Dictionary of National Biography, 1885-1900/Paterson, William (1658-1715)
PATERSON, WILLIAM (1658–1719), founder of the Bank of England, son of John Paterson of Skipmyre, in the old parish of Trailflatt now merged in that of Tinwald, Dumfriesshire, by his wife Elizabeth (Bethia), was born there in April 1658. The farmhouse where he was born was pulled down in 1864. The story that ‘he came from Scotland in his younger years, with a pack on his back,’ and ‘having travell'd this country for some years,’ became first a missionary and then a buccaneer in the West Indies, is not supported by evidence of any value (A Defence of the Scots abdicating Darien, 1700, pp. 2, 3; cf. Caledonia, or the Pedlar turn'd Merchant; Laing, Fugitive Pieces of Scottish Poetry, 2nd ser.) He was ‘bred in England from his infancy’ (Clerk of Penicuik's Memoirs, p. 61), and lived for some time at Bristol with a kinswoman of his mother, from whom he is said to have received a legacy. Until the revolution of 1688 he ‘had experience abroad and at home in matters of general trade and revenues’ (Paterson's ‘Memorial to George I,’ dated 8 March 1714–15 quoted by Bannister), going for several years ‘in person’ to the West Indies, where his reputation was so great that at the time of the Darien expedition it was said that ‘wherever he should be settled, thither the people would throng from all the plantations to join him.’ He also formed connections with New England. He became a member of the Merchant Taylors' Company by redemption on 16 Nov. 1681, and was admitted to the livery on 21 Oct. 1689. In 1688 he took part with those who were planning the revolution, being ‘much in the coffee-houses of Amsterdam’ at this time (Bannister).
By 1691 he had acquired great influence in the city and a considerable fortune. In July and August of that year, he, with Michael Godfrey and other merchants, proposed to the government the foundation of the Bank of England, pointing out at the same time the necessity of restoring the currency. Of the whole scheme Paterson was ‘chief projector.’ But, in spite of repeated applications to the government, nothing was done for three years. In January 1692 Paterson was the principal witness before the parliamentary committee appointed to receive proposals for raising supplies. He conducted the negotiations between the government and the merchants who signed the proposals, and stated that ‘himself and some others might come up to advance 500,000l.’ (Journals of the House of Commons, x. 631, 632). On the foundation of the bank in 1694 he became a director, with a qualification of 2,000l. But the bank realised his wishes ‘but lamely … and far from the extensive nature and other publick advantages concerted in the proposition’ (An Enquiry … By the Wednesday's Club in Friday Street, 1717, p. 68). In 1695, on a difference with his colleagues, when he was outvoted, he sold out and voluntarily withdrew from the directorate. On 12 Feb. of that year he made proposals for the consolidation of the City of London orphan fund which were not accepted. He had 4,000l. invested in the fund, which was ‘of very great moment to him’ (A State of Mr. Paterson's Claim upon the Equivalent). He also took part in the Hampstead Water Company, a scheme for supplying north London with water from reservoirs south of the Hampstead and Highgate hills, and in December 1693 the city granted him a license to lay pipes for supplying water to the inhabitants of Southwark (Sharpe, London and the Kingdom, ii. 582). At this time he had a house in the parish of St. Giles-in-the-fields.
Meanwhile Paterson had matured his scheme, first formed in 1684, for the foundation of a colony in Darien. Originally intending to start a company differing in its constitution from any of the existing English trading companies, he had made overtures to the elector of Brandenburg and the cities of Embden and Bremen. In 1695 he went to Scotland, where Andrew Fletcher [q. v.] of Saltoun introduced him to members of the administration, and his scheme was eagerly taken up. Paterson himself framed the first draft of the act establishing the Scottish Africa and India Company (26 June 1695). He raised 300,000l., the maximum fixed for any one subscription in England, and 400,000l. in Scotland, besides obtaining subscriptions from abroad; he himself subscribed 3,000l. But pressure by Spain, France, and Holland compelled the English government to publicly withdraw their support; the English subscriptions had to be abandoned, and an impeachment on a technical point of infringement of the act of 1695 was commenced, but afterwards dropped, against Paterson and twenty-two members of the company. Paterson had engaged in the company's service on the promise (6 Nov. 1695) of receiving 12,000l. in ready money and three per cent. of the profits for twenty-one years, or an additional 12,000l. He now gave up his business in London, which was ‘considerable,’ and ‘growing upon him daily,’ and devoted himself entirely to the company's interests, on the promise of 30,000l. But a resolution of the directors (6 Oct. 1696), which granted him only one fourth of the stipulated sum, does not appear to have been confirmed by the general council of the company. Paterson was one of four directors sent abroad in 1696 to settle the Hamburg subscriptions. In the following year he and two others were commissioned to purchase stores for the expedition with a sum of 25,000l. The agent employed by him to conduct the financial operation made off with the money, and, though part of it was recovered and Paterson himself paid 6,000l. out of his own resources, a sum of more than 8,000l. was lost. Paterson thereupon offered to leave the company altogether, or to go out in the service of the directors, appropriating a large portion of his salary for their benefit. But his offer was not accepted. He accompanied the expedition in 1698; but as the management was entrusted to seven councillors, who quarrelled amongst themselves, he had little influence on the conduct of affairs. He was seriously ill in Darien, and on the voyage to New York after the colony was abandoned. ‘Trouble of mind’ deprived him temporarily of his reason. He returned to Edinburgh on 5 Dec. 1699, and drew up a report, dated the 19th, to the directors of the company, who appointed a committee to confer with him. Far from abandoning his design, he tried repeatedly to revive it in a form which would enlist the support of England.
