London’s Drift to the Third Charter Commences:
Seeds of Future Destruction
By 1611 the Company had to consider new directions in finance and public support if its fiscal crisis was not to reach its final conclusion. A modern term to describe the fiscal state of the Company by 1611 was, by its own accounting, a “going concern”. No later than early 1611 the Virginia Company was facing a imminent crisis of survival. In real life this state of affairs constituted a first-rate crisis; in most historic commentary is is treated more or less matter-of-factly with a general description of what was included in the charter. For this history, however, the 1612 Charter was a big deal; the approval of the lottery and the Somers Island inclusion were the life or death matters-but the fleshing out of the Company’s corporate structure, and a clearer demarcation of Company responsibilities made evident how much delegation to the Company was included in the revamped royal partnership were also barnburners as well.
Accordingly, the reader should keep in mind that whatever disruption resulted from the unsettled settlement strategy, the budding polarization of court and Parliament, the instability of its investors, and the “democratic joint stock corporate structure that facilitated frustration and fragmented policy-making, the most basic and crippling of all the problems was its financial condition. Its financial plan, if there ever were such a thing, was irreparably broken. In 1611, the Company was broke, with no immediate prospects of funds to close the deficit. It was living day-by-day. Whatever else it had to do, one had to find funds to feed the financial beast.
The 1609 charter reorganization pretty much left intact the debt deficits since 1606 i.e. the Company. Worse, the structure by which debt was incurred remained i.e. with each new initiative or expedition, the company had to incorporate a new subsidiary company (it was those subsidiary companies that held the debt; by the time of its dissolution (1625), some fifty-six subsidiary companies had been formed).
That debt structure left the “conglomerate holding” company unobligated, and the conglomerate corporation remained more or less in the hands of Smythe and his initial London board of directors, at least until 1609-when the stock offering saturated the new 1609 corporate structure with a horde of shareholders—over 900, versus the thirty or so previous. The incorporation of the 1609 regulated joint stock corporation revolutionized the 1606 company (organization, membership, and policy-making structures).
Then the Gates Expedition disaster apparent in October-November unleashed a response that made the previous failing going concern an unmitigated financial disaster. Hanging on mostly because of what the Virginia Company was a royal-private–and now with Parliament—government–partnership in a corporate enterprise that was the cornerstone of England’s engagement in the rising mercantilist competitive international economy and contest for empires.
Whether or not Ireland was preferred, Virginia and the North American unknown wilderness was being settled by England’s rivals and that could not go unanswered. Say it another way, if the rockets launched by the Virginia Company launch platform had another failure, England risked never settling a successful colony on that continent. So, in 1611, the Company management took advantage of that position, role and status to solve, not its permanent settlement strategy, but its permanent settlement financial condition.
By 1611 there were probably around 1100 shareholders, with about one-third or slightly more members of parliament. Change had to mean a weakening in Sandys’ position, especially when combined with the bypass of the Royal Council. Smythe had to remove the Royal Council, however, if the settlement was to be stabilized and transformed into a growing permanent settlement-colony.
Smythe had already risked the diminution of whatever power he held previous to the 1609 charter, and in 1609-10 he saw the consequences. Like it or not Sandys was deeply involved in company decision-making, and given the king’s limited colonization attention span focused on Ireland, , it seems he placed a bet on further opening up the Virginia Company allies-future membership by reaching out to previous privateer-merchant adventurers by cultivating the opportunity that was a potential in the new island on which Gates had been shipwrecked.
Admiral Somers was hot to trot, and so for that matter was Gates. Both saw a potential colony on that unsettled island—an island that could become a permanent settlement, a trading factory, and a base for attacks on the Spanish/Portuguese main. Smythe, himself saw the opportunities there, and it will be no surprise that when the 1612 Charter was signed Somers Island would be a third major subsidiary corporation under the new conglomerate Virginia Company—and Smythe would be its Treasurer-CEO.
Hopes were that this new colony could finance itself, and help in solving Virginia finances as well. Optimistic, perhaps, but hindsight suggests that Bermuda did have solid advantage over Virginia in that time period. In any case one ought to think of the future Third Charter in terms of the Somers Island constituency brought into the Company, and used to leverage a national campaign for a nation-wide lottery that could finance the Company, hopefully out of its fiscal distress, into a stabilized, admittedly slow-growing colony. That is exactly what happened during 1611 and the signing of the Third Charter in March 1612.
In London, however, in order to carry out the decentralization and self-governance in Jamestown required the Company leadership to get its own house in order. In that house was owned by CEO Thomas Smythe: One could hardly tell the difference between the Virginia and the Somers Companies. Smythe was the Treasurer of one and Governor of the other. Both held their meetings in his London townhouse”[99] Grizzard Jr., and Boyd Smith, Jamestown Colony: a Political Social and Cultural History, p. xl .
So company advocates turned to the king and pressed him to authorize a national lottery for the benefit of the Virginia colony. Lotteries were popular, if controversial, prone to scandal and rumor allegations, and clearly outside the Company’s “core skills and constituency. . But with the king’s permission they could start quickly and the financial crisis averted. But the king like many others did not like lotteries, and that discussion encountered some resistance.
If a lottery could also attract more loans and shareholder investment in its wake, the Company could hope to stabilize its finances at the scale needed to be effective. A “think big” and create favorable atmosphere for Virginia (no mention of the Company) seemed logical. The earlier Gate’s expedition generated awareness of Virginia, and Gates’s shipwreck only made the colonization effort more exciting and celebrity-ridden. So new themes and rationale behind the Virginia colony could cause a burst of positive momentum, patriotism, and even adventurer enthusiasm would-could be injected into the behind-the-scene’s campaign for a third charter, and a nation-wide lottery on behalf of the unloved Virginia Company.
