Abstract: The Rise and Fall of America's First Bank

Dror Goldberg


The dictatorial Dominion of New England (1686-1689) saw both the rise and fall of the first operational bank scheme in America. Both events resulted from the appointed rulers' attempts to profit personally from the real estate sector, subject to the same constitution imposed by England. The first, local ruler established a nominally private land bank. The subsequent, foreign ruler invalidated all land titles and thus killed the bank. This unique natural experiment demonstrates the relevance of Mancur Olson's model of stationary and roving bandits, and clarifies how economic development can be affected in different ways by different types of dictators.