Posts tagged ‘Darien Scheme’

November 3, 2017

There’s nothing like the smell of xenophobia in the morning

The Telegraph has run a piece by its digital editor on something very topical, or would have been more than 300 years ago,  under the title  “The farcical story of Scotland’s ill-conceived colony in the jungle” – not many pejorative terms used here, well, not quite all pejorative.

How much the derogatory title is down to a sub-editor with a grudge or the author I’ve no idea and quite why this piece was run is curious for it adds nothing of historical value to the account of this centuries-old venture but with its disparaging title appears as an excuse to have a go at the incompetent Scots. I was not impressed by the character Oliver has chosen to quote in his article on the subject of the Panama isthmus -“you can’t trust the Indians” he says, “with a glint in his eye” as he describes the deaths of hundreds of illegal immigrants in the area. I’m getting that smell again.

The Darien venture runs something like this. Towards the end of the 1600s a group of Scots with some cash behind them planned to establish overseas trading posts with the intention of colonising just like their neighbours the English were doing only the English had got in first and had erected barriers to other nations trading by the imposition of its Navigation Acts.

England’s Navigation Acts of 1651 were protectionism on the high seas. By applying them English colonies and places not colonised had their commerce restricted and were banned from trading in most circumstances except through English vessels and companies. The Acts were enforced by England’s powerful gunboats. The intention was to accrue more wealth for England and to develop London as the world’s powerhouse. Needless to say not everyone was happy with England’s high-handed policies which, in part, stoked resentments among the colonists in America eventually leading to the American declaration of independence from Britain.

While England sought to dominate trade Scotland endeavoured to establish its own merchant enterprise abroad and in 1695 the Company of Scotland for trade with Africa and the Indies was created with monies raised in Scotland and in England. Immediately alarm bells rang in London at the prospect of this mercantile challenge that might impact on the East India Company and aware of the unease south of the border the Scottish company looked at setting up a merchant colony on the other side of the world, around Panama.

The description of the Darien isthmus had been greatly misrepresented by a Welshman with a huge imagination and proved not to be the opportunity he sold it as. If the land was challenging for the Scots who sailed there to establish their trading post the determination of the English to scupper them was as great if not greater for England’s colonies in America and the West Indies were forbidden to trade with the Scots. There is no mention in the piece of the vehemence of England’s active opposition to the Scots e.g that survivors of Darien were denied help when they landed at Jamaica, an English colony, seeking help. When Oliver states “the English still refused to offer any support” he doesn’t quite get to the nub of its wrecking policy.

Oliver refers to the Scots angering “the enemy” not in his view the English but the Spanish who had colonised what England hadn’t in this part of the world. And he can’t help reveal his surprise that in a naval skirmish between the Scots and the Spanish the Scots came out victorious – “an unlikely victory” writes Oliver, dispassionately. Aye, too wee, too feckless.

Vast amounts of Scottish wealth were lost with Darien. Lost to those who had money which excluded the majority of the Scottish population and if there’s something that drives those with fortunes it is the need to preserve if not build on those fortunes so they were open to persuasion to offer up Scotland’s independence as a nation in return for personal gratuities. Even today’s tawdry politicians neck-deep in sleaze and corruption might not quite sell out a whole nation. Well, might.

What the people of Scotland wanted did not come into the reckoning when there was an opportunity to recoup some of the assets lost through Darien. What the people wanted was for Scotland to retain its independence but when did the people matter?

Oliver ploughs on. “The English were blamed for the expedition’s abject failure.” Perish the thought. Surely they must have looked at the evidence. Perish the thought twice.

As I wrote at the outset I don’t know why this article was written other than to take another pop at Scotland – to highlight the ineffectual Scot not quite up to the mark. As for that misguided rascal William Paterson, a director of the Company of Scotland, he went on to found the Bank of England – but Oliver makes no mention of this – well it would be a shame to spoil the damning narrative.

Oliver dismisses suggestions from historians that Darien might have been a success were it not for the fierce opposition it faced from England- he doesn’t explain why so readers are left to surmise it was because Scots have failure built-in.

Not highlighted in the piece:

1) England’s wars with France had seriously damaged Scotland’s mercantile economy.

2) England’s Navigation Laws were aggressively protectionist and rigorously upheld on the high seas by its vast navy preventing Scots pursuing trade.

3) Initially individual English people were found keen to invest in Darien (presumably they weren’t all ineffectual failures) but were strongly pressurised by the government in London to withdraw their money so that England could keep Spain as an ally while it (England) was at war with France (again.)

