Robbing the Poor to Aid the Rich: Roger B. Taney and the Bank of Maryland Swindle

DAVID GRIMSTED

Prologue

In March 1836 Captain Thomas Williams wrote a letter to the Baltimore Republican that told much of his life story A few years earlier prolonged illness caused Williams, then nearing sixty to retire after forty-years labor at sea. When he retired, he deposited his lifetime savings of about $5000 in the Bank of Maryland, judging that he and his wife could live on the five percent interest that the Bank offered. Williams thought that the prominence of the Bank's directors and its state charter would insure his money's safety Almost exactly two years prior to the time Williams wrote his letter, the Bank of Maryland closed its doors and reduced him "in a moment . . . from competence to wretchedness and poverty" With only five dollars on hand, he had to sell his furniture while hoping for a speedy settlement of the Bank's accounts. Instead, the trustees who took charge of the bank's affairs delayed. Williams soon felt obliged to send "the decrepid widow" of an old sea-faring friend, whom he'd pledged to support, to the alms-house. Then he resorted to borrowing from friends, although "the honest pride of my life had been to live by the sweat of my brow, and . . . never be bent down by pecuniary obligation." When he wrote, Williams was beset by creditors, his wife was "literally in rags," and his house was empty and in danger of being forfeited for non-payment of taxes. "Something must be done to save us from despair," he begged, and concluded his appeal for help pathetically "My former employers, all my neighbors and many others, will cheerfully testify that I have ever been an honest man and good citizen."[1]

Many honest men and women in the Jacksonian era, good citizens all, suffered hardships similar to those of the old Captain. Thomas Williams' letter gives human shape to a common enough reality in the "flush times" of the mid-1830's. Williams was only one of thousands who lost a considerable part of their small savings in the Bank of Maryland collapse, and this incident was only one of thousands of similar failures that punctuated the era. Most losers in this process suffered less than Williams only because they pursued their just dues without the sea-dogged tenacity of the old Captain. By 1836 when Williams penned his lament, most of the original creditors of the Bank of Maryland had sold their credits for a fraction of their value to speculators who made probable profits of upwards of $2,000,000, all of it taken from innocent lenders and depositors, most of them of modest means. [2] Captain Williams is a good "representative man" for the kind of person whom economic historians commonly neglect: the thousands of small investors whose funds somehow disappeared in the triumphant but bumpy "take-off" of American industrial capitalism.[3]

Captain Williams' misfortune was related to two of the thorniest and most important questions about the Jacksonian period: the nature and function of the power elite in that vociferously democratic society and the motivation and influence of Andrew Jackson's attack on "the monster" second Bank of the United States. If the events behind Captain Williams' plight can only give shadow of answer to such large questions, the shadows reveal something about the shape of those structures themselves.

I. Speculating

It's good to be shifty in a new country – William Tappan Thompson, The Adventures of Capt. Simon Suggs

The story behind the Baltimore swindle began in the summer of 1831 when thirty-eight-year-old Quaker banker, Evan Poultney gained control of the old but largely inactive Bank of Maryland.[4] Poultney was a prototype of the era's small businessman with large plans, optimistic and sharply aware of new business opportunities. In the next few years he was to build his bank up quickly by offering favorable terms to small depositors and by using the connections of a well-placed group of supporters to get large governmental deposits, local, state, and national. With this group he was to engage in wide-scale speculations, one of them dependent on foreknowledge of the pet bank plans of Andrew Jackson's administration, that were to lead to the closing of his bank. While Poultney bore a full share of the responsibility for the speculations, he did not participate in the subsequent swindle which was to swallow both his and most small investors' savings. As a banker Poultney overreached himself, but ironically the economic tragedy for thousands owed less to his acquisitiveness than to his generous wish to hurt neither his speculating allies nor his unsuspecting depositors.

Poultney's purchase of the Bank of Maryland in 1831 created few ripples on the bustling Baltimore financial scene of these years, except for the people immediately involved. John B. Morris, a leading old-line Baltimore financial figure, perhaps felt some pique at being removed, somewhat unceremoniously from the Presidency of the bank. Certainly Lydia Morris was not pleased by this turn of events, despite the fact that her husband made substantial profit from the sale of his stock. The presidency had been "a most agreeable post" and, she said "with regret," the position "gave an occupation to Mr. Morris."[5] Morris retained substantial real estate investments, but his ouster as president must have rankled. At least this is the kindest explanation of the crucial role he was to play when he was fully occupied three years hence in support of the swindle that was to destroy Evan Poultney and to cause Captain Williams' money to disappear.

The genially ambitious Poultney had no premonitions of disaster in 1831. One of a coterie of up-and-coming businessmen in these prosperous times, he had run for a number of years a successful "discount house," a banking establishment whose profits derived from trading and transporting, at a slight margin, the notes issued by individual banks in all parts of the nation. Such bank notes were the country's primary currency the real value of each depending on the solvency and the reputation of the issuing bank. Poultney's discount business created acute awareness of the profits to be made from being able to issue bank notes, which were in part a kind of loan from the public to the originating institution. So long as a bank's credit was good, it could basically print money for some of its purchases and loans. When Poultney bought controlling interest in the state-chartered Bank of Maryland, he purchased the financial opportunities that came with the legal right to print bank notes. The second Bank of the United States, with branches in all sections of the country was the main monitor of banks' credit, though its watchdog role over this currency was being threatened by the developing political war between President Jackson and his opponent Henry Clay over its recharter.6 All of this, of course, was somewhat distant background to the more immediate problem the new President of the Bank of Maryland faced. He needed to shake off the "inactive" status of his new business and gain sufficient deposits to allow him to issue bank notes safely on a wide-scale.

Poultney probably already had a plan in mind when he took over, a simple idea but one unusual in American banking circles and unprecedented in Baltimore at this time. Baltimore's banks were willing to act as caretaker for people's money but were unwilling to pay for that privilege except in the case of large or long-term deposits. Poultney announced that his bank would offer 5% annual interest on all deposits, large or small, short or long-term. The plan was attractive to a number of people with small savings, like Captain Williams, because it seemingly offered some secure profit as well as protection.[7] It was doubtless unpopular with other bankers who must have lost deposits through Poultney's more generous terms, but Poultney was not to feel their wrath until some years later.

Money quickly came into the Bank of Maryland in quantity Between Poultney's take-over in 1831 and the bank's first crisis in September of 1833, the bank's specie reserves increased five-fold, $8,500 to $45,000; its deposits jumped almost twenty-fold, $89,000 to $1,720,000; and its note circulation nearly trebled, $213,000 to $620,000. The most publicly noticeable change, the increase in note circulation, caused worry about the bank's soundness among conservative bankers and businessmen; the Union Bank, Baltimore's strongest, put a limit on the amount of Bank of Maryland notes it would accept. Yet note issuance was hardly out of line with the increases in deposits and specie reserves that Poultney's new policies, and shortly his new secret co-owners, attracted.

Poultney's genial zest, popularity and reputation allowed him to attract a prominent Board of Directors for his new bank, as law required, but these were figureheads for his personal direction of the operation. This situation changed in the fall of 1832, however, as it was becoming increasingly clear that Andrew Jackson would win his second term with what he considered a mandate to kill the 'monster bank' of the United States. For several years national and local prosperity had been steady in part because of the helpful financial guidance of the national bank, but its decreasing power suggested that even richer opportunities awaited innovative capitalists like Evan Poultney The Bank of Maryland at this point began buying up its own stock at somewhat inflated rates. Within months, six men owned 900 of the 1000 shares of stock in the Bank of Maryland. The largest block, 400, belonged to Evan Poultney but the majority were in the hands – 100 each – of five other men. Until the bank closed its doors about a year after this stock takeover, these six men were to control the main financial maneuverings of the Bank of Maryland.