Accordingly, the new campaign did not intend to support the Company or the costs of Jamestown as a colony, but to tap into deeper concerns and interests held by both potential wealthy subscribers and also popular with those who would buy a lottery ticket. Virginia, and North American colonization was portrayed as a national initiative that would carry England far in prestige, respect, pride, honor, power, and yes wealth for all. While historians may not like the allusion, it was an effort much like JFK launched at the height of the mercantilist Cold War space economy/empire: put a man on the moon in the next decade. In this case it was put an Englishman in North America and keep him there. Public relations was one thing, but this was way more than that. This was a signature national enterprise that in fifty years would transform Virginia into a colony on the edge of existence, into the sovereign’s “Old Dominion”.
The proposed lottery was nation-wide (see below), but was conducted with approvals from cities with relatively large markets. Smythe’s power base was London’s city government and London-based merchant adventurers, and, of course the Stuart court and monarch. Sandys and his parliamentarians were masters of the out ports, so therein lie the management consensus. To conduct the lottery would require a separate municipal-focused marketing-sales effort, a skillset the Company and its board was lacking.
There were agents that could serve as contractors but that entail risks; the company itself did not have staff capacity to monitor the various lotteries in different cities that were persuaded to grant approvals. On paper, a lottery did offer revenues, but a lottery was a poor fit with the Company’s expertise and mission. Smythe, nevertheless, pushed ahead to secure the king’s approval as his first step. Once approved, they would figure out how.
So during 1611 several policy initiatives were simultaneously ongoing, and due to a relatively closed policy making group of actors who operated subrosa (made worse by the few records we have of the period), the process of policy making resembles a whale watch, as every so often the whale “breaks water”, and then “goes under” after which observers scurry about to guess where it reappears. It is nevertheless evident that Virginia’s colonization project position penetrated into London’s policy agenda hierarchy.
To what extent Smythe and his allies mustered the sincere and sustained interest of James is uncertain. Also likely but unsupported was James’s unwillingness to let the Virginia project fail outright, nor let it be infiltrated by his parliamentary foes. Enthusistic or reluctant, James was brought around to make several concessions, including sandbaging his micro-managing Council of Virginia, and surrendering the management and policy direction of the Company to its shareholders and their elected leadership. Today this seems simple; it doubt it was in 1612. Events demonstrate James did not back away from the Ulster Plantation, but for a period of time he found sufficient interest to do whatever he had to do, in order to save the colony.
By the time we roll into 1612, it seems to have been clear to the major participants at least, that the rules and roles of Virginia colonization acts had to again be rewritten and expressed in yet another royal charter. No doubt that wise insiders knew this from the start, but others had to be convinced. So while Virginia’s policy system was changed into a military style governance to compel stability and order sufficient to keep the colony functioning, London was working toward a series of solutions to, in effect, make a new start in Virginia. All of which led to James agreeing to a third charter in March 1612 and the recognition of a Somers Island colony subsidiary in July.
The Third Charter was timely, as the king’s relationship with Parliament, pretty poor in 1612, deteriorated markedly over the next three decades. To an extent that Charter provided some insulation from English politics, and structural autonomy provided a framework sufficient to withstand the worst of the English Civil War and Protectorate.
The charter, initialed in March 1612, and completed officially in July had several features of importance to us:
1.democratization of the company’s corporate governance to allow it to more easily make decisions and govern the colony—that corporate governance structure would be replicated in Virginia after 1618, creating, in effect, a degree of Virginia self-governance;
- a renegotiation of the royal partnership with the king allowing the Virginia Company large does of governance autonomy, and the king stepping up to the bar granting the Company rights to some of his Virginia land, which they could sell or use for an incentive. He gave them an export/import tax abatement for five years (that would last until 1621), and, he gave the Company permission to conduct a nation-wide lottery—which would be the financial mainstay of the Company until it was taken away in 1621;
- finally, the boundaries of Virginia were expanded to include the Somers Island, allowing the Virginia Company to incorporate a subsidiary company empowered with its own officers and and shareholders to operate the founding of a colony in Bermuda.
[99] Charles Andrew ,pp 111ff, Osgood Vol 1, p66ff Craven Virginia Company, pp 16,17-20
An ultimate aim of the charter’s organizational reforms was “to give the rank and file of the adventurers [investor-shareholders] a larger voice in its control [of the Virginia Company]” [99] Craven, the Southern Colonies in the Seventeenth Century, p. 100; see also Andrews, Vol 1., pp. 116-118. y, p. xl. They were the ones who were to, in the mind of James and his advisors, run that colony—and their interests and observations had to be incorporated into its policy-making as well as the king’s.
However, it seems to me the Company’s decision to negotiate a Third Charter also included the company’s sincere wish to establish a more effective local governance, as well as improve their own larger governance capacity. The Company was grappling with a somewhat better sense of what permanent settlement entailed. While they might not have fully appreciated the complexity and implications of self-sufficiency or settlement, the Company knew it had to be in for the long haul, and it had better organize itself, and its fiscal plan, to do so.
