The Scottish Parliament of May-July 1695, held while William was abroad, saw the beginning of evils for Scotland.  The affair of Glencoe was examined into by a Commission, headed by Tweeddale, William’s Commissioner:  several Judges sat in it.  Their report cleared William himself:  Dalrymple, it was found, had “exceeded his instructions.”  Hill was exonerated.  Hamilton, who commanded the detachment that arrived too late, fled the country.  William was asked to send home for trial Duncanson and other butchers who were with his army.  The king was also invited to deal with Dalrymple as he thought fit.  He thought fit to give Dalrymple an indemnity, and made him Viscount Stair, with a grant of money, but did not retain him in office.  He did not send the subaltern butchers home for trial.  Many years later, in 1745, the MacIans insisted on acting as guards of the house and family of the descendant of Campbell of Glenlyon, the guest and murderer of the chief of Glencoe.

Perhaps by way of a sop to the Scots, William allowed an Act for the Establishment of a Scottish East India Company to be passed on June 20, 1695.  He afterwards protested that in this matter he had been “badly served,” probably meaning “misinformed.”  The result was the Darien Expedition, a great financial disaster for Scotland, and a terrible grievance.  Hitherto since the Union of the Crowns all Scottish efforts to found trading companies, as in England, had been wrecked on English jealousy:  there had always been, and to this new East India Company there was, a rival, a pre-existing English company.  Scottish Acts for protection of home industries were met by English retaliation in a war of tariffs.  Scotland had prohibited the exportation of her raw materials, such as wool, but was cut off from English and other foreign markets for her cloths.  The Scots were more successful in secret and unlegalised trading with their kinsmen in the American colonies.

The Scottish East India Company’s aim was to sell Scottish goods in many places, India for example; and it was secretly meant to found a factory and central mart on the isthmus of Panama.  For these ends capital was withdrawn from the new and unsuccessful manufacturing companies.  The great scheme was the idea of William Paterson (born 1658), the far-travelled and financially-speculative son of a farmer in Dumfriesshire.  He was the “projector,” or one of the projectors, of the Bank of England of 1694, investing 2000 pounds.  He kept the Darien part of his scheme for an East India Company in the background, and it seems that William, when he granted a patent to that company, knew nothing of this design to settle in or near the Panama isthmus, which was quite clearly within the Spanish sphere of influence.  When the philosopher John Locke heard of the scheme, he wished England to steal the idea and seize a port in Darien:  it thus appears that he too was unaware that to do so was to inflict an insult and injury on Spain.  There is reason to suppose that the grant of the patent to the East India Company was obtained by bribing some Scottish politician or politicians unnamed, though one name is not beyond probable conjecture.