London Company - History

History

Wealthy merchants, eager to find investment opportunities, established a number of companies set up to trade in various parts of the world. Each company, made up of individuals who purchased shares of company stock, was given by the Crown a monopoly to explore, trade or settle a particular region of the world. Profits were shared among the investors according to the amount of stock they owned. Between 1575 and 1630, more than 6,300 Englishmen and women invested in joint stock companies trading with Russia, Turkey, Africa, the East Indies, the Mediterranean and America.

Investors in the Virginia Company hoped to profit from the wealth of the New World. In 1606 King James I granted the Company organizers exclusive rights to settle in Virginia. A charter granted land to two branches of the Company—the London branch was to settle a colony near the Chesapeake Bay, while the Plymouth branch was granted land in the New England area. The Company paid all the costs of establishing each colony, and in return controlled all land and resources there and required everyone to work for the Company. The first leader of the Virginia Company in England was its treasurer, Sir Thomas Smythe. Investors, called “adventurers,” purchased shares of stock to help finance the costs of establishing overseas settlements. Money from the sale of stock was used to pay for ships and supplies and to recruit and outfit laborers. A single share of stock in the Virginia Company costed 12 pounds 10 shillings, the equivalent of over six month’s wages for an ordinary working man.

In an extensive publicity campaign, the Company founders among whom were Edward Maria Wingfield, Bartholomew Gosnold and few others circulated pamphlets, plays, sermons and broadsides throughout England to raise interest in New World investments. Shareholders could buy stock individually or in groups. Almost 1700 people purchased shares, including men of different occupations and classes, wealthy women, and representatives of institutions such as trade guilds, towns and cities.

The largest single investor was Thomas West, Lord de la Warre, who served as the first governor of Virginia between 1610 and 1618.

The business of the company was the settlement of the Virginia colony using, as the labor force, voluntary transportees under the customary indenture system whereby in exchange for seven years of labor for the company, the company provided passage, food, protection and land ownership.

In December 1606, the Virginia Company's three ships, containing 144 men and boys (with only one man dying during the voyage), set sail from Blackwall, London. After an unusually long voyage of 144 days, they made landfall on April 26, 1607 at the southern edge of the mouth of the Chesapeake Bay, which they named Cape Henry. At the bay, they were attacked by Native Americans who pushed the settlers North. On May 14, 1607, these first settlers selected the site of Jamestown Island as the place to build their fort.

In addition to survival, the early colonists had another pressing mission: to make a profit for the owners of the Virginia Company. Although the settlers were disappointed that gold did not wash up on the beach and gems did not grow in the trees, they realized there was great potential for wealth of other kinds in their new home. Early industries, such as glass manufacture, pitch and tar production and beer and wine making took advantage of natural resources and the land's fertility. From the outset it was thought that the abundance of timber would be the primary leg of the economy, as Britain's forests had long been felled. The seemingly inexhaustible supply of cheap American timber was to be the primary enabler of England's (and then Britain's) rise to maritime (merchant and naval) supremacy. However, the settlers could not devote as much time as the Virginia Company would have liked to their financial responsibilities. They were too busy trying to survive.

Within the three-sided fort erected on the banks of the James, the settlers quickly discovered that they were, first and foremost, employees of the Virginia Company of London, following instructions of the men appointed by the Company to rule them. In exchange, the laborers were armed and received clothes and food from the common store. After seven years, they were to receive land of their own. The gentlemen, who provided their own armor and weapons, were to be paid in land, dividends or additional shares of stock.

Initially, the colonists were governed by a president and seven-member council selected by the King. Leadership problems quickly erupted and Jamestown's first two leaders coped with varying degrees of success with sickness, Indian assaults, poor food and water supplies and class strife.

When Captain John Smith became Virginia's third president, he proved the strong leader that the colony needed. Industry flourished and relations with Chief Powhatan's people improved. In 1609, the Virginia Company received its Second Charter, which allowed the Company to choose its new governor from amongst its shareholders. Investment boomed as the Company launched an intensive recruitment campaign. Over 600 colonists set sail for Virginia between March 1608 and March 1609.

Unfortunately for these new settlers, Sir Thomas Gates, Virginia's deputy governor, bound for the colony aboard the Sea Venture, was shipwrecked in Bermuda, along with the Admiral of the Company, Sir George Somers, Captain Newport, and 147 other settlers and seamen. When Gates arrived to take up his new post in 1610, with most of the survivors of the Sea Venture (on two new ships built in Bermuda, the Deliverance and the Patience) he found only 60 of the original 214 colonists had survived the infamous "Starving Time" of 1609–1610, and most of these were dying or ill. Despite the abundance of food they had brought from Bermuda (which had necessitated the building of two ships), it was clear the colony did not have the means for survival. The survivors of Jamestown were taken aboard the Deliverance and the Patience, and the colony was abandoned. It was intended to return everyone to England, but the fortuitous arrival of another relief fleet, bearing Governor Lord De la Warre, granted Jamestown a reprieve. All the settlers were put ashore again, and Sir George Somers returned to Bermuda aboard the Patience to obtain more food (Somers died there, and his nephew, Matthew Somers, the captain of the Patience, took the vessel to Lyme Regis, instead, to claim his inheritance).