To Craven at least, the Third Charter was anticlimactic. Unimpressed with the lottery—he was vastly more excited about the extension of Virginia Company boundaries to include the Somers Island (p. 19)—Craven did value the fleshing out and empowerment of the Virginia Company’s shareholder conglomerate corporation, largely because it finally officially replaced the Royal Council, and focused the conglomerate corporate body on management of the colony. He draws attention to shareholder vote by voice (or head), not by the number of shares each shareholder held. He suggests the reason for that was that was the way the other merchant adventurer unregulated joint stock corporations were structured; Craven thinks it possible it was an attempt to keep unhappy traditional merchant adventurers on board the Virginia Company (p. 20)
As to the effect of the national public relations campaign, by and after 1612 he asserts there “was no chance of floating another [share] subscription. [As to the restive merchant adventurers, he comments] “By 1612 the adventurers were complaining that only the name of God was more frequently profaned in the streets and market places of London than was the name of Virginia”. [p. 18] … [in the following years] Now and again there would also be found some person who wanted to go to Virginia at his own cost, and was willing to pay the cost in return for shares of stock guaranteeing an ultimate title to land in the colony”. Concluding, he states “Virginia’s name had lost its magic”—but he qualifies that with his last observation that if Virginia had lost whatever position it held in English colonization, Somers Island had risen to become the sweet spot of North American colonization [pp. 18-19]. The rapid rise of Somers colony compels us to deal with that reality a bit later in this module. [99] Wesley Frank Craven, the Virginia Company of London.
Smythe’s Administration: I see more of Smythe than Sandys in the third charter and the period stretching to 1618. He focused on the hard reality of its finances and found a solution: the lottery. But the Third Charter and Smythe’s role in those years seem congruent with Smythe’s tendency to throw balls into the air–the more the better-each being an opportunity to find some niche to make profits. Smythe, I sense, lacked focus, with one exception: profit and loss. With all his positions, jobs, and responsibilities, the man had more irons in the fire than one man should have. Without a personal bureaucracy, his various involvements seem more than one person could handle.
By the early 1620’s we can add failing health to this. He retired in 1624 and died in 1625. In my mind it is possible his health, and the declining health of James underlie the collapse of the Company in Virginia, which by that point faced its own existential survival coping with the 1622 Massacre, and Sandy’s having overplayed his hand.
He must have been a delegator (to Johnson), and his captain-generals in Virginia, and Sandys, probably intermittent in these years, no doubt poked his head and hand into day-to-day management for his own reasons, because he seemed to have a taste for colonization and was building confidence for a major leadership position in it (he would attempt to dethrone Smythe as head of East India Company, for example). For the moment at least, with Parliament suspended after mid-1611, Smythe closely tied to the King, was not threatened by any Parliament in session–therefore investors, dissatisfied or not, were away from London and quorums in the governing master corporation board seemed to boil down to the minions that he and Sandys could generate. That was to change incremently during the next five years. By 1617-18 starting with the Argall affair, Warwick’s aggressiveness, and then with Sandy’s restiveness Smythe was in for the time of his life. More on that later.
Ironic isn’t it. To my way of thinking, the Third Charter reflected more of Thomas Smythe, but, as the company needed to decentralized created seeds for the rise and empowerment of Edwin Sandys. Decentralization was not in Smythe’s skillset. At heart he was multi-tasking merchant adventurer trader, whose roots were firmly lodged in the short-term profits derived from the trading factory. In 1612-13 Somers Island colony offered more return to Smythe—and that is where he place his Virginia Company attention—delegating much to the generals in the formulation and implementation of their vision on how to build a village.
More to the point, the Company, Smythe for certain, had earlier decided could not be managed (or controlled) through its 1606 “holding company” board or directors (then called the ‘Royal Council’). More realistic governance had to be constructed–“democratizing”—company governance and placing it in the hands of the entire membership, not just Smythe or his original investment cohort. This had been done in the Second Charter—but other than that details of structure were not fleshed out.
Heritage of the Third Charter
Of all the changes made by the Third Charter, the most fundamental of all, besides the lottery, was the opening up of the Virginia Company governance to whomever would pay the price of buying just one share. One share!! Company voting was by voice, loudness, not the number of shares each voter held. The Company would ultimately by governed by its loudest membership. Colonialization was playing a major part in the initial evolution of the English private corporation. Thus the Third Charter created an abrupt and transformative corporate reorganization.
The Second Charter’s revision of the 1609 Charter’s finished off the Royal Council, and the placed its powers and responsibilities to the King directly in the positions of the Treasurer (actually CEO) and his Deputy (Sandys). These two company officials had been elevated with authority superior to the other directors and investors of the Virginia Company. I label this corporate democratization, although in practice it was an oligarchy, if a loud one.
The Third Charter took back the powers it had placed on the Treasurer and Deputy, and lodged them in a “court” (and its first quarter shareholder meeting) that was required to meet four times annually “for the handling order and disposing of matters and affairs of greater weight and importance” {with fifteen members considered a quorum]. It also allowed the creation of “lesser courts” made up of at least five members of the corporation’s “council” (i.e. board of directors) plus the mandatory membership of the Treasurer or his Deputy and fifteen company shareholders. “These lesser courts might meet as often as they pleased for the transaction of ordinary business” [99] Charles M. Andrews, the Colonial Period of American History: the Settlements, Vol. 1. p. 117
Another change the Third Charter made was to include in its provisions no dividend would be paid for seven years, and that settlers and employees of the company in Virginia worked for food and boarding for that period. With that one bold stroke, stripping the Company of its obligation to pay its employees, financing started down its path to stabilization; simultaneously it reduced corporate expenses associated with populating the colony directly by the Company. This was in effect shoved down the investor (and employees) membership’s throat, and it left its residues (we shall see in the following modules how the employees were to be paid, by land and headright grants not cash—and those forms of payment fundamentally were to shape the future path of Virginia’s political and economic, if not social development).
