The development of political institutions in Virginia

The founding of Virginia was based on a royal corporate charter drafted in 1606 for the Virginia Company which contained a mixture of private and royal organizational forms. For profit making, the private company planned to establish plantations worked by servants and laborers under contract managed by overseers. The company was given the right to transport settlers, supply provisions, and trade goods. For governing, however, the task was entrusted to three councils whose members were appointed by the King. The powers of government and ownership of land ultimately rested with the King who used instructions to give judicial powers to the local council and issued patents to grant land.

In 1607, 104 passengers in three vessels reached the Chesapeake and settled in Jamestown. The settlers were all male: a third to half were designated as gentlemen and the rest were artisans and laborers. By the order of the King, the identity of the local governing council was kept secret until arrival when the identity was to be revealed. The members of the council then chose a president. By most accounts, under the trying conditions of famine, disease, and threat from Indians, the council form of government proved to be ineffective. In 1608, when many of the council members had died or returned to England, John Smith emerged as the leader who commanded the colony in military style using labor gangs.

In response to the ineffectiveness of the council government, the Virginia Company requested and was granted a new charter by the King in which the company had complete control over the colony. In London, the company took steps to run the colony under a military regime initiated by Smith.Footnote ¹¹ The new leaders of the colony were old soldiers. Between 1611 and 1618, the company ruled the colony through a governor who exercised absolute powers.Footnote ¹² The government forged by the first governor, Lord De la Warr, his deputy Sir Thomas Gates, and subsequent deputy Sir Thomas Dale, was a code of military rule known as Dale's Laws. The settlers continued to work in gangs and were deprived of protection under the common law.Footnote ¹³

When the gang labor system and military rule failed to bear any fruit in the New World, the Virginia Company in 1618 re-organized its governing structure and introduced a charter of grants and liberties. The general assembly, which possessed the powers to make laws, was composed of the governor and council, who were chosen by the company as before, but it now also included two Burgesses from each district who were elected. On 19 June 1619, 22 Burgesses were elected for the first time. While evidence on the workings of the assembly is scant, it is doubtful whether Virginia achieved a fully working form of government during this period. Nevertheless, the election of the Burgesses signaled a significant turning point in Virginian history. It marked the beginnings of a two-tier plutocratic society where access to political participation was open to the elites but closed for most of the masses.Footnote ¹⁴

When the financially troubled Virginia Company was dissolved by the King in 1624, Virginia became a royal colony and the King appointed the governor and the council of the general assembly. Given the distance from England and the lack of a royal standing army, however, the royal governor could not overrule the colonists on important matters. The Virginians made up of the Houses of Burgesses and the council were able to effectively legislate on matters of taxes and law. As the Virginia colony stabilized and grew over the seventeenth century, the government of Virginia evolved into its mature colonial form and formed political boundaries in counties and parishes.

More than the transition to a royal colony, the introduction of tobacco seeds of the Spanish West Indian variety by John Rolfe in 1617 had a major impact on the social organization of Virginians. With the tobacco boom of the 1620s, immigration of male indentured servants and share tenants increased. Under the headrights system introduced in 1618, a settler who came on his own or who paid the transportation of someone else was entitled to 50 acres. In these early years, given the abundance of land, the societal division arose in terms of the accumulation of servants. The growing of tobacco was both intensive in land and labor, but labor was scarce. Evidence shows that the elites were able to acquire numerous indentured servants, often by illegal means. The muster of inhabitants in 1625 shows that the officers of the Virginia Company each held ten to 39 servants.Footnote ¹⁵

The elites were able to accumulate wealth and hold political power, but the basis for their power was precarious since they relied on local militias to enforce their laws. As mortality rates stabilized, an increasing share of the population was composed of free single males who were once servants. In the early seventeenth century, election of the Houses of Burgesses was held infrequently at the discretion of the governor; however, as free whites became more numerous and rebellious, Governor Berkeley was forced to hold new elections with greater access to voting.Footnote ¹⁶ In the election of 1676, the free whites were able to vote into office a large share of their choices. However, this movement toward greater access was short-lived. When Bacon's rebellion collapsed, the elites re-established their political authority, confiscated the property of those who rebelled, and re-established the status-quo of elites.

