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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.

Suggested Citation

  • Goldberg, Dror, 2011. "Why was America's First Bank Aborted?," The Journal of Economic History, Cambridge University Press, vol. 71(01), 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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