The Honourable Company

For He [God] hath not only supplied my necessity to lade these ships I have, but hath given me as much as will lade as many more ships if I had them to lade. So that now my care is not for money but rather where I shall leave these goods…in safety till the returne of ships out of England.

Here was one good reason to establish a ‘factory’ or trading establishment though not, in view of the pepper shortage, in Aceh. Instead he would proceed to Bantam in Java where pepper was supposedly plentiful and the Dutch were already well established.

First, though, he returned to pay his respects to Ala-uddin Shah. Some choice items from the prize had already been set aside for the Sultan. They did not include ‘a faire Portugal maiden’ because Lancaster had seen fit to release all his captives and because Ala-uddin Shah already had wives aplenty. In respect of their own subjects the Sultans of Aceh brooked no refusals in their exercise of the droit de seigneur. ‘If the husband be unwilling to part with her’, noted an English visitor, ‘then he [the Sultan] presently commands her husband’s pricke to be cut off.’

Yet for harem exotics there was always a steady demand. Ala-uddin’s successor would go one better by lodging a request with the Company for two English maidens. By way of incentive he added that, if either bore him a son, the child would be designated his heir. Rather surprisingly the directors of the Company would take him seriously. There could, of course, be no question of condoning bigamy by sending two girls; but one was a possibility and it so happened that ‘a gentleman of honourable parentage’ had a daughter with just the right qualifications, she being ‘of excellent parts for musicke, her needle, and good discourse, also very beautiful and personable’. So keen was the gentleman of honourable parentage to part with this paragon that when theological counsel raised certain objections to marriage with a Muslim, he was ready with a long and closely argued paper rich in scriptural citations which the directors adjudged ‘very pregnant and good’. Happily it was not quite good enough; for the matter was then referred to King James who, as with other contentious issues, determinedly ignored it.

Lancaster was no less diplomatic in the matter of the missing Portuguese maiden. He told Ala-uddin ‘that there was none so worthy that merited to be so presented’, at which, we are told, the Sultan smiled. A fulsome reply to the Queen’s letter plus suitable gifts were now handed over and, having at last got the measure of his guests, Ala-uddin bade them farewell by singing a hymn for their prosperity. Lancaster and his followers replied with a lusty rendering of the psalm of David and on 9 November 1602 the fleet sailed out of Aceh. Two days later the Ascension, being near enough laden with all that Aceh had been able to provide in the way of pepper and spices, was despatched for home. She reached London to a joyous welcome in June 1603 after a voyage remarkable only for the fact that she called at St Helena, thus inaugurating the Company’s long association with that island, and that she fell in with a pair of ‘marmaides’. They were definitely mermaids because ‘their hinde parts were divided into two legges’ and according to the ship’s naturalist they were probably husband and wife ‘because the moste of one of their heads was longer than the other’. ‘They say they are signes of bad weather’, he added, ‘and so we found it.’

Meanwhile the Red Dragon and the Hector had met up with the Susan at Priaman and found her lading almost completed. She sailed for home a few days later and arrived soon after the Ascension. Continuing to coast along the forest-fringed beaches of Sumatra, the main fleet passed the then dormant Krakatoa, entered the Sunda straits between Sumatra and Java, and ‘with a great peale of ordnance such as had never been rung there before’ anchored off Bantam in time for Christmas.

The Portuguese had never really troubled themselves with Java and Sumatra. Their preoccupation had been with the Spice Islands and their pepper requirements had been more than met by the tangled vines of Kerala’s forests. It was thus unsurprising that first the Dutch and now the English would choose Java as their main base in the East Indies. With its enormous population, its rich soil, and its wealthy courts, Java represented a domestic market second only to India and China. Additionally the twin north-coast ports of Bantam and Jakarta attracted maritime trade from all over the archipelago. They were also visited by an annual fleet of magnificent junks, laden with silks and porcelain, from China, and they were home for thriving communities of Chinese financiers and middlemen. Once again Lancaster was reminded that commercial activity in the East had long since spawned a vast and sophisticated network in which the export of spices to Europe was still a marginal sideline.

