Profits In The Wilderness

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History, like most aspects of human existence, has fashions that come and go. In the nineteenth century the Great Man theory was very popular. Columbus was certain he could reach the Orient by sailing toward the setting, not rising, sun. He talked Ferdinand and Isabella into footing the bill, and the rest, as they say, is history.

Today the Great Man theory is about as out of fashion as poor Columbus himself, and so-called people’s history is in vogue. Rather than Columbus, the fate of the native tribes he accidentally discovered and—equally accidentally—largely destroyed is now seen by many as all-important. The truth, as usual, lies somewhere in between.

Both these schools of history, of course, also routinely ignore the fundamental importance of technology itself. It was only because the fullrigged ship was fortuitously developed during Columbus’s lifetime that he was able to do more than theorize about the best way to reach India.

Even more ignored than technology as a driving force in history is economic organization. The full-rigged ship was extraordinarily expensive in the economic universe in which Columbus lived. If its full commercial potential was to be exploited, new ways of financing it beyond appealing to princes were needed. Spain did not develop these new ways and soon stagnated. England and Holland, however, developed the joint-stock company and prospered mightily.

Unlike a partnership, in which every partner’s entire net worth is at risk, in a joint-stock company only the amount invested can be lost. Using this form of organization, many capitalists (not that the word would be invented for another couple of centuries) could join together to seek the potentially huge profits in exploration and distant trade without having to fear being wiped out by the equally huge risks.

In England the Russia Company and the East India Company were chartered by the Crown in the late sixteenth century and evolved into vast, and vastly profitable, enterprises. The Dutch West India Company would make the Netherlands the richest country in Europe in the seventeenth century.

The joint-stock company is the direct ancestor of the modern corporation and thus, together with the nation-state itself, the most important organizational invention of the Renaissance. Without it the modern world simply could not have come into being.

And without the joint-stock company the history of that most modern of nations, the United States, would have taken a very different turn indeed. In a fascinating new book, Profits in the Wilderness (University of North Carolina Press, $34.95), John Frederick Martin makes plain the crucial importance of the joint-stock company and the pursuit of profit to the settlement of New England.

To begin with, both the Massachusetts Bay Colony and the Plymouth Colony were organized as joint-stock companies. Some of the participants in these companies were known as “planters.” They were those who came to New England and contributed their labor to the success of the enterprise. Many of them, to be sure, while technically part of a commercial endeavor, looked for their rewards only in heaven. The men who contributed money but stayed in England, however, were known as “adventurers,” and they were certainly hoping for a quicker and more earthly return. (The old meaning of the word adventurer , by the way, still echoes in the modern phrase venture capitalist .)

Whatever the motives of the original settlers and their financial backers, the toehold of the first New Englanders established on the American continent soon proved a refuge from the rapidly deteriorating political situation in old England after Charles I dismissed Parliament and assumed personal rule. In the first great Atlantic migration, up to twenty-five thousand people came to New England between 1630 and 1643. How to settle these people in so vast a wilderness in so short a time was no small problem.

The usual image of the settling of America is one of a frontier line slowly, inexorably creeping westward as individual pioneers cut down the next patch of wood, fenced the next field, built the next homestead, and, eventually, established the next town.

It was not quite that simple, and certainly not so in the earliest days. To try to push back the frontier on an individual basis in the early seventeenth century would have been nearly Impossible, if not suicidal (and, anyway, entirely alien to the Puritan mind). Just consider all the things that had to be accomplished before people could actually take up residence in a new area of settlement. The colony’s government had to give permission. The site had to be chosen. The land had to be purchased from the Indians and surveyed (and the survey accepted by the government). The various lots —home lots, wood lots, planting lots, meadow, and swampland—had to be laid out and allocated fairly among the settlers. River frontage had to be divvied up, and roadbeds situated. Bridges had to be built.

All of this took a great deal of organization and cost a great deal of money. The only suitable organizational model the Puritans had at hand was the joint-stock company, and it was immediately pressed into service as a model for town founding. Now, instead of planters and adventurers, there were “goers,” who went to settle permanently in the new community, and “stayers,” those who provided money and/or expertise but usually did not take up residence.