Sometime after the Bank's collapse, first in the summer of 1834 and once again in the spring and summer of 1835, a vigorous public debate occurred about exactly who ran the bank during this year. Poultney said that the various activities were fully cooperative efforts by the six large shareholders until the first crisis developed in the late fall of 1833. The other five owners and their friends claimed they had played no more active role in the Bank's affairs than had the official directors.[8] All the evidence supports Poultney's position. A number of letters from the secret owners prove most active involvement. Nor is it credible that they would pay for and own a controlling interest in a bank with whose affairs they were not involved. On top of this was the gross implausibility of the secret owners "explanation" of why they owned the stock. Though they scarcely knew Poultney said the five, they had agreed to become indebted for the Bank's stock at Poultney's request to protect the interest of Poultney's infant son should his father die. This was indeed a strange favor to do, especially since it involved tying up huge amounts of capital for someone who was a distant acquaintance. Nor is there any conceivable explanation of how having the majority holdings in the Bank in the hands of five comparative strangers wholly ignorant of its workings would "protect" any heir.

Clearly the interests of the secret five were not philanthropic as they later pretended, but calculatedly financial. Alexander Hamilton, son of the nation's first and greatest Secretary of the Treasury, reported that in Baltimore "it became very fashionable to laud Poultney for his great genius and abilities in banking." The secret owners perhaps did not think of Poultney "as a second Rothschild," but they decided a large degree of control and of ownership of his bank could prove very profitable to them, especially if kept secret.[9] The advantages to Poultney seemed equally great. Working with these men put him in contact with some of Maryland's ablest younger lawyers and businessmen, people of his own age, but better established politically socially and financially The offer must have seemed both attractive and flattering to the ambitious Poultney who throughout his coming ordeal was to show tragic incapacity to be suspicious of those professing friendship to him.

None of Poultney's five cohorts ever showed any of his genial naivete. Yet they brought to their connection to the bank substantial abilities and position. Hugh McElderry and Evan T Ellicott were wealthy and prominent young businessmen. Ellicott beonged to a leading industrial family; his father had founded a multi-faceted business establishment at Ellicott Mills, a center for wheat-growing and milling and iron-making. Ellicott was the much younger half-brother of Baltimore's leading banker, Thomas Ellicott, a family tie that was the source of deep animosity at the moment, as members of Andrew Ellicott's first and second families legally battled over his estate.[10] McElderry was reputedly wealthy and served in a gentlemanly way on the boards of directors of several banks, although Thomas Ellicott had recently removed him, much to McElderry's embarrassment and anger, from a Directorship of the Union Bank. Seemingly McElderry was a Democrat; certainly he must have been friendly with Roger Taney who had Andrew Jackson appoint McElderry one of the government directors to the Bank of the United States.[11]

The other three secret owners were attorneys. Reverdy Johnson and John Glenn were among the best known of Baltimore's young lawyers. The families of both men were respectably prominent, and by dint of their professional abilities and, in Johnson's case, social skills were well on their way already to a place in the Baltimore elite. Glenn, "preeminently a business lawyer," had gained some public reputation as a man of considerable ambition. Johnson shared this trait, but tempered it with greater subtlety His brilliance at legal maneuvering won him a leading place at the bar, in lobbying work and in Maryland politics. Having served already in the Maryland legislature and as assistant Attorney General of the state, Johnson had ahead of him a career that was to make him a Whig United States Senator and Attorney General of the U.S., as well as Lincoln's chief political strategist in Maryland during the Civil War. An incredibly resourceful antagonist, Johnson destroyed almost all his personal papers (written in the first place in an almost undecipherable script), causing him to remain, as he doubtless wished, one of those shadowy "prominent men" who flourished in the nineteenth century.[12]

The fifth of these 100-share men was a less successful attorney David Perine was never active at the bar, but made his living by managing trusts and property and through his fairly lucrative Clerkship of the Orphan's Court, seemingly his chief source of income prior to the swindle. From a fairly prominent family Perine led a respectable life noted, as he made clear in his manuscript collections, more for his friendship with the notably successful than for his own achievements. His position among the owners seems to have been one of secretary; he was the one who took minutes, wrote notes, copied documents, and carried messages.[13]

Though the secret owners shared many common ties, their most important link was that they were all among Roger B. Taney's closest friends. The ties with Ellicott and McElderry are least clear, though McElderry's appointment as a government Director to the Bank of the United States indicates Taney's personal favor. Johnson, Glenn and Perine were his closest contacts in Baltimore, people he supported and who supported him at all crucial junctures. That Johnson and Glenn were Whigs was part of the practical usefulness of the affiliation. Johnson could use his Whig ties to lobby effectively in Washington for Taney's appointment, all three men worked earlier for Perine's Clerkship and later Glenn's Judgeship, and Taney whenever the Jacksonian paper in Baltimore became angry about the swindle, could be brought in to sanction his friends' positions or even to lobby for their interests in Annapolis. Ideological divisions such as they were – and they existed over slavery issue at least, with Taney approving that institution and Johnson cautiously hostile – faded in the face of such practical considerations. The Perine Papers in the Maryland Historical Society are organized around the "lasting friendship" of the four men which long predated the secret club fraud. Taney Johnson, and Glenn had served together as counsel for the Baltimore and Ohio Railroad. When Taney became Attorney General of Maryland, he appointed Johnson his chief assistant. When Taney went to Washington, Perine took charge of his local finances, even the hassles of renting his house.[14]

What is most important about this friendship was Taney's support of the secret owners at every juncture: in their early speculations, in the perpetration of the fraud, and in the long cover-up that ensued. His aid was essential at several key points and was always given, sometimes at considerable risk to himself On Taney's prior information, the group speculated in bank stock; through his aid about $500,000 of government funds were injected into the Bank of Maryland when the secret owners controlled it; through his maneuvers, the only leading banking figure fighting the swindle was removed from power; through his intervention, public and partisan sentiment against the swindlers was quieted; through his lies, the cover-up, at the time and since, was reinforced. Since even Taney's staunchest admirers picture him as hard-headed rather than generous, friendship seems a much less likely explanation of this conduct than a concealed financial interest in the plot. The serious political risks he took and the elaborate deceptions that he perpetrated make it highly probable that Taney was the seventh and most secret owner in the secret club that ran the bank between the fall of 1832 and the spring of 1834.

When Poultney first revealed the secret ownership in a pamphlet of the summer of 1834, he called the relationship a partnership. His former co-owners jumped on this term to show Poultney's dishonesty arguing correctly that there had never been a legal partnership. Although Poultney had used the term in a colloquial rather than a legal sense, he was careful in subsequent writings to refer to the group as an association or club. Club seems as good a term as any The Club will refer to Poultney and the five secret stock owners, Johnson, Glenn, Perine, McElderry and Evan T Ellicott. The Secret Club will refer to these five hidden owners and to their dependable and indispensable ally Taney who first speculated and then manipulated the swindle after the bank closed in March, 1834.

The Secret Club members shared one final common trait. Between 1834 and 1836 they all bought, built, expanded or refurbished the mansions or estates that marked their secure entrance into the elite. Johnson and Glenn bought and remodeled mansions in downtown Baltimore in 1835. The same year Perine added 250 acres to his suburban estate and shortly began to build a "classical mansion on it that burned in 1840. Hugh McElderry had just completed building a mansion in the summer of 1835. And Roger Taney pressed with debts in 1834, bought his substantial home in Baltimore in 1835. To Baltimoreans angered at the swindle in the summer of 1835, many of these homes stood symbol of the status that had been bought at Captain Williams' and others' tragic expense. When several of the culprits left town to avoid tar and feathering, a mob attacked these homes, their profits made visible.