The introduction of slavery sealed the elite rule based on the ownership of land and slaves rather than on servants. In this period, a mature, stable, plutocratic society emerged based on planter elites (Kulikoff, Reference Kulikoff1986). Prior to the eighteenth century, based on the identity of justices in tidewater Maryland, Kulikoff finds that justices were highly varied in background. However, by the mid-eighteenth century, the justices and burgesses were dominated by the planter gentry. In the late seventeenth century, Virginia justices and burgesses, as well councilmen, used their public offices to patent thousands of acres of frontier land. By 1705, three-fifths of Virginians who owned 2,000 or more acres of land were justices or burgesses. By the mid-eighteenth century, strong political dynasties formed. For example, more than a quarter of the 1,600 justices appointed in Virginia between 1757 and 1775 belonged to only 55 patrilineages. The gentry used entail and marriage to consolidate the political ruling class.

The governor usually chose council members from the top families of the planter gentry. Sydnor (Reference Sydnor1952) finds that a small number of families enjoyed the powers of this office. Only 57 family names appear from 1680 to the Revolution as council members; nine families account for almost a third of the councilors during this century. The House of Burgesses was the only elected body in Virginia, but the election was also controlled by the elite gentry.Footnote ¹⁷ Election dates were chosen by the governor and two members were elected from each county and one each from Jamestown, Williamsburg, and the College of William and Mary.

In Virginia, the county became the most important level of government for most people. Moreover, unlike Massachusetts, where local town officials were elected by freemen, county officials in Virginia were appointed and these officials possessed broad legislative, executive, and judicial powers.Footnote ¹⁸ County justices, who individually settled disputes on small debts and collectively composed the county court, were appointed to serve for life by the governor. In practice, the justices provided the governor with a nominee who the governor then commissioned. The county justices not only decided on issues of law but they also set tax rates, allocated county funds, and managed roads and bridges. Just as importantly, the county justices appointed local government officials, such as the sheriff (who enforced laws, managed jails, collected taxes, managed the treasury, and conducted elections), coroner, militia officers below rank of brigadier, and tobacco inspectors.

The development of political institutions in Massachusetts

The Massachusetts Bay Company, formed in 1629, was based on a corporate charter, much like those of the earlier Virginia Company except in one important aspect.Footnote ¹⁹ In all the previous colonies, they were managed chiefly for profit and controlled by proprietors in England, and the colonists were not entitled to the right of self-government. For Osgood (Reference Osgood1904), the founding of the Massachusetts Bay colony marked a major change where the government of the plantation was transferred to those who lived in the colonies. For governing, the general court, prior to their departure in England, elected Winthrop as governor of colony and company, Dudley as deputy governor, and 18 other assistants. For profit making, the company created a temporary trusteeship known as undertakers who assumed control of assets and liabilities of the joint stock. Undertakers were to receive profits from the fur trade, the salt-making monopoly, and the transportation of passengers and goods.

In 1630, approximately 700 individuals in 11 ships sailed for New England. When the settlers arrived in Massachusetts Bay, they intended to work and live as a corporate body in one location where each settler received an allotment of land based on their investments.Footnote ²⁰ Within months of their arrival, however, these plans were abandoned as settlers dispersed into nearby areas, formed separate towns and claimed land for themselves. These early settlements were established without the explicit authority of the general court. In addition, as the commercial element of the Massachusetts Bay Company quickly disappeared, trade was authorized to take place in private hands and the colony became a de facto commonwealth.

In Massachusetts, unlike Virginia, a democratic government based on regular elections arose in a relatively short period of time. Immediately, Winthrop and his associates were forced to recognize the new towns, fix their boundaries, and give them the rights to grant land. They were also forced to relinquish oligarchic control as large number of colonists applied for admission as freemen. In 1634, the colony declared that the freemen alone had power to admit new freemen, make laws, appoint officers, raise money and grant lands in the commonwealth of Massachusetts. The General Court, composed of two elected deputies from each town, was authorized with legislative powers; the governor and the assistants elected by freemen retained executive and judicial powers.

The General Court also took control over unoccupied lands and claimed the exclusive rights to grant land and create townships (Akagi, Reference Akagi1924; Martin, Reference Martin1991). Prospective settlers, called proprietors, petitioned the General Court for a grant of land. Although the land was granted freely, starting a town was an expensive and complicated affair (Martin, Reference Martin1991). Town promoters, often politically connected and experts in Indian affairs, coordinated the founding of towns and received land for their services. The General Court surveyed the land, coordinated its purchase from the local Indians, and then granted it to proprietors who were given exclusive rights to distribute land and admit new town members. The General Court also gave towns a considerable degree of local political control and, in 1641, selectmen were officially designated as chief administrators of local affairs.