What we are seeing is that investors, members of the corporation, owners of the corporation had regulations imposed on them which restricted their return of investment and the term of their investment. Settlers on the other hand had imposed on them terms, which in a few short years would be transformed into an indenture contract between company and the individual. Both had their impact on the general perception of the Company, and its perception by Parliament, and the non-London elites.
In 1609 the promoter of the [Virginia] company succeeded in obtaining a new charter vesting complete control of government as well as trade in the company on the ground that otherwise people [investors] would not supply the funds, ‘the sinews and moving instruments … By the amended charter of 1612. The source of all power was nominally in the generality of ‘freemen’—the General Court [of the Company]—who were the shareholders, plus any others admitted to the right of freemanship by the company. Voting was by person, ‘voice’ not by share. But as in all [joint stock] companies vast powers were given to or taken by the officers, that I the council [board of directors] and the executive officers—the treasurer and deputy treasurer [99] Joseph Dorfman, the Economic Mind in American Civilization, 1606-1865 (Book One) (Viking Press, 1946), p. 15
In essence the immediate result of the 1612 Charter was the empowerment of a few powerful directors who presided over a distant investor cadre. It seems this “oligarchy” managed through the next few years—maybe as far as 1617. After that the wheels began to come off—but that will be dealt with later. In any case, the 1612 charter change engendered considerable disaffection within the Virginia Company and its multiple investors and subsidiary corporations. The Company still carried a whiff of royalty about it, and its internal decision-making was authoritarian at its best, and an infringement of the rights to shareholder-investors, the members of the Company at worst. The Company appeared to be as mindful of investor-member interests, but in practice it had not. This tension would have its effects on the colony, of course, but it would eventually erupt in a 1618-19 leaderhship coup.
“The third charter added the privilege of admitting new adventurers [investors-members], a direct control in the selection of all officers for both the Company and the colony, and the fundamental right to draft ‘such Laws and Ordinances for the Good and Welfare of the … Plantation .. shall be thought requisite and meet’“. As Craven further observes over the next decade these shareholder assemblies came to meet as often as weekly so long as a quorum of twenty along with either the Treasurer or his Deputy and four other members of the Court (board of directors). It was further required by the third charter to meet formally at least four times a year– a session that was usually larger and handled more weighty matters. [99] Wesley Frank Craven, the Southern Colonies in the Seventeenth Century, pp. 111-112.
Smythe and Sandys, however, in the meantime had their powers sufficiently enhanced to make and implement decisions that permitted Jamestown and the Virginia Colony to begin its pivot to self-sufficiency and permanent settlement. For very different reasons, each of these two powerful individuals had made and imposed a transformative decision probably over the objections of many of its members. Still, after the 1612 charter all was not well with the Virginia Company. The lottery, as intended, provided sufficient revenues to keep the colony and company going, but definitely not enough to grow the colony. Scott’s assessment of the years following the 1612 charter probably are as good a summary of the period of Virginia’s military policy system:
It had often happened that funds could not be obtained when they were most required, and for three years, from 1613 to 1616 the most part of the adventurers abandoned the enterprise, leaving it to a small remnant “of undaunted spirit” to support it. These under the leadership of Smythe contnued to hold meetings every week, and to send such supplies as they could obtain to the plantation. The withdrawal of so many adventurers meant that the undertaking could not be financed by any considerable further issuance of shares, and the chief source from which funds could still be drawn for supplying the colony was the lottery. .. The profit of the lottery enabled the colony to be supplied during a time of great difficulty and anxiety. A new development contributed materially towards saving the situation. In 1613 an experimental consignment of tobacco had been sent from Virginia, and it was soon recognized that this crop would enable the plantation to subsist. The treasurer and council were so impressed with ‘the very good and prosperous condition” of the colony that in the early part of 1616, it was announced that a division of lands would be made to those adventurers who applied and conformed to certain regulations [99] William Robert Scott, the Constitution and Finance of English, Scottish, and Irish Joint Stock Companies, Vol II, pp. 254-5
Office Politics–The history of the Virginia Company includes several questions of political alignment … which historians in the main have accepted as mere fact, scarce important enough to detain them, which still await their complete explanation. The first of these is the virtual surrender by Smythe and his faction of the colonizing and governing functions of the Company. Sir Edwin Sandys, the very antithesis of Smythe, was made ‘assistant to the Treasurer’, and apparently given a free hand in the matter of colonizing and governing. [99] N. W. Stephenson, “Some Inner History of the Virginia Company” (William and Mary Quarterly Vol 22, No. 2 (Oct 1913) Omohundro Institute of Early American History and Culture), pp. 90-1. During the teens, one can see the traditional merchant adventurers, either leaving the sinking ship outright, or moving their attention from Virginia to Somers. That might have been the vacuum they drew Sandys in during this period. The two men worked out a relationship for half a decade and we have little support that friendship and mutual respect underlaid it.
