Advanced Placement US History (AP US History) Practice Exam

What type of colonies were financed by companies as an investment?

1. Proprietary colonies

2. Royal colonies

3. Charter colonies

4. Self-governing colonies

The correct answer is: Charter colonies

Charter colonies were financed by companies as an investment, making them unique among the types of colonies in the early American context. These colonies operated under a charter granted by the crown, which allowed the colonists a certain degree of autonomy in governance, typically established by joint-stock companies. The primary goal of these companies was profit; thus, they invested in the establishment of settlements and trade in the new land. The structure of charter colonies allowed for a partnership between private investors and colonial governance, effectively blending commercial enterprise with self-governance. The most notable examples of charter colonies include the Massachusetts Bay Colony and Rhode Island. Their charters often provided for a significant degree of political and economic independence, which was attractive to both investors and settlers. This distinguishes charter colonies from proprietary colonies, which were granted to individuals who had significant control over the land and its governance, and royal colonies that were directly controlled by the monarchy. Self-governing colonies, while they had a level of self-rule, did not necessarily operate on a commercial investment basis like charter colonies.