Historian's Summary of the Banking Scandal

In his blog, "Remembering Baltimore and Beyond", retired Maryland State Archivist  Edward Papenfuse summarized the banking scandal involving with Williams family and James McCulloh during the time of their involvement with establishing the First Independent Church of Baltimore.  Below are Papenfuse's words, images are from our personal collection:

"The Williams’s especially church members and brothers Amos and young George, along with church treasurer James W. McCulloh would have done well to have heeded the advice of Doctor Freeman to walk humbly and virtuously. 

As Dr. Freeman put it, probably at Gibney’s dance hall in October 1816,

Uncertain as events may be, sufficient motives present themselves to induce us to be virtuous; and if we refuse to attend to them, it cannot be allowed that we act with wisdom.

In 1815 and 16, George Williams and his Clerk, James W. McCulloh concocted a scheme to make themselves and their family rich, or so it seemed. George and James secured the signatures of over three thousand individuals who agreed to buy one share each of stock in the Second Bank of the United States for which they were paid pennies for the use of their names. In turn George Williams and James W. McCulloh offered to act as security for the signatories, and to provide the payment for each share by borrowing the cost of the shares from the bank on their promise to pay. George was given their power of attorney, and with it, voted himself in as a director. No money actually changed hands (except the pennies for the use of the names) and there was no regulatory agency looking over their shoulders. In fact a tinsmith by the name of John James and James W. McCulloh who moved from George Williams’s counting house to be Cashier at the Bank, successfully sued the State of Maryland over the State’s attempt to tax the paper money issued by the Bank, a suit that went all the way to the Supreme court before Chief Justice Marshall decided in favor of the Bank. Meanwhile, George and James continued their stock jobbing. 

At first the value of the Stock rose, in part because on the books so many people were buying it, but then came the crop failures of the summer of 1816, caused by drastic change in the weather caused by a volcanic eruption in what is today Indonesia, the calling in of loans for the purchase of western lands that farmers could no longer afford, the dumping of European goods on the American market for which the public no longer had the means to purchase, and the calling in of the loans by European bankers that financed the purchase of Louisiana. 

By 1825 it was reported to Congress that George and James still owed $1,207,332.08 to the bank, dragging down U. S. Senator Samuel Smith who partnered with them into bankruptcy. By then Amos Williams was also bankrupt and had lost the elegant house that he owned and George occupied on what is now the site of Mercy Hospital on Calvert Street. Curiously neither George nor James was convicted of wrongdoing despite the objections of one of the judges on a three judge panel that reviewed the thousand of pages of testimony and documentation provided by General and Senator Robert Goodloe Harper. Their speculations were deemed an honest mistake, if poor judgment. Amos died in obscurity. George continued as a commission merchant dealing with customers on the Eastern Shore, and managing the family property of Savage Mills."

Source: https://www.rememberingbaltimore.net/2019/11/baltimore-1816.html?lr=1763157867228

Note: Amos A. Williams had a fascinating career after this banking scandal becoming a State Director of the B&O, founder of the Savage Rail Road, and agent/manager of the Savage Manufacturing Company.