10: Age of Corporations Begins

In its simplest form, a ‘corporation’ is nothing but a group of people who agree to work together on a project. People have worked together on various projects from the beginning of human existence. But the corporation as we know it now—as a legal entity with rights to enter into contracts, to hire and fire, and to do other things as if it were a real human being—appears to have originated either in the time of Alexander or in the time of the Roman Empire.

Corporations as legal entities are necessary for extremely large projects that will take many decades to complete. Investors won’t be willing to put their money into a project if they are worried that the project might not be completed. If the project will take a very long time, there is a good chance that the people behind the project will either die or lose interest before it is completed. It doesn’t make sense to invest in a project under these circumstances. However, if the people behind the project can set up a legal organization that will continue, and make sure the project gets finished, with legal rights belonging to the investors, the investors feel safe. If they can have these assurances, they are willing to invest in projects that will take many years or even many decades to complete.

This is where the organizations that Romans called ‘publicans’ and that we now call ‘corporations’ come in: they are legal entities with legal rights that are entirely separate from the rights of the people involved. A corporation can raise money; it can take on debt, it can make contracts, it can elect or appoint its own administrators, and it can continue to exist and work on a project for many human lifetimes. Its existence doesn’t depend on the identities of any people.

As I write this in the 21st century, corporations play a huge role in society. Virtually all weapons made in the world today come from corporations. Corporations are responsible for the great majority of environmental destruction in our world today. Corporations control virtually all of the press and media sources, so they control the information flow; they use their immense power to control public opinion.

Corporations also have immense control over governments. They have powerful lobbyists, political action committees, and other political organizations that allow corporations to basically write their own laws in most of the world. If corporations want wars, they have very powerful tools to make the wars happen. (Many claim that William Randolph Hearst started the Spanish American War simply to give him some ‘news’ to put between the ads of his newspapers.)

Corporations make nearly all manufactured goods in the world today. Corporations run the financial systems that dominate the world, the transportation systems, the distribution systems, and the great majority of the value-creation systems that are in the world as of the 21st century.

We can’t really understand how the world got to be as it is now without understanding the specific type of corporation that exists in the world today. Although this type of corporation is similar in nature to the publicans that existed during Roman times, they have a great deal of rights and powers that early corporations did not have.

To really understand these critical entities, we need to understand how the specific type of corporation that exists in the world today first came to exist and the way it evolved to gain its present powers.

China, India and The Rest of the World

This book is about the way the world came to be in the mess we are in now, as of the 21st century, perched on the edge of extinction. It has focused on events that happened in what is commonly called the ‘western world,’ which includes Europe, the Mediterranean basin, and after 1492, America.

What about the rest of the world? Aren’t the events there important as well?

If we want a general view of history, we need to understand what was going on in the rest of the world. But all of the key structures that dominate our 21st century world, all the structures that place us at risk, and all of the structures that we can potentially use to save ourselves, originated in the part of the world collectively called ‘the west.’ The massive corporations that now dominate the world, governments that are essentially vassals of corporations, the amazing scientific advances that gave us electricity, telephones, computers, smartphones, photoelectric and other non-destructive energy production systems, all came to be in the ‘west.’

The two most important non-western cultures had enormous productivity; they invented a great many things and had a great many products that westerners wanted but didn’t know how to make. In many ways, India and China were both far more advanced than Europe as of 1600 AD. But both of these cultures were to be conquered by western cultures and ultimately forced to accept western ways. As I write this in the 21st century, India and China and, for that matter, all of the cultures and nations of the world, have adopted a cultural, economic, and political model that originated in Europe and then evolved in America.

The Absolute Need for Enormous Corporations

In 1492, Columbus reached what people would call ‘West India.’ Seven years later, in 1497, the Portuguese trader Vasco De Gamma reached what came to be called ‘East India’ with a route that went entirely by sea. At the time, Europeans didn’t know that these were two entirely different continents.

But traders don’t care about such things. They care about making money. Both of the continents that were on the sides of Europe had a great many products and resources that were not available in Europe.

The West Indies (America) had no factories at all. Certain very useful goods needed large-scale facilities to make; they needed factories, or they couldn’t exist. The people in America had never seen goods made in factories because they had a culture that was fundamentally inconsistent with factories. (Natural law societies don’t allow people to modify the planet and you can’t build a factory without modifying a part of the planet.) They had virtually no steel, almost no glass, no mirrors, no brass. Of course, they had no gunpowder and no guns, so they depended on bows and arrows to bring down meat and defend themselves from aggression. These people would trade things of incredible value to Europeans, like gold, silver, and animal pelts for trinkets that were made in enormous factories and that were extremely cheap in Europe.

