“Here every man may be master and owner of his owne labour and land...
If he have nothing but his hands, he may...by industrie quickly grow rich.” —Capt. John Smith, Governor, Jamestown

We talk about the American dream—to own your own home, to make a good living, to live in freedom—dreams that are all with us today, just as they were with the first hardy settlers who labored, bled, fought and died to carve out a life in America 500 years ago. They were entrepreneurs, investors, employees and servants. Some had noble blood, but that didn’t keep them from getting down in the dirt next to the blacksmith or the indentured servant to build a new life. The settlers of the New World were in it to make a profit, both for themselves and for their investors.

In spite of the attention paid by history to the governments and monarchies of Europe, they had little more to do with the early days of exploration and colonization in America than to give official permission, offer a charter and send the brave settlers on their way. Most often, colonization was a chance to increase the size of the empire (as well as the tax base), gain a little personal glory, reward friends and ship off the undesirable without actually having to pay for it.

When we think of English colonies in the New World, we generally think of the 13 colonies that would come together to make up the United States at the end of the 18th Century. There were, however, colonies in Canada, the islands of the Caribbean and in Central and South America. This level of colonial expansion was powered by the drive for profits since all of these colonies had one thing in common: they were all chartered either by individual entrepreneurs or by a joint stock company, similar to the modern corporations of today.

Three colonies offer prime examples of how the spirit of entrepreneurship shaped English colonial America. These are Sir Walter Raleigh’s lost colony of Roanoke; its successor, Jamestown; and the Massachusetts Bay colony of the Puritans.

Roanoke Island

In the 1500s, Spain was in the business of transporting treasure from Mexico and Peru back to Spain and, predictably enough, their great enemy, the English, were in the business of piracy—intercepting those treasures from the Spanish. These adventures on the high seas were not undertaken by the British Navy, but rather by privateers, whose captains had received special permission to commit piracy against the country’s enemies (see “The Privateer” sidebar on page 46). Official naval vessels or not, these ships would be in the Western Atlantic and the Caribbean for long periods, so having a base on the North American continent to service the privateers was an absolute necessity. To get these ventures going, however, required capital and for a long time, that meant personal financing by wealthy entrepreneurs, the most famous of which was Sir Walter Raleigh.

Sir Walter Raleigh and the Lost Colony of Roanoke Island
According to Professor Allen Guelzo, Professor of History at Gettysburg College, Sir Walter Raleigh was an adventurer’s adventurer. He was handsome, he was charming, he was brave, he was courtly, and, most of all, he was rich; and in 1584, Queen Elizabeth I of England gave him a charter for the colonization of the part of the North American continent called Virginia. From there, the riches of America would flow to England, and English privateers would have a convenient base for launching raids against Spanish shipping. Raleigh was given 10 years to establish his colony or lose his charter. With that, he wasted no time.

In 1585, the first expedition dispatched by Raleigh to explore the coast and find a suitable location for the new colony led to its settlement in Roanoke Island, on the Outer Banks of what is now North Carolina. However, from a business point of view, the first colony was a failure. They found no gold, lost many members due to a harsh winter and managed to get into a war with a local native tribe, the Aquascogoc. By June of 1586, thanks to a timely visit by Sir Francis Drake, on his way home from raiding the Spanish in the Caribbean, the first Roanoke settlement was abandoned and the majority of the settlers went back to England with Drake.

Undeterred in his belief in the venture, Raleigh financed a second expedition, but that group fared no better. Upon landing at Roanoke, they discovered the remains of one of the men left behind and no sign of the others. Over the following months as the colonists tried to scratch out a living, the group’s leader, John White, tried to repair relations with the other local tribes, such as the Croatoan, but to no avail. When one of the colonists was murdered, the others realized that they were in danger from the Indians and White went back to England for help. Bad weather in the Atlantic and then the attack of the Spanish Armada in 1588 prevented Raleigh and White from sending any ships to Roanoke until 1590. When White returned, he found the place abandoned and the word “Croatoan” carved into the gatepost. The colonists were never seen again.

