Financial History Issue 126 (Summer 2018) | Page 18

Original caption: “An assaying laboratory, showing balances, muffle furnace for cupeling, ingot mold, etc.” A number of assays were conducted to determine if the ore Frobisher brought back contained gold. It didn’t. another 1,296 tons of ore. Much of the ore was immediately dispatched to the now- completed blast furnace, and the assays began again. Soon everything went silent. Results were not forthcoming. The assay- ing process dragged on and on. Fervent hope turned into concern and worry. Lok began running short of money. At the end of October, he reported that he needed to raise £6,000—some from outstanding pledges and some in new capital—to take care of his bills and cover the considerable and unbudgeted cost of handling and test- ing the ore. Now, as he tried to collect, Lok realized he had made a terrible mistake. Before the first voyage, he had essentially signed a personal guarantee for The Cathay Com- pany’s obligations. But the company had never attained formal legal status, which meant that Lok was personally respon- sible for the costs of the entire venture. He soon found that collecting money after the completion of a venture was far more difficult than doing so in advance, especially when no one was sure if the ore was valuable. Some investors refused to honor their pledges, and Lok got stuck with the entire bill. He was suspended as treasurer of The Cathay Company and, in desper- ate straits, petitioned the Privy Council’s commission for a grant of funds, pleading that he, his wife and 15 children had been reduced to begging. They turned a blind eye, and Lok ended up in debtors’ prison. Frobisher, too, was outraged and railed against the assayers, certain that his ore was the genuine article and that he was being cheated out of his rightful fortune. William Williams conducted a final assay on the ore in May 1581. It proved once and for all that the ore did not con- tain sufficient precious metal to make it profitable. The rock was not completely worthless, however. It was repurposed in a variety of ways—from the repair- ing of roads to the construction of a wall surrounding one of Queen Elizabeth’s houses. If there was a silver lining to Eng- land’s gold bubble of 1576-8, it was that the merchants learned a valuable lesson. Having been so badly burned, they never again invested so heavily in prospecting ventures in the New World. They kept up hopes that they might stumble on a rich lode, but they soberly turned their atten- tion to other, more mundane, commercial pursuits—trade in fish, furs, sassafras and, of course, tobacco—that eventually led to the development of American settlements and a sustainable, productive and unique society.  16    FINANCIAL HISTORY  |  Summer 2018  | www.MoAF.org John Butman is an author, editor and collaborative writer. His writing has appeared in the Harvard Business Review, The Nation and other publica- tions, and his work has been featured in The New York Times, The Economist and media venues around the world. His titles include Trading Up: The New American Luxury, which was a Busi- nessWeek bestseller, and Breaking Out: How to Build Influence in a World of Competing Ideas. John divides his time between Portland and Bailey Island, Maine, not far from one of the earliest English settlement sites in America. Dr. Simon Targett is a writer, historian and media consultant. He holds a Ph.D. in history from Cambridge and has writ- ten articles on British history for various publications. An award-winning jour- nalist, he has served as a correspondent and senior editor of the Financial Times and as global editor-in-chief of The Bos- ton Consulting Group. He lives in Lon- don with his wife and two children. Excerpt taken from New World, Inc.: The Making of America by England’s Mer- chant Adventurers (Little, Brown and Company, 2018).