First Charter (1606)
In 1606, James I issued a royal charter to “adventurers” (a term that referred to both investors and settlers) in the Virginia Company of London, a joint-stock company, “to make habitation, plantation, and to deduce a colony of sundry of our people into that part of America commonly called Virginia.” The Virginia Company actually consisted of two groups of investors: the Virginia Company of Plymouth and the Virginia Company of London. The king authorized the latter to settle on the American coast between 34 and 40 degrees latitude, while the Plymouth investors were directed to lands to the north. The Virginia Company of Plymouth planted a colony at Sagadahoc in present-day Maine in August 1607, but it was abandoned the following spring.
A joint-stock company consisted of investors who pooled resources to fund an enterprise and, if it was successful, shared the profits. Using such an arrangement to fund colonial ventures proved to be attractive both to the Crown and to investors. Companies allowed Queen Elizabeth and later King James to reap the benefits of colonization without incurring the substantial costs. In 1606, the Crown was in debt and short on both money and credit to invest in financially risky projects. And because France and Spain had claimed much of the North American coast, planting colonies there was politically risky, especially for King James, who was determined to ease tensions with Spain. But putting such work in the hands of a company allowed the Crown to distance itself should a crisis arise.
The benefits of a joint-stock company were no less pronounced for the investors. A company allowed investors to distribute their losses more widely in the event of failure. This promoted innovation by reducing individual costs and thereby encouraging more risk. A company also allowed investors to negotiate their charter as a group, providing them more leverage and making the Crown responsible to a larger entity. In theory, this resulted in the Crown’s being less likely to renege on its support.
The economists Douglass C. North and Robert Paul Thomas have argued that joint-stock companies rewarded hard work and initiative rather than royal favor and helped transform Europe into a global economic power. England’s first joint-stock company, the Company of Merchant Adventurers, was chartered in 1551 to find a northeastern passage around Scandinavia to China. In 1555 it became the Muscovy Company, which traded with Russia. In 1606, England was home to about ten joint-stock companies, including the East India Company, which had been chartered in 1600 and was led by the London merchant Sir Thomas Smythe.
Smythe was an early investor in the Virginia Company of London, and Bartholomew Gosnold, whose wife was Smythe’s cousin, one of its chief recruiters. Gosnold brought in his own cousin, Edward Maria Wingfield, as well as Captain John Smith. Other investors included military men like Sir Thomas Gates and Sir George Somers; the minister and geographer Richard Hakluyt (the younger); Sir William Wade, lieutenant of the Tower of London; Sir Francis Popham, son and heir of Lord Chief Justice John Popham; and Sir Walter Cope, a member of Parliament from Westminster.
The company’s goals combined commercial, religious, and national interests. The Crown authorized the investors to found a colony, but their primary mission may have been to explore and fortify the coastline as a way to protect English shipping from the Spanish. Merchants like Smythe also hoped to find a trade route through America to China. Others subscribed to Hakluyt’s case for colonization, outlined at the time Sir Walter Raleigh was funding the Roanoke voyages: The English Protestants could convert the Indians, thus preventing them from being converted by the Spanish; they could exploit the area’s natural resources; they could resettle England’s excess population; they could create a new market for English goods; and they could use the colony as political and commercial leverage against the Spanish.
The initial terms of investment in the Virginia Company of London are unclear. Investors may have bought five-year terminable stock, meaning that the company promised to dispense profits in 1611 with the possibility of reinvestment. It’s also possible that each of Captain Christopher Newport‘s five voyages to Jamestown represented a separate investment overseen by the company. The company—both its London and Plymouth investors—was governed by His Majesty’s Council for Virginia, composed of thirteen investors who had been appointed by the king and had sworn to serve his interests. The company council, in turn, appointed a seven-man council to carry out company instructions in Virginia, with council members electing from their own a president. When that position proved too weak to keep the colony in order, the Crown, in 1609, appointed Sir Thomas Gates to serve as governor.
Second Charter (1609)
A new English colony established its beachhead at Jamestown in 1607, and by 1609, the Virginia Company of London—running low on money while its colonists faced resistance from the Indians of Tsenacomoco—had decided that its arrangements for governance and investment needed an overhaul. A new royal charter, issued on May 23, 1609, divested the king of some of his power. Investors now elected a treasurer to lead the company, with the position being held first by Sir Thomas Smythe. They also elected council members, although their choices were still subject to the king’s veto and still required to swear loyalty to the king’s interests.
By 1609, the council had swelled to fifty members and included elites such as the philosopher and essayist Sir Francis Bacon; Sir Oliver Cromwell, a member of Parliament and uncle of the future Lord Protector; Henry Wriothesley, third earl of Southampton, a patron of William Shakespeare; Sir Humphrey Weld, the lord mayor of London; and James Montague, the lord bishop of Bath and Wells. Investors met in a weekly Court and Assembly and in a quarterly Great and General Court. The former dealt with minor matters while the latter elected councilors and company officials, considered trade issues and land grants, and issued company and colony laws.
