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1493 – Capitalism, Democracy & Slavery At Jamestown

June 22, 2012

Tobacco House at Jamestown
Credit: Ryan O’Shea

Among the many pleasures of Charles C. Mann’s 1493: Uncovering The New World Columbus Created is his talent for zooming in on a particular time and place that illuminates the far-reaching global changes unleashed in the wake of Columbus’ voyages to America—Jamestown, VA in August of 1619, for example.

James I, King of (Protestant) England, faced the same question as his cousin and predecessor, Queen Elizabeth I:  how to catch up with (Catholic) Spain and France in the race for the economic, political and religious benefits opened up by the colonization opportunities in North America?  (By the early 1600s France had already established five colonies there, while Spain had over a dozen—in addition to its growing control of Central and South America.)

King James’ problem was exacerbated by a lack of money.  Colonization ventures were expensive and they usually failed.  What’s more, the English government (unlike the Spanish who were mining literally tons of silver in present-day Potosi, Eduador) was basically broke—dependent on moneylenders who charged high interest rates for such risky ventures.  As Mann describes the British monarchs’ solution,

“Elizabeth and James…delegated colonization to an entity that could independently support it:  a joint-stock company.  An ancestor to the modern corporation, joint-stock companies consisted of groups of wealthy people who pooled their resources to fund a commercial enterprise, being repaid by shares of the proceeds.  By working with other investors, members of the company can limit their participation in an uncertain enterprise to a small part of the total sum.  If a colony failed, the total loss would be huge but the loss to each individual investor would be tolerable—painful, to be sure, but not disastrous.”

And joint-stock companies failed a lot.  Before the Virginia Company was chartered in 1606, all four previous British attempts to establish a North American colony had failed.

What saved Jamestown was tobacco.  Indigenous to the Americas, tobacco (smoked, chewed, snuffed or dipped) became hugely popular in 16th and 17th century Europe.  The Spaniards profited greatly from the tobacco trade.  King James allowed it because the taxes on tobacco overrode his disgust for the product.  As Mann writes,

“Much as crack cocaine is an inferior, cheaper version of powdered cocaine, Virginia tobacco was of lesser quality than Caribbean tobacco but also not nearly as expensive.  Like crack, it was a wild commercial success; within a year of its arrival, Jamestown colonists were paying off debts in London with little bags of the drug.  The cease-fire with Powhatan let colonists expand production explosively.  By 1620 Jamestown was shipping as much as fifty thousand pounds a year; three years later the figure almost tripled.  Within forty years Chesapeake Bay—the Tobacco Coast, as it later became known—was exporting 25 million pounds a year.  Individual farmers were making profits of as much as 1,000 percent on their initial investment.”  (emphasis added)

Mann cites economist Douglass C. North’s work placing joint-stock companies in the context of many institutional changes by Europeans working to mobilize resources more efficiently.  “These institutional arrangements secured property rights (necessary because people will not risk investing if they believe that their gains can be taken away); opened markets (necessary to prevent entrenched interests from stifling innovation); and strengthened democratic governance (necessary to check rulers’ excesses).  All permitted trade and commerce to be independent, which led to research and investment becoming routine—a constant activity that people could profit from with little state interference.”

The ability to profit from the (legal, taxed) drug trade drew so many adventurers to Jamestown that the Virginia Company owners concluded they could no longer govern the colony from London, so they created “an elected council to resolve disputes—the first representative body in colonial North America.  Its opening session lasted from July 30 to August 4, 1619.”

“Barely three weeks later a Dutch pirate ship landed at Jamestown.  In its hold was ’20. and odd Negroes’—slaves taken by the pirates from a Portuguese slave ship destined for Mexico.”

There it is.  August 1619 in Jamestown, Virginia.  The time and place at which three key institutions—business capitalism, representative democracy, chattel slavery—that indelibly form and shape the future United States of America come together for the first time.

From → Books, History

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