PATERSON, WILLIAM (1658-1719), British writer on finance, founder of the Bank of England and projector of the Darien scheme, was born in April 1658, at Tinwald, Dumfries shire. A desire to escape the religious persecution then raging in Scotland, led him southward, and of ter settling for some time in Bristol, he travelled to America where he lived chiefly in the Bahamas. It was here he formed the vast design known as the Darien scheme. On his return to England he was unable to induce the Government of James II. to engage in his plan. He went to the Continent and pressed it to no purpose in Hamburg, Amster dam and Berlin, and on his return to London he engaged in trade and rapidly amassed a considerable fortune. About 1690 he was occupied in the formation of the Hampstead Water company, and in 1694 he founded the Bank of England. The Government re quired money, and the country, rapidly increasing in wealth, re quired a bank. The subscribers lent their money to the nation, and this debt became the bank stock. The credit of having formu lated the scheme and persuaded its adoption is due to Paterson. He was one of the original directors, but in less than a year he fell out with his colleagues, and withdrew from the management. He had already propounded a new plan for an orphan bank (so called because the debt due to the city orphans by the corporation of London was to form the stock). But the subscribers to the Bank of England feared a rival to their own undertaking.
Paterson then went to Edinburgh, where he propounded the Darien (q.v.) scheme to his countrymen who wete desirous of sharing in England's foreign trade. He is the supposed author of the Act of 1695 which formed the "Company of Scotland trading to Africa and the Indies." This company, he arranged, should establish a settlement on the Isthmus of Darien, and "thus hold the key of the commerce of the world." There was to be free trade, the ships of all nations were to find shelter in this harbour not yet erected, differences of race or religion were neglected; but a small tribute was to be paid to the company, and this and other advantages would so act that Scotland would become one of the richest of nations.
On July 26, 1698, the first ships of the expedition set sail "amidst the tears and prayers and praises of relatives and friends and countrymen." Some financial transactions in which Paterson was concerned, and in which, though he had acted with perfect honesty, the company had lost, prevented his nomination to a post of importance. He accompanied the expedition as a private individual, and was obliged to look on whilst his "golden dream" faded away before his eyes. His wife and child died, and he was seized with a dangerous illness. It was noted that "he bath been so mightily concerned in this sad disaster, so that he looks now more like a skeleton than a man." Still weak and helpless, and yet protesting to the last against the abandonment of Darien, he was carried on board ship, and, after a stormy voyage, he and the remnant of the ill-fated band reached home in Dec. 1699.
In his native air Paterson quickly recovered his strength, and his fertile mind was soon at work on new schemes. He prepared an elaborate plan for developing Scottish resources by means of a council of trade, and tried to induce King William to enter on a new Darien expedition. In 1701 he removed to London, and here by conferences with statesmen, by writing, and by personal persuasion helped on the union. He was much employed in settling the financial relations of the two countries. One of the last acts of the Scots parliament was to recommend him to the consideration of Queen Anne. The United Parliament, to which be was returned as a member for the Dumfries burghs, though he never took his seat, decided that his claim should be settled, but it was not till 1715 that an indemnity of L18,241 was ordered to be paid him. His last years were spent in Queen square, West minster, but he removed from there shortly before his death on Jan. 22, 1719.