The Land of Enterprise

A Business History of the United States

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About The Book

This groundbreaking account of the development of American business from the colonial period to the present explains that the history of the United States can best be understood not as a search for freedom—but as a search for wealth and prosperity.

The Land of Enterprise charts the development of American business from the colonial period to the present. It explores the nation’s evolving economic, social, and political landscape by examining how different types of enterprising activities rose and fell, how new labor and production technologies supplanted old ones—and at what costs—and how Americans of all stripes responded to the tumultuous world of business. In particular, historian Benjamin Waterhouse highlights the changes in business practices, the development of different industries and sectors, and the complex relationship between business and national politics.

From executives and bankers to farmers and sailors, from union leaders to politicians to slaves, business history is American history, and Waterhouse pays tribute to the unnamed millions who traded their labor (sometimes by choice, often not) or decided what products to consume (sometimes informed, often not). Their story includes those who fought against what they saw as an oppressive system of exploitation as well as those who defended free markets from any outside intervention. The Land of Enterprise is not only a comprehensive look into our past achievements, but offers clues as to how to confront the challenges of today’s world: globalization, income inequality, and technological change.


The Land of Enterprise 1

We don’t know who the first person born in Europe to set foot in North or South America was, and it is clear that no European could ever “discover” a gigantic plot of land where millions of people lived. But we do know that, beginning in the 1490s, European monarchs began to claim a right to lands in the “New World” of the Western Hemisphere. Within a few decades, those rulers sent thousands of soldiers, miners, farmers, and others to bring back precious metals, furs, timber, human slaves, and other goods.

We also know that, between 1500 and 1750, the center of economic power in Europe shifted from the southern parts of the continent—Italy, Spain, and Portugal—to a small island in the North Atlantic comprising England, Scotland, and Wales. The kingdom known as Great Britain after 1707 emerged in that early modern period as a dominant sea power, an imperial colonizer, a global trader, and the leader in factory-based manufacturing. And then in 1776, a major part of Britain’s colonial empire seceded, fought a long global war, and achieved political independence.

The economic relationship that Anglo-Americans cultivated with Britain during the colonial period proved pivotal. As part of the British empire, white colonial Americans participated in a vibrant, trade-oriented economic system rooted in the exploitation of natural resources and the creation of increasingly sophisticated business forms. After independence, the future of that economic landscape appeared uncertain, and vital debates unfolded about what type of economy the new country should pursue—one devoted to export-based agriculture, or one that built on the new manufacturing technologies that Britain had pioneered in the second half of the 18th century? As American politicians sat down to write the Constitution in 1787, these questions created powerful rifts as competing factions argued—with far-reaching consequences—over the future of business and the legacy of the colonial economy.
The World Economy, c. 1500
To grasp the economic challenges that the first generation of Americans faced when the United States achieved political independence, it is helpful to take the long view of business practices during the period of European colonization. As the major powers of Europe spread their navies and peoples across Africa and the Americas in the late 15th and early 16th centuries, economic life came increasingly to revolve around transatlantic trade.

By 1500, intercontinental land-based commerce had flourished across the Eurasian landmass for several hundred years. The expansion of the Arab empire across the Middle East and North Africa, as well as the Moghul Empire in the Indian subcontinent, connected China, India, North Africa, and Eastern Europe. Powerful rulers across that vast geography secured trade routes and reaped significant wealth from the labor of agrarian people. Fabrics—silk from the East; wool from colder climates—as well as spices, wood, and precious metals all traveled tremendous distances.1

Further south, traders from the Arab and Ottoman empires did a brisk overland business with their counterparts in West African kingdoms across the Sahara. In the mid-15th century, seafaring Europeans, particularly from Portugal, began to arrive regularly by ship along the West African coast to trade textiles for goods such as ivory, sugar, and gold. And by the end of that century, such trade regularly included slaves. Portuguese and later Spanish and other European traders purchased captured Africans to work first on sugar plantations they established on the Canary Islands and later, by the first decades of the 16th century, in the Caribbean and South and North America.2

