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Why was America's First Bank Aborted?

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  • Goldberg, Dror

Abstract

In 1686 the leadership of Massachusetts became involved in the first operational bank scheme in America. In 1688 this note-issuing bank was mysteriously aborted at an advanced stage. I suggest a new, simple explanation for the bank's demise. The bank's notes were supposed to be backed mostly by private land in Massachusetts, but a new royal governor invalidated all the land titles. This episode demonstrates the importance of clearly defined and enforced property rights for the development of financial institutions.“After showing him an Indian deed for land, he said that their hand was no more worth than a scratch with a bear's paw, undervaluing all my titles, though everyway legal under our former charter government.†1Joseph Lynde

Suggested Citation

  • Goldberg, Dror, 2011. "Why was America's First Bank Aborted?," The Journal of Economic History, Cambridge University Press, vol. 71(1), pages 211-222, March.
    • Handle: RePEc:cup:jechis:v:71:y:2011:i:01:p:211-222_00
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    Cited by:

    1. Rousseau, Peter L. & Stroup, Caleb, 2011. "Monetization and growth in colonial New England, 1703–1749," Explorations in Economic History, Elsevier, vol. 48(4), pages 600-613.

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