Many Scotsmen Had Been Drawn into the Scheme of William Paterson, Founder of the Bank of England, for Colonizing the Isthmus of Darien (Panama); It Failed Miserably and Created the Utmost Distress in Scotland

In the summer of 1700 John Law returned to his native land of Scotland, where he found a condition of affairs in which he thought to develop his growing financial ideas. In Scotland, as in England and throughout Europe, a spirit of gambling and speculation had been induced by the uncertainties of a long war, by the disturbances to trade which made some wealthy overnight and reduced others to poverty, by the inflated demand for war materials, by the depreciation of the currency that had been practiced not alone in France but elsewhere, by the sudden rise of banks, and by the discovery of the joint-stock mechanism.

A great many Scotsmen had been drawn into the scheme of William Paterson, founder of the Bank of England, for colonizing the Isthmus of Darien. This scheme was the Scottish Company of Africa and India. It had failed miserably and had created the utmost distress in Scotland, where the shares had been avidly taken up. Paper money issued by the company and profusely distributed in competition with bills of the Bank of Scotland had impaired the position of the bank. Conditions were heartbreaking. Manufacturers were no longer exporting their goods; land rents were not being paid; money was leaving the country; and two hundred thousand poor were crying out for bread.

--Elgin Groseclose, Money and Man: A Survey of Monetary Experience, 4th ed. (Norman: University of Oklahoma Press, 1976), 122-123.