The Sultan of Bantam turned out to be a mere child of ten years. Government was exercised by a council of nobles headed by a Regent, a state of affairs destined to last long after the Sultan came of age. Lancaster, having sorted out the protocol, applied for trading rights, protection, and permission to establish a factory, all of which were granted. ‘We traded there peacably’, wrote the diarist, ‘although the Javians are reckoned amongst the greatest pickers and theeves in the world.’ So it would prove; but after a few marauders were cut down in the act of breaking into the Company’s premises, business proceeded briskly. ‘Within five weekes much more was sold in goods [mostly Indian cottons] than would have laden our two ships.’ The surplus stock was entrusted to senior factors, or merchants, who were to be left at Bantam to buy and sell in readiness for the next fleet from England. Thus was established the first English factory in the East. In no sense, of course, did this modest agency represent a colonial nucleus or a political toehold. It was simply an expedient which by spreading the Company’s trading activities throughout the year eliminated those market factors which would otherwise inflate the price of spices and deflate the price of piece goods every time an English ship entered port. In theory it also reduced the turn-round time for shipping by ensuring that a cargo was always ready for loading.

As well as the factors left at Bantam, another small group was dispatched to establish a similar factory in the Moluccas. The latter sailed from Bantam in a forty-ton pinnace (which must have been commandeered or chartered since it was considerably larger than that assembled in Madagascar) in early 1603. Such satellite voyages were a necessary feature of European trade throughout the East and especially in the archipelago. The fleets of ‘tall ships’ plying between Europe and India represented only the main trunk of the spice trade. Its twigs and branches were an infinitely complex web of subsidiary voyages in small pinnaces and galleys, in Malay prahus and Chinese junks, often commanded but rarely crewed by Europeans, by which the produce and intelligence of remote parts and shallow waters were delivered to the factories and the fleets. The factory system necessitated this involvement in what was really another aspect of the carrying trade. But to the Company’s directors in London this branch of their servants’ activities, with all its bizarre and colourful ramifications, would ever be a subject for misunderstanding and suspicion. The ‘country trade’, as it was called, invariably confounded the auditors but enriched the adventurers.

In the event the pinnace assigned to the Moluccas was back in Bantam after two months, supposedly defeated by adverse winds. But if it had failed to reach the clove-producing islands of Ternate and Tidore, it is clear from the report of the Dutch admiral at Banda Neira that in March 1603 it had somehow found its way to Pulo Run in the nutmeg-scented Bandas. The English had lost the spice race – but only just and not irrevocably. John Middleton, Lancaster’s second in command, would have been the obvious man to have taken up the challenge of finding more places like Pulo Run where neither the Dutch nor the Portuguese had established monopolies. But he now died, the first of many to succumb to Bantam’s lethal combination of enteric amoebae and malarial mosquitoes. Instead it would be his two brothers, Henry and David, who would open up the Moluccas. Both were now serving under Lancaster; and both would eventually join brother John in an eastern grave.

On 20 February 1603, with another ‘great peale of ordnance’, the fleet at last ‘set sayle to the sea toward England’. Steering straight across the Indian Ocean they crossed the Tropic of Capricorn in mid-March and were off the coast of southern Africa by the end of April. There a storm whipped up such seas ‘that in the reason of man no ship was able to live in them’. Somehow they survived, but on 3 May came ‘another very sore storme’ which so buffeted the Red Dragon that it caused its rudder to shear off. The rudder sank without trace and there was no replacement.

This struck a present fear into the hearts of all men so that the best of us and most experienced knew not what to do. And specially, seeing ourselves in such a tempestuous sea and so stormy a place so that I think there be few worse in all the world. Now our ship drove up and down in the sea like a wreck so that sometimes we were within three or four leagues of the Cape Buena Esperanza [Good Hope], then cometh a contrary wind and drove us almost to forty degrees to the southwards into the hail and snow and sleetie cold weather. And this was another great misery to us that pinched exceeding sore so that our case was miserable and very desperate.

