The indenture system worked because it met the needs of North American entrepreneurs and agriculturalists, who were short of labor; European paupers, who were short of money; and European governments, which had too many paupers and criminals with whom to deal. Private operations such as the Virginia Company, the Plymouth Company, and the Company of New France realized that the lure of land was not enough to attract potential investors; there had to be a laboring class available to do most of the menial work. Companies advertised varying combinations of free passage to the Americas, land, tools, and clothing for a servant who completed the period of servitude. Some servants were prepurchased by colonial merchants or landowners. During the first half of the 17th century, prepurchasing posed a considerable risk for the buyer, however, for the servant was more likely to die than to complete his or her term of service. To address the risk, the Virginia Company developed a headright system that rewarded purchasers with 50 acres of land for every servant brought to the colony at their own expense. In other cases, prospective settlers would indenture themselves to the company, which would then sell the contracts upon arrival in American ports. Most indentured servants were from the agricultural classes, though craftspeople and artisans were always in demand. By the 18th century, skilled workers were sometimes able to negotiate especially favorable terms of indenture.
Many servants, like settlers generally, did not survive the voyage to the New World. If they did successfully complete their indenture, there were often legal challenges to obtaining what they had been promised. Life was harsh, and laws were passed prohibiting servants from marrying, trading, or having children. Corporal punishment was common, and infractions of the law often included extension of the term of service. Men and women indentured as a couple were sometimes divided, and if one spouse died, the other was required to serve both terms. Children were indentured until the age of 21. As news of these hardships filtered back to Britain, fewer paupers willingly undertook to indenture themselves. In the second half of the 17th century, people were frequently forced into servitude through deceit, brutality, or as an alternate punishment for crime. In some years, thousands of criminals were deported to America as indentured servants.
Indentured servitude had a profound effect on the development of North America. It was most common in the middle and southern colonies, where it accounted for more than half of all colonial immigrants but was utilized widely throughout the British and French colonies. On the Canadian prairies, servants from Scotland and Ireland married Native American women, and their children were first-generation Métis. Servants came from all classes and races and from many European countries, though English paupers and convicts made up the majority. A few rose in society according to their early expectations, with some becoming landowners and legislators. Most, however, remained servants or were provided with marginal lands when their contracts were fulfilled. Often pushed into the most dangerous and least profitable areas of settlement, these poor whites became discontented and hard to govern. The first Africans transported to America came as indentured servants sold at Jamestown, in 1619. As planters realized that a seven-year term of service created an unsteady supply of labor and that freedmen and - women were often dissatisfied with their social condition, landowners increasingly turned to slavery for their labor needs in the 18th century. After the 1660s, indentured servants were almost always European, and the majority survived their indenture. As late as the 1770s, more than 40 percent of immigrants to America were indentured servants. Enlightened ideals regarding liberty, the American Revolution (1775–83; see American Revolution and immigration), and the growth of industrial capitalism combined to undermine the system of indentured servitude, which finally faded out around 1830.