Before the 1500s, people in the Americas lay outside these trade networks. The indigenous population of the American continents included vast empires such as the Aztec in present-day Mexico, major city-states such as Cahokia near present-day St. Louis, Missouri, and smaller societies of more mobile and less agriculturally rooted people, particularly near the Atlantic and Pacific coasts of North and South America. Trade was extensive within and between the Americas before 1500, but the continents were cut off from the rest of the world. As most students of history know, that situation changed with the advent of European transatlantic voyages in the 1490s, with devastating consequences. In the next three hundred years, a combination of disease, war, and genocide at the hands of European conquerors decimated the native populations of the Caribbean, destroyed empires such as the Incas in Peru, and dramatically affected the number of indigenous people of the eastern woodlands of North America, pushing many inland away from the coast. By the late 16th century, entrepreneurial English businesspeople looked to those “abandoned” wooded areas along the Atlantic as promising sites for colonies.3

The most significant change to the world economy, therefore, was the ascent of European seafaring merchants whose newfound prowess in shipbuilding and navigation allowed them to reach parts of Africa, Asia, and the Americas in greater numbers, and to profit immensely in the process. These new trade ventures changed the distribution and settlement patterns of people around the world. But just as important for the development of business and modern capitalism, the “Age of Exploration” (as the textbooks somewhat cheerfully call this period) also marked a monumental reorganization of the European economy.

Historians have traditionally tried to capture the changes in European social, political, and economic life that developed around 1500 in response to increased global trade by suggesting a transition between the earlier “medieval” period and the subsequent “modern” (or “early modern,” to be more precise) period.4 Essentially, what happened was a change from a feudal model of economic organization to a mercantilist model, the forerunner to a capitalist system.

As with everything in history, this shift was far more complicated than such a simple claim would suggest. Many people quibble over these terms, since the period of so-called feudalism included such diverse experiences over time and space. Ditto for mercantilism, modern, and, for that matter, capitalism. After all, history is a long-running, continuous process, and human beings never jump from one way of living to a different one overnight. So suggesting a clean break from a “feudal” past to a “capitalist” present does injustice to truth. However, if we’re taking a long view and accept these concepts as generalities, not rigidly defined systems, this division provides a helpful way of characterizing important changes.

When historians use the term feudalism, they are attempting to describe an economic system in which power relations among people formed the building blocks of society. In a classically feudal model (not to be confused with reality), most people worked as farmers (the peasants), giving over their agricultural product to a local ruler (the lord) in exchange for military security. Political power flowed from the strength of these personal connections. The concepts of private property and individual rights did not factor into these arrangements, and most people’s socioeconomic status was fixed at birth. Wealth was tied up in the control over land and agricultural production. Trade existed, but not on a massive scale, and most of the agricultural yield was consumed locally.

Even within an archetypal feudal society, not everyone lived this way. Off the feudal manors, artisanal craftspeople populated small towns and produced tools, equipment, and clothing for the agricultural system. Artisans typically conducted such manufacturing out of the home and adhered to a strict labor hierarchy: Masters taught their skills to apprentices, who hoped to one day move up to the master level. Guilds—organizations of skilled craftspeople—regulated the number of up-and-coming apprentices to keep competition low and prices stable.

Another key group in medieval towns was the merchants, who exchanged the surplus production from both the farmers and the craftspeople for foreign-made goods. In places such as Italy, traders accumulated significant wealth and many turned into bankers, making their living by guarding other people’s money and lending it out, at a price.

These town-dwellers—manufacturers, shopkeepers, bankers, and traders—constituted an important minority in feudal society. Known as “burghers,” from the Latin word for a fortified dwelling, they constituted a social class distinct from either the landless peasants or the land-owning feudal rulers. When Europe’s dominant economic paradigm shifted toward capitalism, they became the core of the bourgeoisie, the property-owning middle class.