The financial shock felt in the pockets of Scottish nobles, many of them parliamentarians, took Scotland into a Union with England. There was no popular support for this, quite the contrary, and it was a cynical self-serving betrayal of the Scottish people. As for the London government it was keen on the union because Scotland was too friendly with France for England’s liking and Scotland was seen as a potential backdoor into England for France. And for those who argue the union was of greater value to Scotland than England the response is that if that were true England would not have entered into it. England was fiercely protective of its own power and status. England wanted to shut down Scotland’s relationship with France, it wanted to absorb Scotland’s exports and it wanted that immensely valuable resource it has been exploiting for 300 years Scotland’s strapping young men to fight in its never-ending wars with the enemies it kept making.

Those same people sneered at in “The farcical story of Scotland’s ill-conceived colony in the jungle” went on, as Paterson did, to start up the Bank of England and become core administrators in the vast East India Company till eventually Scots ran it along with many of the colonies that shaped the British Empire which is strange for a nation that was a ship of fools a few short years before.

http://www.telegraph.co.uk/travel/destinations/central-america/panama/articles/darien-scheme-scotland-only-colony/

May 26, 2012

Scotland a feckless and invisible nation

A recent commentator in the Financial Times, -Merryn Somerset Webb, used Douglas Watt’s The Price of Scotland to provide her with an example of mad-cap economics:

‘It’s a fantastic run-through of the “catastrophic failure” of the Darien scheme – the creation of the Company of Scotland to establish a Central American colony. This failure (a result of horrible financial mismanagement and shockingly bad strategy) and the huge financial losses that came with it, made Darien what Watt calls a “central ingredient” in the eventual marriage of convenience between the two countries. “The Price of Scotland” refers to the huge sum of money transferred from England to Scotland on union, the majority of which went to pay back the losses of the original investors in the Company of Scotland. I suspect we’ll be returning to this one here another day.

Not only is it a good lead-in to everything from joint stock mania to the periodically discovered evils of financial innovation, but there has been a good row going on in Scotland for 300 years about whether it was all the fault of the English or not.’

And it was not the only Scottish financial fiasco she found useful for reflecting on the current situation:

However it was in looking around for more information on this (a quest that ended at Douglas’s door) that I came across a much less well-known Scottish financial debacle – the story of Sir Gregor MacGregor. MacGregor turned up in London in 1821. He announced that he was the Cazique, or chief, of a land in the heart of Central America, a position he had been given in gratitude for his all-round heroism in joining the struggle of the South Americans to free themselves from the Spanish.

FT Sat 19 May 2012

History can be a useful tool to provide us with coping mechanisms to manage tricky circumstances if we recognise similar situations in the past. What we do with such information or indeed how we interpret it is up to us as individuals. Darien became such a cause célèbre that it is an obvious choice for those eager to find a handy model on which to base an argument. Will we ever live down Darien? Another Scottish failure. And so useful as it provides us with material for two hot topics – economic implosion and the Scottish independence referendum.

Darien was a ‘catastrophic failure’. Darien led inextricably to union with England. And there were ‘huge sums of money transferred from England to Scotland on union, the majority of which went to pay back the losses of the original investors in the Company of Scotland.’ All perfectly fine…but, but…to tidy up the story. We need mention of the cash for votes element. I know this was not a piece on Darien as such but to warn of the follies of unbridled greed and over-extension in money-making schemes but it is in the omissions that hangs a tale.

Greedy bankers, dodgy arithmetic – look north to Scotland. And those guys think they can make it alone … conflating Scotland with failure. Talk about preaching to the converted.

Darien stands out as a pathetic attempt by Scotland to follow England down the road of empire building and failing miserably. Watt relates this folly. His work is regarded as a useful interpretation of Darien albeit ploughing a pro-union furrow.

Darien regarded as singularly Scottish but it did set out as a joint Scottish/English venture until pressure from London put paid to that. London had no love for the Scots. The Scots with their traditional links with England’s perpetual enemy France was an irritation and as England’s armies depended so much on Scottish mercenaries to fight its wars with France tensions heightened to the extent that only union would resolve England’s problems. England had also been determined to stamp out Scottish trade. Darien provided it with a further opportunity to damage Scotland’s economy and it was an easy target.

‘…blame was also laid squarely at England’s door. English investment had been withdrawn from the original undertaking as a result of mercantile and political pressure from London’

The Scottish Nation 1700-2000 Tom Devine

In a review of Watt’s book, Neal Ascherson tells us that Scotland was always on a hiding to nothing when it came to rivalry with England but that Darien did not lead directly to the union some six years later but intensified anti-English feeling within Scotland.