Under the new charter, Virginia Company stock sold for £12 10s. per share for a seven-year term. The dividend to be paid in 1616 would include a grant of land in addition to a share of any cash profit earned. (As the company was cash poor, the payments in 1616 were made in land alone.) When approaching potential investors, the company emphasized that the purchase of stock earned shareholders not only a stake in the venture’s success, but also a voice in the company’s governance. It was an appeal designed for a broad swath of Britons, not only leading merchants and military men.
The initial stock sales may have netted as much as £10,000, but then the company was hit with two pieces of devastating news. First, in 1609, the Sea Venture, carrying Sir Thomas Gates, the colony’s new governor, was mistakenly believed to have been lost at sea. After landing at Bermuda, Gates and his men spent the winter building two new ships. They finally arrived at Jamestown in the spring of 1610, only to discover a few ragged survivors of the Starving Time. Thomas West, twelfth baron De La Warr, whom the company had appointed to replace Gates, managed to save the colony, but when Gates returned to London late in 1610, his report of the colony’s dire conditions served as the second piece of bad news.
The Virginia Company already faced difficulty collecting money owed by those who had purchased their stock on installments. It was now an open question whether the company should even attempt to continue. In December 1609 the company council published A true and sincere declaration of the purpose and ends of the plantation begun in Virginia, a frank appeal to its investors for patience and loyalty. Following the good news of the Sea Venture passengers’ survival, Lord Robert Rich, a council member, published Newes from Virginia. The lost Flocke Triumphant (1610)—one of many efforts to mythologize the wreck and use its story to make money for the company.
Third Charter (1612)
On March 12, 1612, King James granted the Virginia Company of London a new charter, its third, primarily so it could extend the boundaries of Virginia to include Bermuda, then called the Somers (or Summer) Islands. In order to facilitate the islands’ colonization, the Crown permitted the Virginia Company to form a special joint-stock venture under the company’s auspices. In 1615, the Somers Isles Company became independent of the Virginia Company, but it was also led by Sir Thomas Smythe and its list of investors was nearly identical.
Like those before it, the third charter dealt with issues of governance and finance. The power to elect all officers of the company and the colony, to admit new members to the company, and to draft company and colony laws was transferred from the council to a so-called General Assembly composed of all investors. The move, which democratized even further the workings of the company, was again intended as an appeal to investors across often-rigid class lines.
The charter also authorized lotteries to raise money for the company. The First Great Standing Lottery began in March 1612. For a ticket price of 2s. 6d., players earned an opportunity to win a portion of £5,000 worth of prizes, including a “fayre plate” valued at £1,000. The drawing, originally planned for the end of May, was postponed until the end of June because of unsold tickets and rumors of corruption. Similar problems beset the Little Standing Lottery, which ran from the summer of 1612 until June 1613 and sold tickets for 12d. The Second Great Standing Lottery also began during the summer of 1612 and sold lots for 5s. The drawing was held on November 17, 1615.
While these lotteries were not substantial financial successes, they nevertheless provided almost the sole means of support for the company. In 1616, the company instituted so-called running lotteries. Rather than build up to a final drawing, running lotteries allowed purchasers to immediately draw lots, which either indicated prizes or were blank. The running lotteries were operated by two company men, Gabriel Barbor and Lott Peere, who traveled from town to town and worked to create goodwill with local authorities by bestowing gifts. To ensure the lottery’s credibility, the lots were mixed in the presence of city elders and drawn by a child. In 1618, a running lottery in Leicester lasted six weeks. Forty thousand lots were available for sale at 12d. each, with 1,500 prizes at stake. The company’s profit may have exceeded £961—more than the cost of furnishing an entire ship to Jamestown.
In May 1620, the Virginia Company reported £7,000 in lottery earnings for the previous year out of £9,831 in total cash for the company. And the company expected to reap another £8,000 the next year, which would cover not quite half of the company’s projected £17,800 in expenses. While the running lotteries were very profitable, they were plagued, like their predecessors, by claims that people were being cheated out of their money, and that the poor were only being made poorer. In the House of Commons on February 24, 1621, Sir Lionel Cranfield spoke for many: “I am of the Company of Virginia, but I hear these lotteries do beggar [impoverish] every country they come into. Let Virginia lose rather than England.” The king banned the lotteries soon after.
Great Charter (1618)
On November 18, 1618, the Virginia Company of London’s two top officers, Sir Thomas Smythe and Sir Edwin Sandys, drafted a set of instructions to the colony’s newly appointed governor, Sir George Yeardley. This document, often referred to as the Great Charter, concerned itself—like the three royal charters before it—with finance and, at least where the colony was concerned, governance.
