During colonial times in America, there were two kinds of indentured servants: voluntary and involuntary. Voluntary servants were people, often trained in a craft or skill, who could not afford passage to the colonies. In exchange for their passage, they agreed to work for a period of four to seven years for a colonial master. At the end of this period, the servant became a freeman and was usually granted land, tools, or money by the former master. Involuntary indentured servants were criminals whose sentence was a period of servitude, the impoverished, or those in debt. Most indentured servants were involuntary. Their period of obligation to a colonial master was longer than that of a voluntary servant, usually 7 to 14 years. But, like their counterparts, the involuntary servants also received land, tools, or money at the end of their contract, and they, too, became freemen.

The arrival of indentured servants in the American colonies addressed a labor shortage that emerged in the early 1600s. In 1618 the Virginia Company, a joint-stock enterprise that encouraged the development of Virginia, adopted a new charter based on the “headright system”: Englishmen who could pay their own Atlantic crossing were granted 50 acres of land; each of their sons and servants were also granted an additional 50 acres. Other colonies were also developed under the headright system, with the land amounts varying by colony. Soon there were more farms than there was labor to work the fields. The colonists solved this problem through the system of indentured servitude.

Many indentured servants were drawn from England, Ireland, Scotland, and Germany. In European ports, people contracted themselves or became involuntarily contracted to ship captains, who transported them to the colonies, where their contracts were sold to the highest bidder. Roughly half the colonial immigrants were indentured servants. Colonial laws ensured servants would fulfill the term of their obligation; any servant who ran away was severely punished. Laws also protected the servants, whose masters were obligated to provide them with housing, food, medical care, and even religious training. The system was prevalent in the mid-Atlantic colonies, but it was also used in the South. When the economies of the Caribbean islands failed at the end of the 1600s, plantation owners sold their slaves to the mainland, where they worked primarily on southern plantations, replacing indentured servants by about 1700. In other colonies, the system ended with the American Revolution (1775–83).