Gaining independence 1/22/07 3:57 AM

Latitude of 36 –only allowed to settle above the 36 longitude line (the English)
•Free from the threat of Spanish attacks
•Temperate enough for Mediterranean type
oproduce wine, olige il, figs and sugar
•Close enough for English attacks on Plate-Fleets (Spanish ships carrying gold and siler)
•The English fund their exploration through shares of stock were issued to each partner up to
the amount of his investment
ocompany would sell raw materials to other businesses and they would receive money
in return
company would get stock for $10
new world would bring materials back to the company
company sell materials for profit
•A joint stock compantyy providing the financial means for England’s first permanent
colonization. This enables investors to pool their money together to financiae an
expedititon. (helps diversify portfolio)
•People could invest without the fear of bankruptcy
•Forerunner of the modern corporation (limited liability)
•Hudson bat company, the royal African company, and the Virginia company of London got
started as a result of this limited liability structure.
oThey were granted a royal charter (they were given an exclusive right to run that
business)
obut it was private capital and initiative that motivated it.
•HOWEVER, later as we should see the government of the colony was taken over and operated
by the crown becoming a royal colony.
•Because the company was financially unsuccessful the king recalled the virginia’s company’s
charter and Virginia became a royal colony. It was the first government bailout I north
America.
•because of investors' commercial intentions an entrepôt had to be located between the colony
and England(a distribution center where goods are warehoused and relocated)
•King james goes ahead and gives a monopoly to the Virginia company of London in april 1606
othree ships sail out in 1607 104 men and boys
othey land in Virginia, go up a river and name the river james river and go to a place
which they will come to name as Jamestown
in 1609 another crew of 800 come to Jamestown
The first three years were a disaster
•The summers were brutally hot, following rainfall
oMosquitoes
Malaria

oOther diseases
othey sent all their time looking for gold and silver rather than planting crops
oJamestown was FUBAR
•many people perished on the initial journey
o(very rough water combined with an 8 week journey)
o67 out of the original 104 died =(
oa lot of fighting with each other
oneeded consult with the Indians which they didn’t do
omany of the settlers considered themselves ‘gentleman’ unaccustomed hunting an
fishing
•Worst of all they spent much of their time searching for gold.silver
oFound fools gold
The colony was saved by captain John Smith
•Organized the colony
•tough military discipline
•focused on survival skills
Kidnapped in dec 1607 and saved by Pocahontas she preserved the peace
still many people died but the colony survivedl hwever a financial disaster
•canibalism
Virginia:Child of Tobacco “Stinking Weed” 1/22/07 3:57
AM
No gold or silver, however there is tobacco -> another type of gold
by 1916 John Rolfe perfected growing tobacco (becomes a cash crop)
became the father of the tobacco industry
a much milder tobacco than the West Indie’s tobacco
husband to pochahontas
economic savior to the colony
King james considered it immoral but to soon to change his mind abot it
Tax revenue -tobacco
Price- $10 q -$40
assume king james imposes a $10 tax on tobacco
What is the original busines revenue= pXq or 10*40= 400
What is the tax revenue with theoriginal price? $0
after the $10 tax, business revenue is what?= 38*10=$380
What is the tax revenue $10*38 or $380
here is a subsidy of $100 to giveto businesses wich meas the consumers are
the onl one who lose out
However, government gives a ubsidy to the tobacco businesses or tax credit
of $100 so in the finaly anlysis, business revenue increases from $400 to
$480 government revenue increaes from 0-$280 so busiesses win
government wins, consumer loses.
*When the olonies found out about the tobacco it chnges their search for
gold to tobacco,
•for this you're going to need permanent settlements
•very labor and land itensive
•this will cuse a big problem with the indians,
•*increased demand for labor -> slaver anyone?
•Pressure for more land-> imperialism anyone?
Tobacco destroys the land that it is planted in
•And the roots absorb a lot of moisture
•The economy depended solely on a single crop
owhich means the economy was subject to price fluctuations
•encouraged plantation system and slave labor labor was in high
demand.
oIndentured servants between 50-75% of the population rom
1620 1710 was indentured servants
o1680's african slaves start to come in.
othe first slaves were sold in the us from a dutch warship, sold
twenty slaves
•Starts a conflict ith the Indians
Institutional economics
•Deals with laws, customs, ideas, and cultural norms or institutions
that influence choices and shape the economic system.
Representative self-government was also born in Virginia
•The colonists, when the first go here complained that the Virginia
compny imposed martial law, so the colonists reacted by
establishing the Virginia assembly. “The house of Burgesses” 1619
•Wasthe first minature parliament to mushroom from the soil in
America
•ironically it was the same year that slavery was incorporated
So the charter of the Virginia company --> rights of Englishman
ad the house of burgesses
•plante the seeds of American independence
the first tax break in the country’s history “Headright policy”
•pay your way to the new world and you get a 50 plot had to pay a
small annual rent
•6:1 male to female ratio
•big female shortage and thus a large violent male population resulted
•the wealth of a few justified the exploitation of many
Maryland: Catholic Haven 1/22/07 3:57 AM

Founded by Lord Baltimore in 1634

a catholic, first went to Newfoundland and said it was too ccold
The purpose was to secure a safe place for catholics and chieve financial
success (experienced political instability)
Settledin the Chesapeake bay region and there was some conflict between
the protestants and the catholics.
catholics really depend on indentured servants, start brining over lot of irish
catholics
*Acts of toleration which means freedom of worship in Maryland
•threaten by the protestants the Catholics in 196 by the locl general
assembly.
•still did not tolerate atheis and jews
•but till protected the catholic minority
still another doctrine that would have a major implications later during the
anerican revolutionary war
•the charter of the Virginia company
•the house of burgesses
•act of toleration
•