Sir Thomas Smythe, during nearly ten years of the Virginia Company was its directing spirit. And ever there was an out-and-out plutocrat, in our modern sense, it was Sir Thomas. With a finger in nearly every bold venture of his time, he literally ranged the world in search of dividends. The image of him who goes up and down seeking whom he may devour inevitably comes to mind [a robber baron, I insert]. We are not surprised that Virginia under Sir Thomas’s rule, resembled a penal settlement rather than a colony, justifying the modern account of the earliest Virginia as ‘a plantation system … with great rigor, the colonists working in gangs with officials as overseers, eating a common tables, and living in common barracks. It was only natural that the Company maintained both an absolute monopoly of land and trade as long as Sir Thomas ruled it [99] N. W. Stephenson, “Some Inner History of the Virginia Company” (William and Mary Quarterly Vol 22, No. 2 (Oct 1913) Omohundro Institute of Early American History and Culture), pp. 90-1;
Stephenson’s article is one drawn from a genre that operated on the fringe of American historians at the time. More prominent historians of the time (Osgood, for one) did not challenge the thesis of this group (that the Virginia Company was Jamestown’s primary policy system for the first decade and after 1612 did the local council exercise its own autonomy and initiative to define the Company policy to confront local realities as the council saw them). As we shall see the appointment of a company Captain-Governor, whatever else it did, created order and authority and imposed the will of the local council on the day-to-day life of those resident in the colonies. That the colony averted an immediate pressing fiscal crisis did leave an oligarchical board in control in London, but that far away grouping was willing for several years to follow the suggestions of its local council; to the extent the London corporate body got deeply involved in a colony—it was its Somers Island proto-colony.
[999] Lotteries:
The Virginia Company had to face the prospect of raising its own funds desperately needed to finance the supply ships and population recruitment, Each new debt issuance meant new investors and the potential for new members to the board of directors. Hence, the prospect of dilution in the power of the London board of directors was now on the table. We shall see that in 1612 the expansion of the board and investor base badly complicated the Company’s ability to secure consensus behind goals congruent with permanent settlement. While a lottery diffused Company attention away from Virginia itself, it did not bring divergent and aggressive shareholders into corporate decision-making.
The residue of a national campaign based on patriotism and European rivalries, however, attracted a different sort of investor-board member. While the trading factory oriented merchant adventures were losing enthusiasm and moving on to opportunities suitable to their goals, a well-connected privateer group had come on board. Their colonization meant establishing a base of operations from which raids and privateering expeditions could be launched. Again, whatever it took to found a permanent settlement lacked sympathy from these new adventurers. The only source of funds on the menu for these purposes were those that came from the lottery or the king—and as we shall see the king remained “a dry well” when it came to investing hard currency into colonization outside of Ireland.
So it is pretty evident the lottery, whatever its deficiencies, was the only way viable to ameliorate the Company fiscal crisis. Perhaps surprisingly, lotteries in some form came to be a primary tool of Colonial and early Republic economic development financing tool that lasted through to the second quarter of the 19th century (early railroads in particular employed lotteries). Lotteries were an important means by which venture capital was raised and it is probably a surprise that in the first half-decade of Virginia’s founding, it materialized and was a cornerstone tool on which the colony’s future appeared to be dependent upon.
It is worth our while, therefore, to briefly describe a lottery and see how it was instrumental in raising funds for the Virginia province for more than a decade following. For the reader there is no great violence done to compare contemporary lotteries with the 1612 English-style lottery. Probably the most important difference is today the average individual goes to the store and buys her ticket; in the 1612 period affluent individuals participated, and the proverbial Molly Malone (the oyster vendor) did not. A subscription ticket was still too much for the everyday citizen. So lotteries then were more a class thing than today.
The other exception is voluntary joint stock corporations (guilds, trade associations, ad hoc investment groups, and some municipal-based entities) did participate. In regards to the Virginia Company, the last groups were well represented, as the reader will remember in this period, cities competed among themselves for advantage in participating and sharing in the glories and prosperity of the New World. Municipalities franchised lotteries, and the Virginia Company would send in its team to organize, promote and distribute the winnings–a portion of which went to the home town.
In either case participation in the lottery did not entitle one to be a “member”, voting or not, in the joint stock corporation. Lotteries did award prizes to the winners drawn, and the drawing of the winner was an event followed and reported on. Selling of lottery tickets was a serious organizational activity, and the Virginia Company hired vendors to promote sales. Vendors went on circuits through towns/cities thought as likely markets. Interestingly, a fair way to promote lotteries was to write ballads (songs) that linked the lottery to exciting ventures, finding gold, or other things of popular interest—sort of like the famous Coke commercial “Like to Teach the World to Sing in Perfect Harmony”.
The first Virginia Company lottery (March 1612-Scott reports July 29th, p. 252), the Great Lottery it was called, was at the public area of London’s St Paul (the old one, not Wren’s post-fire tourist and skyscape fame). They drew from London’s middle and upper classes, and were held in the country’s largest marketplace. Ticket price was 2 .6 shillings (half a crown), very affordable to those of means, if one wanted to wager, and the prizes totaled 5,000 pounds, which included a “fayre (fair) plate worth 1000 pounds. The sale period was extended a month because sales were not robust as expected—and trust was obviously lacking as rumors of corruption abounded.
Virginia Company lotteries needed to be marketed for extended times (the next lottery, “the Little Standing Lottery” was hawked for nearly a year). The Second great Lottery, started in summer of 1612 and the drawing and prize was held in November 1615. After 1616 the Company just conducted “running lotteries”. Individual lotteries were run in several larger cities throughout the decade, and such lotteries employed individuals who would, like traveling sales, work their districts. https://encyclopediavirginia.org/entries/virginia-company-of-london/
I might add the back of the barn tale that whatever its faults the lottery lingered on through from 1612 thru 1620. It’s suspension had to wait for a suspended Parliament to be called into session. Lotteries in general possessed an aura of corruption (they benefited enterprises of the rich and were viewed as quick rich schemes that exploited the “gambling” instincts of “certain” people). Over the decade, pressures built first on Parliament, and return when the King reconvened Parliament after 1619. Eventually, the King issued an edict against them in 1621. By that time as we shall soon see, the Virginia Company after 1618 shifted away from lottery revenues and based its revenue raising on selling of land in Virginia.
