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Indentured Servitude


Indentured servitude is a historical labor system where workers were bound by a contract, known as “indenture,” to work for a specific person or company for a fixed period of time. In return, the worker would receive free passage to a new country, training, or other benefits. It was commonly used in colonies in North America in the 17th and 18th centuries.


The phonetic spelling for ‘Indentured Servitude’ is: ɪnˈdenʧərd ˈsɜːrvɪtjuːd

Key Takeaways

  1. Indentured Servitude was a labor system where people paid for their passage to the New World by working for an employer for a certain number of years. It was a common way for poor Europeans to migrate to the American colonies during the 17th and 18th centuries.
  2. Indentured servants were not slaves, but they were bound under contract to work for a specific length of time. This period of servitude typically lasted four to seven years, after which they were free to work on their own.
  3. The system of Indentured Servitude was eventually replaced by slavery, mainly due to the high mortality rate of the servants and the growing availability of African slaves. By the end of the 17th century, racialized slavery had become a lot more common than indentured servitude in the American colonies.


Indentured Servitude is a crucial term in business/finance as it refers to a historical labor system where the worker, known as an indentured servant, was under a contract (indenture) to work for a particular employer for a specified time in exchange for transportation, food, drink, and other necessities. During this period, the worker was not paid wages but gained freedom once the term of indenture expired. Understanding this term is essential as it provides insights into early economic systems and labor practices. It also offers a reference point for discussions of labor rights, contractual obligations, and socioeconomic mobility. Despite its historical context, elements of indenture can still be found in some modern labor practices, making it an important concept in the study of both history and current events in business and finance.


Indentured servitude is a historical term associated with labor systems, particularly during the 17th and 18th centuries, where an individual, known as an indentured servant, would sign a contract or “indenture” agreeing to work for a specific time period in exchange for something valuable, often passage to a new country or training in a trade. The purpose of this system was generally to provide labor in colonies or new regions where labor was scarce, thus facilitating economic growth in these regions. Agriculturally intensive colonies, for example, in the Americas, actively used this labor system for tasks like tobacco cultivation, where the demand for labor was high.

In terms of application, this system often served a two-fold purpose. For the employer, it provided them with a guaranteed labor force for a set period, often several years, thereby allowing them to plan and uphold their economic activity. For the indentured servants, it offered an opportunity, albeit born out of necessity, to pay their way to a new country or to acquire a new trade skill, allowing them to eventually gain their freedom, along with potential prospects for upward mobility. However, conditions for these servants were often harsh, and their rights were significantly restricted for the duration of their indenture.


1. Colonial America: One of the most prominent examples of indentured servitude was in colonial America where many settlers came as indentured servants. They signed a contract, known as an indenture, to work for a certain number of years in return for transportation, food, and shelter. After the completion of the contract, they were given freedom dues such as land or money.

2. Professional Athletes: Some can argue that a form of indentured servitude exists in sports, where young athletes sign multi-year contracts with a team giving them control over their professional career. For the duration of the contract, the player is obligated to play for the assigned team, and they cannot switch teams until their contact expires or if they are traded or released.

3. Migrant Workers: Another present-day example includes certain situations involving migrant workers or immigrant laborers. Some people from poverty-stricken countries agree to work at lower wages for a certain period of time to pay off the debt for their travel expenses, housing and living costs. This is a controversial issue, due to concerns about exploitation, poor living conditions, and lock-down contracts that can sometimes be likened to indentured servitude.

Please note: The modern-day examples mentioned here are subjects to debate. While these practices may share some characteristics with historical indentured servitude, they are not identical. Many laws and protections have been established to prevent exploitation of workers in today’s world. The examples are merely analogies and not strict representations.

Frequently Asked Questions(FAQ)

What does the term Indentured Servitude mean?

Indentured Servitude refers to a historical contractual system where people (indentured servants) offered a certain number of years of service, typically in exchange for passage to a new country, training in a trade, or freedom from debt.

Is Indentured Servitude similar to slavery?

While both are forms of unfree labor, they are not the same. Slavery is an involuntary, lifelong condition, usually based on race or ethnicity. In contrast, indentured servitude was a contract-based labor system often used voluntarily to pay off a debt, that had finite terms.

When was Indentured Servitude most prevalent?

Indentured Servitude was particularly prevalent from the 16th to the 18th centuries in European colonies in the Americas and the Caribbean.

How long did an indenture typically last?

The length of servitude varied greatly and was based on the terms of the contract but it usually lasted for a period of four to seven years.

What were the legal statuses of indentured servants?

Indentured servants were legally recognized as contract workers, often with defined rights and obligations. They were not recognized as free until their period of indenture was over.

What happened when the contracted period of Indentured Servitude ended?

When an indentured servant’s contract expired, they typically received “freedom dues”—a predetermined termination bonus that might include land, money, a gun, clothes or food.

What are some modern examples of systems similar to Indentured Servitude?

Some modern debt-bonded systems, particularly those found in developing economies, bear similarities to indentured servitude. These workers are often trapped in debt to lenders or employers, who control both the debt and the employment. However, it’s important to note that these practices are generally considered human rights violations.

Did Indentured Servitude exist only in the United States?

No, indentured servitude was prevalent in multiple regions of the world including the Americas, the Caribbean, and various colonies in Africa and Asia. It was not unique to the United States.

Related Finance Terms

  • Contract of Indenture
  • Debt Peonage
  • Indentured Labor
  • Indentured Servant’s Contract
  • Indenture Agreement

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