Europe transitioned away from feudalism in the 15th and 16th centuries. Monarchs in Spain, France, and England grew wealthier through trade, which spread from the Mediterranean to coastal West Africa, and then to the Americas. In the process, they consolidated military power at the expense of local lords. A new economic philosophy that historians call mercantilism gradually took hold, reflecting the conviction that economic activity should bolster the wealth and power of nations. Western European monarchs in particular found new ways to expand, promote, and protect trade, reaping both profits and the political power that came with it. This decidedly unfeudal attitude toward external trade led European powers to business opportunities emerging in the New World.5
The Business of Conquest
The renowned historian Carl Degler famously wrote about America that “capitalism came in the first ships.”6 His point was that the European conquest of the New World coincided historically with the profound economic changes that produced a recognizably new system that we call capitalism, but the story was quite a bit more complicated, of course. Capitalism did not emerge as a coherent system. It has never achieved that status. As a system of economic organization, capitalism has taken on many forms across time, and exists in a variety of manifestations even today. But even though “capitalism” defies a simple definition, Degler’s notion still stands that major changes in economic organization and business opportunities accompanied the European colonization of the Americas, beginning around the year 1500.

Europeans’ exploration, exploitation, and ultimate inhabitation of the New World was at heart a financial undertaking, enacted in the mercantilist spirit of profit-making for the realm. Just as important as its causes were its consequences: The act of setting up colonies—with all the bloodshed, atrocity, and hardship it entailed for native people—had long-range consequences for the way European and colonial economies operated. From gold and silver mines in New Spain to fur trapping by the French in present-day Canada to massive sugar, indigo, tobacco, and eventually cotton plantations, European colonizers used the Americas to create new wealth, new types of business, and new ways of thinking about property, profit, and enterprise.

For students of American history, it’s an old story: ships funded by the Spanish and Portuguese governments began to journey regularly to the Caribbean and South America starting in the 1490s in search of material riches. And, in general, they found them. During the 16th century, Iberian soldiers and merchants traded and stole untold quantities of precious metals, kidnapped natives for sale into slavery in Europe, and established permanent settlements—frequently after waging genocidal war on local inhabitants—to facilitate this exploitation.7

Those initial conquests followed a traditional economic model: Generate wealth by accumulating valuable stuff. At the same time, these mercantilist exploits brought a major economic downside. The huge amounts of silver shipped back to Spain flooded the currency market, sparking a bout of inflation that lasted a century and crippled the Spanish economy. In spite of its large land-holdings in the Americas, Spain would never recover the economic power it wielded in the early 16th century.8

By the mid-1500s, a second wave of European voyages to the New World brought merchants from France and England who had motives and strategies similar to those of their Iberian counterparts. With the powerful Spanish and Portuguese empires laying physical claim to lands to the south, early French and English explorers headed north. Given France’s superior military and economic position, the French crown began to fund fur-trading outposts along the St. Lawrence River in present-day Quebec.9

England, poorer than the major continental kingdoms, showed less interest in establishing Atlantic trading routes until later in the 16th century, by which time political and economic power had shifted away from Spain and Portugal. In the 1570s and 1580s, Queen Elizabeth authorized and underwrote imperial operations first in Ireland and then across the North Atlantic in Nova Scotia, urging explorers to claim lands for the crown and search for precious metals.10 While the quest for riches proved disappointing, these ventures led to permanent colonial establishments. Over the course of the next hundred years, several hundred thousand English people migrated to the New World. Most of those early migrants lived along the Atlantic coast in former Indian towns that had been abandoned during the plague epidemic that forced survivors inland from the coast in the late 16th century.11

From the outset, the English colonization of North America was driven by economic imperatives. Although Americans often remember the religious motivations behind that process—stressing the story of the Puritans in Massachusetts, for example—business opportunities and economic institutions played just as important a role. Just as explorers sailing for Queen Elizabeth had scouted the continent for hidden riches, so, too, did English colonists create more durable communities in the 17th century as part of a larger, transatlantic business venture. In fact, the first two successful English colonies in what would become the United States—Virginia (1607) and Massachusetts Bay (1620)—were themselves private companies.12 More specifically, each was chartered in the style of a joint-stock company, an early-modern legal entity that grew increasingly important to the global economy during the height of Europe’s colonial expansion.