The Chinese had silk and tea.

India had Opium.

People in Europe soon found that they could make vast fortunes trading with the other continents.

They needed some things that were incredibly expensive and required enormous investments to make this work:

They needed ships, of course. Lots of them. The bigger the ships they had, the more money they could make. They wanted lots and lots of enormous ships.

They wanted to build them, but they didn’t have any shipyards to speak of. They therefore needed to build shipyards. The bigger the shipyard, the larger the ships it could build and the more money it could make.

Corporations could raise far more money to build shipyards than private proprietors. Corporations ran the shipyards.

Of course, shipyards need a lot of raw materials. Corporations could supply them cheaper than mom-and-pop businesses. All of the businesses needed financial services. Financial corporations like the giant Medici Bank operated throughout the empire, providing funding and letters of credit, so that people could get the money they needed to operate the massive businesses.

Although these corporations were quite large, at least relative to the corporations that had existed before, they still had very limited ownership because the structures needed for corporations with large numbers of owners weren’t developed until 1600. These structures existed because a group of wealthy people in London wanted to get much richer than they already were and realized that they would have to bring small investors into the picture to make their vision happen.

The Governor and Company of Merchants of London trading with the East Indies

Some businesses simply can’t operate without enormous investments. For example, say that you and a group of friends in the late 1500s Europe wanted to open a business to trade with China.

You would need a lot of ships for this. You would also need a network of supply depots to keep the ships supplied, an army to protect them from pirates and thieves, and buyers and sellers in China and Europe to conduct the actual trades. This kind of business requires an enormous investment.

 

Europeans traded with China in the 1500s, but the trade was not organized. Someone with a single ship would make a trip and, if he got through, could get very rich. But with no supply depots and pirates everywhere, very few of the people trying to make this trip actually made it. Until the East India Company was formed in 1600, trade with both continents was very limited.

 

Normally, when people want to open businesses that require large investments, they start by going to their friends, relatives, and business associates to put together an investment pool. They then share the decisions and benefits.

But some businesses require so much money that even the people with the largest families and largest networks of friends and business associates can’t raise enough.

In the late 1590s, a group of investors in London wanted to put together a business to trade with China. They knew they didn’t have enough friends and relatives to provide the funding. They decided to set up a new kind of corporation. This type of corporation has come to be called a ‘public corporation.’ They set up this corporation so that anyone in the ‘public’ could invest in it.

The people who wanted to form the new corporation needed small investors to be able to trust them. Rich people may take advantage of their power and take the money that small investors put into the business, and not give the small investors anything in return. The people who wanted to form this business realized it couldn’t work unless the small investors had protections that they could trust. Of course, most of the investors who were forming this business were part of the government. They put together a set of legal practices that would give the small investors rights.

The first business they put together on this model got its charter on December 31, 1600. The founders called it the ‘Governor and Company of Merchants of London trading with the East Indies.’ Most people called it ‘The East India Co.’ After the French and Dutch governments put together their own corporations that were essentially copies of the British Company, people had to specify which East India Company they were involved with; this was the British East India Company.

Any member of ‘the public’ could invest in this company. The company’s secretary kept a record of all shareholders, with their addresses and the number of shares they owned. When the company wanted to make decisions, the secretary sent out ballots to the registered addresses. The shareholders could fill out the ballots and send them back, and their votes would be counted. When the company had money to pay the shareholders, it would send out checks to its shareholders at their registered addresses.

If you were a shareholder, and wanted to sell your shares, you would have to find a buyer and agree on a price. After this, you could send an order to the secretary to change the registration information, and you wouldn’t be involved anymore; the new owner would get the ballots and checks.

The idea worked very well and the company was able to raise enormous amounts of money. The company eventually had more than 2,690 ships; it had forts and supply depots, trading houses in India, China, and America, and an army that was larger than the armies of most countries to protect itself from people who might want to interfere in its business.

But it was soon to be overshadowed by an even larger company, which added a new wrinkle and became a new kind of public company, now called a ‘joint stock public corporation.’

