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Home , Henry Hudson, Muscovy Company

Henry Hudson The Failed Entrepreneur who Founded By James S. Kaplan archetypal driven corporate entrepre- private entrepreneurs and executives neur who took tremendous risks in working not for the government, but In 2009 there was an elaborate cer- pursuit of fame and fortune. His failed their own personal profit. emony marking the 400th anniversary voyages laid the way not only for the To the , the of the of founding of the , but most promising unexplored routes to and the by the explorer also in certain respects the modern India and the would be from . Although perhaps not international commercial economy in the north. These routes had the advan- as elaborate as the Hudson Fulton a way that few people realize. tages of being shorter, and therefore Tricentennial of 1909, last year’s cel- In reality, virtually nothing defini- cheaper, than those closer to the equa- ebration was heavily promoted by the tive is known about Hudson’s life tor. They were also safer, since the Dutch government and Dutch business prior to 1607, when he captained his southerly routes were controlled by interests, following a resurgence of first ship, or after the day in 1610 the Spanish and Portuguese. The com- scholarship about New York’s Dutch when his mutinous crew put him and pany’s early voyages were successful roots, which fundamentally go back a handful of others (including his son) in establishing trade routes through to Hudson’s third voyage in 1609 out to sea without provisions in Hud- to , though they sus- when he was the first European to son Bay and left them to die. tained tremendous losses. But by 1600 sail into New York harbor and up the What is known is that he was born the company’s backers began to sub- river that today bears his name. in , probably around 1565- scribe to the belief — by then common Ironically, Hudson was an English- 1570. Not much is known about his among the English, Dutch and even to man who except for this one voy- parents, but sources believe that his some extent Spanish explorers — that age worked exclusively for English grandfather, also named Henry, may there was a “” from corporations. Although most people have been one of the founders of the Europe to the Indies that could bypass know Hudson’s name because of the Muscovy Company that sent Hudson the long trip around the southern Hudson River, few know much about on his first two voyages seeking a route capes of South America or Africa. Hudson the man or what and who he to . Whoever could find this water passage represented. Surprisingly, large por- The Muscovy Company, origi- to the East would have wealth and tions of his life remain unknown, even nally named the Company of Mer- fame beyond imagination. to scholars. And there are darker turns chant Adventurers for the Discovery It is in this context, in 1607, that in his life story that are often ignored, of Lands, Territories, was a private Henry Hudson first appeared as the presumably because they do not befit enterprise formed by ’s lead- captain of a ship called the Hopewell, his image of an intrepid explorer wor- ing merchants and explorers to open chartered by the Muscovy Company. thy of founding the world’s greatest trade routes to the East and discover His plan was to sail over the North city. Accounts of his life often omit the new colonies. When it was formed Pole to China, and thus establish a fact that one year after he discovered in 1552, most of the lucrative trade short water route to the East. Even the Hudson River, Hudson’s crew routes with the Americas, India, Japan given that many geographers at the mutinied and murdered him and his and China were controlled by the time believed that because there was son, that his sailing to America and Spanish and Portuguese. The English daylight all day in the summer, the discovery of New York on his most wanted to get in on the action. ’s temperature might be warmer famous third voyage was in direct From the point of view of Queen at the polar caps than it actually is, defiance of his contract with the Dutch Elizabeth and her successor, James I, the idea was insanely visionary. The which employed who lacked the wealth or power of prospects of success were so slim and him, that on his return from that the European monarchs in Catholic the risks so large that it is amazing voyage to England the British govern- countries, a private company of mer- that an enterprise with the experience ment had him arrested and almost chants like the Muscovy Company of the Muscovy Company would ever charged with treason for working for provided an ideal vehicle for financing finance such an effort again. Yet the the Dutch, and that all four of his such activities at private expense. But fact that they did indicates the obses- voyages failed to achieve their objec- unlike the state-sponsored voyages of sion of both Hudson and his backers tives or provide his backers with the Spain and , the main purpose to find, at any cost, a new route to the short-term return on investments that of the Muscovy Company’s explora- riches of India and China. he had promised and they expected. tion was to make a profit for its back- Around May 1, 1607, Hudson sailed C orbis Nevertheless, Hudson’s largely ers. Thus, it represented a new form out of the British port of Gravesend unknown story is a fascinating and of organization — the private com- and headed north. Fortunately for important one because he was an pany — and would be run in effect by modern-day New Yorkers, he turned ©Bettmann/

