First of all, even though the statement is found on a couple of different organizations' websites, it's never backed up with facts or citations. And as I tell my Biblical Theology students, lack of citations makes Baby Jesus cry. Second of all, what I have found is plenty of evidence that the Germans/Pennsylvania Germans were not the only settlers in early Frederick. Logically, it doesn't make sense that a bunch of English settlers would switch from using English to using German all the time. So here's what I can cite.
Edward T. Schultz's monograph "First Settlements of Germans in Maryland" from 1896 gives us a fairly complete look at the early settlement of Frederick:
"In 1735 there arrived about 100 families from the Palatinate Germany by way of Chesapeake Bay, landing at Annapolis or Alexandria (both of which towns were then more important ports of entry than Baltimore). Their leader or headman was Thomas Schley, "their schoolmaster" ... These settlers located on lands belonging to Daniel Dulaney, of Annapolis, who was a large landowner in that section of the province. Here ten years later (1745) a town was laid out on both sides of Carroll Creek, and three miles from the Monocacy River. In compliment to Frederick, son of Lord Baltimore, then a youth of 14, it was called Fredericktown... Germans from Pennsylvania, as well as direct from the Palatinate, continued to arrive, and these being reinforced by settlers of English, Scotch, and Irish extraction from the lower counties of the province, the wilderness was soon transformed into cultivated fields..." (Schultz 7-8).So already we can see that the idea that Frederick was founded solely by Germans is incorrect - like many other colonies, it seems to have been a mixture of ethnicities and thus, assumedly, a mixture of languages.
It is worth noting that the German presence was significant enough that a German language newspaper, Bartgis' Marylandische zeitung, was published alongside Bartgis' Federal Gazette from 1785 to 1789. A single remaining copy of this newspaper is on microform at the Library of Congress.
More evidence for the prevalence of German is given in Louis P. Hennighausen's History of the German Society of Maryland from 1909:
As early as 1779, less than three years after the Declaration of Independence, a resolution was introduced in the senate of the general assembly of Maryland that Messrs. Hanson, Beale and Fischer translate into the German language certain acts of the assembly, and, in 1787, it was ordered by the house of delegates that the printer of Fredericktown be directed to translate into the German language the proceedings of the Committee on Federal Constitution and the resolves of the general assembly thereon to be distributed, and print 300 copies to be equally distributed in Frederick, Washington, and Baltimore counties...This was the first official recognition by the State of the existence of the German language among its inhabitants (Hennighausen 39).Germans were there, in large numbers, but not so isolated from the English-speaking world as hinted at around the Internet. I believe we're looking less at an Amish situation, in which the language and culture fossilized, and more at a slow assimilation, probably hindered by Frederick's relative isolation from larger cities and heavier influences.
More to come.