All this time the Hector kept company with the Red Dragon, standing by to take off survivors when it became necessary. A lull in the storms prompted an attempt to improvise a new rudder by using the mizzen mast as a sweep. It failed and the weather again worsened. This time the men were all for abandoning ship. But their commander stood firm and to quell any further ideas of desertion, sent orders to the Hector to leave them immediately and head for England. He also enclosed a note to his employers advising them of his situation and prospects. He would try, he said, to save his ship. He thought there was a good chance and that was why he was risking his life and the lives of his crew. ‘But I cannot tell where you should look for me if you send out any pinnace to meete me.’ Rudderless and undermanned, he might end up anywhere. ‘I live’, he explained, ‘at the devotion of the wind and seas.’

Next day the Hector was seen to be still keeping her station a couple of miles away and carrying little sail. Observing this flagrant disregard of orders Lancaster was clearly moved. ‘These men regard no commission’, he muttered in a celebrated aside which, like his ‘devotion to the wind and seas’, would be remembered long after names and dates and places were forgotten. Of such sentiments myths are made and to an enterprise as ambitious and enduring as the East India Company myths would matter.

With the help of the Hector’s crew a second attempt was made to rig a makeshift rudder. This time it held; so did the weather. On 16 June, after nearly four months out of sight of land, the two ships approached St Helena ‘at the sight whereof there was no small rejoicing among us’. Three weeks of resting, refitting, and replenishing their provisions with the island’s then plentiful stocks of wild goat were followed by an uneventful voyage back to England. They anchored in the Downs on 11 September 1603 ‘for which thanked be Almightie God who hath delivered us from infinite perils and dangers in this long and tedious navigation’.

CHAPTER TWO This Frothy Nation

THE SPICE RACE

So Lancaster’s fleet had reached the East Indies and returned without losing a single ship. It was no small achievement. Valuable experience of the eastern seas had been acquired and something had been learnt of the complexities and potential of the eastern carrying trade. More tangibly a factory with adequate trading capital had been left at Bantam while in London nearly 500 tons of peppercorns were soon being laboriously transferred from the Red Dragon to the Company’s warehouse. A handsome profit was expected and the Company’s future looked promising. Lancaster had earned the nation’s gratitude. James I, who had succeeded Elizabeth earlier in the year, rose to the occasion by rewarding him with a knighthood.

But though a success, the Company’s first voyage had been no sensation. For one thing it had failed to make direct contact with the clove islands, thus giving the Dutch two more crucial years in which to make good their claim to succeed to the Portuguese monopoly. Then there was the question of economics. Already there were those who failed to see how exchanging precious bullion for an inessential condiment like pepper could possibly be in the national interest; they likened the Company to the gullible native of Central America who supposedly congratulated himself on acquiring pretty beads and funny toys in exchange for boring old gold and silver; their numbers would swell with every voyage. But to a benign commander like Lancaster it was the loss of 182 men, two-fifths of his entire following, that rankled. Here was a less equivocal drain on the nation’s resources and one which even lemon juice had failed to staunch.

In the hard-nosed estimation of his fellow directors an even greater source of anxiety was the unfortunate effect that discharging a million pounds of pepper was having on the London market. A dip in prices was anticipated, but it so happened that in late 1603 the King too had come by a large stock of pepper, probably the contents of a captured carrack. His Majesty, as always, had a pressing need for cash and consequently placed an embargo on the Company’s sales until his own stocks had been sold. Naturally the directors protested. A dividend was immediately declared in kind – that is, pepper – and the London market was soon awash with the stuff. Prices halved. Some underwriters would complain that they were still burdened with stocks from the first voyage ‘six or seven years after’.

Had the Company been the brave new venture in joint-stock ownership which it later became, this would not greatly have mattered. After all, the whole point of a company operating on a stock jointly subscribed by its members is that this working capital should be long term, transcending individual ventures and so less vulnerable to the hiccups of the market. But in fact the 218 petitioners who in 1600 had become the Company of Merchants of London trading into the East Indies had subscribed for only one voyage. The majority now wanted their money back; they were not amused when instead they were told that for every £250 they had subscribed, £200 must be reinvested in a second voyage.

