Why was America's first bank aborted?

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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."1 Joseph Lynde

Original languageEnglish
Pages (from-to)211-222
Number of pages12
JournalJournal of Economic History
Issue number1
StatePublished - Mar 2011
Externally publishedYes


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