Kirtland Safety Society

What was the Kirtland Safety Society?

The Kirtland Safety Society Anti-Banking Company,[1] known as the Kirtland Safety Society, was a financial institution established by Church leaders in 1836.[2][3] It failed in 1837.[4]

The Kirtland Safety Society was initially intended to be a bank,[5] but, because it was unable to secure an Ohio charter,[6] it was reorganized as an "anti-banking" society.[7][8] It issued stock certificates[9] and Kirtland Safety Society notes (essentially a currency)[10] and accepted deposits.[11]

Timeline of the Kirtland Safety Society

January 27, 1816

The General Assembly of Ohio passes "An Act to prohibit the issuing and circulating of unauthorized Bank paper."[12]

January 24, 1824

The General Assembly of Ohio passes "An Act, to regulate judicial proceedings where banks and bankers are parties, and to prohibit issuing bank bills of certain descriptions."[13]

September 11, 1831

Joseph Smith[BIO] receives a revelation warning the Church against falling into debt.[14]

March 27, 1836

The Kirtland Temple is dedicated.[15] As a result of construction costs, the Church finds itself in debt.[16][17]

August 6, 1836

Joseph Smith receives a revelation promising that the Church will be relieved of its debts.[18]

August 3, 1836

Oliver Cowdery,[BIO] in a letter to Joseph Smith, notes that he is "ready to help incorporated bodies to plates and dyes" to print banknotes.[19]

September 12 or 13, 1836

Joseph Smith, Sidney Rigdon,[BIO] Hyrum Smith,[BIO] and Oliver Cowdery decide to establish a bank and purchase land as the solution to the Church's financial issues.[20][21]

October 5, 1836

Joseph Smith, William Miller,[BIO] William Smith,[BIO] and Don Carlos Smith[BIO] enter into a mortgage agreement with Peter French[BIO] for land in Kirtland.[22]

November 2, 1836

Joseph Smith reports the official establishment of the "Kirtland Safety Society."[23]

December 1836

The Constitution of the Kirtland Safety Society Bank (November 2, 1836) is published in the Latter-day Saint periodical Messenger and Advocate.[24]

1837

The Financial Panic of 1837 in the United States results in many financial institutions closing down.[25]

January 1837

The "Articles of Agreement for the Kirtland Safety Society Anti-Banking Company" are published.[26]

January 6, 1837

Wilford Woodruff[BIO] records Joseph Smith's teaching that the Kirtland Safety Society "shall become the greatest of all institutions on earth" if the Saints were to be faithful.[27]

February 9, 1837

Samuel Rounds,[BIO] acting on behalf of Grandison Newell,[BIO] brings charges against Joseph Smith and others for issuing banknotes without a charter.[28]

April 6, 1837

Wilford Woodruff records Joseph and Hyrum teaching that Kirtland would become a center of commerce where "kings of the earth would come to behold the glory thereof."[29]

May 29, 1837

Apostles Lyman E. Johnson[BIO] and Orson Pratt[BIO] accuse Joseph Smith of lying, misrepresentation, and extortion.[30]

June 1, 1837

Joseph Smith cites land speculation as one of the reasons why the Kirtland Safety Society was failing.[31][32]

July 1837

Joseph Smith records his resignation from his office in the Kirtland Safety Society and reports that it was unsuccessful due to "darkness, speculation, and wickedness."[33]

August 1837

In the Messenger and Advocate, Joseph Smith warns members about speculators who are "palming upon them" now-worthless bills from the Kirtland Safety Society.[34]

September 3, 1837

Joseph Smith reorganizes the leadership of the Church in Kirtland, Ohio,[35] following dissension among Church leadership due to the failure of the Kirtland Safety Society.[36]

October 24, 1837

Joseph and Sidney are tried in absentia on the charges brought by Grandison Newell.[37]

November 1837

The Kirtland Safety Society ceases all operations.[38]

January 1, 1838

Joseph Smith and Sidney Rigdon, citing a "spirit of apostate mobocracy," flee Kirtland.[39]

February 5, 1838

In a letter to the editor of the Painesville Republican, Warren Parrish discusses the Kirtland Safety Society and notes he was astonished to hear Joseph declare that the bank had $60,000 in specie[40] and $600,000 at their command.[41]

March 1, 1838

On March 1, 1838, the costs of the legal judgments against Joseph Smith and Sidney Rigdon are assigned to their agents, William Marks[BIO] and Oliver Granger,[BIO] for $1,600.[42]

August 1838

In the August 1838 issue of the Elders' Journal, Joseph accuses Warren Parrish of embezzling funds from the Kirtland Safety Society.[43]

Expand Timeline

So why did the Church start a bank?