Worse, the Virginia Company, a creature of royalty and wealthy London merchants, generated a “populist-style” reaction, sort of similar to that associated with today’s Wal-Mart in a small town, Chic-fil-A, or grapes/wine in the old Cesar Chavez days. The sales campaigns by the Company were not at all without serious controversy:
Barbour’s way [Virginia Company chief official of lottery sales] way of conducting the lottery wrought its evils for the people of the towns in which his agents were at work complained at the demoralizing effects upon trade and industry that were caused by the popular excitement which the lottery aroused. The complaints were brought to the attention of Parliament, where the master of the wards, and later lord treasurer … reported from the King that the latter had never liked the idea of the lottery, and had only agreed to it because he was informed that the colony could not subsist without it. … Therefore, in March 1621 at the request of the House of Commons, the Privy Council ordered ‘that the further execution of these lotteries bee suspended” [99] Charles M. Andrews, the Colonial Period of American History: the Settlements, Vol. 1. p. 138 [999]
the 1612 Charter Shapes Virginia Development
To some extent it, the balance between the two separate realities (London’s and Jamestown), all came down to finding some way to reduce the dependence of Jamestown on company-financed supply ships populated with a constant stream of colonists intended to replace those who had died. These supply expeditions were driving the Company into bankruptcy, and its assumption of the role of immigration manager had borne little fruit other than populate the Jamestown graveyard. By the end of 1611-12 it was seemingly recognized both had to stop—and they did. After 1611, the Company could no longer send in the ships with immigrants that would overwhelm the local governance.
Governor Dale, particularly after 1613, tempered the tone and tenacity of military governance, and introduced what became Virginia’s first most significant economic, political and social change. In his last three years, Dale proved to be an innovative and temperate governor. Still, the reader ought understand the period from 1610 to 1616 could not even be described as stagnant—it was declining, Virginia’s population contracted. “So great was the mortality that in April 1616, out of a total of more than 1,000 who were in the colony in July 1610, or had landed there since that date, only 351 survived” [99] Herbert L. Osgood, the American Colonies in the Seventeenth Century, Vol 1 pp.73.
It was only with Dale that a serious attempt was made to counter the mortality rate and to make deliberate efforts to retain the indentured upon expiration of their term of indenture. Dale (1612-13) dispersed the Jamestown population into a series of new settlements, beginning with Henrico, than up and down the James. This, of course, got them away from Jamestown—which remained as the capital, but not a population center. That dispersal into small settlements, united only by the river itself introduced isolation and increased vulnerability of the colony. The latter especially meant the struggle against the Powhatan and the tribes had to be brought to a conclusion. The marriage of Pocahontas with Rolfe, intermediated and conducted by Dale achieved that result.
the Third Charter’s Buys Time for the Company
The Third Charter did not “solve” the mess that was Virginia Company finances, debt, and future cost obligations. Its principal financial element was royal permission to commence a nation-wide lottery, whose revenues it was hoped would be sufficient to cover costs of founding a permanent settlement. It never came close, of course, but it did allow the Company to pay its bills, mostly, and limp along year by year. Lottery generated enough for the Company to survive, but alive and well in London did not translate into Virginia growth nor its permanent settlement needs. That task seems to have fallen on Gates, but mostly Dale.
In a nutshell, this incapacity to extend its governance to Virginia, and provide resources to grow the colony, left that task to the Virginians themselves. Inevitably, the Company’s lack of capacity, perhaps worse, lack of ideas on how to solve the task of growing Virginia, created a void that those in Virginia had to take advantage of in order to come up with solutions that were not forthcoming from London. As one might imagine, for its own reasons London-bound corporate officials, having placed their “own men” in positions of authority in Virginia, were open to their ideas on how to fill the strategy void. If De La Warr-Gates-Dale had achieved stabilization, then what was the next step—how was the Company to finance the growth of this military colony?
The Company in 1606 assumed all the obligations required of a permanent settlement in return for total ownership over the means of production and the profits that emanated from them. That’s how they were going to pay off any debt, provide return to shareholders, and provide the resources needed for permanent settlement growth. By 1612, the only thing in Virginia that was growing was its cemeteries. In 1612, the germ of a new approach was experimentally tried by Dale. It didn’t challenge, rather it simply abandoned a basic core chunk of the Company’s monopoly by granting its land to its indentured workforce upon the latter’s expiration of its term of indenture.
I do not know, and welcome any clarification, as to whose idea this was. I believe it was Dale’s; Dale wrote a publication at this time defending and explaining the logic of this program. Dale was Gates’s man, whose background provided him a measure of support in James’s court: his best friend was James’s heir apparent, young Prince Henry. Gates was probably close to Smythe and my suspicion, Smythe, a multi-tasker beyond imagination—like Elon Musk—Smythe no doubt saw their ideas as coming from friendly and supportive sources, and let them go forward on their own initiative or with (unrecovered) letters of correspondence. Whichever it was, Gates and Dale went forward.