That was it for Raleigh, who had put up and lost a great deal of his personal fortune to back the colony at Roanoke. Had private investment been the only way to finance colonization, this would have likely been the end of that as well. There was by this time, however, another way of financing such large ventures: the joint stock company.

Joint Stock Companies
Under the laws of the day, individual members in an enterprise were each liable for the debts of the whole venture should things go badly. Once the monetary rules of the Catholic Church were removed in England, this changed and it was possible for people to pool wealth for large projects. So, in 1606 with the charter granted by King James I to the Virginia Company, the first joint stock company was born.

What made these entities so revolutionary is something that we take for granted today—limited liability. In other words, the liability of an investor for the debts of a business venture was limited by the extent of their investment. This added a measure of safety that Raleigh and men like him who tried to personally seed colonies in the New World did not have. That safety, however, came at a price: the glory, profits and personal name recognition that went along with seeding colonies would now go to a company, and investors would have to be satisfied with dividends and increases in share value.

This loss of personal fame and fortune dissuaded no one and joint stock companies sprang up with plans for North America. The first of these ventures was a colony in Virginia called Jamestown.

Jamestown and the Virginia Company

The Virginia Company of London—also known as The London Company—knew they had to change the way they thought about the New World in order to eventually realize success. At first, the stockholders had no realistic idea as to what they were involved in since they were hoping the settlers would find precious metals and the discovery of a passage to the South Seas. There was none of that. There was Jamestown, and life there was hard.

The location had been selected primarily because of the good defensive position it offered against European attackers who might approach the colony. However, a good defensive position is only useful if the land being defended is worth it. The lands around Jamestown were swampy, fever-ridden and plagued by mosquitoes. What’s more, the tidal river water was unsuitable for drinking and the land itself offered limited hunting and little opportunity for farming. Throw in the rather hostile Native Americans, and that sealed the deal; Jamestown didn’t have much of a chance at all. In fact, the years from 1607 to 1612 were the very picture of starvation, disease and poverty. For those five years, the Virginia Company saw no return on its investments. Of course, severely underfunding the venture did not help.

The “First Supply,” in 1608, carried 70 new colonists but insufficient provisions for the colony and the “Second Supply” offered little better. All the colonists had when the ships sailed away were more mouths to feed and little more to feed them with. Even more frustrating for the settlers, the Virginia Company’s London-based directors and investors were demanding enough commodities to pay the cost of the voyage, a lump of gold, assurance that they had found a passage to the South Seas, and one member of the lost Roanoke Colony. In other words, they wanted to see more than simple progress; they wanted to see success.

An angry Captain John Smith, the president of the council of Jamestown at the time, responded by asking the Virginia Company to send relief and skilled laborers. Smith was a strong, pragmatic leader with at least a working relationship with the neighboring Native Americans; he kept the 200 colonists of Jamestown alive during the following winter and into the spring planting season. However, by October he had been severely injured in a gunpowder accident and had to return to England for treatment.

This marked the beginning of a succession of company governors, periods of starvation and war with the Indians. It was also during this time (1612) that a planter named John Rolfe (who would later go on to marry Pocahontas), introduced a new strain of tobacco from the Caribbean, which ended the futile search for gold in the region and turned Virginia’s fortunes around with a luxury cash crop that would be in high demand. Commerce in Virginia took off with this new tobacco industry and hopes for the future were high.

By 1621, the colony had achieved some stability. There were plantations on both sides of the James River and the first of 150 women arrived in Virginia to become colonists’ wives. Until then, very few women had ventured across the ocean to make America their home. This was, however, too little success and too late. With the on-again-off-again warfare with the natives, starvation, disease, not an ounce of gold to be had, nor any Northwest Passage to the Far East, Virginia had just not lived up to its billing. The final blow came in 1622, when the Powhatan tribes staged a skillfully planned attack up and down the James River, massacring as many colonists as they could reach. The retaliation was as terrible as the attack, but it couldn’t change things in England where an exasperated King James I revoked the Virginia Company’s charter and turned Virginia into the first Crown-controlled colony in the New World.