One primary reason was the Church's financial troubles due to debt from land purchases and building projects,[44][45] including the Kirtland Temple, which likely cost an estimated $30,000[46] to $40,000[47] in the 1830s (approximately $1.3 million in 2024[48]).[49] Joseph was reportedly the one who initially conceived the idea for the bank.[50]

An 1846 black and white engraved image of the "old mormon banking house" (probable home of the Kirtland Safety Society Anti-Banking Company) and the Kirtland temple by Henry Howe in his book "Historical Collections of Ohio." — An 1846 engraving of Kirtland by Henry Howe, from "Historical Collections of Ohio." Howe describes the small building on the left as the "old banking house of the Mormons."

Why would the early Church leaders address a debt crisis by opening a bank?

The bank was intended to issue currency, provide loans, and stimulate local business.[51] One way they could do this through the Kirtland Safety Society was by using assets that normally cannot be easily turned into cash (for example, land) as collateral for loans and providing money for purchases.[52]

Was it common to set up a financial institution in America at the time?

Yes. In Ohio, at the time, many businesses were issuing banknotes and performing other "bank-like" activities, even if they were not banking institutions themselves.[53][54] The Ohio General Assembly issued acts in 1816[55] and 1824[56] that restricted newly established institutions from issuing banknotes, creating legal barriers that complicated the operation of unchartered banks.[57]

But was it normal for a church to start a bank at the time?

No, not really. While Protestants established some banks in Europe,[58] this was not a typical practice in America. The closest example in the nineteenth-century United States may have been a limited liability joint stock company that a part of the Oneida Community[BIO] proposed in 1880 but never established.[59]

Why was the Kirtland Safety Society sometimes called an "Anti-Banking" society?

The Kirtland Safety Society was initially intended to be a bank,[60] but, because it was unable to secure an Ohio charter,[61] it was reorganized as an "anti-banking" society.[62] The term "anti-banking" did not mean that they were against banking, but rather, it was a term to make it clear that they were not a state-chartered institution.[63]

Was the Kirtland Safety Society legal?

No, not as originally conceived. The Kirtland Safety Society was denied a bank charter, reportedly because the applicants were Mormons,[64][65] but this may not be the case as there was only one charter approved approved between 1835–36.[66] In early January 1837, the society was reorganized and began operating as an "unauthorized bank," which was common in Ohio at the time.[67]

Then, because Ohio recognized the legitimacy of banking charters from other states,[68] Joseph Smith and others involved with the Kirtland Safety Society met with officials of the Bank of Monroe in Michigan in February 1837 to seek a merger to operate as a subsidiary of the Bank of Monroe.[69]

How was the Kirtland Safety Society financed?

Beginning in October 1836, funds were raised by selling stock in the Kirtland Safety Society.[70] It is also likely that land purchased in the Kirtland area by Joseph Smith and other Church leaders in September and October 1836 served as security for the bank.[71]

Wasn't the initial capital stock for the Kirtland Safety Society set at an extravagant amount?