< The VOC

The investment group that was eventually to be called the Vereenigde Oostin-dische Compagnie, which translates to the ‘Dutch East India Company,’ started with the same model. But its founders added a new feature that made the corporate stock far more attractive to investors: it issued paper ‘stock certificates’ to the owners of stock.

Investors liked this for several reasons. One was that it made buying and selling stock much easier. If they wanted to sell their shares, they could make a deal, give the buyer the certificates, take the money, and walk away.

The new system also offered privacy and anonymity for owners. A lot of people with money don’t want others to know they have money. They want to hide money from their families, or perhaps from creditors, from thieves or extortionists (who could go to the records of a company like the British East India company and find out how rich their target was by the number of shares the target owned), or from governments that may want to tax them.

In the new system, the paper stock certificates represented ownership of the company. If you wanted to have a share in the company, but didn’t want anyone to know that you had a share, you could go to anyone selling shares and buy the certificates. You could then go to a banker (or later, a brokerage house) and put the shares into an account. The bank would hold the certificates and register them in the bank’s name, not yours. The dividends the company pays would go to the bank, which would then transfer them to your account. You would get the money, but no one would know that you were the owner.

If you wanted to vote on an issue, you could simply tell the bank how you wanted to vote. Your banker would vote on your behalf (by ‘proxy’), again, leaving you out of the picture.

The new company was called the Vereenigde Oostin-dische Compagnie, and its logo featured its giant initials, the VOC. Investors from around the world really liked this new system and made huge investments in it. As large as the British Company was, the Dutch Company quickly became even larger. Here is a quick description:

 

Qqq voc flag 299

 

The VOC eclipsed all of its rivals in the Asia trade. Between 1602 and 1796 the VOC sent almost a million Europeans to work in the Asia trade on 4,785 ships, and netted for their efforts more than 2.5 million tons of Asian trade goods. By contrast, the rest of Europe combined sent only 882,412 people from 1500 to 1795, and the fleet of the British East India Company, the VOC’s nearest competitor, was a distant second to its total traffic with 2,690 ships and a mere one-fifth the tonnage of goods carried by the VOC. [Darleen Ross, 1602 Establishments: Dutch East India Company, 2012.]

Corporations that Colonized North America

In 1606, a third corporate innovation came into existence, the kind of company we now call a ‘holding company.’ It is formed specifically to ‘hold’ shares of stock in other corporations. The first holding companyto get a charter was called ‘the Virginia Company.’

The Virginia Company wanted to undertake a massive project. This project was so vast that the founders decided they were better off to divide it into three separate projects to be administered separately. They were going to remove the native people from the east coast of America and turn it into a kind of copy of Europe. They would extract and sell the most valuable resources first; they would then divide the land into farms, towns, and cities along the European model and sell everything, dividing the money among the shareholders.

The founders of the Virginia Company petitioned the Parliament for a ‘patent’ on the land they wanted. A ‘patent’ is a deed or title. They wanted a large government to accept them as the owner of the land. The majority of the founders of the Virginia Company were high in the government and easily convinced the government (themselves) to grant them this patent. According to the government of England, the Virginia Company owned the landing Eastern North America.

The corporation would have to protect its land from other European nations. But this wasn’t a big issue because the land they wanted didn’t have any gold. Other European powers wanted land but there was still plenty of land that had gold on it available for the taking. The other countries were fighting over this other land; they would leave the Virginia Company alone. The corporate managers realized that, eventually, other countries would see what they were doing and try to take the land away from them. But they thought that if they had a large enough presence in America, other European powers wouldn’t be able to remove them without massive strength. They wanted to get the land populated, and fast.

The Virginia Company ultimately had a great many subsidiaries. The company originally divided its patents among three different administrations. The map below shows the original division:

 

Virginia company map Qqq map 301

 

The Plymouth Companies would administer the northern zone, the London Companies would administer the Southern zone, and the central zone remained under the administration of the holding company (the Virginia Company).

Corporate sovereignties

The directors of the company made the rules and formed the governments of the colonies that eventually split off of the land granted to the Virginia Company. The colony that eventually came to be called Virginia organized its government this way:

The Virginia colony had a government that consisted of two houses. The upper house, called the Virginia Governor’s Council, made all legislation and was allowed to enter into financial transactions on behalf of the colony. The board of directors of the Virginia Company appointed all members of the Virginia Governor’s Council.

