Abstract
This article addresses the issue of what made early mutual savings bank trustees tick. It explores two hypotheses: (1) trustees were trying to maximize their depositors’ “well-being” by maximizing the real rate of return on their banks’ portfolios given legal constraints; (2) trustees were trying to profit from their positions. These two hypotheses are tested using investment data drawn from the archives of several of New York's oldest mutuals. Besides offering insights into the objectives of early trustees, the analysis of mutual portfolios will also shed light on several broader issues dealing with capital market efficiency and the effect of legal constraints on resource allocation.
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