Financial History Issue 126 (Summer 2018) | Page 15
By John Butman and Simon Targett
How England
Learned the Perils
of Prospecting
The Gold Rush
of 1576
Toward the end of March 1577, with
spring in the air, Michael Lok, then about
45 years old, found himself in a difficult
situation. He was in the final stages of
organizing a voyage to the New World,
and his fleet had to set sail from Eng-
land soon to catch the westerlies that
would scud them across the Atlantic to
Newfoundland. But Lok had not raised
quite enough capital to comfortably sup-
port the venture, so, as March slipped
away, he found himself in fundraising
mode, approaching friends and fellow
merchants, trying to secure pledges.
It was never easy convincing inves-
tors to gamble their money on high-
risk overseas ventures, even for Lok, who
was a well-known London merchant and
principal agent—essentially the general
manager—of the Muscovy Company,
England’s first joint-stock company. It
had been formed in 1553 to advance the
country’s overseas trade initiatives, and
now it did considerable business to the
east, primarily with Russia.
In 1575, Lok had gained permission
from the Muscovy Company to form a
new organization, to be called The Cathay
Company, whose purpose would be to
seek new trade opportunities to the west.
The plan was to locate the fabled North-
west Passage that was believed to flow
along the northern margin of America,
sail through it to the East Indies and
Cathay—as China was then known. There
they would conduct trade, exchanging
England’s woolen cloth for the sought-
after commodities of the East.
Lok had teamed up with Martin
Frobisher, a bold and experienced mari-
ner, albeit with a slight spotty reputation—
as the result of occasional piracy and stints
in jail. Lok took on the role of principal
organizer and main financial backer of
the voyage. Frobisher’s fleet of three small
vessels set sail in June of 1576, with high
hopes of a speedy transit to China and a
swift return, holds filled with exotic goods:
silks for clothing, spices for food prepara-
tion and medicinal concoctions.
Portrait of Sir Martin Frobisher
by Cornelis Ketel, 1577.
FINANCIAL HISTORY 13