Tobacco, the Commodity that Could Pay the Bills:
There was a huge need to find an export that could be sold at profit in England. Fools gold and timber, and whatever else the colonists had dragged into the ship’s hold thus far had to stop, and a desirable marketable export product had to be found—and fast. If the Company could discover, innovate or trade for a robust export crop or product it would be a godsend to the corporate fiscal plan. The absence of such a product had been a surprise as Hakluyt’s vision of accessible and willing natives with access to a host of marketable commodities—a sort of factory trading relationship-had never materialized. In 1611 with the First Powhatan War ongoing, that relationship appeared out of the question.
Fortunately, one of their on-site Company officials had an idea he believed could work: a better tasting tobacco. John Rolfe had hopes for this in England and had brought plants with which to experiment in Virginia. A shareholder well-placed in the Company hierarchy, Rolfe had traveled on board with Gates in 1609—and was shipwrecked. He spent ten months in Bermuda—where his wife died. By the time he got to Virginia and was in a position to engage in this experiment a considerable period of time elapsed. When Dale arrived in country in 1611, however, he set up his first plantations—granted to him by Dale. When his experiments resulted in what he believed was a marketable good taste, he distributed his seed to his company companions, and planted.
Williams reports that in 1613, he sent “a small amount to Sir Thomas Smythe for appraisal” [99] Jamestown Colony, xliii. 1613 proved a busy year for Rolfe; he was married by Dale to Pocahontas. Rolfe named his son Thomas, after Dale, and Dale named his first settlement where Rolfe was located after Prince Henry. By 1613-14 Rolfe was ready to start mass-scale production on plantations-hundreds launched by the Company starting in 1613. Rolfe became the Company’s Secretary of the Colony and sat on the Governor’s council in 1614.
When Dale returned to England in 1616, he brought Rolfe, his wife, and Thomas with him to conduct a promotion campaign for tobacco and the colony. In England, De La Warr, the first recipient of a Dale’s Gift hundred plantation on which he had already planted and was able to ship to England, introduced the family to English society and the court. Only Rolfe would immediately return to Virginia. Pocahontas died on the ship back, in sight of England—where she was buried and her young son raised..
While historians have always, correctly, noted that tobacco never fit the preferences of the Company leaders, nor the King, both instinctively preferred a diversified economy, their actions as early as 1611 in conjunction with Rolfe strongly support our sense that of all the potential for quick export profits, tobacco from the start was high on the list—for all practicable purposes it was the only product on the list. With an entrepreneur within their ranks–and realistic in its aspirations for a market, Rolfe innovated an export product controlled by the Company which could be planted on company estates-plantations, and made available to former indentured servants upon the expiration of their indenture. Within a planting cycle, the tobacco could be sold/bartered/ for staples, tools, and seed, and Virginia had a crop to export.
One need not overthink this readily available solution to the company fiscal crisis. In this early period, there was probably little thought as to how fast tobacco could achieve its exclusivity of export, nor that it could easily become the “way of life” for the colony. There was no plan behind the spread of tobacco, other than the need for quick profits to pay the Company bills; that proved sufficient to plant the monoculture in early Virginia.
In this early years, the fear that tobacco would take over everything it touched, likely was not central to anyone. But as little as five years later (by the mid-teens), the “disgust” with the stampede to tobacco was noticeable—even Smythe was resistant to it—and the concern that a diversified economy was at risk prompted a decided counter effort included in the 1618 Greate Charter instructions. But by this time, tobacco was impossible to stop; it was promoted intensely by the Virginia company officials, ship captains, and young entrepreneurial immigrant freeman and company business associates. The headright attraction program cemented tobacco into the business plan and post-1612 investors willing to set up plantations outside the company-owned framework, on their private land, granted by the company, along with a workforce embraced tobacco as well.
Role of tobacco as currency: At this point in our history it is wise we prepare the reader for the inevitable, and soon to be felt, need to install an economic base in the permanent settlement. Tobacco waste no little time becoming the defacto currency, medium of exchange in a wilderness colony that lacked access to the standard currency of England. To an economist, the lack of a currency is an obvious massive problem to overcome—and Jamestown had no currency for the better part of a decade, Partially in a semi-socialist military colony it had become, there was less need for an monetary exchange system, but that meant there was not practical way the Jamestown residents could generate capital, besides their sweat labor, necessary for their own infrastructure.
Moreover the lack of currency only intensified the subordination of the Jamestown “unpaid” employees. Just how were these folk supposed to set up a colony when their term of indenture left them no compelling tools with which to set up their opportunity. Understanding the impact of an economy without a currency we can better understand why tobacco took of like wildfire in the early “teens”.
First, the Virginia Company, in its desperate fiscal need, preempted that any need for currency because the 1609 charter set up the Company Magazine. Exports and imports to Virginia went through this distinguished organization, led by Alderman Johnson. He dedicated himself to wring out whatever he could for [himself ?] and the Company coffers. His goal was to buy in Virginia for the lowest price possible, and sell in London for the highest. In this manner the debt for the supply ship bond issuance and shareholder dividend were to be paid. As we know the Company insisted that Jamestown’s economy (so to speak) was tasked with paying for its own supplies.
That set off Jamestown’s company employees to scuttle about finding goal, timber, and whatever to send back to England for sale. They did this instead of planting their own staples and making their own tools, to the degree possible. Exports to pay debt only hollowed out the sustainability of the colony. The problem was aggravated by the London belief that “more was better” and it sent over more colonists than the economy could handle and support. Their deaths during seasoning time only generated another large number of immigrants sometime previous to the winter—without sufficient stores, staples or tools to feed them while they died. This is a horror show that the company played through 1611—when they finally slowed immigration down (because London was broke, BTW).
