What is the joint stock company and what role did this type of company play in the creation of colonies?

Answer 1

In a joint stock company a group of investors join together and pool their resources. Each one contributes some money. The money is used for the expenses of the company to purchase whatever the company needs. It may be a factory, a ship, some land, or something else.

Originally it involved the purchase of a ship. When the ship brought cargo back to England, the cargo and ship were sold, and the stockholders split the money among them according to the original investment.

The East India Company set up as a joint stock company. It brought back a load of pepper. The company decided to just sell a little bit at a time and keep the price high so the price would remain high. It became a continuous operation. Individual stock holders could sell their shares in the company.

The Virginia Company organized like the East India Company. It bought land from the King. It paid money to set up a colony. It paid for provisions for the first colonists. The colonists would also need to build houses and plant crops. After seven years, half of the houses and fields would belong to the colonists and half to the Virginia Company. The Virginia Company could then sell those houses and fields to other colonists.

Soon the King bought the stock in the Virginia Company from the stockholders and Virginia became a royal colony.

The Plymouth Company started the same way.

Rhode Island and Connecticut took their charter across the Atlantic so the King could not take it away from the company.