Joint-stock companies, the forerunners of today’s publicly owned corporations, pooled private sources of capital under the official protection of the crown, funding ventures that were too expensive or risky for an individual person. Drawing on a system of legal contracts developed in Italy centuries earlier, 16th-century English monarchs pioneered the practice of issuing corporate charters that granted an exclusive right to trade in a certain area to a particular group of subjects. In addition to creating a helpful monopoly, these charters created legal entities whose ownership was spread among several investors. These people purchased shares, or stock, to make up the whole company, which they owned jointly. Hence, “joint-stock company.”

Under the legal and military protection of the crown, English merchants gained tremendous advantages. Large sums of capital came together to form the Muscovy Company (chartered in 1555 to trade with Russia) and the East India Company (1600). Building on the English model, the kingdom of the Netherlands chartered the Dutch East India Company in 1602.13

In 1606, English joint-stock investors expanded from trade to colonization. That year, King James I issued a charter to the Virginia Company to establish a settlement in the part of the Atlantic coast near the Chesapeake Bay that, about thirty years earlier, English people had renamed “Virginia” in honor of Elizabeth (the never-married “virgin” queen).

According to the charter decree, James specifically bestowed on a group of investors, whom he cited by name, a “licence to make habitacion, plantancion and to deduce a colonie of sondrie of our people into that parte of America commonly called Virginia.” Those investors could choose “anie place upon the saide coaste of Virginia or America where they shall thincke fitte and conveniente” between specific lines of latitude. Most crucially, the king continued, “noe other of our subjectes shalbe permitted or suffered to plante or inhabit behind or on the backside of them . . . without the expresse licence or consente of the Counsell of that Colonie.”14

The florid language of the charter, in other words, gave the Virginia Company’s investors exclusive trading and exploitation rights and the explicit promise of military backing from the crown. James intended the Virginia Company’s colony to send back products such as timber, fur, and, the investors hoped, precious metals from the vast woodlands of the mid-Atlantic. He also hoped the colony could grow sugar and citrus, whose appeal was growing in England but that had to be imported. (Turns out those crops couldn’t be grown in Virginia, a fact that only worsened early Virginia’s fortunes.) In addition, the king hoped English settlers would locate the mythical “Northwest Passage,” a water route through North America to the Pacific, which England could then claim. (No such waterway existed.) Finally, James had geopolitical motives: A permanent agricultural community, he wagered, would provide a buffer against French and Spanish expansion and help solidify his land claims.

In 1607, employees hired by the company established a camp at a site called Jamestown and began working the land, building forts, searching for gold, and trading with Indians. The project turned disastrous. The company’s workers found no precious minerals and failed to cultivate exotic produce—or really enough food to live on—and the colony fought a series of wars with the Powhatan confederacy, on whose land the Jamestown settlement sat. Approximately 80 percent of the English migrants to Virginia between 1607 and 1624, or close to five thousand, were dead by 1625. Hemorrhaging money and unable to attract new investors, the Virginia Company failed in 1624, when the English government declared Jamestown a royal colony.15

Running the Virginia Colony as a private business failed, but the joint-stock model of colonization persisted. English private investors, buoyed by royal support, established permanent English habitations in places such as Newfoundland (for fish) and Bermuda (for tobacco). In 1617, a small group of religious dissenters known as Separatists, fleeing persecution from the Church of England, purchased special permission called a patent from the (not yet dead) Virginia Company to create a settlement near Jamestown. Three years later, approximately one hundred people—a combination of the Separatists who had bought the patent and others who purchased their own passage directly—landed by accident far to the north of Jamestown in a former Massasoit Indian town, which they renamed Plymouth. In 1629, a group of English Puritans—other religious dissenters from the Church of England—secured a royal charter to establish the Massachusetts Bay Company, which founded a colony just north of Plymouth the next year.

