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 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;, 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 ), 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.

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 (, 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