Though the ink was still wet on their degrees from the University of Maryland law school, Sewell S. Watts Sr. and his friend William G. Baker Jr. decided their futures would be better spent in a bank than a courtroom.
Banking was not completely foreign to them. Watts was a bank teller while attending law school. Baker came from a well-known banking family in Frederick County. So on March 1, 1900, they hung out their shingle at Baltimore and South streets, starting a banking and investment house called Baker, Watts & Co. with $43,500 in mostly borrowed capital.
Four years later, that corner and much of downtown was devastated by the Great Baltimore Fire. Undeterred, they salvaged whatever papers they could and sought temporary space elsewhere.
A year later, the U.S. Fidelity and Guaranty Building opened at Calvert and Redwood streets and became the new headquarters for Baker, Watts, where it remained for decades. In 1974, the firm moved to the new 42-story USF&G building at Pratt and Light streets at the Inner Harbor. The partners took the ornate front door with them, because it represented the "stability" of Baker, Watts and had appeared in much of the firm's advertising.
In the beginning, the firm did commercial banking and institutional investing. When laws were passed in the 1930s prohibiting banks from doing both, Baker, Watts focused on the latter, calling themselves "counselors in investments." Clients included Black & Decker Corp. and the Noxzema Chemical Co.
Baker, Watts managed to avoid the merger frenzy of the early 1980s and remained one of the last three independent brokerages in the city, along with Alex. Brown & Sons Inc. and Legg Mason Inc.
But 1987 turned out to be a defining year, and not only because it was the year of the second big stock market crash endured by the firm. That year, Baker, Watts switched from a partnership to a corporation - not unusual for growing firms at the time but a move that foreshadowed more changes to come.
Baker, Watts found itself in trouble when a number of oil and gas tax shelters that it had recommended to customers collapsed. Clients sued for millions. The partners wrote personal checks to help cover legal expenses. USF&G, the Baltimore insurance company whose relationship with Baker, Watts dated to the founders, bought a 25 percent stake in the firm to stabilize it.
