by Mayor Jim Reynolds
One of the many things early American settlers escaped was the strict regulatory nature of European Guilds. An improvement over manor life, the Guilds grew increasingly regulatory toward creativity as craftsmen sought to protect their livelihood. While guilds also took root on the American landscape, they had far less regulatory power.
That relative freedom from regulation led to the golden age of entrepreneurship and huge economic growth in 19th Century America. It was the time when the hand of government was the lightest.
The French word “entrepreneur” literally means one who undertakes, manages and takes the risk of new enterprises—an undertaker. America was quite literally founded by entrepreneurs. The Virginia Company in 1607 founded Jamestown, Virginia to createAmericanplantations. Thenewly created joint-stock company allowed people to invest in enterprises without the risk of losing everything if the business did not survive.
Unfortunately, the Virginia Company found this new enterprise to have a steep learning curve, a curve that was too steep and too short of capital to survive. They were in search of gold in Virginia, and Virginia had none. It was not until John Rolfe introduced West Indian tobacco in 1612 that Virginia found an export market for European tastes; too late for the Virginia Company.
Many of the early settlements were founded by companies seeking profit in the new world: Massachusetts Bay, Plymouth, and of course, New Amsterdam. The Dutch settlement on Manhattan Island was established to advance the fur trade. New York City’s seal is still a beaver surrounded by wampum, and making money is still their great enterprise.
John Winthrop the younger, son of the Puritan John Winthrop, recognized the enormous value of pig iron to New England, but America lacked an important ingredient—capital. Winthrop sailed for England to find financial backing. Savvy bankers recognized great potential in the enterprise, for while both countries had plenty of iron ore, England’s forests had been severely depleted, while wood in America was prevalent and easily accessible. From wood came the critical ingredient in smelting iron—charcoal.
By the time the colonies declared their independence from England, it was the richest place on earth per capita, and it was entrepreneurship that drove it. By the end of the Colonial era, America was supplying the world with pig iron. Just 100 years later, we were producing more than England and Germany combined. Much of that was manufactured by Andrew Carnegie, a penniless immigrant from Scotland arriving in the 1840’s. When he finally sold his business to J.P. Morgan in 1901, Morgan said Carnegie was the “richest man in the world.”
Speaking of entrepreneurs, consider Frederic Tudor, who revolutionized the food industry in 1806 when he decided that he could sell ice. New England had plenty in winter, and he began sending it to southern states and as far away as Calcutta. He did so by shipping it in sawdust—an excellent insulator—and selling it for 25 cents a pound. By 1850, it was one of New England’s largest exports.
While Adam Smith’s Wealth of Nations was alive and well in the new world, it was not without obstacles—those in government will always try to help those who are powerful at the expense of those aspiring to create. That reality is on display today, where overzealous government regulators seek to control even the smallest detail of our lives.
Entrepreneurism has given us life-changing inventions such as bi-focal glasses, cotton gin, the steam engine, an affordable automobile, the digital computer, Twitter, and the ever-popular Buffalo Wings. We must always remember to protect that precious spirit that is the source of our economic vitality, providing the excellent quality of life most of us enjoy today.
Special thanks to John Steele Gordon for much of the historical material.