Probably.[72] The initial capital stock for the Kirtland Safety Society was set at $4 million,[73] whereas community banks of the time are reported to have been typically capitalized with $100,000 to $300,000.[74][75]

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201 Primary Sources

Footnotes

BIOJoseph Smith, Jr.
Joseph Smith (1805–1844) organized The Church of Jesus Christ of Latter-day Saints. Born in Sharon, Vermont, he began to experience visions of deity and angels at a young age. One vision featured the Angel Moroni, who revealed the location of gold plates with an account of ancient Americans. He translated this record and published it as The Book of Mormon. He continued to receive revelations throughout his life which serve as the foundation for the Church's doctrine today. He led the Latter-day Saints across the country from New York to Illinois. In 1844, he was martyred while awaiting trial in Carthage, Illinois.
BIOOliver Cowdery
Oliver Cowdery (1806–1850) was a scribe for the Book of Mormon and served as one of the Book of Mormon's Three Witnesses. In 1838, he was excommunicated from the church for a number of reasons, including encouraging lawsuits against the Church and defaming Joseph Smith by accusing him of adultery. He returned to the faith near the end of his life and never denied his testimony of the Book of Mormon's veracity.
BIOSidney Rigdon
Sidney Rigdon (1793–1876) was a Campbellite minister in Pennsylvania but joined the Church in 1830. He was a gifted orator and served as a member of Joseph Smith's First Presidency. He ran as Joseph Smith's vice presidential candidate in 1844. After Joseph Smith's death, he claimed to be Joseph Smith's successor in opposition to the Quorum of the Twelve. He was excommunicated and went on to establish "The Church of Jesus Christ" in Friendship, New York, where he lived until his death.
BIOHyrum Smith
Hyrum Smith (1800–1844) was born in Tunbridge, Vermont. He was the older brother of Joseph Smith, who organized the Church of Jesus Christ of Latter-day Saints, and served as the Church's second patriarch. He was one of the Eight Witnesses to the Book of Mormon. In 1837, he became Second Counselor in the First Presidency, and the following year, he was imprisoned alongside Joseph Smith in Liberty Jail. Hyrum Smith became the Church's new patriarch in 1841 after the death of his father, Joseph Smith, Sr., in Nauvoo. Hyrum also served as a member of the City Council, the Nauvoo Legion, and the Council of Fifty. He was martyred along with Joseph Smith in Carthage Jail in 1844.
BIOWilliam Miller
William Miller (February 15, 1782–December 20, 1849) was an American preacher who is best known for founding the Millerite movement, which predicted the Second Coming of Christ. His teachings and the subsequent movement had a significant impact on American religious history and laid the groundwork for the Seventh-day Adventist Church. Around 1818, he concluded that the Second Coming of Christ would occur around 1843 or 1844. This conclusion was based on his interpretation of biblical prophecies, particularly from the books of Daniel and Revelation. The failure of Miller's prediction led to widespread disillusionment among his followers. Many left the movement, but some continued to believe in Miller's interpretation of prophecy. This event prompted a period of reflection and reorganization among the remaining adherents, eventually leading to the formation of new religious groups, including the Seventh-day Adventist Church.
BIOWilliam Smith
William Smith (1811–1893) was a brother of Joseph Smith and served as one of the original members of the Quorum of the Twelve Apostles. William became the Church's patriarch following Hyrum Smith's death in 1844. William was excommunicated when he publicly accused Brigham Young of covertly practicing polygamy.
BIODon Carlos Smith
Don Carlos Smith (1816–1841) was the youngest brother of Joseph Smith, the founder of The Church of Jesus Christ of Latter-day Saints. Baptized into the church in its early years, Don Carlos became a trusted leader. In 1838, he was appointed as the president of the High Priests’ Quorum in Far West, Missouri, and later served as the editor of the Times and Seasons, an important Latter-day Saint newspaper in Nauvoo, Illinois. Known for his deep loyalty to his family and the church, he was also a captain in the Nauvoo Legion. Tragically, Don Carlos died at the young age of 25, likely from malaria, in 1841, leaving behind his wife Agnes and three daughters. His premature death profoundly impacted Joseph Smith and the Smith family.
BIOPeter French
