The Kirtland Safety Society

At the latter end of 1836, many Mormon converts
had gathered in Kirtland, Ohio. As a result of Kirtland’s increased population, land prices
increased greatly. While the Mormons held considerable real estate, they needed liquidity
to repay outstanding loans. In order to provide for the credit needs of the church, the growing
population, and ongoing land transactions, the church leadership decided to form a bank.
The Kirtland Safety Society Bank Company was organized in November, with Sydney Rigdon
as president, and Joseph Smith as cashier. Soon, rumors began to spread that the bank
had been established by a revelation from God. William Parish, who was a member of the
first quorum of the seventy and Joseph’s personal scribe at the time, reported; “I have listened to [the Prophet] with feelings
of no ordinary kind when he declared that the audible voice of God instructed him to
establish a Banking-Anti-Banking Institution, which, like Aaron’s rod, should swallow up
all other Banks…and grow and flourish and spread from the rivers to the ends of the
earth, and survive when all others should be laid in ruins.” Wilford Woodruff also reported that a revelation
had been given: “I also heard President Joseph Smith Jr. declare
in the presence of F. Williams, D. Whitmer, S. Smith, W. Parrish, and others in the deposit
office that he had received that morning the word of the Lord upon the subject of the Kirtland
Safety Society. He was alone in the room by himself and he had not only the voice of the
Spirit upon the subject but even an audible voice. He did not tell us at that time what
the Lord said upon the subject but remarked that if we would give heed to the commandments
the Lord had given this morning all would be well. May the Lord bless Brother Joseph
with all the Saints and support the above-named institution and protect it so that every weapon
formed against it may be broken and come to naught while the Kirtland Safety Society shall
become the greatest of all institutions on earth.” In addition to rumored revelations from God,
members of the church received an invitation to invest in the society in the form of a
verse from Isaiah: “It is wisdom and according to the mind of
the Holy Spirit, that you should call at Kirtland, and receive counsel and instruction upon those
principles that are necessary to further the great work of the Lord … we invite the brethren
from abroad, to call on us, and take stock in our Safety Society; and we would remind
them also of the sayings of Isaiah, contained in the 60th chapter and more particularly
the 9th and 17th verses, which are as follows: “Surely the isles shall wait for me, and
the ships of Tarshish first, to bring thy sons from far, their silver and their gold
[not their bank notes] with them, unto the name of the Lord thy God, and to the Holy
One of Israel, because He hath glorified thee.” Given these three sources, it is clear that
the membership had been given prophetic and divine assurances that God would prosper their
new bank. In January of 1837, Orson Hyde was sent to
apply for a state bank charter, while Oliver Cowdery went to obtain plates for printing
bank notes. Unfortunately, their charter was rejected by the state. According to Joseph, “…because we were “Mormons,” the Legislature
raised some frivolous excuse, on which they refused to grant us those banking privileges
they so freely granted to others, thus elder Hyde was compelled to return without accomplishing
the object of his Mission, while elder Cowdery succeeded, at a great expence, in procuring
the plates, and bringing them to Kirtland.” Contrary to Joseph’s complaint of persecution,
the Ohio legislature was extremely restrictive in issuing bank charters to any institution,
rejecting all but one of the aplications received during the years 1836 and 1837. This was due,
in part, to nationwide problems with land speculation, wildcat banking and counterfeiting. Issuing bank notes without a charter was illegal,
but Joseph had already had the printing plates made, and the saints still desperately needed
a solution to their financial predicament. He decided to have the notes issued anyway,
but they were stamped to read “Kirtland Safety Society Anti-Banking Co.” In other words,
the society would operate as a bank, but deny the title. This circumvented, in Joseph’s
mind at least, the law requiring a charter to opperate. In addition to dispensing heavenly assurances,
it appears that Joseph also employed a rather dishonest method to inspire confidence in
investing. According to Chauncey Gilbert Webb: “In the bank they kept eight or nine window-glass
boxes, which seemed to be full of silver; but the initiated knew very well that they