On his arrival in London Paterson was kindly received by William III (April 1701), with whom he had frequent private conferences on public credit and state affairs, and at whose request he put his proposals into writing. Paterson suggested (1) the provision of interest for the existing national debts; (2) the regulation of the treasury and the exchequer, so as to leave no room for fraud; (3) strict inquiry from time to time into the conduct of all concerned in the revenue; (4) a commission of inquiry into the state and the management of the national debt; (5) a West India expedition, on the ground that ‘to secure the Spanish monarchy from France … it was more practicable to make Spain and the other dominions in Europe follow the fate of the West Indies, than to make the West Indies, if once in the power of France, follow the fate of Spain;’ (6) union with Scotland, than which, he convinced William, ‘nothing could tend more … to render this island great and considerable’ (Paterson's letter to Godolphin, 12 Dec. 1709; An Enquiry … By the Wednesday's Club in Friday Street, 1717, p. 84). After the death of William III he renewed his proposals, with the addition of others, to Godolphin, at the request of that minister. From this time until his death Paterson was frequently consulted by ministers, and employed by them to devise means of raising public supplies. From 1701 he urged upon the government the financial measures which became the basis of ‘Walpole's Sinking Fund’ and the great scheme of 1717 for the consolidation and conversion of the national debt. In 1703 he proposed, if indeed he did not actually establish, a public library of commerce and finance, for ‘to this necessary and it's hoped now rising study of trade there is requisite not only as complete a collection as possible of all books, pamphlets, and schemes relating to trade … ancient or modern, but likewise of the best histories, voyages, and accounts of the states, laws, and customs of countries, that from them it may be more clearly … understood how … wars, conquests … plenty, want, good or bad management, or influence of government … have more immediately affected the rise and decline of the industry of a people’ (‘A Catalogue of Books … collected by William Paterson, Esq.,’ Harl. MS. 4684, Brit. Mus.) In 1705 he engaged in a controversy with John Law (1671–1729) [q. v.], and prevented the adoption of an inconvertible paper currency in Scotland.
Paterson not only published an able pamphlet in favour of the union of England and Scotland, but he had a ‘great share’ in framing the articles of the treaty relating to trade and finance. He was also employed, with Bower and Gregory, in the calculation of the equivalent, for which he received 200l. He went to Scotland in 1706, and remained there until the end of the negotiations, waiting upon ministers, explaining the treaty, and smoothing away difficulties. One of the last acts of the Scottish parliament (25 March 1707) was to recommend him to Queen Anne ‘for his good service’ (Defoe, History of the Union, p. 525). Though the people of Dumfries had suffered much from the failure of the Darien scheme, and had been violently opposed to the union, they returned Paterson, with William Johnstoun, to the first united parliament. But the house decided that it was a double return, and Paterson was unseated (Luttrell, Brief Relation, vi. 378). In the accounts of the Scottish Africa Company's debt to be provided for out of the equivalent, Paterson's claims had been omitted. He repeatedly urged his claims, without success. In 1713 the commons reported in his favour, and passed a bill, which was thrown out by the lords, appropriating to him the sum of 18,000l. He did not receive the money until 1715, when a bill, supported by the king, was passed without opposition. From 1703 until his death he resided in Queen Square, Westminster, where he was one of the higher ratepayers. He appears to have been in reduced circumstances until he received the Darien indemnity, and is said to have taught mathematics and navigation. He was paid, however, small sums for services in the management of the South Sea Company, and he retained an interest in the Hampstead Water Company. He died in January 1719. His will was proved at Doctors' Commons on 22 Jan. 1719 (O.S.) Paterson married, first, Elizabeth Turner, widow of Thomas Bridge, minister of the gospel in Boston, New England (she died before his return to England); secondly, Hannah Kemp, widow of Samuel South, by whom he had one son. His second wife and child died in Darien. By his will, signed at Westminster on 1 July 1718, and certified on 3 July at the Ship Tavern, Without Temple Bar, he left legacies to his step-children, the children of his sister Janet Mounsey, and to his sister Elizabeth, who married John Paterson the younger of Kinharvey. The legacies to his Scottish relatives were never paid, as the ‘just debts’ he was forced to contract in connection with his various schemes absorbed all his estate.