From the start the Company’s stock had appealed to two very different types of investor. On the one hand there was the shareholder interested primarily in a quick and substantial return on his investment. He might be anything from a tradesman to a courtier and, as the Company grew, he might entertain ulterior expectations of influence and patronage within it; but he had no obvious interest in the specifics of its trade. On the other hand there were those who perceived some collateral advantage in the trade itself. This group consisted of wealthy and influential City merchants with extensive commercial and financial interests outside the Company. Such interests might coincide with the Company’s upstream requirements, like the supply of bullion and broadcloth for export, of ships and provisions, of sources of finance, or with its downstream requirements like the sale, re-export and distribution of eastern produce.

At the risk of further over-simplification, these two types of investor may be roughly identified with the Company’s two institutional bodies, the General Court (later the Court of Proprietors) and the Court of Committees. The General Court comprised all those with voting rights, the qualification for which in the early seventeenth century was a minimum holding of, usually, £200. It therefore represented the generality of investors amongst whom those interested primarily in profits and dividends predominated. It was also, of course, the supreme authority within the Company. But, several hundred strong, it necessarily met infrequently and had little to do with the day-to-day running of the business.

Under the terms of the original charter this was left to the Court of Committees consisting of the Governor, Deputy-Governor and twenty-four ‘committees’, or directors, all of whom were elected by the General Court. The Court of Committees was the Company’s executive, making policy decisions which had to be ratified by the General Court as well as directing all operations. For specific and recurrent functions like purchasing bullion, timber, provisions, etc., handling correspondence with overseas factors, and managing the Company’s sales it divided into a host of influential sub-committees. Both these and the Court of Committees met frequently. Naturally their work demanded managerial and commercial experience, and so naturally the ‘committees’ were predominantly City merchants.

Such men were usually senior members of one of the City’s livery companies and leading figures in some line of business that was relevant to the Company’s. Thus Alderman Sir Thomas Smythe, the Company’s first governor, was also involved in the Levant Company, previously the main importer of Eastern produce, in the Muscovy Company and in settlement projects in North America. On and off he held the governorship until 1621. Three years later Sir Morris Abbot, also of the Levant Company and also a founder member of the East India Company, succeeded. Abbot, originally of the Mercers’ Company, operated a large export business in cloth, indigo and spices. Retiring in 1638 to become Lord Mayor of London, he was succeeded first by Sir Christopher Clitherow and then by Sir Henry Garraway, both leading City merchants and both themselves ex-Lord Mayors. Other directors had financial interests in Europe’s capitals whence the supply of rials for export must be obtained and whither the Company was now looking to re-export its Eastern imports. In other words these City interests saw English participation in Eastern trade in an international context and attached more importance to its ramifications in terms of borrowing, shipping and commercial requirements than they did to the profit or loss on a single cargo. They took a longer view of the Company’s prospects and a broader view of its role in the national economy.

The potential for conflict between the Company’s management and the majority of its shareholders stemmed also from a flaw in its structure. The organization of the Company is usually characterized as a half way stage in the evolution of the medieval guild into today’s public limited company. It is also regarded as the most sophisticated example of an Elizabethan chartered company; and certainly it was significantly different from most of its Tudor predecessors. An organization such as the Levant Company was more like a regulatory body, licensing and governing the commercial activities of its members who formed individual syndicates to raise capital and trade on their own account. The Levant Company was not itself an operational concern and in this respect resembled the guilds of old.