Putting aside the problem that those exports didn’t come close to paying the bills, and ignoring that Virginia-based discretionary income (which could be used for infrastructure, for example) was reduced to nil, and since payment to its indentured workforce and employees was deferred to the future, and day-to-day expenses were assumed by the company, there was no need for a local, or even English currency, to be used. We can begin to see what seldom enters into Jamestown’s historic tale: that as long as Jamestown was enmeshed in this Company-imposed military colony, semi-socialist “economy”, the permanent settlement economic essentials were simply ignored.
As alluded to earlier, the King in 1606 had no money to bring into the Company project, and so if he was to retain a dominant a role he needed to inject something besides his signature to this public private initiative. What the King had in Virginia, and he had it all (a monopoly of it), was ownership of all land in the area claimed for England. The reader, of course is aware, “this ownership” was assumed without regard for its Native American inhabitants as no provision was made for its purchase—or even a fiction of purchase.
Nevertheless, by making land grants to the Company (which the Company could sell or use as a valuable incentive for a desired action/ initiative) the Company got an equivalent to money for its use in the development and growth of the colony. Land became a commodity that functioned as a currency of exchange. By 1613, the Company would be paying its employees with a land grant to establish a plantation whose goods could be sold for payment.
We shall see shortly the Company was not empowered to issue its own Virginia currency, so English coin, hard to export to Virginia, was always going to be very scarce. Without coin, bartering prevailed, and an alternative currency developed about land, its sale and use, and even trading of indentured servant contracts, and amassing property through marrying newly made widows. While it lacks sex appeal, this failure to address how economic transactions were to be made in Virginia, was, if you care to think about it, a very serious incumbrance.
Say it another way, instead of the King issuing orders for his mint to coin/ more English pounds for use in his colonial ventures, the company had to find an equivalent. This would set up what proved to be a major issue and chasm between England and the colonies: how the colony was to finance its debt issuance, lending practices and how its citizens were to pay for its wants and needs. In empowering the Company to do this, in its time the province itself, its legislature most specifically would inherit the company’s obligations and power. That was not the issue in 1609. The Company would rely exclusively on its semi-joint stock individual subscriptions/companies for financial resources for a little while longer. But the financial die had been cast.
Democratization of Company Governance
The 1612 charter addressed several serious Virginia Company needs. These needs were long-standing and related to the lack of salient experience in permanent settlement, and carryover of past practices and strategy paradigm that proved inadequate to the Company’s mission. To repeat the theme we have developed in this module series, the Virginia Company was broken at its birth in 1606-so was the Jamestown colony. Charles Andrews does not pull his punches on this matter either: “Thus, at the very outset the form of control provided by the charter [s] was not well adapted to promote a successful colonization movement and it is not to be wondered at that the first attempt should have been a failure”. [99] Charles A. Andrews, Colonial Period of American History, Vol. 1, p. 88.
The form of joint stock corporation existing at the turn of the seventeenth century, and the attitudes of its investors, in my hindsight, predestined the Company’s failure The policy system set up in England by James, and followed, more of less, by the Stuarts through 1689 proved to be inconsistent, preoccupied with other matters, and unsupportive of a colonization which cost it monies it wanted for other purposes. In the hands of another royal policy system who knows if the Virginia Company could have made it through?
But James and certainly Charles I did not want to directly manage colonization. They delegated it to the Virginia Company (and others), but the “structural vehicle” that was the Virginia Company—a joint stock corporation of which there were several varieties at that time—was not developed or matured sufficiently to conduct an effective and sustainable colony. As I said in my opening paragraphs, the Virginia Company was not ready for prime time colonization in 1606, and by 1612 it was a basket case going concern. We have already seen in the Second Charter that the Company tried seriously and meaningfully to repair its broken parts; it would do so again in the Third Charter of 1612.
In its charter and in the attitudes, values and ambitions of its shareholders and board of directors, the Company had its vision of what the colony should be and develop into. The problem from the start was the vision of Virginia governance and economic development was seriously different from that of its London corporate masters. Hence “a separate reality” existed in London and Jamestown from their beginning in 1607 and try as they may the two realities never synchronized. The intention of the Company was to set up a permanent settlement—but they had little sense of what that meant, nor what it entailed.
The crew sent to Virginia to create and install that vision during its first five years were overwhelmingly not settlers, but adventurers, well-meaning opportunists, and a indentured “workforce” that was little more than company property. That the latter were intended to work as company employees with the sketchiest of ties to the mission of permanent settlement. That the others, usually men of means, by no means, were in their own unchartered waters, governed by their own ambitions, character and reaction of corporate governance. This is a human relations management problem of the first order, which, not surprisingly was put into the backburner due to the wonderful location of death-causing swamps that was Jamestown.
If the Company was fatally flawed at its birth, an equally strong case could be made that Jamestown was fatally flawed by its location. That Jamestown is no more, an archeological site, and not a province capital, is testimony. But the problem I am dancing around in all this description and many words is the “separate realities” interacted, and each made the world of the other more desperate and seemingly unfixable—and they were forever changing, making them unpredictable to a considerable extent. In this present instance, as the Company attempted to repair itself in London, it really had no idea what the consequences would be in Jamestown. In the end it did not matter; each went about coping with their own realities and coped with, or ignored, the realities of the other.
Ron W. Coan 