Do you allow players to keep secrets from each other?

In my early days of gaming, it wasn’t uncommon for players to keep secrets from each other, usually to each others’ detriment. The party thief (that’s back when we called a thief a thief, you whippersnapper!) often wanted to pilfer some valuables from other PCs or undervalue the latest haul in the hopes of getting a better percentage. Occasionally a PC was an infiltrator, tasked with some secret mission by the GM that went against the party’s goals. Sometimes a scouting PC found something that she didn’t want to share with the rest of the party (including a recently acquired lycanthropy or vampirism).

As you might imagine, many of these secrets served to tear parties apart, which often happened after players (not PCs) suspected another PC of plotting against them (back in ye olden days of gaming this was easy to notice simply by watching the note-passing). A game of cat-and-mouse ensued until the inevitable explosive climax.

As a side-effect, intra-party secrets often slowed the game down, as the GM had to pause to read and respond to notes. Particularly involved secrets resulted in the GM and one or two players leaving the table for a secret discussion, during which the rest of the group sat around for several minutes. I can recall at least two occasions when the entire table was cleared as everyone headed for separate rooms as the GM made the rounds.

As I became more experienced as a GM, I stopped allowing secrets; they were simply too distracting. I still allowed for the clandestine stuff, but it was only clandestine in-game; out of character the players had to announce their plans to me at the table. While this certainly had a chilling effect on most secrets, I found that the game sessions flowed better as the party was more likely to stick together to achieve goals.

In my current home campaign, which involves seasoned gamers, we still have occasional in-game secrets and I’ve found that the other players tend to roll with it and even help the player keeping them out, at least out-of-character.

So how about you? Do you enable players to keep secrets from each other? If so, does it tend to slow down the game or do new technologies (e-mail, texting) mitigate that? If not, how well do “announced” secrets play at your table? Do you ever allow intra-party conflict?