In contrast the East India Company was both regulatory body and sole operator. In recognition of the national importance that attached to its activities and of their long term, high risk nature which must involve considerable overheads – shipping, factories – it was accepted that the Company, and the Company alone, must itself conduct all business. From this it followed that raising capital must also be on a corporate basis. And thus, as the directors put it, ‘the trade of the Indias being so far remote from hence [it] cannot be traded but in a joint and united stock.’ Theoretically this opened the Company’s membership to any who were willing to subscribe and indeed, initially, subscription was the commonest avenue of induction into the Company. This remained the case during the boom years of 1610-20 and the bust years of mid century. But later it would work the other way. Come the Restoration, when profits became more dependable and stock less terminable, the privilege of subscribing to new stock was effectively restricted to existing shareholders.

Perhaps the most significant point about the Company’s organization is not where it stood in the evolutionary chain of commercial institutions but the extent to which this organization itself evolved. For though indeed a self-declared joint stock company, it began operations more like a regulated company. One third of those who first petitioned for a charter were, like Sir Thomas Smythe, members of the regulated Levant Company. They included its treasurer, its governor, and two of its founders. Initially the two organizations shared the same secretary and even used the same correspondence book. The Court of Committees and its numerous sub-groups met in Sir Thomas Smythe’s house, which doubled as the Company’s headquarters until Smythe’s retirement in 1621. Even by then the Company’s permanent London staff consisted only of the secretary, a beadle, a book-keeper-cum-accountant, a cashier, a solicitor and a ‘ship’s husband’ (who organized the provisioning, loading and unloading of fleets). Almost an offshoot of the Levant Company then, the East India Company was expected to operate with the minimal staff and informal arrangements typical of a regulatory body.

Consistent with such traditional thinking the Company had begun life with no fixed capital, the idea being simply to raise a separate stock for each voyage; hence the expectation by investors in the First Voyage of a speedy pay-out. Since a willingness to invest in further voyages depended on the success of previous ones, this ad hoc system bred uncertainty and delay; and because in uncertain times new subscriptions were often hard to realize, it also put an additional strain on relations between the directors and the majority of shareholders.

The normal procedure for raising a new subscription began with the Court of Committees recommending a new voyage to the General Court. If the idea was approved, a target figure was set and a subscription book was opened. It was first taken round by the Company’s beadle; then, assuming the target figure was not already reached, it was taken up by the Committees who privately urged its merits on those susceptible to pressure. Such arm-twisting usually proved effective, but there was still the problem of actually collecting the subscribed sums. They were called in by instalments as and when expenditure was required. But late payment frequently necessitated heavy borrowing, and non-payment obliged the Committees to petition the Privy Council for injunctions against the defaulters.

Prosperous times would, of course, make for more amicable relations; from 1609-16 the subscription books would fill readily enough. But in 1601-3, while the fate of the First Voyage was still unknown, the General Court had refused to hear of a new venture round the Cape. Even when Lancaster returned and a second voyage was at last approved, the new subscription brought in only £11,000 against the £60,000 subscribed for the First Voyage. It was in this crisis that the Court of Committees insisted that investors in the First Voyage support the Second to the tune of £200 for every £250 previously subscribed. It was not a popular move and it would appear that it was strongly resisted. For whereas the First Voyage had exported freight, mostly silver, to the value of over £28,000, the Second carried only £12,000. Assuming that, as with subsequent stocks, up to two thirds of the total subscription went on fixed costs and shipping (including provisioning, manning, armaments, etc) and little more than one third on exports, the sum actually realized cannot have exceeded £40,000.

In this fraught climate Henry Middleton, brother of Lancaster’s second in command and captain of the Susan on her return voyage, received his orders as commander of the Second Voyage. Not surprisingly he was instructed to make the Spice Islands his priority and to bring back cloves, nutmegs, mace, cinnamon, raw silk – anything rather than pepper. He was also to avoid ‘refreshing’ at Table Bay, presumably because of Lancaster’s near-disaster off the stormy Cape, and to forgo taking any Portuguese prizes, peace negotiations with Spain-Portugal being near a happy conclusion. Far from capitalizing on the successes of Lancaster’s voyage, Middleton was in effect to make good Lancaster’s failures. With the same four ships, a similar complement and a similar mix of cargo and bullion, he sailed from Gravesend on 25 March 1604.