Rather than seek to sell shares or depend entirely on lotteries, the company proposed to fund itself through a resource it already had in abundance: land. By 1618, the company’s debt had swelled to about £9,000, and officials hoped to find a way to entice settlers to pay their own way to Virginia, thus relieving the company of one of its chief expenses. They found it in the headright system, through which the company promised fifty acres of land for each person who paid his or her own passage or any other person’s passage to Virginia. The settler then agreed to pay the company a quitrent of one shilling per year for every fifty acres. The company also used land to defray another big cost: funding the government. Rather than tax colonists, the company granted its officers in Virginia land and tenants, including slaves and indentured servants, to work the land. The governor, for instance, received 3,000 acres and 100 tenants; the treasurer, 1,500 acres and 50 tenants.
The company had struggled to convince some people that Virginia was an acceptable place for an Englishman to live. Tales of an exceedingly strict regime under the Lawes Divine, Morall and Martiall were hurting the company’s reputation. As a partial response to this, the Virginia Company authorized the creation of of Council of State and General Assembly. The former’s appointed advisors and the latter’s elected burgesses would more widely distribute power in the colony, providing investor-colonists a greater stake in the enterprise for which they risked their lives.
At about the same time, Virginia Company officials also sought to restore investor confidence through a series of reforms in London. The treasurer, elected by company members at the Easter-season quarter court, could now serve a maximum of just three one-year terms. In addition, the treasurer could no longer simultaneously lead another company, as Smythe had led the East India Company. (The Somers Isles Company was excepted from this rule.) To improve record keeping and to make the company’s inner workings more transparent for investors, new provisions added a secretary, a bookkeeper, a husband (accountant), and a bedel (messenger). The company also authorized a sixteen-man council to assist the deputy treasurer in running the company from day to day. Finally, an auditor’s office was created. It consisted of seven members, two of whom were required to be councilors. The office was charged with reviewing both current and, in what turned out to be a significant development, past accounts.
Many of these reforms were created under the leadership of Sir Thomas Smythe but became associated with Sir Edwin Sandys, who was elected the Virginia Company’s treasurer on April 28, 1619. At the time, three large factions of investors dominated the company. One, led by Smythe, represented wealthy merchants who were not afraid of shunning short-term rewards in favor of a long-term investment. The second faction, led by Lord Robert Rich and his son—the second and third earls of Warwick—viewed the Virginia colony primarily as a port of protection for their ships, which often raided Spanish galleons in the Caribbean. The Sandys faction represented smaller investors who could ill afford high short-term risks and who, therefore, were dissatisfied with the Smythe regime.
By allying himself with the Rich family, Sandys wrested control of the company from Smythe, but the alliance proved short-lived. Sandys’s opposition to piracy ran him afoul of the third earl of Warwick, who was offended that Governor George Yeardley did not properly welcome his ship the Treasurer when it arrived in Virginia with a stolen cargo of enslaved Africans. A longtime member of Parliament and an outspoken defender of that body’s rights, Sandys also found an enemy in the king. When Sandys stood for reelection as company treasurer in 1620, King James intervened: “Choose the Devil if you will, but not Sir Edwin Sandys,” he is reputed to have said. As a result, Henry Wriothesley, third earl of Southampton, became treasurer on June 28, 1620.
Remarkably, Sandys managed to maintain de facto control of the company. He attempted to diversify the Virginia economy, then overly dependent on tobacco. When that effort failed, in 1622 Sandys negotiated a contract that gave the Virginia Company a monopoly over tobacco imports to England. The details of the contract, however, showed large salaries being paid to Sandys and other officials, and questions arose about the finances of a company that was nearly bankrupt.
At about the same time, on March 22, 1622, an alliance of Virginia Indians led by Opechancanough launched a series of attacks against English settlements along the James River, killing as many as 347 colonists, or about a quarter of Virginia’s colonial population. Samuel Wrote, an investor and Sandys’s enemy, called attention to an alarming set of figures. He estimated that Virginia’s population in 1619, when Sandys took over the company, was 700. Another 3,570 men, women, and children had entered the colony in the subsequent three years, adding up to a population of 4,270. But after Opechancanough’s attacks, which resulted in the deaths of 347 colonists, only 1,240 settlers remained. What, Wrote demanded, had happened to the other 2,683? Most of them, it turns out, had died of disease.
In May 1623, the Privy Council—responding in part to a petition sent to the king by a faction of councilors allied against Sandys—created a royal commission to investigate the Virginia Company of London. That same year, Nathaniel Butler, a former governor of the Somers Islands, published The Unmasked Face of Our Colony in Virginia, as it was in the Winter of the Year 1622, criticizing Virginia’s governance. Royal commissioners arrived in Virginia in March 1624 to see for themselves, and on May 24 of that year, the Crown formally revoked the company’s charter and assumed direct control of the Virginia colony.
As a financial venture, the Virginia Company of London had failed. Yet despite so many lost investments and lost lives, the English settlement begun at Jamestown survived. Historians, looking to connect the early history of the colony with the ideals of the Revolutionary War (1775–1783), long suggested that the king’s revocation of the company’s charter was an act of tyranny. Edmund S. Morgan, writing in 1975, countered: “Modern scholarship has altered the verdict and shown that any responsible monarch would have been obliged to stop the reckless shipment of his subjects to their deaths.”