The Plymouth Colony Pilgrims

Another group came to the New World to achieve both religious freedom and a profitable living: the Puritans. There were some Puritans who wanted to see reform in the Church of England, but other Puritans, called the Separatists, felt that the Church of England was so corrupt that they needed to walk away from it altogether. So, the Separatists cast an eye to North America. The problems they faced were two-fold: How to remain good and loyal Englishmen while getting out from under the thumb of the Church of England; and, how to get a land grant for a religious community when it was clear that the monarch, King Charles I, would never sanction one inside the country. Their answer was to not approach this as a religious issue but rather as a business venture by going into business with the Virginia Company. So, in 1620, they received a land grant and set sail aboard the Mayflower.

Although they originally were due to settle around the Hudson River, they decided to land farther to the north, in what is now Massachusetts. This led to disagreements among the Puritans and indentured servants, who declared their freedom since the settlement would not be placed where they had agreed to go. To settle the disputes, it was decided to establish a government.

The result was the Mayflower Compact, a social contract the settlers agreed to abide by for the sake of survival. It was signed aboard the Mayflower in what is today Provincetown Harbor near Cape Cod on November 11, 1620, by 41 of the ship’s more than 100 passengers. Now known as the Pilgrims, they landed at Plymouth Rock in December 1620. A year later, the Mayflower Compact would be superseded in authority by the 1621 Pierce Patent, in which the king officially gave the Pilgrims the right to self-government at Plymouth.

The Joint Stock Company Boom
There were a couple of other notable colonial attempts that sprang up in the early 1600s. In 1623, Robert Cushman, Edward Winslow and their associates with the Dorchester Company were awarded a patent for Cape Ann. During that winter, a colony was founded at the location of modern Gloucester, Massachusetts. People from Plymouth joined them and the next year, they launched a new fishing colony. It lasted until 1626 when the Dorchester Company went bankrupt and the colony failed. A group of about 20 re-settled in a place called Naumkeag to set up a trading post. This would later be the site of Salem.

1627 saw the New England Company, which had members from the failed Dorchester Company, receive a patent for New England on lands that ran from the Charles River to the Merrimac River and three miles on either side. In 1628, John Endecott led a group of Puritan settlers to Salem, where he served as governor until John Winthrop was elected the next governor.

Upon its chartering by the king in 1629, the Massachusetts Bay Company was able to replace both of these by converting the earlier patents into a single royal charter. In this new charter, the company was called the “Company of the Massachusetts Bay in New England.”

The Winthrop Fleet and Massachusetts Bay
By the late 1620s, the settlers managed to obtain a colonial charter from the King for a colony in New England that would bring the other New England settlements under a single governor. That was a key feature of the charter, but what truly made this charter special was an oversight, something that we today might consider minor but was, back in 1629, of tremendous import. The charter failed to specify where the company’s annual meeting would be held. Since the beginning of these joint stock companies, meetings always had to be held in England, which had the effect of keeping the owners of the companies, as well as the charters themselves, in England.

This, then, raised an interesting possibility: The Governor of the company, as well as the company’s general court (what we could call a board of directors) and the charter itself, did not have to remain in England. In fact, the company leaders could serve as the government for the colony, which could prosper far from royal or parliamentary interference. It was just the chance for freedom that the Puritans were looking for.

The Cambridge Agreement was signed in early 1629, by which all of the England-based shareholders agreed to give full control of the Massachusetts Bay Company to the colony-based shareholders. Winthrop was made governor and entrusted with the company charter. In 1630, Winthrop and 700 colonists aboard eleven ships—known collectively as the Winthrop Fleet—set sail for New England. This was the start of what was called “The Great Migration” when, between 1629 and 1640, about 21,000 Puritans shipped out to New England. It wasn’t the largest wave of immigrants these shores would ever see, but it was the first of those waves and they haven’t stopped since.

Looking Back

As conditions within the colonies stabilized, the English colonists reveled in a new kind of freedom—the freedom to succeed. This freedom, born mainly from the benign neglect of the king and Parliament back in England, had put America into commercial competition with the home islands. This was a place where business could prosper along with the various experiments in self-government and religion, and eventually develop into the country we call home today.