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Illustration of Henry Hudson descending the Hudson River. Published in the April 12, 1856 edition of Ballon’s Pictorial Drawing—Room Companion. around after reaching a point further rather than going directly across the backers were no longer interested in than any ship had ever gone north, , Hudson planned to sail financing his voyages, and he report- or would for another 150 years. He along the northern coast of Norway edly sank into depression. But in the wisely decided that his wooden ship and Russia to an archipelago north autumn of 1608, Hudson was invited would not penetrate the polar ice caps, of the Ural Mountains called Novaya to dinner at the Dutch consulate in and returned to England. Although he Zemlya. This route made more sense London, where a representative of the did find what would later prove to be than his first, but also had tremendous asked if he lucrative grounds, the voyage risks. Some years earlier three ships would be willing to travel to Holland was a complete failure in terms of its that the Muscovy Company had sent to meet with the company’s directors. objective of reaching China. on a similar route had never returned. At the time, Holland was begin- However, in 1608, the Muscovy As on his first voyage, Hudson’s ship ning to supplant Portugal as one of Company management decided to was blocked by huge ice floes and he the major trading nations with the Far finance a second attempt by Hudson to was forced to turn back. East. This was in part because of its find the Northwest Passage.T his time, After his second failure, Hudson’s superior banking structure, and in part

Financial History ~ Fall 2010 28 www.moaf.org because the legal structure through By May, he had reached the coast Passage had failed, and he returned which it traded, using privately-owned of Norway near , but downriver to the Atlantic Ocean. He trading companies on the English the ship was blocked by fog, high did, however, write that this was as model, was more efficient than the winds and ice. The mixed crew of fair a land as he had ever seen and pur- government-run enterprises of the English and Dutch sailors grew quar- ported to claim it for the Dutch East Catholic European powers. Although relsome, particularly the Dutch, who India Company. A member of the crew England had been Holland’s military were not used to the arctic weather. noted the tremendous potential of such ally in wars with Spain, the two coun- Hudson was able to squelch threat- an area for settlement. tries were becoming commercial rivals ened by promising to sail By October 4, at the apparent urg- in the competition for world trade and south to try to find a route to China ing of his unruly crew, Hudson sailed colonies. The Dutch East India Com- through America. Just before the voy- back across the Atlantic. For reasons pany was as interested as the Muscovy age, Hudson had received maps and that are not entirely clear, he landed Company in finding a cheaper route to news from his friend, John Smith, the at Dartmouth, England and imme- the East, but apparently did not have English explorer who had established diately sent word to his backers in sea captains of Hudson’s experience. the Virginia colony, indicating that Holland of his return, recommend- Thus, Hudson was in effect a highly- there were many inlets north of Vir- ing that he make a return voyage to skilled out-of-work executive who was ginia, and that the Indians spoke of a to find the Northwest willing and eager to work for what- significant river between Virginia and Passage the following March. But the ever organization would employ him Newfoundland. Hudson’s decision to Dutch East India Company, disap- to permit him to achieve his goal of turn around and sail 4,000 miles away pointed with his failure to obey their obtaining the riches of finding a pas- from where he was ordered without orders, ordered him to return with sage to the Orient. stopping in Amsterdam to talk to his his ship to Amsterdam immediately. In November 1608, Hudson made employers on the way is curious, and However, Hudson had a problem. a presentation to the directors of the some have suggested that this may The English government refused to let Dutch East India Company, much have become a complete rogue opera- him, his ship and the other English- the same way an entrepreneur today tion in which Hudson had in effect men in his crew return to Holland. would present his ideas in a corporate stolen the Half Moon from its own- Although there was no legal prohibi- board room. After some hard negotia- ers. It does appear, however, that the tion against an Englishman sailing for tion, including an overture from the Dutch sailors and representatives on a Dutch company — particularly when French king to Hudson as they were the ship approved of this decision. no English company was willing to negotiating, they agreed that he would In May 1609, Hudson sailed south- invest in him — Hudson’s discovery of set sail the next spring. west toward North America in defiance fertile lands and a great river in North Based on the failure of his last voy- of his orders from the Dutch East India America on behalf of the Dutch argu- age, Hudson warned his new back- Company. By late July he reached the ably threatened English commercial ers about the dangers of a northerly coast of Maine and then proceeded interests. King James himself report- route, suggesting that a route through down the coast to Virginia. He thought edly summoned Hudson and berated North America was more promis- of visiting his friend Smith, but feared him for serving a foreign power, and ing. But they ignored him, ordering the Half Moon, as a ship flying a Dutch Hudson was forbidden from working him to sail east around the northern flag, might be attacked. So he returned for any foreign company in the future. coast of Russia instead and his con- north up the eastern seaboard in search He never set foot in Holland again. tract specifically provided that he was of the great river that would lead to the For his greatest contribution to his- only to sail east to Novaya Zemlya fabled northwest passage. By the begin- tory, he was nearly branded a traitor. and to take no other route. Because ning of September, he sailed into New But Hudson could not have been Hudson insisted on paying premium York Harbor. When he first saw the completely out of favor in England, wages — after all, a trip through the Hudson River, particularly how wide it since the English East India Company arctic through unknown routes did was at Tappan Zee, he thought he had immediately hired him to put together have certain hazards not present in a found the route to the West he had been a fourth voyage to find the Northwest usual voyage — the Dutch East India seeking. Noting the beauty and fertility Passage. This time Hudson proposed Company provided him with a second- of the land on the river banks, he sailed sailing along the northern coast of rate ship, the Half Moon. On April 6, up the river past Albany, where he real- and following promising inlets 1609, he set sail from Holland with a ized there was no route through the to the interior. He did, in fact, find a crew of approximately 20 English and mountains that a ship could navigate. very significant bay in the interior of Dutch sailors. Once again his for the Northwest the country, Hudson’s Bay, which

