As English state capacity grew and the crown faced growing financial constraints at home, colonies became tempting targets. This chapter explores the crown’s attempts to unwind the institutions of contractual imperialism and assert unilateral, direct control over colonies. However, when the crown made these attempts, colonial institutions had taken deep root over decades. The chapter explains why the crown was unable to force its vision of government on the colonies autocratically, and instead pivoted to a negotiated model of governance: Regulatory imperialism.

This chapter explores the terms of letters patent for early colonies, particularly in their economic dimensions. It shows the textual basis for colonial autonomy in these patents as grants from the crown. In particular, patents granted long-term control of colonies to private actors, protected their control over colonial economic operations, and obliged minimal sharing of their economic output with the crown. The chapter presents the theory of contractual imperialism to explain why these contract terms solved an important incentive problem: To induce colonial agents to identify profitable resource endowments, despite great cost and risk, and to exploit them fully.