But Massachusetts Bay proved to be the last North American colony founded on the joint-stock model. England thereafter established many colonial settlements along the Atlantic coast and in the Caribbean, but used a different model based on direct land grants to individual proprietors (notwithstanding competing claims of ownership by people already living there) and direct political rule from London. And in the 1680s, infighting among Massachusetts colonists led the crown to nullify the corporate charter and disband the unprofitable company, just as it had in Virginia.

The use of joint-stock companies as instruments of colonization left a profound legacy for the development of British North America. Like their joint-stock forebears, the businesspeople who managed early English colonies had a clear mandate to exploit natural resources, expand farming and artisanal production, and export surpluses for profit back to England. As those colonies increasingly identified themselves as distinct—and increasingly as “American” as the 18th century wore on—they retained the focus on commerce, profit, and independent business activity that had marked their founding.16

In 1748, the Philadelphia printer Benjamin Franklin—then in his early forties—summoned the business-oriented attitude of the colonies in a letter of advice to a younger friend. “Remember, that time is money . . . that credit is money . . . that money is of the prolific, generating nature,” he wrote. “In short, the way to wealth, if you desire it . . . depends chiefly on two words, industry and frugality.”17
British North America on the Eve of the Revolution
The colonial settlements in the parts of North America claimed by Great Britain were economically vibrant in the mid-18th century. (We start to refer to “Britain” instead of “England” after the Acts of Union in 1706 and 1707 by the English and Scottish Parliaments unified those two countries into the United Kingdom of Great Britain.) An active consumer culture emerged among white colonists as their communities and cities became more permanent. “The quick importation of fashions from the mother country is really astonishing,” one British visitor to Maryland wrote. “I am almost inclined to believe that a new fashion is adopted earlier by the polished and affluent American than by many opulent persons in the great metropolis [of London].”18

Most colonial Americans lived close to the ocean and made their living growing and exporting raw agricultural products. Mid-Atlantic colonies like Pennsylvania grew wheat, while the hot and humid climate of the Carolinas and Georgia supported the cultivation of rice and indigo. In New England, where rocky soil and cold winters made large-scale commercial agriculture difficult, colonists supplemented meager crops with an elaborate fishing industry. The most profitable crop of the colonial period, tobacco, flourished in the Chesapeake region of Virginia and Maryland. Cheap and easy to grow, tobacco remained the mainstay of the colonial export economy until the American Revolution, when the total value of tobacco exports nearly equaled that of all food grains combined.19

Yet while farming occupied most people’s energies, seaports in the North—especially Boston, New York, and Philadelphia—also developed a thriving merchant class rooted in the transatlantic trade. Colonial merchants acted as wholesalers who financed trading voyages but did not undertake significant travel themselves. Rather, they managed the money, owned the trading ships, and invested in the cargo—the wheat, tobacco, timber, indigo, whale oil, human beings, and other products that crisscrossed the ocean. They operated by collecting a return on profitable voyages to offset losses from piracy or shipwrecks.

As they accumulated wealth, many merchants branched into related activities, setting up shipyards and selling ships themselves or establishing retail outlets for items such as books, equipment, and clothing imported from Britain. Still others parlayed trading successes into finance, operating as local colonial bankers.20

Business opportunities were generally more varied in the North than in the South. With fewer major ports and a climate conducive to cash crops such as tobacco, rice, and indigo, the southern colonies remained nearly entirely agricultural throughout the colonial period. (Charleston, South Carolina, which boasted a bustling merchant and artisan class, supported by both free and slave labor, was a notable outlier.) Large plantations tended to specialize in exporting cash crops, and they relied on smaller local farms for much of their food and other supplies. Small-scale colonial farmers had less surplus than their plantation neighbors, but they moved what extra goods they had to market, using any profits to expand their landholdings. Those small farmers helped inaugurate what would become a classic theme in the history of business and modern capitalism: small operators aiming to become big.21

