Virginia Company

The Virginia Company was the English joint-stock enterprise that founded Jamestown in 1607 and struggled to make its North American colony profitable. Its initial plan drew on the extractive model used by the Spanish in Mexico and South America: obtain provisions and wealth by subordinating Indigenous people. Virginia’s circumstances defeated that approach. The company could not reliably force local communities to provide food or labor, and it could not make the settlers work under the conditions it wanted. Its eventual response was to offer settlers land and political participation, a turn that the book identifies as the beginning of democracy in the United States.

Foundation and Colonial Model

The company sponsored the expedition that founded Jamestown. In late 1606, three vessels—the Susan Constant, Godspeed, and Discovery—sailed for Virginia under Christopher Newport. The colonists entered Chesapeake Bay, proceeded up the river they named the James after James I, and established Jamestown on May 14, 1607. This was not the English colonial venture’s first attempt: a settlement at Roanoke, in North Carolina, had failed between 1585 and 1587.

The company’s settlers were English, but their ambitions followed a model associated with Spanish conquest. Their first plan was to capture the local chief and use him to obtain provisions and compel the population to produce food and wealth. They initially did not understand that the settlement stood within the territory of the Powhatan Confederacy, a coalition of about thirty polities led by Wahunsunacock, whose capital at Werowocomoco lay only twenty miles away. The colonists hoped to learn the land’s resources and, if local people could not be induced to supply food and labor, to trade with them. The possibility that the settlers themselves would have to grow their food scarcely figured in their plans.

The company’s strategy confronted a basic difference between Virginia and the regions conquered by Spain. Outside a few pockets, population density in what is now the United States was no more than three-quarters of a person per square mile; central Mexico and Andean Peru could have as many as four hundred people per square mile. In the book’s account, the sparse population made the methods used in Mexico and Peru impracticable in Virginia: there were fewer people to exploit, and the company could not simply reproduce the same machinery of coercion.

Resistance and the Limits of Company Rule

Wahunsunacock viewed the English presence with suspicion. Newport returned from England in September 1608 carrying the company’s order to take firmer control of local people. Its proposed means was a ceremony intended to crown Wahunsunacock and make him subordinate to James I. Wahunsunacock refused to come to Jamestown, and the attempted coronation at Werowocomoco produced no effective English control. He then imposed a trade embargo, cutting off Jamestown’s access to supplies and seeking to starve the settlement into submission.

The company’s authority also had limits within the colony. John Smith, who had recognized that Virginia offered no quick fortune in precious metals and that Indigenous people could not be made to supply food and labor at will, urged the company to send workers with practical skills rather than another large contingent of people unsuited to the work. He argued that a viable settlement depended on the colonists’ own labor. While in command at Jamestown, he relied on resourcefulness to secure provisions, including cajoling and bullying local groups to trade and taking what he could when they refused. He imposed the rule that those who would not work should not eat, and the settlement survived a second winter.

The company’s commercial purpose sharpened the crisis. After two disastrous years, it had produced no sign of profit. The directors responded by replacing the governing council with a single governor, appointing Sir Thomas Gates. Smith, excluded by this new arrangement, returned to England in autumn 1609. The change in governance did not solve the food problem: during the winter of 1609–1610, Wahunsunacock continued to restrict supplies, and the colony entered the period known as the starving time. Of the five hundred colonists who went into that winter, only sixty remained alive by March; the survivors resorted to cannibalism. The company’s failure to secure food was thus not merely a commercial setback but a threat to the settlement’s survival.

From Coercion to Incentives

Under Gates and his deputy, Thomas Dale, the company imposed a severe labor regime on English settlers, while leaving the colonial elite outside the same burdens. Dale promulgated the Lawes Divine, Morall and Martiall, which included the threat of death for any man or woman who fled the colony to live with Indigenous people. Yet the company’s power remained insufficient to compel settlers to work hard on subsistence rations. The punitive model could not solve the mismatch between the company’s expectations and the labor and food available to it.

Beginning in 1618, the company adopted a different strategy: instead of relying on coercion, it offered settlers incentives. The headright system granted each male settler fifty acres, with an additional fifty acres for each family member and each servant brought to Virginia. Settlers received their houses and were freed from their contracts. In 1619, a General Assembly was introduced, giving all adult men a say in the laws and institutions governing the colony. The company had moved from attempting to extract labor through strict rules toward encouraging settlement and work through landholding and political participation.

This shift was not immediate or inevitable. It took the Virginia Company twelve years to learn that the Spanish approach would not work in the north, and the failure of the Lawes Divine, Morall and Martiall took time to become clear. The book presents the headright system and assembly as part of a broader lesson: Virginia’s economic viability required institutions that gave colonists reasons to invest and work. The General Assembly, in particular, is identified as the start of democracy in the United States, even though this early grant of political voice applied to adult men, not to all inhabitants.

Legacy and Institutional Significance

The Virginia Company’s experience became an early instance of a recurring contest in English North America. English elites repeatedly tried to establish institutions that concentrated economic and political rights among a privileged few, on the model of Spanish colonial rule. In Virginia, however, such arrangements repeatedly broke down. The company’s turn to incentives followed from its inability to compel either settlers or local people to sustain the colony on its preferred terms.

The episode illustrates the book’s larger argument that political and economic institutions shape incentives. Political arrangements determine who can influence the rules; economic arrangements affect whether people have reason and opportunity to work, invest, and innovate. The Virginia Company began as a profit-seeking enterprise pursuing control and extraction, but the conditions it faced forced it toward a system that offered settlers land, release from contracts, and a role in governing. Its significance lies in that institutional reversal: the colony’s prospects improved not through a more successful attempt at coercion, but through a change in the rules that governed settlers’ interests and participation.