Driving principles of market economy still truePublished 4:01pm Tuesday, June 7, 2011
By WAYNE CURTIS / Guest Columnist
The Jamestown colony was floundering, hovering on the brink of disaster with staggering financial and human losses. Only a miracle could save it.
A miracle came in the form of a market economy. And this kept the fledgling colony intact and brought forth a new burst of energy that forever changed the course of American history.
Two factors led to the establishment of a market economy in Jamestown. They were the institution of private property and the introduction of tobacco as a cash crop.
By 1615, eight years after its founding, Jamestown was essentially defunct. The Virginia Company, which owned the colony, had sunk an enormous sum — over $11 million in today’s currency — into its investment sitting on the edge of a dismal swamp. While more than 1,700 colonists found their way to the colony, only 350 remained.
Concluding that a new strategy was needed to preserve the settlement, officers of the Virginia Company provided a much-needed incentive that allowed people to work for themselves. This came in the form of a gift of 50 acres of land to each colonist.
This gesture made a tremendous difference. When the colonists began working for themselves rather than as tenants, productivity increased. They no longer faced starvation. Self-interest and the profit motive became of paramount importance.
Tobacco had been in the area when the first colonists landed. It was a harsh product, which could not be exported.
But when a different strain was brought in from Trinidad, it thrived in Virginia and produced a smooth smoke that captured the English market. Tobacco became the chief export, and the economy began to flourish. Thus began the saga of the free enterprise system in this nation, which is such a vital component of economic life in the twenty-first century.
And, not surprisingly, the principles implemented by the Virginia Company almost four centuries ago still hold true today.
Wayne Curtis, Ph.D., is on the board of directors of First United Security Bank. He may be reached at email@example.com.