Joint-Stock Company in Jamestown: History, Advantages & Disadvantages

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  • 0:01 Historical Background
  • 1:25 The Founding of Jamestown
  • 2:14 Advantages
  • 5:09 Disadvantages
  • 6:34 Lesson Summary
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Lesson Transcript
Instructor: Ronald Kotlik

Ron has taught history and educational technologies at the high school and college level and has a doctorate in American History.

Learn about the history of the Virginia Company, the joint-stock company that founded the colony at Jamestown in 1607, and understand the advantages and disadvantages in using a joint-stock company to establish a colony.

Historical Background

Joint-stock companies were similar to modern corporations that sell stock to investors in order to pool resources like capital, or money, together for new product development, research, etc. All of this was done with the goal to make a profit and reward investors with increased share prices of their stock. Joint-stock companies were used by English merchants in the 17th century (which is the 1600s) to pool capital and share the risks associated with trading voyages to Asia and Africa.

In 1606, the Virginia Company, a joint-stock company, was founded to establish a permanent English colony in North America with the goal to reap similar successes as the Spanish had done with their growing empire in parts of modern-day Mexico.

King James I granted the Virginia Company a charter to establish a colony in North America somewhere between the 34th and 41st parallel.

Map of Colonial Virginia

The company immediately began selling shares for 12 pounds and 10 shillings to investors, called 'adventurers,' to aid in the establishment of a colony in this designated area. Over 1,600 investors bought shares in the company, producing enough capital to pay for ships, supplies, and the recruitment of laborers.

The Founding of Jamestown

In April of 1607, 144 English colonists arrived on the shores of modern-day Virginia. After an initial attack by a small band of natives, the colonists quickly built a fort in their newly-created settlement named Jamestown.

Despite the misleading advertisements published by the Virginia Company, which promised that a paradise was waiting to be settled, the colonists quickly learned that tremendous challenges faced them. Difficulties included establishing peaceful relations with the powerful Powhatan tribe, feeding themselves, and establishing adequate shelter in a challenging environment that was very swampy and prone to disease. These challenges reveal the advantages and disadvantages of using a joint-stock company to establish Jamestown.

Advantages of the Virginia Company

The most important advantage of using a joint-stock company was having the organization to recruit investors and raise enough money to attempt to establish a colony. The Virginia Company, as highlighted above, was very successful in this respect. In addition, the company provided needed organization in preparing the initial settlement at Jamestown. The initial settlers quickly realized that they were bound to follow the orders of company officials in constructing a fort and other dwellings. Contracted laborers received a weapon, clothes, and food, while investor gentlemen were compensated with land and additional stock in the company.

The company also raised additional capital from investors after the initial settlement was established. After the first ten years of settlement, interest in the colony began to fade because the promises of finding gold in Virginia never materialized. A key advantage in using a joint-stock company was having an organization that could shift its marketing strategy to keep current and new investors interested in the colony. Rather than focusing on the lure of gold and riches, the Virginia Company began a new advertising campaign stressing that every Englishman and Christian had a responsibility to contribute to the colony to advance England's status in the world against its French and Spanish rivals and to help Christianize the 'savage' and 'heathen' natives.

The company also stressed that the colony offered opportunities for the English poor to acquire their own land in the resource-rich environment of Virginia. A pamphlet published by the colony in 1620 stated that, ''...the land replenished with the goodliest woods in the world... both water and land yielding fowle in very great store and variety... a country, too good for ill people; and reserved by the providence of God, for such as shall apply themselves faithfully to his service, and be a strength and honour to our King and nation.'' The Virginia Company's new advertising appeal worked, and new investors continued to contribute needed money to keep the struggling colony alive.

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