www.moaf.org 29 Financial History ~ Fall 2010 Dutch East India company soon real- ized that, even though he never found a water passage to the East, the voyage of their wayward and disobedient employee provided them with a claim to the Eastern seaboard of the United States from Delaware to Massachusetts, and the basis for what would later become the colony of . The Dutch now claim Hudson’s voyage and the founding of New York as one of their greatest historical achievements. While the river that he founded did not extend to the Pacific, it did prove to be the clearest water route to the interior of America, particularly after the open- ing of the Erie Canal 200 years later. On the vacant land he found as fine as any he had ever seen, there would within the next 400 years arise the larg- est and most important commercial city in North America, if not the world, which both the Dutch and the English would fight over for the next 70 years. Furthermore, as a corporate entrepre- neur working with tremendous drive and daring for two of the largest multi- national corporations in the world, he C orbis

/ probably more than any other major explorer of the age presaged the rise of global capitalism and democratic gov- ernments that are the dominant force in the world today. It is unfortunate that

©Michael Nicholson the true story of his efforts is not better- Illustration of Henry Hudson adrift in the Arctic with his son after a by Hudson’s crew. known today. FH

James S. Kaplan is a lawyer and walk- looked like a possible water route to wife, Katherine, spent years seeking ing tour historian who with Richard the East. But with the onset of win- compensation from the East India Com- M. Warshauer for the last 21 years ter, his ship got stuck in the ice, and pany and recognition for her husband has annually given a walking tour he and his crew had to lay over until in the form of a monument erected in (now sponsored by the Museum of the next spring. Hudson then report- London in his honor. Her unsuccess- American Finance) on the Saturday edly wanted to continue west but his ful quest for a monument must have closest to October 29 entitled “The crew, which reportedly accused him of seemed strange at the time, as Hudson Great Crashes of Wall Street” on hoarding rations, ordered him along was considered a failure who had never which he discusses Henry Hudson. with his young son John and several achieved his quixotic goal of finding the He has written on historical subjects others into in a shal- Northwest Passage to China and had for such diverse publications as The low boat without supplies. They were left his family in poverty; to the English Wall Street Journal, American Spirit never seen again. he was a traitor and, to the Dutch a and Last Exit magazines. He also for Thus, Hudson’s fourth voyage, often disobedient mercenary. the last 13 years has been the head of omitted from accounts of his life, was However, as time went on, the the Tax and Estates Department at for him personally his least successful, importance of his accomplishments the downtown law firm of Herzfeld and his family was left in poverty. His became clearer. The directors of the & Rubin.

Financial History ~ Fall 2010 30 www.moaf.org