Financial History Issue 126 (Summer 2018) | Page 17

accidently stumbled on a gold mine shook Lok to his core. If The Cathay Company could locate a new wealth stream, and Lok were the one to develop it, his whole life and the fortunes of England could be transformed. At the time, England was a marginal country on the edge of Europe, and in dire straits—socially, politically and economically. Its cloth merchants, long content to trade in Continental mar- kets, faced increased competition from abroad and a decline in demand for their products. England was overshadowed in wealth and might by Spain, whose trea- sury overflowed with the output of Mexi- can and Peruvian gold and silver mines. English maritime capability—its ships and navigational knowledge—was limited, and so were its options for expanding its reach. As a result of the Treaty of Tordesil- las, agreed in 1494, the unclaimed areas of the world had been divided in two by Pope Alexander VI, with half granted to Spain and half to Portugal. The English dared not sail the southern routes to China— around the tip of Africa or South Amer- ica—or venture into the West Indies or South America, for fear of treading on the salty toes of Spanish and Portuguese trad- ers. If England could tap into a source of precious metal as rich as Spain had found in Peru, Lok could conceivably become fabulously wealthy and England could erase its debts, build a more capable navy, develop new products for sale, open new Continental markets and assume a much more powerful position in the world. But first Lok had to be sure that the glis- tering substance was indeed gold, which meant subjecting it to a thorough assay by an expert metallurgist. This was not so easy or sure a thing as it may sound. At the time, the assay process—from the French word for a “trial”—was still in develop- ment. Precious metals, including gold and silver, are typically embedded in rock and earth and rarely found in a pure state. The purpose of the assay is to separate out the precious metals and determine the per- centage of gold or silver in the rock or ore. The usual approach was to burn the ore in a furnace, often in combination with other materials, until the precious metal melted out. But there was no standard procedure, and results could vary widely depending on many factors, including heat, duration, additives and the skill of the assayer. Lok entrusted his precious sample to one of England’s leading metallurgists, Wil- liam Williams, asking him to keep the results confidential. The findings were not encouraging. The stone, Williams said, was an iron compound of some kind—a pyrite, otherwise known as fool’s gold. But Lok, knowing how unreliable an assay could be, took samples to two other experts. They both confirmed Williams’s view that the rock was worthless. Still Lok refused to accept the tests as conclusive. Like a hypo- chondriac seeking a doctor who will con- firm his imagined ailment, he looked for an assayer who would give him the analysis he wanted. He soon found one: Giovanni Baptista Agnello, a Venetian goldsmith living in London, who was considered an expert in alchemy and metallurgy. He examined Lok’s sample and, after three days of tests, reported that he had managed to extract “a very little powder of gold” from the ore. Lok, finally hearing what he wanted to hear, now seemed unable to accept it. Why was it that Agnello had found gold when three other skilled assayers had found none? Agnello assured Lok, in his native Italian, easily understood by the well-traveled Lok, “Bisogna sapere adulare la natura”: You have to know how to flatter nature. Lok was not the only one pursuing an investigation into the stones. The Queen’s Privy Council had formed an official com- mission, headed by Sir William Winter, surveyor of the Navy, to look into the matter. Their results were conclusive and contrary to Lok’s. The royal assayers esti- mated there were four ounces of gold in every hundred pounds of ore. That meant each ton was worth some £240. And, with ore this rich on the surface, there was likely to be much more gold lurk- ing underground. As Winter explained to Lok, the venture was now a matter of national significance, far too great for The Cathay Company to pursue solely for its own private gain. The news flew all across London and beyond. Lok’s struggling venture was swiftly transformed into a hunt for gold, and his financial worries evaporated. In just six weeks, nearly £2,000 of additional capital was pledged, taking the total raised to £5,150—more than enough to cover the costs of a well-supplied voyage. Not everyone was convinced, however, of the benefits of chasing after precious metal. Philip Sidney, the great poet and one of the main investors in Lok’s venture, had been cautioned about the risks of gold lust. He had written a letter to his friend, the Frenchman Hubert Languet, one of the most learned men of the day, to report that Frobisher believed the gold find could be more valuable to England than the mines in Mexico and Peru were to Spain. Languet replied with a warn- ing. England would soon be gripped with an “insane” longing and unquenchable “thirst for gold,” he wrote, which was among the “most fatal and hurtful to man- kind.” Languet counselled Sidney to resist the temptation, advice Sidney ignored. By May, two months after the rock had been rescued from the fire, Lok had orga- nized the second voyage, and Frobisher was ready to sail. He had be en instructed to gather and mine as much ore as the two ships could hold. At the end of June 1577, the fleet reached an island near New- foundland, and the men immediately dis- embarked and set to work. They lifted, dug and carried the heavy stone for three weeks—with Frobisher working alongside them—and loaded almost 200 tons of ore aboard the ship. On August 20, with the weather turning nasty and the men exhausted, the fleet headed for England. This time, when Frobisher returned to London, the news of the gold-laden ore on English soil generated so much excitement that Lok began thinking about a third voy- age, even before the tests of the ore were complete. Several assayers were engaged, and they soon fell to squabbling about methods and motives, although they all agreed that a bigger and better furnace was required to test such a huge sample. But no one had the patience for that, so the assayers made do with an existing fur- nace. They concluded that the “richness” of the ore was such that it would indeed yield a great deal of gold. Lok and The Cathay Company wasted no time organizing a third voyage that would not only gather more ore but would transport 100 men to establish a settle- ment at the mining site. This enterprise was far grander than either of the previous two. With Elizabeth as the lead investor, the merchants pledged a total of £6,952, more than the amounts raised for the first two voyages combined. The fleet com- prised 15 ships—the largest assembled for a commercial venture at that time—with the Ayde once again as flagship. Frobisher set sail at the end of May 1578 and returned to England that fall, hauling www.MoAF.org  |  Summer 2018  |  FINANCIAL HISTORY  15