Taney was older and more prominent than the other Secret Club members, but his financial position was precarious, and his political-judicial future uncertain though highly promising in 1832. That all six had done well gave them confidence and reputation to do better, while the insecurities of their status attracted them to an opportunity like that of the Bank of Maryland which seemed tailor-made for quick profits with little risk in this heady stage of American capitalism. Accelerating growth cast doubt on the older economic verities and restraints, and these men, following what seemed newer and shorter paths to wealth, were at a stage in life that made them quite willing to treat "old-fashioned notions of banking" with "levity and badinage" in the pursuit of prompter happiness.[15]

Things briefly went well. The early Club dealings diverged little from the commonplace if somewhat speculative practices of most banks or businesses with good political connections, made devious only by the secrecy of the Club's ownership and control. The first problem, as the Club saw it, was increasing the capital they had to work with. Through Reverdy Johnson's lobbying efforts, the state of Maryland deposited over $335,000 of its funds in the Bank of Maryland, and David Perine, clerk of the Orphan's Court, directed most of that agency's lucrative accounts there. Reverdy Johnson and Hugh McElderry also lobbied a legislative charter for the General Insurance Company of which Johnson became President and the four other secret owners directors. Taking its own stock as security the Bank of Maryland lent Club members the money for their shares in the insurance company These capitalists well understood the profitable, if dangerous, investment principle that came into active use in these years: buy on margin and use what you've "bought" to finance further speculation. Borrow to buy Bank of Maryland stock, and then borrow on it to buy General Insurance Corporation shares. If things went well, it could be the source of great wealth, but the indebtedness was perilously stacked if economic winds blew wrong.

The Club's second application of this principle occurred in this same spring. The Bank of Maryland bought, largely on credit, $500,000 worth of Tennessee Bonds from the Union Bank of Tennessee; seemingly the Club intended to sell these quickly for cash to give them speculative capital while they slowly retired the debt to the Tennessee bank. This decision to invest in "stocks from the South" for some quick cash perhaps resulted from a failed speculation in the North. On March 19 Evan T Ellicott wrote Poultney from New York City a letter that gave clear suggestion of the Club's speculative breeziness before troubles developed. "I have the satisfaction of announcing to the Club that the duplicates of the contract have been by mutual agreement cancelled. A good anthracite fire did the important service of annihilating this evidence of indiscretion and misapplied confidence," Ellicott explained. Little daunted, he added, "We may lose about as much as we ought to lose to make admonishment impressive," before urging that their speculations now look southward.[16]

In May of 1833 the Club launched a major new project. They decided to buy 6000 shares of the Union Bank of Maryland, for which they paid more than the going rate. This transaction made clear how Club management blurred lines between personal and corporate responsibility In buying the Union Bank stock, John Glenn personally gave the Tennessee bonds, which the Bank of Maryland owned, to the Union Bank as security on a personal loan to him to buy the Union stock. Only months later was Glenn's debt transferred to Poultney and then to the Bank of Maryland. Such strategies make the transactions difficult to trace, but make amply clear Secret Club members' deep personal involvement in all the affairs of the Bank of Maryland.[17]

Only one reason for such a large stock purchase at inflated rates makes sense. The Club knew that the Union Bank was to be made a federal repository under the "pet" system which Andrew Jackson intended to institute, and concluded that the worth of the stock would rise quickly once this accession of government funds to its coffers became known.

The two people from whom Club members could have learned this inside information were two of the men most responsible for Jackson's special deposits system, Roger B. Taney who suggested the policy to the President, and Union Bank president Thomas Ellicott, who devised it for Taney Profits and politics were obviously converging here, and an understanding of the coming manipulations about the Bank of Maryland require some filling in of the political history concerning Jackson's reelection in 1832 and its financial-political aftermath.

Jackson's first term had climaxed with a sharp political battle focused on the rechartering of the national bank. The opposition candidate, Henry Clay sensing the need to embarrass Jackson politically if he were to have much chance against the popular president, worked with Nicholas Biddle, President of the United States Bank, to ask for early recharter, four years before the existing charter ran out. Biddle, who'd been trying to cajole Jackson into support for the Bank in some form with ambiguous results, calculated that his chances were better now than if he waited until Jackson's second term neared its end. Biddle believed it probable that the bank bill would pass, and Jackson would approve it rather than face the election saddled with having attacked what seemed a popular and effective institution. And Clay wanted early recharter because he felt a Jackson veto would provide the issue that would propel this secure friend of the Bank to the White House.

The Bank's friends could not have been more mistaken in their calculations. Taney correctly wrote Ellicott that the Biddle action had caused "what those opposed to it [BUS] could not have done. He has insured its certain and inevitable destruction." The obvious intention to embarrass him politically by early recharter brought out Jackson's immense combativeness. The Bank became the monster, and Jackson's resounding veto the prelude to resounding electoral victory In many ways the Bank issue less injured Jackson than salvaged a kind of political integrity for his first administration which had been characterized up to that point by the tragedy of Indian removal and the farce of Peggy Eaton's social problems. There's no indication that the Bank issue fueled Jackson's success, but, because of it, his perhaps inevitable triumph became invested with a political point it would have otherwise lacked. Certainly for Jackson his election was a mandate to destroy the bank.[18]

This situation was less clear to others than to Jackson himself. The political ploy involved in early recharter gave his veto an aura of justice even to many sympathetic to the Bank, some of whom expected that Jackson would change or replace it so that its primary functions regarding economic convenience and control would remain. There was hope for this policy even within Jackson's administration. Van Buren had not been enthusiastic about the veto, and remained dubious about, or at least aloof from, Jackson's subsequent policies.[19] But his primary concern – shaking as little as possible the boat that seemed to be carrying him to the Presidency – also made him hesitant to suggest any serious opposition to whatever Jackson came up with. Much less cautious was Louis McLane, Jackson's able and ambitious Secretary of the Treasury McLane had told Biddle, prior to the early recharter attempt, that Jackson's reservations about the Bank were not such that would imperil its existence unless Biddle allowed it to become tied to politics. When Biddle neglected McLane's advice, the results were precisely those the Secretary of the Treasury predicted.[20]

Jackson's second presidential victory was immediately followed by McLane's first report as Secretary of the Treasury It was the most comprehensive and integrated bit of financial planning since Alexander Hamilton's days, and as politically bold as Hamilton's various measures. McLane urged modified recharter of the Bank of the United States in a way that would continue its financial functions while putting them more fully in governmental rather than private hands.[21] It was a politically daring tack for McLane to take, who made clear that this position was his and not the President's. McLane understood Jackson well. He knew the President would appreciate the complex intelligence of the report and also the honesty of an opinion opposed to his general feelings but frankly and fairly expressed. Jackson admired the report, though he disagreed with the evaluation of the BUS. Possibly McLane's plan would have become administration strategy had not Roger B. Taney and Thomas Ellicott devised an alternative program that appealed much more to Jackson's desire "to strangle this hydra of corruption."

Taney and McLane were rivals within the administration for Jackson's favor, in much the same way John C. Calhoun and Van Buren had been in the first years of his presidency. While the earlier competition had centered on becoming Jackson's presidential heir apparent, the Taney-McLane rivalry involved favoritism for appointment to the Supreme Court. Taney's strategy for Jackson's support was much less intricate than McLane's; it also proved more successful. He told Jackson at all times precisely what Jackson most wanted to hear.

