On 17th July 1698, five ships set sail from the port of Leith. They were carrying 1,200 settlers embarking on the most audacious overseas adventure ever mounted north of the border. When they made landfall at Darién in Central America four months later, the settlers christened their new home "Caledonia" and the settlements; "New Edinburgh" and "Fort St Andrews". The Scottish Empire was born.

The Darién Project was the brainchild of William Paterson, the Scottish founder of the Bank of England. Paterson imagined Darién as a haven of Free Trade for merchants of all lands. He saw the colony, situated on the isthmus of Panama, as the "door of the Seas and Key of the Universe". He that controlled it, he believed, would become "the arbitrator of the Commercial world". Paterson was anticipating the Panama Canal by almost 200 years, but, despite such high ideals, Darién was the child of necessity.

Scotland in the late 17th century was in crisis. The Union of the English and Scottish Crowns of 1603 had brought little benefit to the Scots. James I had promised a "joyfull marriage", but the fruits of the union were meagre. After failed attempts to forge a more tangible economic relationship with England, a peculiar form of Scottish "colonialism" had evolved. Though under the English flag, colonies mainly inhabited by Scottish settlers had been established in New Jersey, and at Stuart's Town in South Carolina. Scottish merchants were also key players in trade with the Americas. Darién was no aberration therefore; it was part of a concerted effort at Scottish economic expansion.

Situated in eastern Panama, Darién is a hot, humid area of tropical rain forest, situated to the west of the river Darién. At the river's mouth, a headland forms a natural harbour sheltered from all but the worst Caribbean storms. The region had first been reached by Europeans in 1501 and had been seen by Columbus on his last voyage two years later. In 1510 the Spanish settlement of Santa Maria de la Antigua del Darién, was established. It was from there that the colony's governor, Vasco Nuñez de Balboa, led an expedition across the isthmus to discover the "South Sea" - the Pacific - in 1513. Though the colony was apparently abandoned soon after, it remained, in Spanish eyes at least, an integral part of "New Granada".

Despite the Spanish failure, the Scottish Darién began with high hopes. Public subscriptions had raised £400.000, thought to be half of Scotland's available capital. English opposition had spurred popular interest in the scheme, and the promise of 50 acres of land per man had attracted a throng of would-be settlers, many of them Highlanders in search of a new life. When the fleet departed, the hopes of all Scotland sailed with it.

At the start, some settlers gave glowing reports of the colony as "the best and surest Mart in all America". Yet, the expedition would be dogged throughout by misfortune and maladministration. Its planners held grave misconceptions about the climate of the region. They had interviewed only one man who had actually visited Darién, one Lionel Wafer, and they had chosen to ignore his description of it as "a very wet country". They had also overestimated the prospects for agriculture - European-style farming was impossible in the tropics, as cleared land was overgrown in days. Moreover, the prospects for trade were also hamstrung. No supply network had been agreed for the colony, and the natives, though not hostile, had little interest in purchasing European luxuries and bibles. The planners also discovered that they had only 3 months of rations - half of the projected store, and only half of the £400,000 pledged had actually been paid. Their bickering soon began to poison the colony's administration. The Highlanders and Lowlanders fought and the clerics and merchants squabbled.

As if to compound such difficulties, the English adopted a hostile stance. King William had already distanced himself from the scheme in 1695. His English merchants were unsettled by the prospect of a Scottish success, and had persuaded him to declare himself "ill-served in Scotland". More importantly, he was fearful of Spanish displeasure, and was reluctant for his kingdom of England to pay the price for the adventures of his Scottish subjects. The result was a proclamation, in January 1699, from the English Governor of Jamaica: "His Majesty's subjects…are not to hold any correspondence with the Scots, nor to give them any assistance of arms, ammunition, provisions or any other necessaries." Darién was to be left to its fate.