Peter French (ca. 1774–after 1850) was a farmer, tavern keeper, and early hotelier in Ohio. Born in New York, French moved to the Western Reserve (now Lake County, Ohio) in 1799 and became one of the first settlers of Kirtland by 1811. Known as a community leader, he was listed among Kirtland’s town proprietors in 1818 and served in various civic roles, including overseer of the poor and highway supervisor. He was also involved in founding the Mentor Library Company in 1819. In 1827, French built a hotel in Kirtland, which he later sold, along with other property—including the temple lot—to Joseph Smith and church leaders between 1833 and 1836. By 1850, French had relocated to Mentor, Ohio, where he continued to live into his later years. His involvement in the Kirtland community made him a notable figure during the formative years of both the town and the early Latter-day Saint movement.
BIOWilford Woodruff
Wilford Woodruff (1807–1898) was the fourth president of the Church of Jesus Christ of Latter-day Saints. He joined the faith in 1833 and became an apostle in 1839. He served as an apostle until he became President of the Church in 1889.
BIOSamuel Rounds
Samuel Rounds (ca. 1807–after 1887) was a builder, brick mason, farmer, and opponent of the early Latter-day Saints. Born in Massachusetts, Rounds moved to Ohio by 1834 and became involved in legal actions against Joseph Smith and Sidney Rigdon. In 1837, he participated in lawsuits related to the Kirtland Safety Society, accusing church leaders of illegally operating the banking venture without a state charter. His legal conflicts with the Saints reflect the broader opposition they faced in Ohio during this turbulent period, contributing to tensions that eventually drove them out of Kirtland.
BIOGrandison Newell
Grandison Newell (2 May 1785 – 10 June 1874) was a farmer, clockmaker, furniture maker, and businessman who became a prominent opponent of Joseph Smith and the early Latter-day Saints. Born in Barkhamsted, Connecticut, he married Betsy Smith in 1807 and relocated multiple times before settling in Mentor, Ohio, in 1819. There, Newell expanded his business interests into manufacturing, banking, and commerce. Newell is best known for his conflict with Joseph Smith during the Kirtland period. He, along with Samuel Rounds, engaged in legal disputes with Smith and Sidney Rigdon over the controversial Kirtland Safety Society, a banking venture started by church leaders. In 1837, Newell accused Joseph Smith of plotting to assassinate him, though the allegations did not hold up in court. His opposition to the Saints played a role in increasing social and legal pressures that contributed to the church's departure from Kirtland.
BIOLyman E. Johnson
Lyman E. Johnson (1811–1856) was one of the original members of the Quorum of the Twelve Apostles in the Church of Christ, later known as The Church of Jesus Christ of Latter-day Saints. Called as an apostle in 1835 at the age of 23, he was known for his early missionary efforts, particularly in New York and New England. Johnson, however, became disaffected with church leadership following internal conflicts in Kirtland, Ohio, and was excommunicated in 1838. He spent the remainder of his life engaged in law and business, passing away in 1856 after drowning in the Mississippi River.
BIOOrson Pratt
Orson Pratt (1811–1881) was born in Hartford, New York, and was an apostle for The Church of Jesus Christ of Latter-day Saints. He was called on many missions. He was excommunicated from the Church in August 1842, after allegations of Joseph Smith's impropriety. Pratt was rebaptized in January 1843 and served as a leading pamphleteer for the Church and defender of the faith.
BIOWilliam Marks
William Marks (1792–1872) was a prominent leader in the early Latter-day Saint movement. Baptized in 1835, he quickly rose to positions of influence, becoming president of the church’s stake in Kirtland, Ohio, and later the stake president in Nauvoo, Illinois. Known for his opposition to polygamy, Marks grew uneasy with some of the more controversial teachings introduced by Joseph Smith in Nauvoo. After Joseph Smith’s death in 1844, Marks initially aligned with Sidney Rigdon’s leadership claim but soon joined with James Strang’s faction. Eventually, he rejected both and became a key figure in the formation of the Reorganized Church of Jesus Christ of Latter Day Saints (RLDS), supporting Joseph Smith III’s leadership. Marks served as a counselor in the RLDS First Presidency until his death in 1872.
BIOOliver Granger