were full of sand, only the top being covered with 50-cent pieces. The effect of those boxes
was like magic; they created general confidence in the solidity of the bank, and that beautiful
paper money went like hot cakes. For about a month it was the best money in the country.” William Parrish, who had been the cashier
of the bank in its final days, wrote in 1838: “I have been astonished to hear him declare
that we had $60,000 in specie in our vaults and $600,000 at our command, when we had not
to exceed $6,000 and could not command any more; also that we had but about ten thousand
dollars of our bills in circulation when he, as cashier of that institution, knew that
there was at least $150,000.” Joseph and other leaders sold themselves stock
in the bank for pennies on the dollar. Heber C. Kimball, for example, received $50,000
worth of stock for a $15 investment, yet Smith and Rigdon were still the chief owners and
operators. In fact, the Smith family owned 1/6th of the entire bank’s stock. They stood
to make a fortune if the bank succeeded, but there was little risk to them otherwise. Unfortunately, the bank’s success was not
in the cards. Due to bad publicity in the Painesville Telegraph about the society’s
inability to redeem bank notes, there was a run on the bank. On January 27, less than
a month after the bank’s opening, the Telegraph reported that Joseph had “shut up shop … saying
he would not redeem another dollar except with land.” Everyone with Kirtland anti-bank
bills now realized their quandary and tried desperately to get rid of them. By February
1 the bills were selling for 12.5 cents on the dollar. On 9 February 1837, Samuel Rounds, acting
for Grandison Newell, brought charges against Joseph Smith, Sidney Rigdon, and four others
for violating a state banking statute that prohibited unchartered institutions from issuing
bank notes. By March 24th Joseph was in court, where he lost and was fined 1,000 dollars. Joseph Smith and Sidney Rigdon resigned from the safety society, finally
convinced that the bank was not viable. Frederick G Williams and Warren Parrish were elected
as replacements. Between June 8th and July 7th, the Smith family transferred all of their holdings to Oliver Granger and Jared Carter, as did nine other stockholders. In the midst of their troubles, Smith and
Rigdon sought escape by taking a five-week “mission trip” to Canada. When they returned
in late August, they found that half of the church members had pledged their loyalty to
a young girl who claimed to be a seeress by virtue of a black seer stone in which she
could see the future. She believed, as her followers did, that Joseph was a fallen prophet.
David Whitmer, Martin Harris, and Oliver Cowdery, whose faith in seer stones had not diminished
since Joseph gave up their use, became her disciples. Joseph was eventually able to silence the girl, and
he persuaded the majority of her converts to reunite with the church. The Kirtland Safety Society closed for good
some time before 3 September 1837, with great losses sustained by all investors. These losses
caused hardship, confusion, and bitterness among the saints. On September 27th, 1837 Joseph and Sidney
Rigdon decided to visit Missouri. In their absence, the church again fell into apostasy.
As a result of this apostasy fifty leading members of the church were excommunicated.
Between November 1837 and June 1838, two or three hundred members withdrew from the Church.
The Three Witnesses, a member of the First Presidency, four members of the Twelve Apostles,
and several members of the First Quorum of the Seventy all left the Church. As Heber
Kimball put it, during this time “there were not twenty persons on earth that would declare
that Joseph Smith was a prophet of God.” Thirteen suits were brought against Joseph
between June 1837 and April 1839, to collect sums totaling nearly $25,000. Of the thirteen suits only six were settled out of court-about
$12,000 out of the $25,000. In the other seven the creditors either were awarded damages
or won them by default. Joseph was arrested seven times in four months, and his followers
managed to raise the $38,428 required for bail. On January 12, 1838, faced with another
warrant for his arrest, Joseph and Sidney were forced to flee Kirtland. They escaped
on horseback in the middle of the night, evading armed mobs until they arrived in Clay County,
Missouri. The destitute and confused church members would soon follow them. Of those who remained in the church, Christopher Crary said; “It was marvelous to see with what
tenacity they held to their faith in the prophet, when they knew they had been robbed, abused
and insulted.”

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