Qqq indenture page 301

The Virginia Company’s business model involved selling very large amounts of land to private investors. They knew that people would be more likely to buy the land if they could control the legal system of the colony. The company formed a ‘second house’ of government, called the ‘House of Burgesses,’ to be controlled by landowners.

This system of government gave the corporation general power but gave the landowners control of the details.

People who bought enough land were guaranteed a voice in government. Shareholders of the company were also guaranteed a voice in the government. The largest landowners were shareholders; they had a say in the upper house through their role in the company and in the lower house because they were landowners. (The Washington and Jefferson families, for example, were both shareholders in the company and owners of large parcels; they had a say in all policy decisions.

Slaves: first White, then Black

Most of the people who bought land from the Virginia Company in the first sales didn’t have any interest in actually living in America; they just wanted to own land there. Once they bought land, they needed to find people to actually work on it. England had laws requiring people to pay their bills; if people took on obligations and couldn’t pay, they were criminals and put into prison. Debtor’s prisons were horrible places and few people survived; for most people, debtor’s prison was a death sentence.

In 1597 the British Parliament passed ‘The Vagabonds Act’ which allowed corporations to pay off the debts of debtors, thereby saving them from hanging or debtor’s prison. Instead, corporations would send debtors to work on foreign soil as ‘indentured servants.’

The law says that the servants could be put to work ‘on foreign soil.’ This is a very important provision. These released debtors, to be called ‘indentured servants,’ would be considered to be slaves. Slavery was not legal in England so the corporations couldn’t put them to work in England. But the Virginia Company and other companies that chartered land in America got charters that granted them sovereignty. They were in charge of their own laws. Corporate land was technically ‘foreign soil.’ (America didn’t become British soil until the Treaty of Paris made it a part of Britain in 1763; this is an important transition as we will see shortly.)

The Virginia Company planned to sell large parcels of land to wealthy investors in Europe. The buyers would then bring in indentured servants to work this land. They would work first to remove the resources, and then to organize the land into towns, cities, and farms along the European model. From the very first, the Virginia Company’s business model was built on slavery.

The initial investors didn’t treat their slaves very well.

Here is a sample of the reports of the way indentured servants were treated that were coming back to the Eastern Hemisphere, from the academic paper ‘The Rise and Fall of Indentured Servitude in the Americas:’

 

Conditions for the workers were hard. One observer commented, in explaining the colony’s high rate of mortality, that “the hard work and the scanty food, on public works kills them, and increases the discontent in which they live, seeing themselves treated like slaves, with great cruelty.”

The response of some workers was to run away to live with the Indians. The Company clearly felt that this action threatened the continued survival of their enterprise, for they reacted forcefully to this crime. In 1612, the colony’s governor dealt firmly with some recaptured laborers: “Some he appointed to be hanged, Some burned, Some to be broken upon wheels, others to be staked and some to be shot to death.”

The underlying motive of maintaining labor discipline was apparent to an observer, who remarked on the punishments that “all this extreme and cruel tortures he used and inflicted upon them to terrify the rest for Attempting the Lyke.” [David W. Galenson, ‘The Rise and Fall of Indentured Servitude in the Americas: An Economic Analysis.’ The Journal of Economic History 44:1, March 1984, pp. 1-26.]

 

About 70% of people convicted of the crime of non-payment of debt during the early 1600s were sent to America as indentured servants. The great bulk of early arrivals to the land were technically slaves. (Even after the United States became a country, it had white slavery; the Constitution recognizes it.)

In some cases, they were indentured to a specific company which had a use for them. In others, people called ‘agents’ would buy large numbers of these slaves and send them to America to be sold in slave markets. This quote describes the way this worked:

 

By the time the servants reached the colonies they were dirty, sick, and weak. Those with prearranged indentures were taken off the ship by their new masters, while those indentured to agents were readied for sale. Fresh clothing, clean water, and good food were enough to erase most of the visible ill effects of the voyage, and within a few days the cargo was ready for sale.

Newspaper advertisements or broadsides announced the arrival of “a number of healthy indented men and women servants…a variety of tradesmen, good farmers, stout laborers…whose indentures will be disposed of, on reasonable terms, for cash.” The buyers arrived on the day of the sale, and the servants were brought out for inspection. Strong young men, skilled workers, & comely women sold quickly, but the sick or old were harder to dispose of, and at times were given away as a bonus with more desirable servants.