Oliver Granger (1794–1841) was an early member of the Church of Jesus Christ of Latter-day Saints, known for his faithfulness and trustworthiness. A former War of 1812 veteran and merchant, he joined the church in the 1830s. Granger was tasked by Joseph Smith with resolving church debts during the financial crisis in Kirtland, Ohio. Despite the difficulty of the assignment, he carried it out honorably, earning the deep respect of church leaders. In Doctrine and Covenants 117:12–15, Joseph Smith praised Granger, promising his name would be held in sacred remembrance. Granger later moved to Far West, Missouri, and then to Nauvoo, Illinois, and finally back to Kirtland, Ohio, where he passed away in 1841.
BIOOneida Community
The Oneida Community was a 19th-century utopian religious commune founded in 1848 in Oneida, New York, by John Humphrey Noyes. The community practiced "complex marriage," where all members were considered to be married to each other, rejecting monogamy. They also emphasized communal ownership, mutual criticism, and gender equality in work. Known for their focus on spiritual perfection and economic success, they produced goods such as silverware, which became a lasting legacy. Internal conflicts and legal pressures led to the commune's disbandment in 1881, transitioning into the Oneida silverware company.
[1]↩︎
The original name of the institution, on November 2, 1836, was the "Kirtland Safety Society." But in January 1837, it was retitled the "Kirtland Safety Society Anti-Banking Company."
- Text of the Constitution of the Kirtland Safety Society Bank from November 2, 1836.
- The text of the Articles and Agreements of the Kirtland Safety Society Anti-Banking Company from January 2, 1837.
[2]↩︎
"The Constitution of the Kirtland Bank, 2 November 1836," published in the December 1836 issue of the Messenger and Advocate, listed Joseph Smith, Sidney Rigdon, and Oliver Cowdery as the founding members.
- Text of the Constitution of the Kirtland Safety Society Bank from November 2, 1836.
[3]↩︎
Joseph Young, in a letter dated November 18, 1880, wrote the following to Lewis Harvey:
The prophet had conceived a plan of instituting a Bank, with a view of relieving their financial embarrassments which all the saints believed, that it met with the approval and favor of God.
- Writing in November 1880, Joseph Young informs Lewis Harvey that the Kirtland Bank is a stumbling block for Church members.
[4]↩︎
On September 3, 1837, Joseph Smith reorganized Church leadership in Kirtland, Ohio, following dissension among Church leadership due to the failure of the Kirtland Safety Society. On November 1837, the Kirtland Safety Society ceased all operations.
[5]↩︎
The organization's original constitution, dated November 2, 1836, called it "the Kirtland Safety Society Bank."
- Text of the Constitution of the Kirtland Safety Society Bank from November 2, 1836.
[6]↩︎
On November 2, 1836, Joseph reported:
President O[liver] Cowdery was delegated to Philadelphia [HC 2:467] to procure plates for the Institution; and Elder O[rson] Hyde, to repair to Columbus, with a petition to the Legislature of Ohio, for an act of incorporation, which was presented at an early period of their session, but 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 other, thus elder Hyde was compelled to return without accomplishing his this object of his Mission, while elder Cowdery succeeded, in at a great expence, in procuring the plates, and bringing them to Kirtland.
- Joseph reports the establishment of the Kirtland Bank and the procuring of plates for the bank; petition to Ohio legislature for an act of incorporation was not successful.
[7]↩︎
The change in name from "Kirtland Safety Society" to "Kirtland Safety Society Anti-Banking Company" took place on January 2, 1837 in “Articles of Agreement for the Kirtland Safety Society Anti-Banking Company, 2 January 1837." The articles read:
We, the undersigned subscribers, for the promotion of our temporal interests, and for the better management of our different occupations, which consist in agriculture, mechanical arts, and merchandising; do hereby form ourselves into a firm or company for the before mentioned objects, by the name of the “Kirtland Safety Society Anti-Banking Company,” and for the proper management of said firm, we individually and jointly enter into, and adopt, the following Articles of Agreement.
As The Joseph Smith Papers website notes:
The change in the name reflected the fact that the Kirtland Safety Society was not a state-chartered institution and could therefore conduct banking services only in an unofficial capacity.
It also added:
This term is misleading. Unlike the anti-bank wing of the Democratic Party, which opposed paper currency and the proliferation of banks, the stockholders of the Kirtland Safety Society were not opposed to banking and continued to run their institution as a bank.
