The Company of Scotland Trading to Africa and the Indies, also called the Scottish Darien Company, was an overseas trading company created by an act of the Parliament of Scotland in 1695. The act granted the company a monopoly of Scottish trade to India, Africa and the Americas, extraordinary sovereign rights[1]: 25 and 21 years of exemptions from taxation.[2]: 100
Financial and political troubles plagued its early years. The court of directors was divided between those residing and meeting in Edinburgh and those in London, amongst whom were both Scots and English.[1]: 26 They were also divided by business intentions; some intended to trade in India and on the African coast, as an effective competitor to the English East India Company, while others were drawn to William Paterson's Darien scheme, which ultimately prevailed.[2]: 111–2
In July 1698 the company launched its first expedition, led by Paterson, who hoped to establish a colony in Darien (on the Isthmus of Panama), which could then be used as a trading point between Europe and the Far East. Though five ships and 1,200 Scottish colonists landed successfully in Darien, the settlement was poorly provisioned and eventually abandoned.[1]: 28 A second, larger expedition (launched before the fate of the first was known) took up the deserted settlement, but was quickly besieged by the Spanish. More than a thousand succumbed to hunger and disease, and in April 1700, two ships carried the few survivors home.
In 1700–01 the Company sent further expeditions to Java and China, but suffered shipwrecks at Malacca and seizure of cargo by pirates at Madagascar.[1]: 29
On 26 June 1695 the Parliament of Scotland passed the Company of Scotland Act 1695 (c. 10), Act for a Company Tradeing to Affrica and the Indies, establishing the Company of Scotland trading to Africa and the Indies. The subscription book of the Company of Scotland was opened in Edinburgh on 26 February 1696, inviting investments from a minimum of £100 up to a maximum of £3,000. Such was the popularity of the scheme that on the first day alone 69 subscriptions were taken, worth £50,400. A second book was open in Glasgow between 5 March and 22 April. Although attempts to raise funds in London, Hamburg[2]: 109 and Amsterdam had been blocked, by the beginning of August 1696 the full target of £400,000 sterling had been reached.[1]: 28
When the Company of Scotland was first formed, it was managed by its promoters, whose key task was to encourage subscriptions to the company. Once the subscription target of £400,000 sterling had been reached, however, the company required a more formal management structure. On 3 April 1696 a general meeting of subscribers elected a committee of twenty from their number to work with the promoters to establish rules and a constitution. By the middle of the month they had agreed that the company would be managed by a court of directors and a council general. The court of directors was to be an elected body with a maximum of fifty members, with each £1,000 of stock entitling its holder to one vote in the election. Twenty-five members would be elected by the subscribers, with up to a further twenty-five being elected by the first twenty-five. Subscribers with a holding of £1,000 or more could stand for election. A different director was to act as president of the court at each meeting. The first court of twenty-five directors was elected by shareholders on 12 May 1696. Candidates for election had to own at least £1,000 of company stock and so a limited number of shareholders, 119 out of a total of 1,320 (1,267 individuals and 53 institutions), were eligible to become directors. The court's directors came from across Scotland's wealthy classes, comprising two nobles, eight merchants and 15 lairds. Shortly afterwards, the first twenty-five directors appointed William Paterson and three others as additional directors. From July 1696 the court of directors met in the company's offices in Mylne Square on Edinburgh's High Street.
The council general was to be a larger body than the court of directors, comprising both the directors themselves and representatives of the remaining subscribers, with one representative for each £10,000 of stock. Whilst the court of directors was responsible for the day-to-day running of the company, the council general was convened to discuss major decisions, such as capital-raising, the election of future directors and the payment of dividends. The council general was only convened as and when there were matters to discuss, and therefore meetings were not held at regular intervals.
All told, the venture, dubbed the Darien Scheme,[3] drained Scotland of an estimated quarter of its liquid assets and played a key role in forcing the country to the 1707 Act of Union which united the Kingdoms of Scotland and England. By 1707, the company's debt was over £14,000 (equivalent to £2,975,459 in 2023).[2]: 101
The new joint government, in a political bargain, agreed to cover the costs of winding up the Company of Scotland, in addition to compensate for servicing the English national debt and higher taxes for Scotland.[4]
Note:[5]
All were Scots by birth except John Smith, who was Lord of the Treasury for the English parliament.