In Massachusetts, democratic town governments became the most important local institution. Once a year in March, freeholders met to elect local town officials: clerk, selectman, treasurer, constable, and many lesser offices. Since the voting procedure was left to the discretion of towns, there was a great deal of variation in electoral practices. Over time, the elections were handled by a moderator, written but not secret ballots were used, and they became more formal (Cook, Reference Cook1976). Yet, towns were not free of disputes. Because towns were often ill-equipped to settle and enforce disputes, Konig (Reference Konig1979) argues that the quarterly courts were an indispensable institution for establishing social order throughout the colony.Footnote ²¹

The continual movement toward a democratic government in Massachusetts occurred under considerable dissension and debate (Breen, Reference Breen1970). For a colony founded to form a religious community, the political separation of church and state was a major issue, especially in the early years. Related to the idea of the religious and moral authority of the ruler was whether political leaders possessed wide discretion or possessed delegated authority. While dissension on the right form of government never dissipated, political debates increasingly became more secular and were on topics of property and liberty rather than of scripture and religion.

With the return to power of the Stuarts in 1660 in England, the Massachusetts colony faced a major challenge to its autonomy. In an abrupt change of policy, the King and the Board of Trade annulled the original charter in 1684 and established royal political authority over the colony. Massachusetts and other northern colonies were consolidated into a single Dominion of New England and placed under the rule of a royally appointed governor. Representative government and town authority were significantly curtailed. While an elected House of Representatives became the legislative body, and nominated the members of the upper house, the governor selected the Council from the representatives’ list of nominees and his signature was necessary for an enactment to become law.

The period under royal rule between 1684 and 1776 was a period of uneasy compromise. When property rights and representation were significantly undermined under the rule of the royal governor Edmund Andros in 1686, the colonists rebelled by arresting Andros, thereby setting the boundaries of what they would allow. After the Andros affair, the royal governors learned to work within the limits of their authority, but for colonists who developed their own political institutions based on electoral representation, the royal government never gained full legitimacy. In the eighteenth century, as the interests of England and the American colony continued to diverge, the colonists, who were without representation on major policies, rebelled to recover their democratic institutions developed in their early years of colonial history.

Colonial law in Massachusetts and Virginia

For Nelson (Reference Nelson1975), pre-revolutionary law in Massachusetts was characterized by a legal system based on the British common law tradition of local communal consensus. One of the most important features of pre-revolutionary law was that the jury ruled as both law and fact.Footnote ²⁵ Because norms of local communities varied, and since local juries did not provide written commentaries on their decisions, jury-based law did not provide a sound basis for a uniform law over a wide geographic area. Moreover, the common law concept of fair exchange, often determined by the ethical norms of a local community, subjected the enforceability of a contract to local community standards of fairness. Likewise, under common law, corporations were believed to be created by the legislature for public rather than for private purposes and their charters could be amended or abolished for the communal purposes of a community.

Common law property rights gave the landowner the right to prevent the use of any neighbor's land that conflicted with his own quiet enjoyment. The natural use and prescription doctrines limited the use of a property to natural uses (agriculture) and gave monopoly rights to the first developer of a resource. Horwitz (Reference Horwitz1977) argues that property rights under common law hindered development. These laws raised the costs of building roads, canals, and railroads as well as building mills for waterpower. For example, the natural use doctrine did not allow the alteration of water flow except in its natural channel and any use of water that conflicted with the interests of other land owners along the stream was an unlawful invasion of property.

Common law principle of contract was based on the fairness doctrine that sought to protect people from unfair exchanges. The fairness standard, however, created uncertainty in contractual transactions. Under the fairness doctrine, if two parties agreed on a contract on the delivery of a good at a specified price, the contract could be nullified by the courts if the contract was deemed to be unfair to one party. Thus, the enforceability of a contract was at the discretion of the courts rather than bounded by the agreement drawn up by individuals.Footnote ²⁶ Since the standards of fairness may differ between jurors in different communities, the fairness principle raised the costs of transactions across localities. In addition, the fairness standard limited the negotiability of a contract. If individual A gave a promissory note to B, who transferred the note to C, then C could not sue A in the event that the contract was breached.