- The Joseph Smith Papers website discusses the history of the Kirtland Bank.
- The text of the Articles and Agreements of the Kirtland Safety Society Anti-Banking Company from January 2, 1837.
[8]↩︎
Latter-day Saint researcher R. Mckay White said Joseph and the other leaders called it an "anti-bank" because of "precedent set by other unchartered banks in Ohio and adjoining states."
Echoing this, legal historian Jeffrey N. Walker noted that the change in name was "an apparent effort to further evidence and to give full public notice of this important change in the structure and legal form of the Society from a state-chartered corporation to a joint stock company."
- R. McKay White discusses the Kirtland Bank; concluded that Joseph was not guilty of any illegal behavior that led to the bank's failure.
- Jeffrey N. Walker discusses the Kirtland Bank and the lawsuit brought against Joseph.
[9]↩︎
Latter-day Saint historian Max H. Parkin explained that the Kirtland Safety Society "issued stock certificates based on the capital subscribed by stockholders which were circulated as regular bank-issued money, with the private land owned by the stockholders along with specie (gold and silver) received becoming the capital basis upon which the firm operated."
He also added:
The Kirtland Safety Society gave out special papers called stock certificates to people who invested money in the company. These certificates were used like regular money. The value of these certificates was backed by the land and gold or silver that the investors owned, which helped support the company’s operations.
- Max H. Parkin discusses the establishment of the "Kirtland Safety Society Anti-Banking Company," a joint-stock association, on January 2, 1837.
[10]↩︎
“Articles of Agreement for the Kirtland Safety Society Anti-Banking Company, 2 January 1837" reads:
Art. 14th. All notes given by said society, shall be signed by the Treasurer and Secretary thereof, and we the individual members of said firm, hereby hold ourselves bound for the redemption of all such notes. Art. 15. The notes given for the benefit of said society, shall be given to the Treasurer, in the following form: “Ninety days after date, we jointly and severally promise to pay A. B. or order [blank] dollars and [blank] cents, value received.”
- The text of the Articles and Agreements of the Kirtland Safety Society Anti-Banking Company from January 2, 1837.
[11]↩︎
Article 15 of "Articles of Agreement for the Kirtland Safety Society Anti-Banking Company, 2 January 1837" reads:
A record of which shall be made in the books at the time, of the amount, and by whom given, and when due—and deposited with the files and papers of said society.
- The text of the Articles and Agreements of the Kirtland Safety Society Anti-Banking Company from January 2, 1837.
[12]↩︎
Section 1 of "An Act to prohibit the issuing and circulating of unauthorised Bank paper" (January 27, 1816) reads:
Be it enacted by the general assembly of the state of Ohio, That if any person shall, within this state, act as an officer or monied association, coming within the description contained in the second selection of this act, except a bank incorporated by a law of this state, he shall, for every such offence, forfeit and pay them the sum of one thousand dollars.
- Text of the Act of January 27, 1816, passed by the General Assembly of Ohio, prohibiting the issuing and circulating of unauthorized bank paper.
[13]↩︎
Section 23 of "An Act, to regulate judicial proceedings where banks and bankers are parties, and to prohibit issuing bank bills of certain descriptions" (January 24, 1824) reads:
That no action shall be brought upon any notes or bills hereafter issued by any bank, banker or bankers, and intended for circulation, or upon any note, bill, bond or other security given, and made payable to any such bank, banker or bankers, unless such bank, banker, or bankers; shall be incorporated and authorized by the laws of this state to issue such bills and notes, but that all such notes, and bills, and bonds, and other securities shall be held and taken in all courts as absolutely void.
- Text of the the Act of 1824, issued by the Ohio General Assembly, prohibiting unauthorized issuing of banknotes.
[14]↩︎
The revelation, now canonized as section 64:27-29 of the Doctrine and Covenants, reads:
27. Behold, it is said in my laws, or forbidden, to get in debt to thine enemies; 28. But behold, it is not said at any time that the Lord should not take when he please, and pay as seemeth him good. 29. Wherefore, as ye are agents, ye are on the Lord’s errand; and whatever ye do according to the will of the Lord is the Lord’s business.