That ‘the Union of Crowns was operated exclusively to England’s benefit and had become intolerable for Scotland’

Ascherson – LRB 3 Jan 2008 Vol 30 No1

While Ms Webb is brushing up on her history in search of examples of the impact of financial freefall and subsequent quantitative easing she may give a thought to that other Scottish matter –  independence. It is clear from the FT on 26 May that this issue has not yet reached a point of much interest to its readers which ties in nicely with our history lesson. It is not so much that post-Darien Scotland feels discriminated against by its more powerful neighbour rather it feels invisible to England. And that is a dangerous position for the continuation of the union.

‘hostile crowds rampaged through the streets of Edinburgh, had a great deal to do with Darien but little to do with any sense of national failure.’

Ascherson.

I’m not blaming Ms Webb. At least she is trying to get a better understanding of the issues as she puts it, ‘in advance of the independence debate heading up’. As I say she is referring to her circle in Englandshire. Here in Scotland this debate is already red-hot, although somewhat limited in scope.

The cash Webb refers to pouring into Scotland, £3980,000 (£55 million) was England ensuring a ‘yes vote’ for union by stuffing the pockets of disgruntled Darien investors. What is this in Webb’s world – bribery? corruption? And who was behind it? The English state. So what lessons should we be taking from these events? Not quite the pro-union interpretation of English money making good the losses of Scots investors suggesting beneficence on the part of the English state.

It was the payments, the payoffs which led in Webb’s words to ‘ a good row going on in Scotland for 300 years about whether it was the fault of the English or not.’ Clearly such corrupt practises have not troubled the ‘English’ conscience.

What England couldn’t do 500 years earlier through slaughter it succeeded through buying support for union. According to Ascherson around 15per cent of Scotland’s population were bought off in this way, happy to capitulate with the myth that England was helping out Scotland. In other words they put self-interest before the long-term benefit of their country.

How far will pro-unionist be prepared to go today to preserve the union? I am reminded of Westminster Labour government under Blair removing 6000 sq miles of Scottish water and claiming it as England’s in an action clearly arranged to damage a future independent Scotland’s economy. Such actions only increase support for independence within Scotland.

Darien and even Westminster’s theft of Scottish maritime boundaries was all a long time ago. Things change. Actually things don’t change that much. The hostility of ‘the people’ to the sale of their country as the price to be paid so that greedy speculators could have their losses reinstated has survived 300 years. We still have greedy speculators happy to sell off the family silver when their get-rich-quick schemes turn belly up. These free marketeers – but only up to a point Lord Copper – are more than happy to have state handouts whenever the market lets them down. Then they are all happy for state intervention and public cash bail outs.

With hindsight, and isn’t that a grand thing which many a banker and City investor would love to have, Darien wasn’t ever going to succeed. Perhaps Scots with money in their pockets and nowhere to invest it given England’s aggressive domination of Africa and the Indies imagined Central America was sufficiently far away as to succeed. However England’s influence ensured that no other country would trade with or even lend assistance to the Darien adventurers. That was not just protection of trade but the hounding and taming of a nation.

And what of the man behind Darien, the man who was responsible for such a gigantic loss of revenue from Scotland? He was none other than William Paterson who had earlier set up the Bank of England and it was his pal who was perhaps most to blame for the Darien catastrophe.

Nobody, it seems, thought of blaming Paterson. He had led a costly and fruitless ‘road-show’ to raise more capital in the Netherlands and Hamburg, in order to pay for the ships being built on the Continent. The failure was not his fault: Dutch financiers were initially attracted by the company’s duty-free privilege, but the English intervened. An official letter warned the Hamburg Senate that King William would regard any agreements with the Company of Scotland as an ‘affront’. Paterson and his delegation returned almost empty-handed.

Meanwhile, the directors had managed to slow the cash haemorrhage just before the company went broke. The first expedition sailed from the Forth in 1698. The five ships carried nearly 1300 settlers, including Paterson and his wife, and £19,000 worth of equipment and trade goods. (The legend that they took 4000 periwigs to sell to the natives is a slander; Watt has been through the cargo lists and found only 219 wigs.) The Darien colonists took with them a £70,000 debt to the company, which the directors assumed would be repaid by instalments from the colony’s profits. But there were no profits. The only sound investment the company ever made was in Edinburgh property: its own offices eventually fetched a good price.

Darien was a disaster. The local Tule people were friendly; the harbour looked safe; a Fort St Andrew was constructed at New Edinburgh. But insects, climate, flooding, disease and the threat of attack by Spanish troops from Panama were against the Scots. The settlers disembarked in October 1698, and by March 1699, starving and dying of fevers, they were demoralised. In April, England forbade its American and West Indian colonies to supply Darien. In June, the 900 survivors abandoned the place and set off for Jamaica or America. Hundreds more died on these voyages. Paterson, whose wife had died in Darien and who had almost perished himself, made it back to Scotland.