Paterson published anonymously:
- ‘Conferences on the Public Debts. By the Wednesday's Club in Friday Street,’ London, 1695, 4to.
- ‘A Letter to a Member of the late Parliament, concerning the Debts of the Nation,’ London, 1701.
- ‘Proposals and Reasons for constituting a Council of Trade,’ Edinburgh, 1701, 12mo.
- ‘England's great Concern, in the perpetual settlement of a Commission of Accounts. … With a discovery of some notable frauds committed in collecting the supplies,’ London, 1702, 4to.
- ‘The Occasion of Scotland's Decay in Trade, with a proper expedient for recovery thereof, and the increasing our Wealth,’ 1705.
- ‘An Essay, concerning Inland and Foreign, Publick and Private Trade; together with some overtures how a company or national trade may be constituted in Scotland, with the advantages which will result therefrom,’ 1705. The last two pamphlets were written in reply to ‘Two Overtures humbly offered to … John, Duke of Argyle [by John Law].’
- ‘An Enquiry into the Reasonableness and Consequences of an Union with Scotland. … By Lewis Medway. With observations thereupon, as communicated to Lawrence Phillips, Esq., near York,’ London, 1706, 8vo.
- ‘An Enquiry into the State of the Union of Great Britain and the Past and Present State of the Trade and Public Revenues thereof,’ London, 1717, 8vo. Written, it is said, at Walpole's request.
Bannister also printed and published Paterson's memorial to William III (1 Jan. 1701), and his proposal for settling on the isthmus of Darien, releasing the natives from the tyranny of Spain, and throwing open the trade of South America to all nations, 1701 (Addit. MS. 12437, Brit. Mus.), with the title, ‘Central America,’ London, 8vo, 1857; reprinted, with some of Paterson's other works, in Bannister's ‘Life and Writings of Paterson,’ 1859.
The only known portrait of Paterson is the pen-and-ink wash-drawing in the British Museum (ib. 10403, f. i b), executed in 1708, the date of the transcription of ‘Two Treatises relating to the Union … by William Paterson, Esq.,’ to which it is prefixed.
[Notes kindly supplied by Archibald Constable, esq.; authorities quoted, and Bannister's Life and Writings of Paterson; Carstares' State Papers, pp. 584, 635, 645, 655; Burnet's History of his own Time; Clerk of Penicuik's Memoirs (Scottish Hist. Soc.), xviii. 61; Darien Papers (Bannatyne Club); Hist. MSS. Comm. 11th Rep. App. v. p. 304; Boyer's Political State, 1711, p. 470; Dalrymple's Memoirs of Great Britain and Ireland, vol. ii. pt. iii. pp. 89–123; Laing's History of Scotland, iv. 249 sqq.; Sinclair's Statistical Account of Scotland; Scott's Tales of a Grandfather (ed. Cadell, 1846), chap. lix.; Chambers's Domestic Annals of Scotland, iii. 121, 124, 131; Chambers's Biogr. Dict. ed. Thomson, iii. 231–7; Macpherson's Annals of Commerce, ii. 657 sqq.; Macaulay's Hist. of England, 1862, 8vo, vii. 123, viii. 196 sqq.; Pagan's Birthplace and Parentage of William Paterson; Burton's Scot Abroad, ii. 278 sqq.; McDowall's Hist. of Dumfries, pp. 532–6; McKerlie's Lands and their Owners in Galloway, iii. 72, 280; McCulloch's Literature of Political Economy, p. 159; Lawson's History of Banking, pp. 67, 396–9; Francis's Hist. of the Bank of England, i. 44, 60, 71; Martin's Stories of Banks and Bankers, pp. 12–19; Rogers's First Nine Years of the Bank of England, pp. 2, 22, 148. Paterson is the hero of Eliot Warburton's novel Darien, or the Merchant Prince, an historical romance, London, 1852; and to Paterson is dedicated Paul Coq's treatise La Monnaie de Banque ou l'espèce et le portefeuille, Paris, 1863, to which is prefixed a memoir, in which full justice is done to Paterson's supreme business talents.]