Soon, disease and starvation were threatening anarchy. Of the 1,200 colonists, one third succumbed to yellow fever, dysentery and malaria, including Paterson's wife, child and servant. One colonist confided to his diary that: "the Air is abominable and the Water Poyson". The "key to the Universe" had become the doorway to hell. In June 1699, a little over six months after their arrival, the surviving settlers abandoned Darién and boarded their ships for home. Only one of the fleet was to complete the voyage. Its captain, Robert Drummond, noted: "I am not capable of writing of the miserable conditions we have undergone".

Back in Scotland, meanwhile, no definite word had been received of the colony, so two relief ships set out, in May 1699, with an additional 300 settlers. By their arrival that July, half of the new settlers were already dead of fever, the remainder found Darién deserted. After attempting in vain to rebuild the settlement, they set sail for the nearest English colony - Jamaica. Though they landed safely, most of them were to die there of fever.

Although news of the misfortune of the initial expedition had begun to seep back to Scotland, a third and final expedition sailed from Leith in September 1699. The largest of the three, with four ships and 1,300 settlers and supplies, it reached Darién on St. Andrew's Day. Like their predecessors, the colonists found the site abandoned - "a vast howling wilderness" in the words of one - and elected to resettle it. Some preferred to cut their losses and set sail for Jamaica.

By the following spring, the Spanish grip on the area had begun to tighten. The remaining Scottish settlers sought vainly to resist, scoring a minor victory at the battle of Tubacanti in February 1700. But they were soon forced to embark once again for home. In keeping with the two previous expeditions, the return voyage was disastrous. The Rising Sun lost some 350 of its passengers to disease before being wrecked off Jamaica and losing the remaining 112. The Duke of Hamilton was lost in the same storm. The Hope was lost with all hands off Cuba and the Hope of Bo'ness was forced to limp to Cartagena (in modern Colombia) where she was sold as scrap to the Spanish. Only 300 settlers survived.

Scotland's "Empire", upon which the hopes of the nation had rested, ended in ignominy. It had cost the lives of some 2,000 Scots and consumed all of the funds invested. Of the 11 ships that left Scotland, only one, the Caledonia, ever returned to Scottish shores. Of the 2,800 settlers that departed, few survived - scattered across the Caribbean either in English service or Spanish captivity. Those that returned to Scotland were fewer still. Paterson, however, was amongst them. Despite returning penniless and physically broken, he was undaunted and pressed for colonisation of the Caribbean for the remainder of his life.

Predictably perhaps, despite financial shortage, chronic administrative malaise and Spanish hostility, the principal cause of the disaster was popularly held to be English opposition. When news of the failure of Darién reached Scotland there was widespread anti-English rioting in Edinburgh and Glasgow. The King noted that the Scots were "like raging madmen". His Scottish parliament passed three resolutions condemning English interference as: "inhumane, barbarous and contrary to the Law of Nations."

Given its role as a catalyst for such a wave of anti-English sentiment in Scotland, it is peculiar that the Darién adventure should ultimately have served to hasten the eventual union of the two countries in 1707. But, it brought into sharp focus the fundamental impossibility of two nations and two parliaments competing under one crown. Union was the logical solution. In England, fears of the economic implications of such a move were outweighed by concerns about the consequences of Scotland's continued independence. For the Scots, the realisation dawned that they could not hope to prosper as a nation unless they could gain access to England's greater trading sphere and capital. Darién therefore represents a seminal point in Anglo-Scottish relations, when the failure of the Scottish "Empire" contributed directly to the subsequent cession of Scottish independence and the emergence of "Great Britain".

Though Darién reverted to Spanish rule in 1700, a straight line can be drawn from the Scottish adventure there to the Union of England and Scotland of 1707, and, from that, to the British Empire. That Empire was to give ample scope to the Scots, and others, to realise their potential as colonists, administrators, explorers and soldiers. Though they doubtless would not have welcomed the accolade, the unfortunate Scottish settlers of Darién were, after all, to be contributors to the greatest Imperial experiment that the world has ever seen.