What Jackson most wanted to hear, Taney correctly concluded as soon as the effort for early recharter developed, was some means of directly counter-attacking the BUS. The veto message was gratifying, but it left intact the Bank's position as government repository until 1836. Jackson wanted something done more quickly; he argued, and perhaps believed, that unless the Bank were crippled immediately it would "corrupt" the election of 1834.[22] Hardly a realistic fear, it was nonetheless a good barometer of Jackson's anxiety to move offensively To gratify this desire Taney contacted an old Baltimore acquaintance, Thomas Ellicott, President of the Union Bank, Baltimore's strongest, to get suggestions. Perhaps piqued at his failure to be made President of the BUS years before, Ellicott had penned a pamphlet questioning the necessity or desirability of the national Bank. When Taney asked Ellicott's opinion, the latter replied so that Taney concluded, "The views of the subject taken by you are unanswerable." On February 20, 1832 Taney wrote Ellicott lamenting the way in which the national bank was given credit for sound currency when any bank – say the Union Bank – whose notes were sound could do as well. Taney requested that Ellicott send him some copies of his pamphlets outlining this position, and suggested his hope that, if Congress demanded a national banking system, a series of "different independent Banks" would replace this "gigantic machine."[23]

Taney claimed to have carelessly misplaced Ellicott's letters in these years, though probably he destroyed them when the discrediting of Ellicott became necessary to the Club's financial plot. At any rate, the "Taney collection" in the Library of Congress are really the letters he sent to Ellicott, along with a few to Ellicott from Amos Kendall and a very few Ellicott letters on topics he considered major enough to require drafts. One of these drafts is the plan which Ellicott sent Taney once Jackson's reelection was assured. Though brief, it offers the fullest statement of the financial thought behind Jacksonian removal policy Ellicott's theoretical position rested on Adam Smith's laissez-faire idealism: "Experience has proved where there exists no monopoly.., the effect of competition will reduce prices to the very smallest measure of profit." The best system was one unencumbered by legal restraint and left open to the greatest degree of competition, for the power to regulate exchange inevitably suggested a monopoly somewhere which "never fails to be abused by the people who enjoy it." Ellicott barely mentioned constitutional or states' rights objections to the bank; either of these he considered unimportant, or he felt they properly fell into Taney's political-legal bailiwick.

Ellicott's plan foresaw the replacement of the BUS with one or more banks chartered in each state. These several designated banks would at once insure competition and reduce the total number of banks of issuance because each state would develop a vested interest in its designated federal repository which would curb wide-scale issue of charters to competing institutions. The federal government, as price of its favor, would require repositories to provide ample securities for government funds, and also regulate their emission of bank notes through Treasury Department directives to insure a stable and dependable currency Ellicott's confidence that this system would naturally lead to the curtailment of the number of banks seems questionable, and time was to show how difficult the Jacksonians found imposing controls on the state banks of deposit. Still no document so coherently outlines a Jacksonian economic vision at the time when Jackson's determination to destroy Biddle's bank required and received some positive action. Clearly Ellicott appreciated the BUS' positive functions, and wished to replace them as well as the Bank itself, a reality clear later in the policies of Taney's replacement as Secretary of the Treasury, Levi Wood-bury Ellicott's argument also makes clear how a commitment to laissez-faire and commercial expansion was perfectly compatible with a desire for some banking and currency control.[24] The way Taney and Jackson implemented the plan, however, shows their immediate disinterest in its controlling features. When a trial balloon of the plan was sketched in the Jacksonian Pennsylvanian a month after Ellicott wrote it, it stressed the possible controls of the new system, but skirted the state monopoly and Treasury directive aspects which, rhetorically and practically might have been politically disruptive but which were the heart of Ellicott's idea.[25] Taney later charged that Ellicott used the pet bank system to finance speculation and urged immediate withdrawal of all BUS funds, but no evidence exists supporting such charges.[26] Ellicott's plan showed a concern for restraint that was not apparent in any of the early actions or arguments of Jackson, Kendall or Taney.

Whatever the Administration's interest in the long-range ideas Ellicott outlined, response was favorable to their immediate aspects. Ellicott wrote Taney summing up their discussions of the issue that now stretched over a year, "I know there is so little discrepancy in our views." Taney must have shown or revealed the Ellicott plan to his ally Kendall and probably to Jackson. Three weeks after Ellicott sent the proposal and one week before the public suggestion appeared in the Pennsylvanian, Taney wrote, "It is not intended at the present moment to enter upon the arrangements you speak of – and when the proper time arrives you may rely on it that I shall not forget what you mention."[27] The Bank issue was to be held in abeyance until Jackson handled the more pressing nullification crisis which South Carolina and John C. Calhoun fomented in these months.

By March 26, 1833 the proper time had come. Taney wrote Ellicott, "It will be well for you to come to Washington." On April 1 or 2 Ellicott visited Jackson and on April 6 he formally submitted a sketch for weakening the BUS by establishing other depositories for government funds, which seemingly became the basis for the pet bank system. On April 13 Ellicott wrote Kendall, who with Taney was the only member of the cabinet supportive of the scheme, soothing fears about note exchange if the deposits were removed.[28]

By early May Jackson had apparently fully accepted the plan. Taney claimed on the 5th that, since nothing was fully determined, what he had to say could wait until he saw Ellicott, but assured him, "I have nothing to say to you on that subject that you will not be pleased to know" In the same letter Taney mentioned that he'd asked the cashier at the Union Bank "to invest the money I have on deposit in Union Bank stocks – at whatever the market price." Obviously having sober second thoughts about what he'd done, Taney now piled on qualifications: it was not intended "for profit and resale," but as "a permanent investment" for his sisters and sister-in-law, while he'd welcome any other investment suggestions.[29] Perhaps Ellicott pointed out what Taney seemed on the brink of realizing: the folly of his personally buying stock in a bank whose "pet" status seemed already secure, when the plan, much less the specifically favored banks, had not been publicly announced. Some dangers lurked in such self-evident use of privileged political knowledge to line the pockets even of sisters and sister-in-law.[30] The letters that followed took on a cryptic vagueness suggesting that what went on subsequently between the two men Taney judged safer to say than put in writing. The men had at least two conferences within the month, one in Baltimore and one in Washington, for "a free discussion of other matters" and to discuss things "before you go about the various matters we spoke of."[31]

It was at this point in mid-May that political action in Washington and financial action of the Bank of Maryland Club converged. While Ellicott and Taney talked of "other matters," which Taney hesitated to put to paper, the Bank of Maryland Club began negotiations to purchase 6000 shares of Union Bank stock at something above the market rate. There could only have been one reason for such action: the Club knew the Union Bank was to become a federal repository and concluded that its stock would rise in value once this became public knowledge. Taney ignored this transaction in all his subsequent complicated defenses of himself and the secret Club; Ellicott feigned surprise at this transaction in what seems the least honest part of his history of the Bank of Maryland swindle.[32] Both men must have known who was doing what and why at this point, despite later pretensions to innocence. Taney's "laundered" interest in the Club's speculations was obviously a safer way to profiteer than any sudden personal purchases, and Ellicott may have arranged the transaction partly out of his desire to enrich his son as well as to curry Taney's favor. Part of the men's discussions in these days must have involved that a third of the stock purchase was to go to Evan Poultney's discount house, Poultney Ellicott and Co., now run by Evan's brother, Samuel, and William Ellicott, who was Thomas Ellicott's only son.

The money to purchase the stock the Union Bank loaned to John Glenn against the surety of the Tennessee Bonds Glenn personally deposited despite Bank of Maryland ownership. Glenn then distributed the shares to the Bank of Maryland and Poultney Ellicott and Co. to camouflage the purchase. So just before the pet banks were to be chosen, a large chunk of the stock in that bank most certain to be designated fell into the hands of Taney's friends, with a portion of it going to Ellicott's son's company

Jackson chose Amos Kendall to locate suitable depositories and Taney ostentatiously avoided having anything to do formally with the selection of Baltimore's "pet." Taney later claimed that his Baltimore friends warned both him and Jackson about the shakiness of the Union Bank, but that Jackson personally chose it.[33] That Jackson should be supportive of the Bank of the man who laid the groundwork for his revenge against the BUS is not surprising. But that Taney's friends, who had just bought large blocks of stock in the Union Bank, were spreading reports hostile to it is not credible. Taney's argument that the Union Bank was unsound was proved untrue by all subsequent events, including Taney's determined effort to create a crisis of confidence in it the following year when such a policy suited the ends of the Secret Club. Perhaps some thought was given to making the upstart Bank of Maryland the bank of deposit. In August, 1834 the Whig National Gazette charged that Kendall had wanted to put government funds into Evan Poultney's "leaky canoe" and the Bank's letterbook showed much correspondence about getting deposits.[34] Yet by May there was probably no serious doubt of the selection of the Union Bank. In late July Kendall wrote Ellicott that he'd like to see him in Baltimore, and Taney informed Ellicott that he might find Kendall in the North if he'd left Baltimore before the banker returned. On August 10, Kendall's Baltimore investigation ended, Taney wrote Ellicott coyly that he would be glad to learn "that in Baltimore, arrangements that are likely to prove satisfactory have been offered by the banks in relation to the public deposits." [35] A week later the list of pet banks, including the Union, was made public.