Slavery, in addition to land, represented a major marker of wealth in colonial America. The practice of racialized slavery expanded in the British colonies as early settlements became increasingly stable and market demand for mass-produced crops, starting with tobacco, exploded in Europe. The American slave population became self-sustaining in the early 18th century, so even as the international trade declined, the population of enslaved people grew. By the 1770s, nearly seven hundred thousand people, or 15 percent of the total non-Indian population of the United States, were enslaved. Although slavery remained legal throughout the British empire, it was increasingly rare north of Pennsylvania. Almost 95 percent of all enslaved people in the United States at the time of the Founding lived in Delaware, Maryland, Virginia, the Carolinas, and Georgia. One-third of the population of those southern colonies was enslaved, and approximately one-third of all southern households owned slaves.22

British North America included far more than the thirteen colonies that declared independence in July 1776, and economic conditions played a critical role in determining which seceded and which did not. Compared to their counterparts in Quebec and the Caribbean, white colonists who lived between New Hampshire and Georgia enjoyed a more diverse economy and relatively greater security. By the 1770s, only about one hundred thousand Indians lived in those thirteen colonies, along with more than 2 million white Europeans and half a million Africans and descendants of Africans, the majority of them slaves. The push for national independence grew strongest in the parts of the British empire that could envision their economies operating without the British army present.

On the other hand, Europeans on the periphery of the British empire depended greatly on the mother country. In present-day Canada, which Britain acquired from France after the Seven Years War in 1763, ongoing conflicts between the substantial native population and far-flung European fur traders and fishers meant that colonists depended greatly on British military support. In the slave societies of the West Indies, native inhabitants had been almost entirely annihilated, and small numbers of English colonists owned massive sugar plantations farmed by African slaves, whose numbers eclipsed those of their white owners by as much as ten to one in 1780. Landowners relied on brutal violence, sanctioned and backed by British law, and the strength of the British military, further cementing their ties to the crown.23
Writing the Constitution: The Place of Business in a Young Nation
In the summer of 1787, fifty-five delegates from thirteen American states convened in Philadelphia first to reconsider, and then to replace, the governing structure known as the Articles of Confederation, which had organized the states since their independence from the British empire the decade before. When I poll my college students about the reasons behind the Constitutional Convention, they all demonstrate a clear sense of the common story: The Articles of Confederation devolved too much power to state governments at the expense of the national government; internal conflicts, such as Shays’s Rebellion, abounded over unpaid veterans’ benefits; and the weak central Congress couldn’t raise national taxes to pay foreign war debts. All this left the country weak and vulnerable to attack.

That story is largely accurate, but the standard telling of the Constitutional Convention often misses the intense debate over fundamental economic questions that propelled the convention. Questions about the separation of powers and the distribution of rights among the people, the states, and the federal government were not merely philosophical abstractions. Rather, they reflected material issues that pitted different business interests against each other, and their resolution had real consequences for the development of business in the United States.

More than one hundred years ago, the historian Charles Beard published An Economic Interpretation of the Constitution of the United States, in which he argued that the Founders created a particular structure of government to serve their immediate financial interests.24 Beard claimed that the wealthy merchants and bankers who had loaned money to the war effort could only hope to be repaid if a strong national government compelled the individual states to repay them. Subsequent historians threw considerable cold water on parts of this thesis, demonstrating that many of the Constitution’s opponents, called the Antifederalists, also had significant financial interests at stake. Ideological concerns about republicanism and self-government, they showed, were at least as important to the Founders as economic gain. Clearly the story is more complicated than Beard suggested.

But even if Beard overreached in his particular condemnation of the Founders as wholly profit-driven and self-interested, he was right that promoting a healthy national business climate was a paramount issue for them. “The prosperity of commerce is now perceived and acknowledged by all enlightened statesmen to be the most useful as well as the most productive source of national wealth,” boasted Alexander Hamilton in one of his essays defending the federal Constitution. Union, the Founders insisted, would only create greater economic opportunity and, as a result, political security.25

The Constitution, drafted in 1787 and ratified the next year, affirmed the central place of business in early American politics. The first three sections of the document laid out the roles and responsibilities of the three branches of the federal government: the Congress, the presidency, and the judiciary, in that order. Section 8 of Article 1—the longest section of the entire document—provides a substantial list of Congress’s powers. Here is an abridged list of what that section says:

Article I, Section 8: The Congress shall have Power:

To lay and collect Taxes;

To borrow Money;

To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;

To coin Money;

To provide for the Punishment of counterfeiting;

To establish Post Offices and post Roads;

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;

To define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations.

