Why were joint-stock companies necessary for colonizing North America?

Answer 1

Colonization was expensive and risky.

Answer 2

Colonization was expensive and risky. Compared with other European nations in 1600, England was relatively poor. As new agricultural techniques made fewer farmers necessary, the poor multiplied in the streets of cities such as LONDON and Bristol. The impoverished were an increasingly burdensome presence and problem. Joint stock companies were the reason the colonies were established. These companies were set up for the sole purpose of sending settlers to the New World to make money for the shareholders. For example, Jamestown, VA was established by the Virginia Company of London- NY City was established by the Dutch West India Company- Boston was established by the Massachusetts Bay Company. At the time, Spain was THE power in the New World, and they were making a fortune off their holdings, shipping literally boat-loads of gold back to the Spanish crown. A bunch of merchants/ aristocrats/ etc. in London saw this and wanted in on the action, so they petitioned the King for a charter, giving them the right to set up a colony in the New world for the express purpose of making money for the shareholders in the venture. For the most part, these joint-stock companies were successful