In later years, it was not uncommon for one buyer to purchase the indentures of all, or a large part, of the human cargo. These “soul-drivers” loaded their merchandise on wagons and drove through the countryside selling it door-to-door the way the drummer sold sewing needles. [Barbara Bigham, ‘Colonists in Bondage: Indentured Servants in America.’ Early American Life, 1979.]

Pierce and Associates and the Plymouth Colony

In 1619, a corporation in London, John Pierce and Associates, a subsidiary of the Merchant Adventurers Company, purchased land along the west side of the Hudson River in the current state of New Jersey. The corporations intended to call this plantation ‘The Plymouth Plantation.’ The Merchant Adventurers contracted with a company called the ‘Planters and Adventurers,’ to recruit for the operation. The companies were able to recruit 55 people from debtor’s prisons in London, but this wasn’t enough to provide the workers that the company needed for the plantation.

The Planters and Adventurers had been in contact with a member of achurch group in Lieden Holland that wanted to emigrate to either to Virginia or Guiana. The corporation sent an agent, Thomas Weston, to Holland to see if these people could be recruited to go to the Plymouth Plantation. He found a total of 47 people in Holland willing to take the trip.

The people in Holland weren’t debtors. (They also weren’t repressed by authorities, as history books in the United States claim; they lived in Holland, a Catholic country, and they were ‘Puritan’ Catholics, an accepted branch of the Catholic church.) Some of them were even able to pay their passage over to America. However, the company would not allow them to go unless they signed indentured servitude contracts for seven-year terms. They would work along with the other indentured servants for this time. If they completed their terms, each person 16 years old or older at the start of the trip would get one share of stock in John Pierce and Associates (the corporation) in exchange for their seven years of service. People who paid their own way—by paying ten pounds of sterling silver per person—would get an additional share of corporate stock for each ten pounds they paid. Here are the terms of the agreement with ‘The Lieden contingent’ from William Bradford’s 1628 book, Of Plymouth Plantation.

 

1. The adventurers & planters doe agree, that every person that goeth being aged 16. years & upward, be rated at 10li., and ten pounds to be accounted a single share. [note: ‘li’ stands for ‘libra’ which means 10 pounds of sterling silver]

2. That he that goeth in person, and furnisheth him selfe out with 10li. either in money or other provissions, be accounted as haveing 20li. in stock, and in ye devission shall receive a double share.

3. The persons transported & ye adventurers shall continue their joynt stock & partnership togeather, ye space of 7. years, (excepte some unexpected impedimente doe cause ye whole company to agree otherwise,) during which time, all profits & benifits that are gott by trade, traffick, trucking, working, fishing, or any other means of any person or persons, remaine still in ye com̅one stock untill ye division.

4. That at their coming ther, they chose out such a number of fitt persons, as may furnish their ships and boats for fishing upon ye sea; imploying the rest in their severall faculties upon ye land; as building houses, tilling, and planting ye ground, & makeing shuch com̅odities as shall be most usefull for ye collonie.

5. That at ye end of ye 7. years, ye capitall & profits, viz. the houses, lands, goods and chatles, be equally devided betwixte ye adventurers, and planters; wch done, every man shall be free from other of them of any debt or detrimente concerning this adventure.

6. Whosoever cometh to ye colonie herafter, or putteth any into ye stock, shall at the ende of ye 7. years be alowed proportionably to ye time of his so doing.

7. He that shall carie his wife & children, or servants, shall be alowed for everie person now aged 16. years & upward, a single share in ye devision, or if he provid them necessaries, a duble share, or if they be between 10. year old and 16., then 2. of them to be reconed for a person, both in trāsportation and devision.

8. That such children as now goe, & are under ye age of ten years, have noe other shar in ye devision, but 50. acers of unmanured land.

9. That such persons as die before ye 7. years be expired, their executors to have their parte or sharr at ye devision, proportionably to ye time of their life in ye collonie.

10. That all such persons as are of this collonie, are to have their meate, drink, apparell, and all provissions out of ye corn on stock & goods of ye said collonie.

The Mayflower Compact

The agreement between Pierce and Associates, Merchant Adventurers Company, and the Virginia Company allowed the company to build a plantation on land owned by the Virginia Company in what is now the state of New Jersey.