Jackson's initiation of the special repositories system precipitated two crises. For Club members the trauma concerned the failure of Union Bank stock to rise and the resulting cash flow crisis which terminated their various loose speculations. While this local economic trouble reached a head six weeks later, the national political crisis developed in early September around the removal plan. McLane gained appointment as Secretary of State and William J. Duane was made Secretary of the Treasury Duane, whose credentials as a hard money advocate were clearer than anyone else's in the administration, had doubts about the political legality of the administration plan which lacked any Congressional seal of approval. He also recognized that the project as instituted was without mechanism for currency or bank control while undercutting those functions by the BUS. It would foster, he correctly claimed, speculation, not sound currency.[36] He also incorrectly argued cabinet officer's independence from presidential control regarding legally mandated orders. Jackson had no doubts about his own responsibility for controlling his administration or about the legality of any orders he mandated. On September 19 Taney told Ellicott not to come to Washington unless Duane refused Jackson's orders; two days later he asked Ellicott to be in the capitol the next day.[37] Duane had been fired, Jackson had designated Taney to replace him, and the new acting Secretary of the Treasury apparently wanted Ellicott on hand to offer procedural advice as the special deposits system began operation.

At the same time, the Club which ran the Bank of Maryland faced several problems. Though basically sound, the heavy investments in the General Insurance Company Tennessee Bonds and Bank of Maryland and Union Bank stock had strained their liquid capital. The Union stock was worth only a bit less than had been paid for it, but the expectation was that it would rise as the pet bank system gained stability and acceptance. What was most desirable for Club members was that they resell the Tennessee Bonds, but this had not proved as easy as they had expected. Johnson wrote Nicholas Biddle begging both a loan, and that Bank of Maryland notes be accepted. When Biddle refused to be accommodating, the best solution seemed to be to hire Thomas Ellicott, who had some international as well as national reputation and excellent ties with England's wealthy Quakers, to go to Great Britain to peddle the bonds.[38] But the economic uncertainties of the new pet

system brought on a crisis too quickly for this strategem. Two days before Ellicott was to leave for London, Club members realized that their speculations and their reputations would be endangered unless the Bank of Maryland immediately gained some funds to avoid failure.

The one quick source of sufficient funds for their needs was the United States Treasury which was luckily under the control of their collaborator, Taney Yet a direct federal loan to the Bank of Maryland threatened embarrassment to the acting Secretary; there was need to have some excuse if the transaction came to public attention. Protecting pet banks from sudden runs by the BUS seemed legitimate, and Taney sent drafts to all the pets, $100,000 to Ellicott, with instructions that they be used only against a run. A request from a pet banker would justify sending additional funds –and place the onus on him if trouble brewed. David Perine and Johnson asked Ellicott to write a note to Taney requesting aid for Baltimore banks, and Johnson insisted that the Bank of Maryland not be specifically mentioned. Ellicott agreed, but made amply clear that the money was not needed at the Union Bank, so the letter proved of no use in the Secret Club's later deceptions. Hence it disappeared. Johnson, Perine and Glenn said later it begged money for the Union Bank; Taney said merely he'd misplaced it and had no memory of the gist of the note that supposedly triggered his $200,000 federal contribution.[39]

Johnson and Perine traveled to Washington to talk to Taney and on Thursday October 3 wrote back to Thomas Ellicott and Evan Poultney that the acting Secretary had acted with his "usual kindness and despatch." These letters, saved by the recipients, are the crucial documents in the crisis. Printed during the controversy of the next years, Taney and Secret Club members never questioned their authenticity though they insisted that what happened was very different from what these letters make apparent. Perine wrote to Ellicott with precise instructions about how the drafts Taney was sending with them were to be used. Two of them were to be cashed, and $300,000 sent to the Bank of Maryland in the form of personal loans of $75,000 each to Johnson, Glenn, Poultney and Evan Ellicott. For this money Ellicott was to get ownership of a part of the Tennessee Bonds, which, Perine instructed, he should be prepared to send to Washington as collateral for the government funds. This letter makes clear Ellicott spoke honestly of these events. The whole procedure was concocted in Washington between Johnson, Perine and Taney and then Ellicott was informed of it. Not only was Ellicott not asking for money but was being asked to hand out to the Bank of Maryland more than he took in from the federal treasury, something he was readily able to do. And finally the drafts came with instruction not only that they be cashed right away but that the Bonds be sent immediately to Taney a provision explained only by Taney's central role in devising it.

Johnson wrote to Poultney as "Dear Evan," suggesting the unusual closeness of the Club. In the nineteenth century close acquaintances – even married couples – wrote each other formally as Dear Mr. ______________, Dear Colonel ______________ and even "Sir." "Dear Evan," wrote Johnson, "We have succeeded in our visit and will bring up tomorrow a draft for the Bank of the United States for $200,000. Have the bonds ready to be sent to Ellicott. The secretary was prompt in the matter... He acted with his usual kindness and despatch out of no other motive than friendship for me." That Taney when he saw these letters never blamed the Secret Club makes clear that no one tricked him, but that he, Kendall and the Club all lied about Ellicott. Johson's last clause is interesting. Presumably Johnson stressed personal friendship, hardly a very good reason for handing out $200,000 in government funds, to convince. Poultney that personal interest had no influence on this "prompt" and generous decision of the acting Secretary of the Treasury.[40]

Johnson's greed in large and small matters was to disprove his claim that he went to Washington for the Union Bank rather than the Bank of Maryland. He charged the latter institution for his visit, a fee that later appeared on its books.[41]

The peculiarities of the specific transaction also suggest Taney's active role in devising it. The money went immediately to the Bank of Maryland, but on the Union Bank's books it was officially recorded as personal loans of $75,000 each to Johnson, Glenn, Evan T. Ellicott, and Evan Poultney Certainly the Club members, whose centrality in the Bank's affairs were secret, would have preferred not being personally named in the transaction should it ever come to public attention; Johnson, Glenn, and Evan Ellicott fought hard and successfully in the spring and summer of 1834 to get these personal loans changed to one drawn on the Bank of Maryland. Nor was there any advantage in this strategy to Thomas Ellicott whose bank's part in the transaction was fully protected by the purchase of the Tennessee Bonds. Only Taney could have wanted the loan in this form, for the good reason that, if the Bank of Maryland failed despite this financial transfusion, it would be less easy to trace in its books the sudden appearance of $200,000 in government funds.[42] The two secret Club members not directly involved in this deal were those with closest ties to the administration: McElderry who held a Jacksonian appointment, and Perine, who was Taney's financial errand boy in Baltimore.

The scheme Taney worked out with Johnson and Perine had a number of advantages: the government would hold the Tennessee Bonds as collateral insurance against any real loss; the Bank of Maryland would get enough cash to prevent or postpone its demise; the government "loan" to the Bank of Maryland would be indirect and veiled; secret Club members would have some time to extricate themselves and their money Perhaps most important to Taney Thomas Ellicott could be made scapegoat if the transaction drew public criticism.

