-stock of
£3,000,000.]
On the 26th February 1696, within a few weeks
after the denunciation of the English Parliament, the subscription book of
the Darien Company was opened in Edinburgh. The scheme immediately became a
national concern, and people of all classes pressed forward to participate
in the emission. In his 'History of England,' Macaulay says: "From the
Pentland Firth to the Solway, every one who had a hundred pounds was
impatient to put down his name."
[The Lord Justice-Clerk, writing to Lord
Tullibardine on 18th December 1697, says : " 'Twas the notice the Parliament
of England first took of it [Darien Company] made the whole nation throng in
to have some share, and I'm of opinion the resentments people are acted by
are the greatest supplies that furnishes life to that afi'air." support. On
the 30th, Mr Thomas Scott, merchant, Dundee, came as a deputy from that town
with 42 subscriptions besides his own. On the 31st, a large contingent came
forward. To meet the pressure that day the subscription book was kept open
in the afternoon, and 176 applications in all were received. A separate book
was opened at Glasgow on the 5th of March, and the total amount received
there was £56,325. At a General Meeting of the Company held on 3rd
April—Lord Belhaven in the chair—it was reported that upwards of £300,000
had been subscribed. By the end of May the capital of £400,000 was all taken
up excepting £25,000. In June and July the applications dropped away, and
several days frequently passed without an entry. The list was kept open
until 1st August, the last day fixed by the Company's Act, when the grand
total of £400,000 was completed. (Macaulay, in his ' History of England,'
says four hundred thousand pounds probably bore as great a ratio to the
wealth of Scotland in 1696 as forty millions would do at the time he wrote
his History.) This result, however, was accomplished with some difficulty,
as the books of the Company reveal the fact that on the closing day certain
subscribers, by arrangement with the Company, temporarily increased their
original applications, so as to enable the Directors to make the
announcement that the total issue had been taken up. On the first day, 26th
February, £50,400 was subscribed, and daily, till the end of March, the list
filled up steadily.]
The names of the various subscribers — all "residenters
in Scotland" — are noteworthy. They comprise nobles, landed gentry,
merchants, ministers, surgeons, lawyers, &c., including all the royal burghs
of Scotland. Paterson's scheme appealed strongly to the ladies of Scotland,
the first five names put down on the list being—
The "Good Town of Edinburgh" (per Lord Provost
Chiesly) took the maximum subscription of £3000, and the Merchant Company of
Edinburgh took £1200, while the little "Town of Queensferry" went in for
£100 stock. On the closing day the "Royal Burghs," as a body, ventured
£3000, and the last to sign the list was "Sir Archibald Mure, in name of the
burgh of Cowpper of Fyfe," for £100 stock.
The various calls made on the stockholders were
as follows :—
Note.—The first call of 25 per cent was to bear
interest from 1st August 1698, and the remaining calls from their respective
dates of payment.
The first instalment of 25 per cent was well
met. It should have produced £100,000, and it actually realised the sum of
£98,223, 17s. 2½d. In connection with this call, the Directors offered a
discount of 12 per cent on prepayments, whereby they drew in the sum of
£34,006, 13s. 4d. before the due date, 1st June. This proved to be bad
business, as the Company, in their assumed role of bankers, commenced
shortly afterwards to lend money to their proprietors at the modified rate
of 4 per cent. They had to make this concession in competing with the Bank
of Scotland, whose directors at this time had reduced the interest on loans
from 6 per cent — the legal rate — to 4 per cent.
As mentioned above, the various calls made by
the Directors amounted in all to 42£ per cent of the total capital of
£400,000 subscribed, and this should have realised £170,000. The actual cash
paid up by the subscribers in respect of calls was £153,448, 5s. 4§d., along
with £65,646, 3s. 2½d. of overdue interest. This large amount of interest
indicates the great difficulty experienced by the subscribers in meeting
their calls. In the extraordinary national enthusiasm evoked at the time,
the Scottish people subscribed for much more stock than they were able to
pay calls upon. In the final years of the Company, subscribers all over the
country had to be sued at law for payment of their calls, and when the
Company was dissolved in 1707 a considerable balance then still due by the
proprietors had to be cancelled.
The call-money paid up, together with the
interest, amounted in all to £219,094, 8s. 7½d., and this sum represented
the grand total which Scotland stood to lose in the ill-fated concern. |
