[1] Initially created as means of funding voyages for European workers to the New World, the institution dwindled over time as the labor force was replaced with enslaved Africans.
Lands newly acquired from Powhatan Indians by white settlers required large amounts of tedious labor in order to transform into profit-producing tobacco farms.
[2] The most critical economic problem facing early investors in the Virginia Company and the settlers they sent to North America was recruiting and motivating an adequate labor force.
Passage fares to Virginia in the early seventeenth century were high relative to the annual wages of English servants in husbandry or hired agricultural laborers.
The company's advance took the form of a loan to the migrants, who contracted to repay this debt out of their net earnings in America.
The new immigrants’ placement with established planters would provide them with a place to live immediately after arrival, so the company would not be responsible for funding their maintenance once in Virginia any longer.
Additionally, the established planters would train the laborers so that when their year of private service expired, they would have the skills necessary to provide for themselves in these new conditions and socio-political structure.
The company became concerned that there were insufficient incentives for the planters to adequately maintain the health and wellbeing of laborers, since they only rented them for one year.
High rates of mortality and instances of runaways became the economic burden of the company, which maintained legal ownership of the servants during their rental tenures.