In 1606 King James I granted the Virginia Company exclusive rights to settle on a tract of land 100 miles wide stretching from latitude 34 to latitude 45.
The Virginia Company was established through the efforts of the explorer Bartholomew Gosnold, who had surveyed the coastline of New England in 1602 and, through his friendship with Richard Hakluyt and having sailed with Capt. John Smith and Sir Walter Raleigh, with their help received the backing of the Earl of Southampton in his successful promotion of the idea of settlement in Virginia.
The mission of the Virginia Company was to extend the bounds of English civilization by finding wealth, converting the Virginia Indians to Christianity, creating jobs for England’s unemployed, seeking a route to the Orient, and tapping the resources of the New World.
The charter established two branches of the Company—the London company was granted land between latitudes 31 – 41, (approximately Wilmington, North Carolina to New York) while the Plymouth company was granted land between latitudes 38 -45 (the Maryland/Virginia border to Eastport, Maine).
The overlapping area between latitudes 38 and 41 was open to the branch first occupying it.
The London Company was composed of knights, gentlemen, merchants and adventurers of London and the Plymouth Company was composed of people of the same description from the English west country (Dorset, Devon and Somerset). By far the most active was the London Company, first lead by its treasurer, Sir Thomas Smythe.
The Virginia Company undertook to pay all the costs of establishing each colony, and in return controlled all land and resources there and required everyone to work for the Company. Investors, called “adventurers,” purchased shares of stock to help finance the costs of establishing overseas settlements.
Money from the sale of stock was used to pay for ships and supplies and to recruit and outfit laborers. A single share of stock in the Virginia Company cost £12½ , the equivalent of over six month’s wages for an ordinary working man. In an extensive publicity campaign, the Company circulated pamphlets, plays, sermons and broadsides throughout England to raise interest in New World investments. Shareholders could buy stock individually or in groups.
Almost 1700 people purchased shares in the London Company, including men of different occupations and classes, wealthy women, and representatives of institutions such as trade guilds, towns and cities. The largest single investor was Thomas West, Lord de la Warr, who served as the first governor of Virginia between 1610 and 1618, after whom the state of Delaware was named.
The Plymouth Company, led and largely financed by Sir Ferdinando Gorges, had great difficulty attracting investment and attention. To such an extent that the London Company became the de facto Virginia Company and the Plymouth Company went its own way, ultimately to become the Council for New England.
The idea of colonization appealed to all classes of English society. Members of the gentry were interested in the glory of having overseas colonies, hoping to spread England’s fame abroad and frustrate Spanish ambitions in the New World. Merchants hoped to develop new industries that would provide essential goods and resources and eliminate England’s dependence upon imports from European countries. They also hoped that colonies could provide a market for English goods. Poorer members of the population hoped to improve their lot, with the possibility of jobs and the opportunity to acquire land.
Supplying an overseas colony with food, materials and laborers was an expensive venture for the Virginia Company, and it depended upon the sale of stock to raise money. The idea of owning shares of stock in a Company to get wealthy is not a new idea. But when not enough people were willing to take the risk and buy stock, Company officials turned to another money-making idea that is not new either—running lotteries. The Company organized lotteries in London and outlying towns, with prizes of up to £5,000. These lotteries soon became the primary source of investment income for the Virginia Company, raising more than £29,000 before they ended in 1621.
Recruiting laborers willing to settle and work in Virginia, and obtaining supplies for them, were other challenges. The Virginia Company promised food, clothes, tools, housing and transportation to Virginia, all at Company expense. However, supplies for the colonists, bought in London and surrounding areas, often were insufficient or of poor quality. The laborers had to work for the Company for up to seven years, and then they would be released from service, with the possibility of acquiring their own land.
The Company tried to maintain its colony by obtaining several new charters from King James I that reflected changes that its management was making to run the colony more efficiently. It also continued to work on raising funds and recruiting people to go to Virginia. But the costs were always high. Selling stock and running lotteries could not keep the Company out of debt. When no profit was raised to pay those who had bought stock, the Company gave them land in Virginia.
An early voyage to Virginia by Sir George Somers resulted in the discovery and settlement of Bermuda. The Virginia Company formed a subsidiary the Somers Isles Company. Eventually, to raise money, they sold the Company to private investors for £12,000.
In England, the Company went through a number of reorganizations. In 1618 a new treasurer came to power, Sir Edwin Sandys. In the next few years the leadership argued over the proper focus for the colony. Bankruptcy and mismanagement of funds by Company leaders took their toll. Fewer people were willing to go to Virginia after a devastating war with the Powhatan Indians in 1622. At that point, King James I sent commissioners to investigate the Company and the colony and decided to revoke the Company’s charter. In 1624 Virginia became a royal colony, answerable to the monarch’s privy council.