The Darien Scheme: How Scotland Lost Everything

The Scots invented almost everything. But when they miscalculated, they did so on a grand scale. On this day, July 12, in 1698, a Scottish fleet set sail for the Isthmus of Darien in Panama. It was one of the most disastrous investment ventures ever launched.

The Darien Scheme was born of desperation. Scotland had endured decades of political turmoil followed by famine and the effects of a little ice age. As a last, bet-the-farm hope, the Company of Scotland was formed, funded with about 20-25 percent of all the money Scots possessed.  Its goal: transform Scotland into a great trading nation like England or Spain.

Scotland didn't merely aim to join those countries in making settlements in the New World. The Scots thought bigger. They intended to create a colony, Caledonia, that would straddle Panama, linking the Atlantic and the Pacific and becoming a global trading hub.

The Darien Scheme was a disaster. The site could not support settlers. Disease was rampant, the neighbors were unfriendly and both the English and the Spanish resisted the Scots effort to become a trading nation.Within a year the colony was abandoned. Soon after, in 1707, the Kingdom of Scotland agreed to unite with England and ceased to be an independent nation.

Today the site of Caledonia remains virtually uninhabited. Only a name on the map, "Puerto Escoces" ("Scottish Port") remains to commemorate one of the world's all-time worst investments.