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The Board of Mental Hygiene was established in 1922 as the "lawful successor" of the State Lunacy Commission (Laws of 1922, ch. 29, art. vii, sec. 4). Appointed by the governor, the board consisted of six associate members, four of whom had to be physicians. At least one associate was a woman. The commissioner of Mental Hygiene chaired the board and was its sole paid member.

The board's primary concern was the proper care of the insane. It supervised "all matters relating to the custody, cure and treatment of the insane." Twice a year, the chairman or a designated associate member visited "all public, corporate and private institutions, almshouses or county asylums where the insane or feeble-minded [were] kept." The board could also require reports from the institutions themselves. The board paid close attention to the health of patients and their living conditions. Besides the scheduled inspections, it was vested with the "functions and powers" of a coroner to investigate any deaths that occurred at institutions under their jurisdiction. Furthermore, in cases where a patient was improperly treated or confined, the board could issue subpoenas and judge evidence with the same powers as a justice of the peace. The board was also authorized to license asylums, retreats, and private homes for the care or custody of the insane. When requested by the Board of Welfare (which oversaw the state penal system), the board evaluated the mental health of convicts in the Maryland Penitentiary and House of Correction.

From 1922 to 1939 the Board of Mental Hygiene was a part of the Department of Welfare. A 1924 law redefined the board's role (Laws of 1924, ch. 283), instructing it to submit reports to the director of the Department of Welfare and to meet jointly with the Board of Welfare when the director deemed it necessary. The two boards met jointly several times between 1924 and 1927. When the Department of Correction replaced the Department of Welfare in 1939, the Board of Mental Hygiene became an independent agency (Laws of 1939, ch. 120). Although daily operation of state mental hospitals remained the responsibility of their respective boards of managers or visitors, the 1939 legislation placed the hospitals "under the supervision, direction and control of the Board of Mental Hygiene."

Following a largely unfavorable report by the American Psychiatric Association and extensive "bad press" in the local media concerning the state mental hospital system, the Board of Mental Hygiene was replaced by the Department of Mental Hygiene (Laws of 1949, ch. 685).