Section 10 then lists things that states cannot do:

No state shall . . . pass any . . . Law impairing the Obligation of Contracts.

Through this list of enumerated powers, the Founders made clear that the federal government was responsible for creating a stable, profitable environment for private enterprise. Some of these points may appear obvious: The power to borrow money and collect taxes meant that people who loaned money to the public purse, particularly wealthy merchants and southern planters, could be confident that they would be reimbursed. In addition, the power to coin money and punish counterfeiters allowed the federal government to stabilize the national economy—people in New York could conduct business with people in South Carolina using a verifiable, trustworthy currency. And the oft-cited “Commerce Clause” guaranteed that the federal government should monitor and regulate business transactions that crossed state lines or involved foreign countries. That clause made the land from New Hampshire to Georgia a giant free trade zone, where products and people could move free of tariffs or other barriers.

In addition to enumerating specific rights, this part of the Constitution illustrates the Founders’ business-oriented values. By retaining the right to define and punish piracy on the high seas, they declared that protecting private property—that which pirates were most likely to abscond with—was in the national interest. By establishing post offices and roads, Congress would create a vital infrastructure for transporting goods and facilitating communication across state lines. And finally, by enshrining the principles of patent protection—the “exclusive Right to their respective Writings and Discoveries”—the Constitution protected intellectual property at the highest level. For businesspeople, this clause promised that the federal government would protect them from dishonest competitors and promote new ideas and innovations.

Finally, and perhaps most important, the Founders enshrined the paramount importance of contracts by barring states from contravening legal agreements. The Contracts Clause represented an overt exercise of federal authority—remarkable in a document committed to the separation of powers—that reaffirmed the critical role of the government in economic transactions from tobacco wholesaling to whaling to slaving.

Most public discussions of the U.S. Constitution today tend to stress the document’s contribution to political philosophy, including questions about individual liberty and the limitations of governmental authority. Reading the document from an economic perspective, however, reveals the vibrant, enterprise-oriented legal system its authors envisioned. By the 1780s, business practices in the United States had grown more diversified than they had been earlier in the colonial period. As industrialization spread across the Atlantic from Britain, American businesspeople would benefit tremendously from the economic order created by those who wrote and ratified the Constitution.

About The Author

Lili Engelhardt

Benjamin C. Waterhouse is a historian of American politics, business, and capitalism. Waterhouse graduated from Princeton University and received his PhD in history from Harvard University. He is currently an associate professor and Grauer Scholar at the University of North Carolina. He lives in Chapel Hill with his wife Daniela and their two children. He is the author of Lobbying America: The Politics of Business from Nixon to NAFTA and The Land of Enterprise: A Business History of the United States.

Product Details

  • Publisher: Simon & Schuster (April 2018)
  • Length: 288 pages
  • ISBN13: 9781476766652

Raves and Reviews

"Teachers trying to meet the growing demand for sweeping surveys on American business history have long lamented the lack of a readable overview on the subject. Benjamin Waterhouse's book more than fits the bill. This fast-paced, lively and concise narrative is the perfect place to begin for anyone interested in the history of capitalism in the United States."—Stephen Mihm, author of Crisis Economics and A Nation of Counterfeiters

"Waterhouse's new history is my go-to book for understanding the long sweep of American business. Want to understand how we got from the Massachusetts Bay Company to Wal-Mart? This is your book.”—Louis Hyman, author of Debtor Nation and American Capitalism 

“An invaluable overview of the central role business has played in American history, from conquest and enslavement to the financial crisis of 2008. Waterhouse adroitly synthesizes the most significant scholarship in business history into a brisk, engaging narrative. He's an admirably clear guide both to the shifting organization of American enterprise and to the legal, financial, and managerial ecologies that have enabled it.”—Bethany E. Moreton, author of To Serve God and Wal-Mart: The Making of Christian Free Enterprise


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