1493: Uncovering the New World Columbus Created by Charles C. Mann

as “privateering” and in Spain as “terrorism.” She authorized English ships to loot any Spanish ships or colonies they came across. After Elizabeth died in 1603, James I ratcheted down tensions. But he knew that installing English colonies in North America would rekindle the conflict. Spain had already planted more than a dozen small colonies and missions on the Atlantic Coast, one of them just miles away from Jamestown’s future location (it had failed). The empire would not look favorably on an intrusion into its domain. If that weren’t enough, France, too, had claimed North America, setting down five colonies and missions of its own.
    Still, the monarchy was unwilling to cede the Americas to the competition. In a kind of white paper to Elizabeth, the influential cleric and writer Richard Hakluyt argued that Christian rulers had a sacred duty to save the souls of “those wretched people”—that is, Indians. “The people of America crye out unto us,” he said, to “bringe unto them the gladd tidings of the gospell.” Spain, he noted, had already converted “many millions of infidells.” And what had been Spain’s reward for this deed? God had “open[ed] the bottomles treasures of his riches,” letting England’s hated adversary acquire vast stores of silver, which in turn had let it open trade with China. Hakluyt pointed out that Spain, formerly a “poore and barren nation,” was now so rich that, incredibly, its seamen had almost stopped being thieves. England, by sad contrast, was “moste infamous” for its “outeragious, common, and daily piracies.”
    And there was opportunity in North America, or so it was thought. Between 1577 and 1580 Sir Francis Drake, England’s best-known privateer/ terrorist, went on a round-the-world tour, sacking Spain’s silver fleet along the way. During this trip he stopped on the west coast of the United States. Exactly what he did there is not known because almost all of the expedition’s records have disappeared. But something Drake saw convinced many powerful Londoners that a watery channel cut across North America—it was possible to sail through the United States. If so, the Americas could only be a few hundred miles wide. After that short trip one would be on the Pacific shore, ready to sail to China.
    Elizabeth and James were wary but persuaded. Unwilling to pay the high interest rates moneylenders charged poor credit risks, though, the sovereigns delegated colonization to an entity that could independently support it: a joint-stock company. An ancestor to the modern corporation, joint-stock companies consisted of groups of wealthy people who pooled their resources to fund a commercial enterprise, being repaid by shares of the proceeds. By working with other investors, members of the company can limit their participation in an uncertain enterprise to a small part of the total sum. If a colony failed, the total loss would be huge but the loss to each individual investor would be tolerable—painful, to be sure, but not disastrous.
    As the economic historian Douglass C. North has argued, the joint-stock company was more than a novel means of making money; it was one of many institutional arrangements European societies were developing to mobilize resources efficiently. (North shared the 1993 Nobel Memorial Prize in Economics, largely for working out these ideas.) These institutional arrangements secured property rights (necessary because people will not risk investing if they believe that their gains can be taken away); opened markets (necessary to prevent entrenched interests from stifling innovation); and strengthened democratic governance (necessary to check rulers’ excesses). All permitted trade and commerce to be independent, which led to research and investment becoming routine—a constant activity that people could profit from with little state interference. “What counts is work, thrift, honesty, patience, tenacity,” wrote the Harvard