The Taney-Ellicott letters in these days make clear that Taney was not only fully aware that the government money was going to the Bank of Maryland, but that he was as ready in October as he would be the next May to ruin the reputation of Ellicott, if that proved necessary in the hard business of saving his own. Ellicott, following Perine's instructions, cashed two of the three $100,000 drafts on Saturday October 5, two days after Johnson and Perine rushed to Washington. On Monday Ellicott informed Taney of the transaction, "It seemed to me clear, and I was confirmed in the impression by persons in whose judgement I place much reliance, that this was your wish and intention by the transmission of these drafts." This letter worried Taney not because the drafts had been used, but because Ellicott tied their use directly to the wishes of the acting Secretary and his friends. Taney's letter chided Ellicott's conduct, and said that the final draft should be used only "if made indispensable by the conduct of the Bank of the United States," in accord with the official instructions that he'd sent with the original draft. A longer letter of the same date, seemingly the one first sent, made clear however that Taney wanted the transaction completed: he trusted Ellicott to "take measures to enable you to relieve the present pressure in Baltimore" and not to allow "the $200,000 you have received to be locked up in a manner that will give no advantage to the commerce of your city."[43] Taney's problem at this point was to express anger at the transaction, while ensuring that Ellicott went ahead with it.

The next day Ellicott wrote apologetically explaining he'd acted on the verbal representations of Perine and Johnson when they handed him the two drafts. Taney not pleased at this statement of fact, wrote a note to Johnson, who showed it to Ellicott, which seemingly chided Johnson and Perine for their misrepresentations. This letter was to suggest to Ellicott that Taney's will had really been distorted, but, as a letter in Johnson's possession, it could not be used to prove deception on their part and innocence on Ellicott's. The letter, of course, disappeared, and Johnson and Taney never remembered it, much less found it or a copy when these events became the subject of controversy Its existence however is proved in Ellicott's next letter to Taney which mentions it, saying that both Johnson and Perine "feel most keenly the effect they have produced by their verbal statements to me," and explains how deeply entwined both men were with the insecure Bank of Maryland.[44]

The scenario that Taney Perine and Johnson wanted to impose kept being frustrated by either the shrewdness or the naivete of Ellicott's responses. Seemingly he didn't know at this point that Taney was fully aware of how deeply involved Johnson and Perine were with the Bank of Maryland, but no "news," set down in writing about this transaction, could have pleased Taney less. It triggered his longest and harshest letter to Ellicott in which he fumed that Perine, Johnson and the recipient – "there are no three men on whose honor or personal friendship I more firmly rely" – had acted "in a way to do me serious injury and injustice." Here Taney again made clear that he knew the Union Bank was not in danger; Ellicott was "authorized to use the drafts to maintain the Bank of Maryland or any other Bank in Baltimore which was solvent" from attack by the United States Bank. The problem was, Taney lamented, that the money had been used to protect a speculation and not against a run. Aware obviously of the Bank of Maryland's speculations, Taney's greatest source of distress was evident: "and all this is managed in such a way to bring upon me the suspicion of having sanctioned it – and to make it difficult for me to vindicate myself from the unjust imputation." All three friends would have acted differently "if the painful and mortifying situation in which it may place me had occurred to you." Ellicott's letters, like the alleged Johnson-Perine "deceptions," had tied Taney to rather than extricated him from the plot.[45]

The next day October 11, the acting Secretary wrote Ellicott a pacifying note. He repeated his instructions about not cashing the final draft, but expressed his entire confidence" in Ellicott's judgement, suggested that the Bank of Maryland, if a run occurred, should not have been left to its fate even if guilty of speculation, and praised Ellicott for his support of the Susquehanna Bridge and Bank Company where a part of the government draft had gone. On October 12, Ellicott thanked Taney for his letter of the 11th because "the letter of the day before had given me the blues."[46] The crisis, for the time being, was over.

All these letters, Taney's, Ellicott's, Perine and Johnson's prove the claims of Ellicott and Poultney that Taney intended the government drafts to shore up the Bank of Maryland. Throughout these troubles, the financial strength of the Union Bank was clear. While it cashed government drafts for $200,000, it actually sent $300,000 in cash to the Bank of Maryland without any strain on its resources.[47] This makes more remarkable the key "event" in this crisis which Taney described in his manuscript history of it and which Kendall related in his Autobiography

Both Jacksonians claimed that a haggard and furtive Thomas Ellicott rushed to Washington on the weekend of October 5 and 6, demanded and begged $500,000 more, confessed in effect to corrupt speculations, and finally in the face of their invincible rectitude, backed down and slunk back to Baltimore. Kendall, who claimed he just happened to be visiting Taney when Ellicott appeared, described the interview this way:

Kendall's concern that exposure might have served as proof "that the entire movement had originated in similar motives" seems the one true statement in his account. Taney with his love for invented self-sacrifice, says he turned down Ellicott's half-million dollar request despite the fact that the Union Bank's failure might have driven him from public life "with disgrace and contempt:" "Whatever might be the effect on myself personally the path of duty was a plain one."[48]

Yet Taney's path of duty never led him to refer to this remarkable interview, in which Ellicott allegedly showed himself a desperate and semi-criminal man, in the daily letters of complaint, crimination, explanation, and reconciliation that flowed between Ellicott and Taney the next week. Within a few weeks Taney was writing Ellicott casually again, and in early November he privately authorized the banker to use the final $100,000 draft if he wished. Two weeks after Ellicott "virtually assented" to having used government funds for stock speculation, Kendall asked him for advice on banking matters and signed the letter "your friend."[49]

Taney and Kendall must have contrived their supportive fabrications of this interview together. Why they did so raises some questions about what their basic relation to the Bank War was. Emotion, time and human bias always distort one's perception and memory of events, but the literary invention of a nonexistent incident suggests a determination to blame Ellicott and to misdirect attention from the financial history of the Bank of Maryland that's hard to explain in terms other than those of deep involvement with the Secret Club and the "historical lies" that these men fought to sanctify later. Kendall's invention in support of Taney his later letters and his placing of post office funds in the Bank of Maryland conceivably grew from friendship for Taney.[50] Certainly Kendall's involvement with the Secret Club was much less direct than Taney's, but this imagined tale creates some suspicion of his being connected, as Taney almost certainly was, with the maneuverings and financial interest of the Secret Club.

Secret Club members took advantage of the federal treasury's help in easing this financial crisis to begin to extricate themselves from the more dangerous aspects of their ties to the Bank of Maryland. Poultney later reported that the agreement between them was burned, and Poultney agreed to buy the 500 shares of Bank of Maryland stock that the Secret Club members had owned. The stock purchase certainly took place at this time, and there seems no reason to doubt that what Evan T Ellicott called, in another context, some "well placed anthracite" was used to end this arrangement.[51] Quite probably the extrication of the Secret Club from direct ties with the Bank of Maryland was part of the solution Johnson and Taney worked out when the $200,000 drafts were sent to Baltimore.

