But he also had a powerful enemy in Virginian Arthur Lee, who cared nothing for Bancroft. Lee disliked Bancroft's using his insider knowledge to profit on stocks during the revolution. He disliked Bancroft having a mistress. And, most importantly, he believed Bancroft was a spy.
Franklin and Deane were active in negotiations with the French, hoping to draw them into the Revolutionary War on the side of the colonists, and Bancroft served as their secretary. Bancroft, after growing up in Massachusetts and Connecticut, had studied medicine in England. His unique position gave him access to the inner workings of the American delegation in France and easy access to Britain, where he could travel freely.
In a letter to Benjamin Franklin in a February, 1779 Lee protested Franklin's continued reliance on Bancroft.
Lee had long believed that Bancroft was acting as a spy for the British, having friends in England who told him so, and the Virginia doctor did not hesitate to say so. He had reported to the continental Congress' Committee on Correspondence in April of 1778 that he suspected Bancroft was supplying information to the British and he repeated the charge to Franklin.
"I have farther to inform you as one of your Colleagues, that I have evidence in my possession, which makes me consider Dr. Bancroft as a Criminal with regard to the United States, and that I shall have him charged as such, whenever he goes within their jurisdiction."
Franklin, who had used Bancroft to gather information in England as a spy for the American cause, refused to believe that Bancroft was a double agent. Franklin was wrong.
Edward Bancroft had been recruited by the British Secret Service in 1776 for a sum of 200 pounds per year, later elevated to 500. And throughout negotiations with the French, Bancroft provided his British handlers with copies of documents containing directions from Congress to Franklin and the negotiators dealing with the French.
Hundreds of documents made their way into British hands over the course of several years. Bancroft also routinely gave face-to-face briefings to British officials on his trips to England. Aware that he was suspected of spying, Bancroft helped to point the finger at others to shake off suspicions and at one point the British arranged to have him arrested and charged with giving aid to the American rebels, as part of a smokescreen to preserve his cover.
In the end, all the subterfuge worked and it didn’t work. Bancroft was able to continue in his role as spy. But the alliance with France continued. Franklin, in particular, had little fear of spies among the diplomatic ranks. If a person always represented his intentions consistently, Franklin asserted, a spy would do little good, and indeed the alliance with France was created.
As to why Bancroft became paid spy, he explained it in a letter in 1784. He simply wanted to prevent the colonies from leaving England. When approached for help by representatives of the British government, “I had then resided near ten years, and expected to reside the rest of my Life, in England; and all my views, interests and inclinations were adverse to the independency of the Colonies, though I had advocated some of their Claims, from a persuasion, of their being founded in Justice. I therefore wished, that the Government of this Country, might be informed, of the Danger of French interference.”
Though he initially volunteered information freely, he would later turn it into a career. Bancroft’s role as a British agent remained a secret throughout his life. It was only revealed in 1890 when papers related to his pension were released to the public.