Post-revolutionary law in Massachusetts

Between the American Revolution and the early nineteenth century, the legal institution in Massachusetts was transformed from one based on preserving the status quo and traditional social stability to one based on free will, uniformity, and predictability for economic exchange (Nelson, Reference Nelson1975; Horwitz, Reference Horwitz1977). Between 1804 and 1809, reforms were enacted to limit jury power. The law finding function was shifted from the jury to the judge and the jury's task was relegated to fact-finding functions such as determining the credibility of the witness or weighing the probability of competing testimonies. Moreover, the common law of contract was replaced by the ‘will theory’ of contract. What mattered was whether individuals agreed on the terms of the bargain rather than whether the agreement was fair, foolish, or inequitable to a party. These developments reduced the uncertainty of contractual exchanges and the costs of market transactions.

The will theory of contract affected many areas of economic activity. In the sale of land, individuals were free to devise contracts which were binding in courts. The sentiment for will theory was expressed by Chief Justice John Marshall: ‘To deny the power of two individuals, capable of acting for themselves, to make a contract for the purchase of land and sale of lands defeasible by the payment of money at a future date, or, in other words, to make a sale with reservation to the vendor a right to repurchase the same land at a fixed price and at a specified time, would be to transfer to the Court of Chancery, in a considerable degree, the guardianship of adults as well as of infants.’

In pre-revolutionary law, caveat emptor did not apply. For example, if two people bargained over a horse and the horse died subsequent to exchange, the buyer could sue the seller for damages. In post-revolutionary law, the will theory of contract increased the importance of caveat emptor. Thus, even if a person purchased a defective good, the buyer was now responsible for his actions. By limiting the buyers’ right to sue for decline in the quality of goods after purchase, caveat emptor reduced the transactions costs of market exchanges.

Common law viewed corporations as similar to municipalities which were created for public rather than private purposes. In the early nineteenth century, Massachusetts recognized the private nature of corporations, upheld the private contractual nature of the corporate charter, and provided limited liability to managers and shareholders. In Ellis v. Marshall (1807), the Massachusetts Supreme Judicial Court made a firm distinction between public and private corporations. In deciding that a private corporation was distinct from a public corporation, the court effectively limited legislative authority over corporations. Likewise, in Wales v. Stetson, the Massachusetts Supreme Court ruled that private corporations were closer to contracts than municipal governments.Footnote ²⁷

In Gray v. Portland Bank (1807), the Massachusetts Supreme court established that the officers of a corporation had fiduciary duty to its shareholders. In the early nineteenth century, it was not clear whether a breach of contract or in tort could be brought against a corporation rather than its officers who performed the injury-creating act. In Gray and Riddle v. Locks and Canals on Merrimack River (1810), the court ruled that corporations could be sued for damages. However, while the corporation could be sued for damages, the court also gave the officers and shareholders of the firms limited liability. In Nichols v. Thomas (1808), the court ruled that owners were not personally liable for the debts of the firm.

In Massachusetts, the state legislature played an important role in eroding the common law vested property rights through enacting mill acts in the early nineteenth century. The foundation of common law was the view that property owners had absolute dominion over their land.Footnote ²⁸ Because the development of mills, water power or transportation often impacted negatively on adjacent private properties, the hold-up costs associated with the vested rights doctrine raised the costs of development. The mill acts lowered the costs of litigation by allowing the owner to flood a neighbor's land and pay an annual compensation specified by the act. Thus, the legislature reversed the common law rule that flooding the land of a neighbor created an injury and nuisance (Hall, Reference Hall1989).

Under the ‘common law’ rules of contract, the transaction costs of developing roads, canals, and railroads were very high because property owners had absolute dominion over their land. By using its power of eminent domain, the state legislature in Massachusetts was able to reduce the transaction costs associated with the development of roads, canals, and railways. Because transportation networks traversed property owned by numerous private individuals, traditional vested rights of property guaranteed under common law significantly raised the costs of infrastructural investments and collided with the public's interest in economic growth. In the antebellum period, state legislatures and courts used eminent domain to take property for public purpose subject to reasonable compensation to land owners.