The burning of the formal agreement did not end Secret Club connections to the Bank of Maryland, unfortunately for Evan Poultney its new majority owner. The General Insurance Company continued to borrow, and Secret Club members Ellicott, McElderry and especially Glenn continued to run branches set up in other states to facilitate circulation of Bank of Maryland notes.[52] Probably the seeds of the coming failure were sown, as the most thorough investigator of the Bank of Maryland later claimed, by Poultney's "imprudent liberality" in assuming this indebtedness while letting the Secret Club retain access to its funds. Though directly responsible for the Bank of Maryland and of sanguinely speculative temperament, Poultney behaved toward both his secret partners and to the creditors of his bank with steady generosity and decency He wanted to make quick money obviously but he also showed concern that he not hurt others in doing so. It was his tragedy that his finer traits of generosity trust, and concern were to be the sources of his helplessness when Johnson, Taney and others plotted his ruin, as well as that of hundreds of small investors. Naivete was a fatal weakness given the willingness to be unscrupulously calculating of those who surrounded him. Because he was much less guilty than Taney and the Secret Club, Poultney as one paper put it, "got off worse than anybody else."[53]

The ending of the October crisis did not end the problems of Roger B. Taney When John H. B. Latrobe visited Washington in December, 1833, Taney was fuming about a public letter of Ellicott's defending him which he judged insufficiently strong, although he wrote Ellicott in praise of it. "As the remover of the Deposits," Latrobe concluded, Taney was "not on a bed of roses."[54] On the same day he talked to Latrobe, Taney asked Ellicott to come to Washington again, probably to consult on the Treasury report to Congress Taney was finishing.[55]

Taney as remover of deposits and Secret Club supporter, was on a bed of thorns again in early 1834 when another and much more general financial panic occurred. The United States Bank, its government funds dwindling, began to call in its loans. Money was tight, the patronage and speculative aspects of the pet bank system were clear, and political pressure for recharter in some form became intense. At the largest public meetings the country had known, a broad spectrum of citizens, ranging from businessmen to laborers, protested the administration's economic course. A stream of delegations poured into Washington to ask Jackson to reconsider only to be met by Old Hickory with growing suspicion, impatience and hostility A Washington Democrat wrote that he had "never seen such a time as this when our country is threatened with civil war, revolution and ruin," while Nicholas Biddle predicted, with evident satisfaction, that "an experiment begun in ignorance must end in ruin."[56]

If the dire predictions about the national economy proved decidedly exaggerated, or at least premature, the activities of the Bank of Maryland were reaching a crisis point. In February over $200,000 more went from the Federal treasury into the coffers of the Bank of Maryland, in much the same way money had traveled in early October. Now instead of special drafts, Taney arranged to have government funds from Philadelphia's Girard Bank, which was withdrawing from its pet status, transferred to Baltimore. With this money the Union Bank bought the rest of the Tennessee Bonds which again went to the U.S. Treasury as collateral for the federal funds. This system permitted both Taney and Ellicott to say with technical truthfulness that there had been no special transfer of funds into the Union Bank that year and no loans from the Union to the Bank of Maryland.[57] By early March however, Taney and the Secret Club had decided against a policy of further help, and on March 24 the Bank of Maryland suddenly ceased operation.

II. Swindling

An' you've gut to git up airly ef you want to take in God – James Russell Lowell

"Today may truly be called Black Monday" wrote John H. B. Latrobe in his diary of March 24:

For the whole Baltimore community the Bank's failure was "felt with a heavy shock," partly because of its extensive bank notes and partly because it "held a large amount of money of widows and orphans, small dealers and thrifty persons, mechanics and others." Those others included Captain Thomas Williams whose $5000 life-savings had been deposited there a few months earlier. The Bank had some wealthy creditors, of course; the Union Bank of Tennessee was to be the largest loser. But the popular impression was true that the losses fell mostly on "the savings of poor people" or on "the working classes."[59]

Evan Poultney published a card after closure assuring the public that the Bank of Maryland was basically solvent, but faced immediate problems that caused him to close its doors rather than take the risk of substantial real losses. He also pledged his personal estate to compensate for any creditor loss.[60] Poultney's was basically an honest statement, but one that was to be discredited as a result of decisions that the Secret Club had made a few weeks earlier.

The renewed problems of the Bank of Maryland must have become apparent in February or earlier. After the second influx of government money the Secret Club began systematically to withdraw their assets. The General Insurance company collected as much money from the Bank as possible while paying none of its much larger debts to Poultney's institution. In early March John Glenn began to take the assets of the Bank of Maryland branch he controlled and to loan himself, Secret Club members, and especially companies they had an interest in, notably the General Insurance Company large amounts of money.[61] These actions make clear that the decision to let the Bank of Maryland fail had been made in early March, Since they both contributed to the impending crisis and made it advantageous to the Secret Club members. The "effort" of David Perine and Hugh McElderry to persuade Taney to a last minute loan was a charade, intended probably to mislead Poultney about his former associates' friendship, or perhaps to draw an incriminating request from Thomas Ellicott. Again at Johnson's solicitation, Ellicott wrote Taney suggesting the shakiness of the Bank of Maryland and correctly stressed that he had no direct interest in it. Taney reported that when Perine and McElderry showed him a financial statement from the Bank of Maryland, he glanced at it, asked a few questions, saw immediately the Bank was unsound, and peremptorily refused the request for aid.[62] If this scene ever occurred, Taney showed much quicker economic comprehension than he was to in later months where careful accountants' reports never dented his support of the position that Bank of Maryland funds were radically deficient.

Probably the original intention of Secret Club supporters was simply to rake off some quick profits over the uncertainty and panic bound to follow the closing of a bank. The failure of the Bank of Maryland triggered a run on the Union Bank, because of rumored ties to the collapsed institution. John H. B. Latrobe found the Union Bank besieged by creditors on March 24, with even its directors helping count out silver. It stayed open until 4:00 to meet the rush and passed out $20,000 to depositor's while a huge crowd watched "having to their infinite sorrow no doubt no checks to present." Latrobe, himself a director of the Union Bank, knew it was safe; "all the other banks in the town were indebted to it." The next day the town was quieter. $12,000 more was withdrawn from the Union Bank before its obvious ability and willingness to pay restored confidence in it.[63] The run on the Union Bank provided a comfortable political cover for Taney Henry Clay demanded a Senate study of it and Taney's tie to it – and had to conclude that it was sound and that Taney had bought no stock in it for a number of years.[64] The wisdom of Taney's buying through the Secret Club rather than directly as he'd contemplated the previous May was never clearer.

On March 25 not only did the run on the Union Bank end, but confidence grew that the Bank of Maryland would be able to pay its debts. This owed much to Poultney's card which asserted the Bank's basic solvency and pledged his personal estate to make up any deficit. The latter was an act of liberality suggesting Poultney's sincerity in not wanting to hurt anyone. At the same time, Thomas Ellicott, at Reverdy Johnson's request, agreed to become trustee for the Bank of Maryland– that is the person responsible for controlling and settling the Bank's affairs – if the presidents and cashiers of Baltimore's other banks so requested. When they did so, Ellicott became sole trustee and promised prompt settlement. The whole picture brightened sharply Latrobe concluded that Poultney had been "unfortunate and injudicious, but is as honest a man as lives;" on his way home he called to shake hands with the ex-banker. And the son of a small Baltimore businessman traveling in Kentucky wrote his father to warn him of the Bank of Maryland's failure on the day it happened; three days later he suggested the Bank seemed to have money to pay its debts and, if his father had the chance, it would be a good investment to pick up Bank of Maryland notes at 2A their value.[65] Renewed hope sprang for Thomas Williams and thousands like him.

What was good news for most people was bad news to those few who owed large amounts of money to the Bank of Maryland. If there was confidence in the Bank and in a quick settlement, those who held credits on it would not be willing to sell them at much of a discount. On the other hand, if it was believed that funds for payment were partial or would be slow coming, many would want or have to sell their credits at a fraction of their value. The money that Glenn and others in the Secret Club got at full value could then be paid back at only 50 or even 25 cents per dollar. Taney and Johnson consequently launched a campaign of pressure to discredit the Bank of Maryland's solvency and to insure long delay on any settlement.

