Initially, the royal charters provided support for early North American colonial farms and businesses, but later, monarchs used the charter’s powers to impose taxes and regulations on the colonists, creating the impediments to colonial economic activity that laid the basis for the Revolutionary War.
England began colonizing North America about one hundred years after the Spanish began their colonization of the New World and decades after many other European nations started colonies. Although most European monarchs retained fairly tight political control over their colonies, the English and Dutch, in accordance with their commercial experience, allowed greater political freedom by using joint-stock companies and proprietary charters. For example, the original Jamestown settlement was based on a joint-stock company with British government approval.
Without charters of some kind, it would have been difficult for any colonization to take place. Initially, British monarchs did not object to joint-stock or proprietary charters as long as some colonization took place. Although the English explorers and colonists did not find much in the way of precious metals, they did prosper by growing tobacco, rice, and sugar. They also used the abundant New World forests for lumber–which had become scarce in England–to build ships.
King James II preferred a much more rapid development of the North American colonies and much tighter control. In some cases, he revoked earlier proprietary charters and required those colonies to accept royal charters. James saw a potential for profit from other economic activities. Colonial economic activity increased under this king, but the change to royal charters was one of the lesser charges that led to James’s abdication in the Glorious Revolution.
King James II’s successors did not govern the North American colonies harshly over the next eighty years, but eventually the British government came to view the cost of defending the North American colonies as too great to pay from existing revenues and imposed an increasing number of taxes and other punitive requirements on the colonies, which inhibited economic activity. Overall royal charters encouraged economic activity, but the punitive regulations in the eighteenth century were counterproductive. Whatever economic gains the British Crown got from royal charters were lost when its thirteen American colonies successfully rebelled and gained their independence. Economic activity was restrained by the perceived harshness of British rule, and business activity was often curtailed.
Canny, Nicholas. The Origins of Empire: British Overseas Enterprise to the Close of the Seventeenth Century. Vol. 1 in The Oxford History of the British Empire. New York: Oxford University Press, 2001. Newman, Peter C. Empire of the Bay. Toronto: Madison Press Books, 1989. Taylor, Alan. American Colonies. New York: Viking, 2001.
Colonial economic systems
Parliamentary Charter of 1763