King Charles II of England granted all of the captured Dutch colony to his brother, James, Duke of York. James in turn granted a proprietorship over New Jersey to Lord John Berkeley and Sir George Carteret. Unaware of this transaction, the royal governor of New York parceled out tracts of land in Monmouth County and at Elizabethtown (now Elizabeth) to Puritans from New England and Long Island.
Almost immediately, conflict arose between the proprietors and the Puritans over land claims and the right to establish a government. Political and religious differences intensified the friction; the proprietors were Anglicans and loyal to the king, while the Puritans were dissenting Protestants. Sporadic riots broke out over the demands of the proprietors that landholders pay them rent. However, the colony continued to grow.
By 1670 English settlers, mostly Puritans from Connecticut and Long Island, had founded settlements at Newark, Woodbridge, Piscataway, Middletown, and Shrewsbury. Immigration of non-English colonists later swelled the population and magnified the religious differences. The Dutch briefly regained possession of New Jersey, but lost it again to the English in 1674. Meanwhile, Berkeley sold his share of the colony to two Quakers. When one of them, Edward Billinge, went bankrupt in 1676, his creditors took control of his share under a deed that divided New Jersey in half from Little Egg Harbor to a point north of the Delaware Water Gap. Carteret retained control of the eastern half, while the creditors, including prominent Quaker William Penn, controlled the western half.
This touched off a long-lasting boundary dispute and enduring political, economic, and social differences between the two Jerseys. The Quakers gravitated toward Philadelphia, while those in the eastern half turned toward New York City.
In attempting to establish a colony, the Quakers in West Jersey soon went bankrupt, so they formed a joint stock company and sold shares to finance their efforts. The company shareholders became the board of proprietors, who acted as landlords and government of the colony. In East Jersey, Carteret’s heirs also formed a stock company in 1682, and its shareholders became that area’s board of proprietors. Under the original two proprietors, the charter for the government of New Jersey was the Concessions and Agreements of the Lords Proprietors, which provided for religious freedom, trial by jury, and a representative assembly.
In 1677 Penn wrote a second charter for West Jersey called the Concessions and Agreements, which guaranteed freedom of religion and personal liberty, and provided for the annual election by secret ballot of a representative assembly with limited powers of taxation. By the time New Jersey was united as a royal colony in 1702, a tradition of self-government had been established.
Settlements were sparse and scattered. In the 1680s and 1690s West Jersey was settled by English, Irish, Welsh, and Scottish Quakers. The Burlington Quaker Meeting, which dictated terms of settlement—and nearly everything else—among the local Society of Friends, allowed settlers to spread across the countryside in farms of more than 240 hectares (600 acres). In East Jersey, Essex County and what later became Morris County were largely owned by the Scottish partners of the proprietors, who tried to transplant their ways to New Jersey. They set up huge estates, imported several hundred indentured servants, and refused to sell land to independent farmers. The Dutch brought the first African slaves into Bergen County. By the 1680s English landowners from the West Indies settled in and purchased larger numbers from the slave markets of New York City. In 1702 the population of East and West Jersey was about 14,000. "New Jersey" © Emmanuel BUCHOT, Encarta, Wikipedia
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