When news of Virginia's woeful state reached London, the result was predictable: financial catastrophe for the Company. Many new subscribers reneged payment on their shares, and the Company became entangled in dozens of court cases. On top of these losses, the Company was forced to incur further debt when it sent hundreds more colonists to Virginia.

There was little to counter this crushing debt. No gold had been found in Virginia; trading commodities produced by exploitation of the raw materials found in the New World were minimal. Attempts at producing glass, pitch, tar and potash had been barely profitable, and such commodities could be had far more cheaply on the other side of the Atlantic.

Increasingly bad publicity, political infighting and financial woes led the Virginia Company to organize a massive advertising campaign. The Company plastered street corners with tempting broadsheets, published persuasive articles, and even convinced the clergy to preach of the virtues of supporting colonization. Before the Company was dissolved, it would publish twenty-seven books and pamphlets promoting the Virginia venture.

To make shares more marketable, the Virginia Company changed its sales pitch. Instead of promising instant returns and vast profits for investors, the Company exploited patriotic sentiment and national pride. A stockholder was assured that his purchase of shares would help build the might of England, to make her the power she deserved to be. The heathen natives would be converted to the proper form of Christianity, the Church of England. People out of work could find employment in the New World. The standard of living would increase across the nation. How could any good, patriotic Englishman resist?

The English rose to the bait. The gentry wished to win favor by proving their loyalty to the crown. The growing middle class also saw stock purchasing as a way to better itself. But the news was not all good. Although the population of Jamestown rose, high settler mortality kept profits unstable. By 1612, the Company's debts had soared to over £1000.

A third charter provided a short-term resolution to the Virginia Company's problems. The Company was permitted to run a lottery as a fundraising venture. Other attractive features of the charter allowed Virginia's assembly to act as the colony's legislature and also added 300 leagues of ocean to the colony's holdings, which would include Bermuda (sometimes known as Virgineola) as part of Virginia. But the colony was still on shaky ground until John Rolfe's successful experiment with tobacco as a cash crop provided a way to recoup financially.

Unfortunately, by 1616, the Virginia Company suffered further adversity. The original settlers were owed their land and stock shares; initial investors at home were owed their dividends. The Company was forced to renege on its cash promises, instead distributing 50 acre (200,000 m²) lots in payment. The next year, the Company instituted the headright system, a way to bring more settlers to Virginia. Investors and residents were able to acquire land in paying the passage of new settlers. In most cases, these newcomers spent a period of time in servitude on the investor's land. Edwin Sandys, a leading force in the Virginia Company, strongly supported the headright system, for his goal was a permanent colony which would enlarge British territory, relieve the nation's overpopulation, and expand the market for English goods. Sir Thomas Smythe, as the Company's Treasurer, had a different dream: the Virginia Company's mission was to trade and to make a profit.

In the end, it was Sandys' vision which prevailed. When he became Treasurer of the Company in 1619, he moved forward to populate the colony and earn a protective status for the tobacco crop which had become the cash crop of Virginia. At the same time, he urged colonists to diversify their plantings and thus become less reliant on only one staple. The colonists ignored this advice, to their later dismay.

In 1619, the Company issued a grant to one John Wincob, which was originally to be used by the English Separatist Pilgrims for settling in the New World. (It was abandoned by the Pilgrims when they instead decided to use a grant issued by the Company to their financial backers. Since their crossing on the Mayflower landed them in what is now New England, beyond the lands controlled by the Company, this grant was also effectively abandoned.)

In 1621, the Company was in trouble; unpaid dividends and increased use of lotteries had made future investors wary. The Company debt was now over £9000. Worried Virginians were hardly reassured by the advice of pragmatic Treasurer Sandys, who warned that the Company "cannot wish you to rely on anything but yourselves." In March 1622, the Company's and the colony's situation went from dire to disastrous when the Powhatan Indians staged an uprising which wiped out a quarter of the European population of Virginia. When a fourth charter, severely reducing the Company's ability to make decisions in the governing of Virginia, was proposed by the Crown, subscribers rejected it. King James I forthwith changed the status of Virginia in 1624. Virginia was now a royal colony to be administered by a governor appointed by the King. The Virginia Assembly finally received royal approval, in 1627, and this form of government, with governor and assembly, would oversee the colony of Virginia until 1776, excepting only the years of the English Commonwealth.

Bermuda had been separated, in 1614, when the Crown briefly took over its administration. In 1615, the shareholders of the Virginia Company created a new company, the Somers Isles Company, which continued to operate Bermuda, subsequently, also known officially as The Somers Isles (for the Admiral of the Virginia Company, Sir George Somers) until it, too, was dissolved in 1684,