The extraordinary tactics the Secret Club supporters were to employ can be explained only in terms of the huge profits attendant upon their success. There is no way of knowing how much particular individuals won or lost in this business, but the gross profits –every bit tied to losses by innocent depositers and note holders–can be roughly judged from the official audits that Joshua Atkinson later published of Bank of Maryland debts as of March, 1834, and September, 1836. When it closed its doors, the Bank of Maryland owed $3,110,000; two and a half years later it still owed $828,000. Thus in the interim about $2,282,000 worth of credits had been retired. Using the highest rumored rate of exchange for the Bank's credits during most of this period, one-half, would suggest that smaller creditors and depositors in the Bank lost about $1,141,000 which went into the pockets of the Bank's wealthy debtors and speculators. Of course, a part of the retired debt, especially that settled prior to the majority trustee's deceptive report in May 1834, was handled at a fairer rate. Yet in April, 1834, before this report and the initiation of court cases that promised interminable delay Niles' Register said credits were selling at 40 cents on the dollar, and the rates most often mentioned thereafter was 25 cents. In addition, of the $828,000 debt outstanding in 1836, probably only about $100,000 was still in the hands of the original holders. Given these figures almost $1,500,000 were lost and won, if one uses the high 50% rate, and about $2,200,000 if one uses the low 25% rate. If the figures are necessarily rough, they make clear enough the tremendous stakes in the plot Taney and Secret Club members launched in late March, 1834.[66]

In the summer of 1835 Poultney claimed that the five Secret Club members owed the Bank of Maryland personally and corporately when it closed its doors about $665,000, on which they must have made a profit of at least $300,000."[67] This seems a conservative estimate; Poultney was never allowed to examine or get information from the Bank's books after he became aware of the Secret Club plot, and he had no knowledge of some of their last minute maneuvers. The probable profits on those transactions of the General Insurance Company just before the bank closed, suggest the scantiness of Poultney's estimate. While sending the Bank of Maryland soon-to-be valueless stock, its own and the Bank's, the Secret Club took in nearly $398,000 in cash. Though this stock retained some value, the profits to the Secret Club and their supporters must have been over $350,000 on these transactions alone. At the same time their General Insurance Company owed the Bank at its closing $101,000; of this sum $65,000 was never repaid, the largest outstanding bad debt at the final settlement of the Bank of Maryland.[68] If a convenient bankruptcy gave $65,000 to the Secret Club and friends, the discount rate would have made their profits on the rest of the debt $18,000 or $27,000, for a total gain of between $83,000 and $92,000. Thus by forcing the Bank's closure and transferring good money for bad stock and "cheap" debts, these men put something just under $450,000 in their hands through the General Insurance Company alone, almost all of it from third parties like Captain Williams.

The Secret Club members were flexible men. They had expected quick substantial profits from secret speculations, and had tried to capitalize on governmental foreknowledge and favor. Both efforts had failed, but they came to see how to turn this failure into much greater profits than they could have expected from success. When the Bank of Maryland closed its doors, Captain Williams' money was really there, as Poultney claimed, but the Secret Club had already devised the strategy that would rob the bank and put most of its funds into their pockets and those of people who cooperated with them.

If it was a profitable journey that the Secret Club embarked on in March, 1834, it was also a complicated and risky one which at times threatened disaster to them. Their first problem was in combatting the confidence and prompt settlement that seemed likely in the few days Ellicott was sole trustee. Whatever his connivance at the profiteering involved with the purchase of Union Bank stock prior to its official designation as a pet, Ellicott would have nothing to do with the more vicious plan of March, 1834. As soon as they realized this, Taney and the Secret Club launched an attack to remove him first as single trustee of the Bank of Maryland, and then from his position of power and influence in Baltimore, the presidency of the Union Bank.

As early as March 29, a few days after Ellicott assumed the trust, a meeting of some Bank of Maryland creditors requested that two additional trustees be appointed to act with Ellicott. Probably Reverdy Johnson and friends quietly organized this "suggestion," playing upon the rumors of Ellicott's ties to the Bank of Maryland. Certainly Taney put maximum pressure on Ellicott to accept the new set up. A financial report that Ellicott submitted on the Union Bank during the run on it gave Taney "entire confidence" in its stability but, on March 27, in conjunction with the pressure from the "creditor's" meeting, Taney urged Ellicott to resign the trusteeship or to associate two others in it. He told Ellicott that Jackson also urged him to do this, and implied loss of favor for the Union Bank if this was not done.[69] There is no other evidence regarding Jackson's concern, but it seems likely since Ellicott and Jackson were acquaintances, that Taney presented – and misrepresented – the situation in such a way to gain the president's assent to the Secret Club strategem.

Ellicott reluctantly succumbed to this pressure, in what he later saw as the greatest mistake of his life. Certainly it was a tragic decision for him, for Poultney and his relatives, and for the Bank's creditors, including Captain Williams. With the addition of Richard Gill and John B. Morris as trustees, legal control was assured to the Secret Club in their maneuvers. The majority trustees Morris and Gill, over Thomas Ellicott's protest, initiated a policy of delay of circulating false reports suggesting gross deficiencies and frauds in the Bank of Maryland, and of instituting specious legal cases to justify prolonged non-settlement. They refused to heed careful and correct accountants' findings about the Bank, refused to resign although the creditors repeatedly requested this, and refused all offers and demands for arbitration of claims to allow settlement. Appointed at the behest of the Secret Club, they at every point served the interests of that group and sacrificed those whose interests were entrusted to them.

The crucial issue over which Thomas Ellicott fought Morris and Gill (who had the support of the Secret Club and Taney) concerned how solvent the Bank of Maryland was when it closed its doors. Poultney insisted that the credits were there to coverall, or almost all, debts, but the majority trustees claimed huge deficits explainable only by fraud. The argument could be resolved only by auditing the bank's books, but Gill and Morris refused to have this done promptly indicating that they did not believe in the stories they circulated or the court cases they initiated. Even clearer evidence of their deception comes from their refusal to acknowledge or consider the preliminary but accurate findings of the accountant whom they were finally forced to allow access to the books. Their only reaction to this clear indication that their policies were hostile to the interest of those they were allegedly serving was to bar the accountant's further access to the books. Every accounting told the same story: despite the cash flow crisis that the Secret Club had prodded, despite some bad loans mostly to Secret Club members and supporters, despite the loss of the value of its charter by long delay the Bank of Maryland was solvent when it closed its doors. When the trust finally ended, not only were the outstanding debts paid at full value, but with a 10% dividend.[70] Captain Williams certainly deserved this good fortune; if he somehow managed to retain his credits, small payment it was for five years of suffering and uncertainty by an elderly man and the two elderly women dependent on him. Yet the typical and much more substantial beneficiary was John B. Morris whose deceptions as trustee allowed him to profit immensely as banker.

Once Taney and the Secret Club badgered Ellicott into accepting Gill and Morris as co-trustees, the stage was set for the legal farce that was the heart of the swindle. Over the next three years, individuals would fulminate against the plot, pamphlets would expose it, creditors would demand legal redress, part of the press would briefly flagellate the schemers, rioters at one point would punish some of the chief perpetrators while much of the city looked on approvingly but nothing impeded the swindle. Maryland's courts supported it at every stage, and Baltimore's elite shut their eyes to the truth – apparent in 1835 to rioting payers and carpenters – when it became clear that the plotters would win and those few powerful men who were largely innocent would be destroyed.

The first actions of the new trustees made clear the triumph of the Secret Club. The legal advisors Ellicott had chosen to aid the trust, Judges Thomas B. Dorsey and Stevenson Archer, announced they could not serve and appointed as their replacements, John V L. McMahon and the omnipresent Reverdy Johnson. Hence perhaps the leading figure in the Secret Club manipulations became the guiding legal hand for the majority trustees. In the statement of April 7 announcing the appointment of McMahon and Johnson, the trustees passed on their new counsels' first legal advice. In reply to an "inquiry" from the trustees, McMahon and Johnson told them that debtors must be allowed to retire their debts with any credits on the Bank of Maryland "without regard to the period at which such debtors may have become proprietors of such notes, certificates or accounts, or the value they may have paid for them."[71] Immediately Johnson laid down the ground rules on which the swindle depended: debtors to the bank, mostly wealthy businesses and business men, could take advantage of any delay or indication of insufficiency of funds to buy at a fraction of their value creditors' holdings. Ellicott had wanted to have a quick accounting and setting up of a schedule of repayment to creditors so that profiteering from small holders' uncertainty