Ascherson

There are lots of stories relating to Darien. Many still taught in our schools are factually wrong. The propaganda has become truth and the truth has been tucked away out of sight.

Daniel MacKay, a colony councillor, wrote that ‘it is one of the fruitfullest spots of ground on the face of the Earth and best situat for trade.’ Captain Drummond, who commanded a ship in the first expedition, announced that the colony had only been abandoned because of the English trade ban: ‘the Climate was undoubtedly as wholesome as any in America.’ Lieutenant Loudon, another survivor, somehow felt able to insist that there were no mosquitoes or vermin at Darien. Paterson wrote a report on his return which blamed the English, the planners who had provisioned the ships, and the malcontents among the settlers, but never Darien itself, prized for ‘healthfullness, fruitfulness, and riches, above all other in the Indies’.

Ascherson

It appears that Paterson was a honey-tongued rogue who made a personal fortune out of Darien, through his share of the Equivalent payment, despite his having had no money invested in the scheme, but by 1714 he was such a good friend of England that they paid him anyway. There’s a nice symmetry to Paterson’s role, in receipt of an enormous handout for an investment he didn’t invest in and a bunch of incompetent bankers gambling with cash which did not belong to them being bailed out by Paterson’s Bank of England. Events are not so different today.

The lessons we can take form this episode may be that you cannot trust Scottish bankers with money. Or you have to scrutinise events a little harder to see what was really happening.

Ascherson makes interesting reference to Watt’s exploration of other Scottish failures, namely colonisation which reinforces the argument that the union became a progressive force for Scotland but as Ascherson argues Scotland operated through a different economic system and criticises Watt for omitting references to Poland in his book. Now as most Scots with any knowledge of Scottish history know Scotland’s greatest export was its people. Eastern Europe attracted them in their thousands. Polish towns commonly had thriving Scottish trading communities. .

It was this ‘Vistula’ pattern, not the grand joint-stock company, that reasserted itself after the Union and thrived within the British Empire and beyond it until the mid-20th century. Especially in Asia and Australia, Scottish capitalism in the Victorian age centred on ‘private partnerships’. These were, typically, small patriarchal outfits recruiting through recommendations by family and friends back in Scotland, lending money adventurously and ploughing profits back into the local economy – all traits visible in the 17th century Baltic settlements. But Darien, like its ‘American’ predecessors, turned its back on all this experience and pretended that Scotland could in a single leap achieve a conquest-based empire in the English, Spanish or Dutch style.

Ascherson

Scotland’s embryonic trade was not hurting England in any real sense. Scotland’s association with France potentially would have and this French connection alarmed and infuriated the British crown so when time came to decide on a successor to the heirless Queen Anne and the Scottish parliament attempted to force the English lift its actions against Scotland’s legitimate trade by threatening to reinstate a monarchy separate from England’s (then looking to Germany and to the House of Hanover) the London establishment decided it was time to absorb Scotland.

‘…the threat of the French war which finally moved Godolphin, Queen Anne’s Lord High Treasurer and Chief Minister, and Marlborough, her Captain-General, to opt for the union solution to the Scottish problem. Marlborough was concerned because so many of the crack troops for his armies were recruited from Scotland. Since the need to safeguard English national security was therefore paramount, only an ‘incorporating union’ which would both dissolve the Edinburgh parliament and create a new United Kingdom legislature, was ever acceptable to English negotiators. A federal solution, which might have perpetuated weak government, was never on offer.’

Devine p8

There appears to be huge ignorance in England about Scotland. Scots are commonly seen as sponging off the English taxpayers. When Scots aren’t being ridiculed they’re being overlooked. There is no rational debate about independence at the moment in the UK. There never will be any rational debate before 2014. There will only be claims and counter claims from the two sides. But why, given the hostility there is towards Scotland in England, do so many commentators get hot under the collar about Scotland resuming its independent state?

Join us in a union or else was the choice the Scottish parliament was given then …or else we will continue to do what we did with Darien and with all other attempts at trading abroad. Join us and you can trade freely, profits naturally accruing to the Great Britain treasury. The 1707 union was not born out of concern for Scotland’s welfare but from England’s aggressive policy of colonisation and political necessity. Scotland was quickly and still is the invisible partner in this unequal union.

Yes let us look back to Darien and the events leading to the union to see where we stand today but perhaps the lessons will not be those you assumed were there.