400 Years of Corporate Scandal: An Anniversary

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I wanted to do an item about the economics of exploration on Columbus Day, but now it’s two days late, and I’ll take advantage of another, related anniversary: 400 years since the founding of the Jamestown Colony in Virginia.

Yes, that was a long time ago. I wouldn’t stop the presses for this either. If you just want to get the latest on the Chrysler strike or the stock market, you can press the “Back” button on your browser. Fair warning.

You might remember learning that the Jamestown colony was founded in 1607 by settlers who were funded by a group of investors, the Virginia Company of London, one of several mercantile groups (the British East India Company was another that hoped to make money in the exploration business). But you never get to hear much more about it and that might leave you wondering–okay, it maybe not, but it left me wondering–what ever happened to the Virginia Company? As in, “Why don’t they still own Virginia?”

You might assume that in the natural course of things the crown would have realized that putting the new empire in private hands was a bad idea. But that’s not really the answer. What actually happened was that the a disastrous battle with Indian tribes in 1622 that destroyed a part of Jamestown known as “Martin’s Hundred” led to an outcry in Parliament and a royal investigation. The outcome of this was to show that not only had 347 colonists died in the Martin’s Hundred massacre, only a fraction of the thousands of colonists shipped to Virginia were still alive.

A “>Library of Congress capsule history summarizes the investigation’s conclusions:

Since 1606, approximately seventy-three hundred emigrants have sailed for the colony, and 6,040 have died either en route or after arrival. However, the Privy Council argues that that the colony has had a net increase of only 275 people since its founding. The colony suffers from chronic food shortages and seems unable to get a subsistence from its own efforts.

I’ve seen some other numbers on this, but they are in general agreement that a stunning majority of the colonists who tried to settle in Jamestown were dead within a few years. Among the reasons for this were the Virginia Company’s desperate efforts to make the colony profitable by mandating the planting of tobacco instead of food. Director Terence Malik’s 2005 film The New World gives you an appropriately harrowing picture of the conditions. (You’ll notice that the quote above says 1606 while the colony was founded in 1607. That’s because the first batch of settlers set sail in 1606 and landed in 1607.)

The outcome was that the Virginia Company’s charter was revoked in 1624 and the colony was put under the administration of the crown. The investors lost their money. I wouldn’t use this to make any big conclusions either about private versus government services or about the dangers of pouring money into the hot investment idea of the moment. But it is worth knowing that disastrous corporate meltdowns have a very, very long history.

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