Excerpts: Sir Francis Drake, Walter Raleigh & the Origins of the East India Company

Summary

This script explores the adventures of English privateers Sir Francis Drake and Sir Walter Raleigh, who were celebrated as heroes in England but viewed as pirates by the Spanish. It delves into how they navigated the political and economic landscape of the time, with the English crown supporting their expeditions against Spanish interests. The narrative also touches on the formation of the East India Company, the rise of joint-stock companies, and the early days of the stock exchange, highlighting the financial strategies and market manipulations of the era.

Takeaways

• 🏴‍☠️ Sir Francis Drake and Sir Walter Raleigh were English adventurers who challenged Spanish dominance by sailing into enemy territory.
• 🇪🇸 To the Spanish, Drake and Raleigh were pirates, attacking Christian vessels and plundering towns for England's Queen.
• 📜 The Pope's decree granting Spain and Portugal exclusive ownership of the New World was largely ignored by other European powers.
• 👑 English monarchs would grant charters to adventurers to explore, claim territories, establish settlements, and plunder Spanish shipping.
• 💰 These adventurers often had to raise capital through investors, forming joint ventures and issuing shares of profit.
• 🌍 Drake's successful circumnavigation of the globe in 1580 resulted in a profit margin of over 4,600% for his investors.
• 🎖 Raleigh, despite his military honors and the Queen's favor, ended up in jail and was executed after plundering a Spanish town during a truce.
• 📈 The formation of joint venture companies was a key strategy for raising funds to pursue political and economic goals.
• 🇮🇹 The Italians were pioneers in joint ventures, and their banking practices in London influenced the English.
• 🌏 Queen Elizabeth I sanctioned the formation of the East India Company in 1600, granting them a monopoly on trade in certain regions.
• 📊 The Dutch East India Company's structure was more modern, with stocks available for public purchase and perpetual shareholder ownership.

Q & A

Who were Sir Francis Drake and Sir Walter Raleigh, and how were they perceived differently by the English and the Spanish?

Sir Francis Drake and Sir Walter Raleigh were English adventurers and explorers who were celebrated as heroes in England for their daring expeditions against the Spanish. They were seen as swashbuckling figures who brought back riches and glory to England. However, to the Spanish, they were considered little more than state-sanctioned pirates, attacking Christian vessels and plundering towns on behalf of their queen.

What was the Pope's role in the colonization of the New World, and how did it affect other European nations?

The Pope formalized the possession of the New World between the Spanish and the Portuguese, granting them exclusive ownership of the Americas and the Far East. This papal decree led to other European nations, such as the English and the French, to ignore the decree and scramble for their own footholds, especially in North America.

How did aspiring adventurers raise capital for their expeditions during the time of Drake and Raleigh?

Aspiring adventurers raised capital through recruiting investors, often by forming joint venture companies and issuing shares of the profit. The crown would license a company to act on its behalf and in return would receive a substantial share of the spoils, typically at 50%.

What was the significance of Sir Francis Drake's circumnavigation of the globe in 1580?

Drake's circumnavigation was significant because it was the first by an Englishman and only the second overall. His successful voyage returned to London with trade goods that netted his investors a profit margin of over 4,600%, showcasing the potential for immense returns from such expeditions.

What was the role of Queen Elizabeth I in supporting the ventures of adventurers like Drake and Raleigh?

Queen Elizabeth I played a crucial role by granting charters to adventurers like Drake and Raleigh, allowing them to explore, claim, and establish settlements. In return, she would receive a share of the profits, and these ventures also served to expand English influence and challenge Spanish dominance.

How did Sir Walter Raleigh's actions lead to his downfall, and how was he perceived by the common folk?

Raleigh's downfall came when he plundered a Spanish town during a truce, which led to the death of his son and, eventually, his own execution after the Spanish demanded justice. Despite this, his heroic exploits made him a figure of admiration among the common folk, who viewed his execution as unjust and lionized him for decades.

What was the impact of the formation of joint venture companies on the Crown's political and economic goals?

The formation of joint venture companies allowed the Crown to pursue its political and economic goals by raising cash needed for expeditions. It also spread the risk across many investors and provided a continuous cash flow, which was reinvested into the growing business.

How did the structure of the Dutch joint-stock company differ from the English model, and what benefits did it offer?

The Dutch joint-stock company differed from the English model by allowing designated stocks to be purchased by any individual in the open market, with shareholders having perpetual ownership. This structure spread risk widely, allowed for continuous cash flow, and led to the creation of the stock exchange.

What was the East India Company, and what privileges did Queen Elizabeth I grant it?

The East India Company was a corporation sanctioned by Queen Elizabeth I, which was granted a monopoly on all trade west of the Straits of Magellan and east of the Cape of Good Hope for 15 years. Any English vessel trading in that zone without permission was considered illegal.

How did the practice of insider trading affect the early stock market, and what was the behavior of the company directors?

Insider trading in the early stock market allowed company directors to make significant profits by timing their shareholder announcements to sell high and buy low. They often manipulated the market with fraudulent announcements to create conditions that suited their interests, taking advantage of unsuspecting investors.