he Elizabethan period
saw a move away from family-oriented business activities towards
partnerships of merchants and speculators which extended beyond
any single mercantile venture or voyage. To sustain such
arrangements, the partnerships needed to be formalized as what
later came to be known as
joint-stock
companies.
When in 1553 an expedition seeking a northeast passage to Cathay instead
established trading relations with Moscow, various London merchants formed
the Muscovy Company
to exploit Anglo-Russian trade and continue the search for a passage
through to Asia. A royal charter granted the company a monopoly. It was
therefore to the Muscovy Company that Frobisher,
in December 1574, applied for a licence and financial backing to seek a
northwest passage to the Far East.
The Company was skeptical and at first refused a licence. However, its
London agent, Michael Lok, was already in favour
and convinced some fellow members - perhaps dissatisfied with the poor
profits from the trade with Russia and the Company's suspension of the
search for a northeast passage - to his way of thinking. Their
influence, combined with pressure from the Privy Council, persuaded
the Company to reverse its decision.
Lok's supporters within the Company included one of its governors,
Sir Lionel Duckett, who was also a member of the
Mercers' Company
and Governor of the Company of Mines Royal as well as a former Lord Mayor
of London; it was Duckett who arranged for John
Dee to tutor Frobisher and his principal officers in the nautical
sciences. They also included
Stephen Borough,
who had sailed on the 1553 expedition and in 1556 had made his own attempt
to find a northeast passage; his
brother and
fellow-navigator William recruited seamen for the Frobisher voyages and
later joined the investors. More important was the support of Muscovy Company
member William,
Lord Burghley, for he was lord treasurer of England, the Queen's
chief advisor, and a leading member of the
Privy Council.
It was Burghley (who had employed Frobisher on state business in the
past, and was already a supporter of the proposed voyage) who
would steer the direction of the Frobisher expeditions, on behalf
of the interests of Queen and Council. His commitment to the
northwest venture led others of the Privy Council to invest.
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Sir Lionel Duckett, artist unknown, 1586, oil on panel
Reproduced by permission of the Mercers' Company
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Portrait of Sir William Cecil, later Lord Burghley, by Marcus Gheeraerts
Reproduced by permission of Burghley House
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Lok used his membership of the Mercer's Company to attract
additional investors from that quarter. These were among London's
leading men of commercial affairs: men such as financier
Sir Thomas
Gresham, who had been a business partner with the Lok
family in the past, and was wealthy enough to risk investing in
a speculative venture such as was being proposed. Gresham
appreciated the need to develop the foundations of English trade;
his legacy included the financial centre, the Royal Exchange, and
Gresham College whose courses
included navigation. Merchants of lesser wealth showed less interest in
gambling on Frobisher's voyages.
Emulating the example of the Muscovy Company, Lok and his fellow
investors aimed at creating their own company - the Cathay Company -
which would have a similar monopoly over trade and exploration in
northwestern waters. It was important to obtain legal recognition
of the investors' interests and rights, via a royal charter
incorporating the company. Lok put forward repeated petitions to
that end, proposing himself as the company's governor, but they
appear to have been ignored by the Queen.
The problem was that, while Burghley insisted upon some
structured arrangement for organizing and funding the voyages,
after the apparent success of the first voyage and even more once
it appeared that a source of gold had been discovered,
Queen
Elizabeth herself invested, and many of her courtiers followed suit. An
incorporated company would have limited the Queen's control over
the aims of the expeditions and the resulting gold supply, and
limited her share of the profits; so she withheld charter rights.
Instead she appointed a royal commission to oversee the organization
of further voyages. What had begun as a private enterprise had
taken on characteristics of a public one.
The Cathay Company consequently never acquired any legal status,
and the original investors from the Muscovy and Mercers' Companies
had little say over the direction in which the venture developed.
Yet they were compelled by the royal commission to increase their
investments as the third expedition, driven by political ambitions
in terms of establishing a colony to protect England's interests
in Meta Incognita, assumed a massive scale. The need for money
was compounded by the fact that certain shrewd investors -
including Burghley and Gresham - had not yet paid up most of
the sums they had promised.
With the collapse of hopes, once it was finally determined the
Arctic ore was worthless, the scene was set for investors and
creditors to try to recoup their losses. In the absence of any
legal recognition of the "Company of Cathay", it was
Michael Lok who became the principal target for recriminations
and lawsuits.
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