The ship actually landed in Massachusetts, some 300 miles north of its intended landfall. Almost certainly, this was not an accident. The passengers didn’t want to go where they were supposed to go; they would be slaves there. They wanted to go somewhere outside of the jurisdiction of their owner, Pierce and Associates. They wound up on land that was not owned by Pierce and Associates. The passengers then claimed that their servitude contracts were null and void and they were free. They wrote out a document claiming they were free and therefore able to form their own government and live as they pleased. This document was called ‘The Mayflower Compact.’

The corporate managers found out about the revolt of their indentured servants when the Mayflower arrived back in England on May 6, 1621. The attorneys for Pierce and Associates filed papers with the Virginia Company (the legal owner of the land) to swap the land they had originally purchased with the land the Mayflower passengers had settled. The company made the swap and the change in ownership was approved by the government in a ‘Patent’ on the land issued the first of June 1621. Here are the details of the land grant, called ‘the Pierce Patent of 1621:’

 

This Indenture made the First Day of June 1621 And in the yeeres of the raigne of our soveraigne Lord James by the grace of god King of England Scotland Fraunce and Ireland defendor of the faith etc. Betwene the President and Counsell of New England of the one partie And John Peirce Citizen and Clothworker of London and his Associates of the other partie.

Witnesseth that where-as the said John Peirce and his Associates have already transported and undertaken to transporte at their cost and chardges themselves and dyvers persons into New England and there to erect and build a Towne and settle dyvers Inhabitantes for the advancemt of the generall plantacon of that Country of New England Now the sayde President and Counsell in consideracon thereof and for the furtherance of the said plantacon and incoragemt of the said Undertakers have agreed to graunt assigne allott and appoynt to the said John Peirce and his associates and every of them his and their heires and assignes one hundred acres of grownd for every person so to be transported besides dyvers other pryviledges Liberties and commodyties hereafter menconed.

 

The patent reestablished corporate control and allowed Pierce and associates to take back authority over the Plymouth Plantation.

The ‘Mayflower Compact’ therefore had no force whatsoever; it was simply an attempt by a group of bondage slaves to revolt against their corporate masters. As soon as the corporation heard about it, it took the case to court and got full authority back. The Compact had no impact on any laws or rules in Plymouth or anywhere else.

The Real Government of Massachusetts

In 1626, a holding company called the ‘Governor and Company of the Massachusetts Bay in New England’ was granted a patent on all land in what is now eastern Massachusetts except the land that had already been granted to Pierce and Associates. The holding company had several subsidiaries, the largest of which were the Dorchester Company and the Massachusetts Bay Company.

In 1629, the shareholders of the Governor and Company of the Massachusetts Bay in New England passed a resolution requiring all shareholders to move to and live in lands under the control of the corporation. Shareholders who lived other places and didn’t want to move would have to sell their shares to people who were willing to relocate. From then on, all corporate decisions would be made in Massachusetts itself. Here is the relevant part of the resolution:

 

Now, for the better encouragement of ourselves and others that shall joyne with us in this action, and to the end that every man may without scruple dispose of his estate and affayres as may best fit his preparation for this voyage; it is fully and faithfully agreed amongst us, and every of us doth hereby freely and sincerely promise and bind himselfe in the word of a christian and in the presence of God, who is the searcher of all hearts, that we will so really endeavour the prosecution of this worke, as by God’s assistance, we will be ready in our persons, and with such of our several familyes as are to go with us, and such provision as we are able conveniently to furnish ourselves withall, to embarke for the said Plantation by the first of March next, at such port or ports of this land as shall be agreed upon by the Companie, to the end to passe the seas, (under God’s protection,) to inhabite and continue in New-England: Provided always, that, before the last of September next, the whole government, together with the patent for the said Plantation, be first, by an order of Court, legally transferred and established to remain with us and others which shall inhabit upon the said Plantation.

 

The book, The records of the Governor and Company of the Massachusetts Bay in New England contains the original laws of what is now the state of Massachusetts. The first 20 pages contain the text of the original corporate charter. The rest of the book, some 400 additional pages, explain the laws the company passed and (very painful to read) descriptions of hangings, brandings, tortures, and other punishments the corporation inflicted against violators of the corporate laws. The company could and did make its own laws. These laws formed the foundation of the legal system for what is now the State of Massachusetts.

