1 The Rise and Fall of America’s First Bank

In 1686 the leadership of Massachusetts was involved in the first operational bank scheme in America. In 1688 this note-issuing bank was mysteriously aborted at an advanced stage. It was a unique opportunity for financial development that did not arise again for decades. I suggest a new, simple explanation of the bank’s demise: The bank’s notes were supposed to be backed mostly by private land in Massachusetts, but the new royal governor invalidated all the land titles. As in contemporary England, absolutism’s disrespect of property rights prevented financial development