Post-revolutionary law in Virginia

While the study of laws and legal systems in Virginia is not as developed as that of Massachusetts, scholars generally believe that the legal system in Virginia continued to champion the English common law traditions based on local juries (Miller, Reference Miller1994). Unlike Massachusetts, which transformed its legal system to foster industrial development, Virginia used its legal system to protect the landed interests of the elites. Virginia's legal system inhibited development in a variety of ways: it favored debtors over creditors, favored landlords over tenants and sharecroppers, was slow to adopt caveat emptor or to recognize private corporations, and adhered to ‘vested’ rather than legislative rights (Ely and Bodenhamer, Reference Ely, Bodenhamer, Bodenhamer and Ely1984).

In Virginia, unlike Massachusetts, Miller (Reference Miller1994) argues that the legal system continued to advance the traditional rights of the jury over the judge. Because a large share of civil suits between 1785 and 1825 involved British debt cases, the local jury system provided effective means to delay and reduce debt claims. The judges’ role in Virginia was only to answer a question concerning a specific point of law if requested. A judge instructing the jury was seen as an invasion of the jury's province; judges in Virginia were not allowed to sum up the evidence at the end of the trial. In a series of cases brought to the appeals court on the relative roles of juries and judges, the Virginia appellate courts consistently upheld the traditional, common law rights of the jury.

Due to the lack of systematic legal studies, it is difficult to determine to what extent Virginia's contract law was based on the common law fairness doctrine rather than the will theory introduced in Massachusetts. At best, the evidence is mixed. In Groves v. Groves (1790), Virginia's lower court appeared to adopt the will theory of contracts by ruling for expectations damages in connection with a buyer's action for securities, but the Virginia Court of Appeals subsequently reversed this decision (Horwitz, Reference Horwitz1977). In the sale or hiring out of slaves, Wahl (Reference Wahl1998) finds continued acceptance of the common law fairness doctrine, but Morris (Reference Morris1996) argues that, except for the Carolinas and Louisiana, southern judges adopted caveat emptor by the end of the eighteenth century.Footnote ²⁹

In Virginia, corporate charters were often seen as a public good and the legislature either reserved the power to amend the charter or, if not, limited the duration of the corporation (Campbell, Reference Campbell1975).Footnote ³⁰ In the well-known case of Currie's Administrators v. Mutual Assurance Society (1809), Justice Spencer Roane ruled that the legislature could amend the original charter of the corporation.Footnote ³¹ The Mutual Assurance Society, an insurance scheme where members insured each other, was originally chartered by the legislature in 1794. However, in 1805, the legislature amended the charter under interest group pressure. Since country subscribers were subsidizing town subscribers who faced great danger of fire, the legislature separated the subscribers into the two groups. In 1805, Currie, a town dweller, brought a suit against the Society claiming that the 1805 act violated the society's original charter by increasing rates without consent.

Roane upheld the 1805 legislative act and sided against Currie. Roane's verdict is interesting on two important counts. First, Roane's decision is consistent with the common law theory of contract. Roane's decision was fair in the common law sense because the rural residents should have contributed less than the urban interests and they should have been protected from unfair exchanges. However, under the will theory of contract, the court would have upheld the original contract, even if it turned out to be unfair. Second, Roane did not believe in the sanctity of private corporations. Since corporations were created by legislatures for public rather than private purposes, the Mutual Assurance Charter was not sacred or inviolate. Thus, the legislature was well within its rights to amend the charter, especially if it served the public.

In Virginia, the rights of property favored agriculture rather than transportation and manufacturing. The legal system through the use of local juries continued to uphold the traditional common law rights of property, which raised the costs of industrialization. Unlike Massachusetts, where the mill acts and eminent domain were used by the legislature and the courts to transfer the rights of land use to transportation companies and manufacturing firms, the opposite remained true in Virginia. Whereas statute laws minimized compensation to affected landowners in Massachusetts, the local juries determined damages to landowners in Virginia.Footnote ³²

Finally, scholars believe that Virginia and the South promoted a tradition of violence and extra-legal methods of enforcing behavior (Ely and Bodenhamer, Reference Ely, Bodenhamer, Bodenhamer and Ely1984; Friedman, Reference Friedman, Bodenhamer and Ely1984). In his study of criminal justice in South Carolina and Massachusetts, Hindus (Reference Hindus1980) argues that South Carolina promoted extra-legal and informal authority, whereas Massachusetts took strong steps to limit extra-legal authority. In Virginia (like South Carolina), extra-legal authority of planters was consistent with localism. In addition, slavery condoned violent behavior of whites such as whipping even though brutality of masters was restricted (Wahl, Reference Wahl1998).