The Corporate Colonies

The colonies of Massachusetts, Rhode Island, New Hampshire, Virginia, New York, New Jersey and Connecticut were corporate colonies. They were created by profit-motivated corporations (certainly not by freedom-seeking pilgrims). These corporations operated the colonies for profit until 1763, when the Treaty of Paris made these lands British Soil.

Pennsylvania, North Carolina, and South Carolina were formed by proprietary land grants. These grants went to individuals to whom the king owed money. The proprietors treated their land the same basic way as the companies: they wanted to sell the bulk of their land for the highest price they could get. Each colony formed a government to administer its operations. The owners of each colony set the rules for these governments. Buyers of large parcels of land got rights to involve themselves personally in the government; buyers of small parcels could vote for representatives. At least until 1763, when England began to require change, people who did not own land did not have any representation in the governments.

All of the above colonies used two kinds of slaves:

White slaves were called ‘indentured servants.’ Most of these slaves came from the debtor’s prisons of England. The corporations brought over these slaves to make money from their labor. The corporate managers had incentives to work them as hard as they could get them to work and to provide as little for their care as they could. They had no incentives to allow them to form families and have children, because they would not own the children.

Although each corporation had different policies, generally speaking, they appear to have treated the white slaves as corporate assets; they wanted to maximize the return they got while they owned the assets and relinquish the asset with as little residual value as possible. A very large percentage of the indentured servants were worked to death.

Black slaves were property. The corporations had incentives to treat them much better than they treated white slaves, because the corporations knew that they could have their labor for the rest of their lives. The longer they lived, the more value the company got from them. In fact, the owning corporations had incentives to allow black slaves to form families and raise children, as the children would belong to the companies that owned the parents.

Pennsylvania, Delaware, North Carolina, and South Carolina started as proprietary colonies. As noted above, the proprietors could make their own rules in these places. They all used both kinds of slaves.

 

Georgia:

Georgia was the only colony to break the mold. Georgia was under Spanish control until 1732 and the Spanish used slave labor. When England gained control of Georgia, the government freed all slaves, as slavery was not legal in England at the time and Georgia was considered to be British soil.

In 1749 a group of nobles convinced the legislature to convert the colony to a proprietary colony and grant them a patent on the land. Their patent granted them extra-territoriality; the land was no longer British Soil so its owners could own slaves. Georgia was the only colony without slavery, but it was only without slavery for the first 17 years of its existence as a colony because it was the only colony that was legally British soil before 1763.

 

Slavery in England

Slavery was abolished in Ireland in 1171. Slavery was abolished in England in 1381. At the time, the abolition applied only to British citizens. No British could be a slave or could own a slave.

In 1559, a case led to the prohibition of slavery of any kind. A man, Cartwright, was observed savagely beating another and was arrested for battery. Cartwright testified that the man was a slave who he had brought to England from Russia, and since the slave he was beating was his property, he could treat him as he pleased; the punishment was not illegal.

The judge ruled that the man was not a slave because slavery didn’t exist in England; the fact that he had paid for his slave in Russia didn’t matter. The judge claimed that slavery could not exist in England. His exact words were ‘England was too pure an air for a slave to breathe in.’ Upon reaching British soil, all slaves became free.

Several important British court cases involving slave litigation established that the colonies in America were not British soil and therefore slavery could exist in the colonies. In these cases, several important rulings became a part of British law that would have an important impact on the events that would happen later (when the colonies would break way from England to form a new country, in part so the corporations that ran the colonies could keep their slaves).

The first was in the case of Chamberlain v. Harvey. Chamberlain had claimed that the ruling in the Cartwright’s case did not apply because the slave in the Cartwright case was white and his slave was black. The judge disagreed. He ruled that the law didn’t recognize black people as having different rights than white people. This ruling led to a significant difference in law between England and the colonies because the colonies accepted that whites, particularly white slaves, had entirely different rights than blacks.

The second important ruling, in Smith v. Brown and Cooper, involved the different status of slaves in the colonies. In this case, Chief Justice Holt held that ‘although blacks could be bought and sold as chattels in Barbados, that was not the case in England.’ (England had many colonies in the Americas; the colony of Barbados was an island in the Caribbean.)

His ruling includes the follow sentences: ‘As soon as a negro comes into England, he becomes free. One may be a villein in England but not a slave’.

The ruling in Smith v. Brown and Cooper made it very clear that the colonies were not ‘British Soil.’ The ‘colonies’ had entirely different laws than those that applied on British soil.

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