street. Hunt resigned as mayor and frightened property holders finally called on eighty- three-year-old Sam Smith to lead a military force and restore order. Nothing so dramatic or violent occurred in connection with the city’s private banks, but two of the most valuable ones, Alex Brown and Sons and Peabody and Riggs, actually left the city. Alex Brown and Sons, the city’s first private banking house, opened an office in New York in 1825, the year the Erie Canal opened. Operated by two of the four sons, this office gradually became the center of the family business operating under the name Brown Brothers. It worked closely with the Liverpool office, which had been opened by the third son and became known as Brown and Shipley. The fourth son, George, remained in Baltimore and after Alex Brown’s death in 1834 he took over the Baltimore office. When George Brown sold out his share of the business to his brothers in 1839 (for well over a million dollars), the Baltimore office had really become a small branch of the New York-Liverpool firm. The loss of George Peabody was not a severe blow to the city because he had not achieved the stature in the financial world that he later achieved, but if he had stayed, the city’s financial community might have been substantially strengthened. Peabody was born in Massachusetts, but spent his early mercantile years in Baltimore. Like the Browns however, he realized during the 1820s that the city was not destined to be a major financial center and moved on to London where he founded a banking firm in partnership with Junius S. Morgan. It eventually became the London office of J. P. Morgan & Co. After two decades of financial turbulence and losses, the city’s banking system gradually recovered. The private banks that remained in the city, while never matching the huge success that Brown Brothers or Peabody & Morgan achieved, grew steadily and, as can be seen in the activities of Robert Garrett and Sons, played a leading role in helping corporations like the B&O railroad achieve success in the 1850s. After the debacle with the Bank of Maryland in 1834, a group of Baltimore merchants established the Merchants Bank and vowed to set a higher standard of honesty and efficiency in its operations. A revision of the Maryland state banking laws in 1844, and undoubtedly a better-qualified and more honest generation of bank directors, allowed the city to come through the Panic of 1857 without a single bank failure. To some degree the new stability stemmed from more cautious investment policies on the part of the new directors. Some thought they were much too conservative. They made few speculative loans and dealt largely with a select circle of well-known and well-established borrowers. It is difficult to determine

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