- Section 64 of the Doctrine and Covenants warns the Church from getting into debt from their enemies.
[15]↩︎
Section 109 of the Doctrine and Covenants records Joseph dedicating the Kirtland Temple.
- Doctrine and Covenants Section 109 includes the text of Joseph's prayer dedicating the Kirtland Temple on March 27, 1836.
[16]↩︎
While the exact figure is unknown, some report the total cost of the construction to be between $30,000 and $40,000. One account from George A. Smith states the overall cost was around $100,000.
[17]↩︎
Leland Homer Gentry, in his PhD thesis on the history of the Church during the Missouri period, offered the following break-down of debts the Church had incurred before the establishment of the Kirtlank Bank:
The Church in Ohio, like the one in Missouri, was heavily in debt. Three principal items of expense were responsible for this fact: (1) a six-thousand-dollar debt which had accumulated from repeated attempts to recover the Church’s lands in Jackson County; (2) a thirteen-thousand-dollar debt incurred in building the Kirtland Temple; (30 a debt of unspecified amount for the purchase of lands which the Church could settle in peace.
- Leland Homer Gentry, in a PhD thesis on the history of the Church during the Missouri period, provides a discussion of the failure of the Kirtland Bank.
[18]↩︎
The revelation, canonized as section 111 of the Doctrine and Covenants, instructs the Saints to "Concern not yourselves about your debts, for I will give you power to pay them."
- Revelation to Joseph where the Lord promises that the Church will be given the power to pay off their debts.
[19]↩︎
In his letter, Oliver wrote:
There is money yet in Wall street, and "Draper, Underwood," and others, ready to help incorporated bodies to plates and dyes, to make more. Our Government is creating a large Custom House on the corner of Nassau and Wall streets, which, when completed, will be very grand.
- In a letter from August 1836, Oliver Cowdery notes that he is "ready to help incorporated bodies to plates and dyes" to print banknotes.
[20]↩︎
Mark Lyman Staker wrote:
Church leaders had already purchased some property from Peter French in 1833 that would serve as the center of their planned city. But the continuing gathering made it clear that they would need additional property. It is not clear exactly when they decided to establish a bank and acquire land; but Joseph Smith and his companions returned form Massachusetts on September 12 or 13 with a clear sense of direction.
Elsewhere, Staker noted that:
After Joseph Smith, Sidney Rigdon, Hyrum Smith, and Oliver Cowdery reached Kirtland on September 12 or 13, 1836, from their trip to Salem, Massachusetts, the idea of a bank quickly became firmly established in the community. Brigham Young noted in is account book: “Oct. 15 [1836] B Young paid to the Bank this day $150 cents in silver.” Although bank deposits did not earn direct interest as they would later in the century, economists at the time encouraged people to deposit their money in banks as a means of fostering saving in a protected environment.
- Mark Staker discusses the economics of Kirtland and the events that led up to the establishment and failure of the Kirtland Bank.
[21]↩︎
Joseph Young, in a letter dated November 18, 1880, wrote the following to Lewis Harvey:
The prophet had conceived a plan of instituting a Bank, with a view of relieving their financial embarrassments which all the saints believed, that it met with the approval and favor of God.
- Writing in November 1880, Joseph Young informs Lewis Harvey that the Kirtland Bank is a stumbling block for Church members.
[22]↩︎
The agreement read:
Personally appeared Wm. Miller Wm. Smith Don C. Smith & Joseph Smith Jr. who acknowledged that they did Sign and seal the foregoing instrument; and that the same is their free act and deed. I further certify that I did examine the said Phebe Miller, Caroline Smith Agnes M Smith & Emma Smith separate and apart from her said husband and did then and there make known to her the contents of the foregoing instrument; and upon that examination she declared that she did voluntarily sign seal and acknowledge the same and that she was still satisfied therewith.
- Mortgage agreement between Joseph, William Miller, William Smith, and Don Carlos Smith with Peter French for land in Kirtland.
[23]↩︎
In the same document, Joseph Smith reported the denial of a charter on November 2, 1836:
On the 2d of November the Brethren at Kirtland drew up certain articles of Agreement, preparatory to the organization of a Banking Institution, to be called the Kirtland Safety society. President O[liver] Cowdery was delegated to Philadelphia [HC 2:467] to procure plates for the Institution; and Elder O[rson] Hyde, to repair to Columbus, with a petition to the Legislature of Ohio, for an act of incorporation, which was presented at an early period of their session, but 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 other, thus elder Hyde was compelled to return without accomplishing his this object of his Mission, while elder Cowdery succeeded, in at a great expence, in procuring the plates, and bringing them to Kirtland.
- Joseph reports the establishment of the Kirtland Bank and the procuring of plates for the bank; petition to Ohio legislature for an act of incorporation was not successful.
[24]↩︎
Article I of the "Constitution of the Kirtland Safety Society Bank" (November 2, 1836) reads:
The capital stock of said Bank shall not be less than four millions of dollars; to be divided into shares of fifty dollars each; and may be increased to any amount, at the discretion of the directors.
- Text of the Constitution of the Kirtland Safety Society Bank from November 2, 1836.
[25]↩︎
Historian Ernest Ludlow Bogart, in Financial History of Ohio, noted:
Specie payments had been suspended in Ohio, in common with the rest of the country, after the panic of 1837. The following year all bank notes under $3 were forbidden after July 4, 1839; all those under $5 and between $5 and $10 after October 1, 1839. If any bank offended it was to pay a fine of $50 for each unauthorized note, or lose its banking privileges. Another law in 1840 showed how ineffective this legislation had been. Small notes were once more forbidden, as were post notes and those payable elsewhere than at place of issue. All notes were declared redeemable in specie, no broker was to pay out illegal notes, and no state officer was to receive or pay out notes under $5. This law was successful in reducing somewhat the circulation of unauthorized notes.
Latter-day Saint historian Scott H. Partridge wrote:
At the time the Ohio banks declined the redemption of their bills with specie, they were apprised that the banks of the states North and South, East and West, had generally, if not universally, suspended specie payments. The Ohio banks were well aware that a continuance of specie payments, under such conditions, would subject them to heavy and constant drafts on their coin; and that, too, by banks of other states which had closed their doors to this mode of payment.
- Ernest Ludlow Bogart reports on the shift to state bank money in Ohio; notes the Ohio legislature made it illegal for any person to act as an agent or circulate notes for the Bank of the United States.
- Scott H. Partridge discusses the failure of the Kirtland Bank and the question of how much blame Joseph has for such; also discusses contemporary banks and their failures.
[26]↩︎
Article 1 of the articles reads:
The capital stock of said society or firm shall not be less than four millions of dollars; to be divided into shares of fifty dollars each; and may be increased to any amount, at the discretion of the managers.
- The text of the Articles and Agreements of the Kirtland Safety Society Anti-Banking Company from January 2, 1837.
[27]↩︎
In his journal for January 6, 1837, Wilford Woodruff recorded Joseph as teaching the following:
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 & support the above named institution & protect it so that every weapen formed against it may be broaken & come to nought while the Kirtland Safety Society shall become the greatest of all institutions on EARTH.
- Wilford Woodruff records Joseph teaching that, if the Saints were to be faithful, the Kirtland Bank "shall become the greatest of all institutions on earth."
[28]↩︎
The summons, issued February 9, 1837, reads:
To the Sheriff of our said County. . . Greeting:— We command you that you summon Joseph Smith Junior if he be found in your bailiwick to appear before our Court of Common Pleas, to be held at the court house in the town of Chardon the twenty first day of March next to answer Samuel D. Rounds who sues as well for the State of Ohio as for himself in a plea of debt for one thousand dollars, damage one thousand dollars, as is said. Herein fail not but of this Writ and your service make due return. Witness the Honourable Van R. Humphrey President of our said Court at Chardon the ninth day of February Anno Domini one thousand eight hundred and thirty seven. D[avid] D. Aiken Clerk.
- Summons issued by Sheriff Abel Kimball for Joseph on October 9, 1837.
[29]↩︎
Wilford Woodruff recorded that Joseph taught:
The city extended to the east, west, north, & south, steam boats will come puffing into the city our Goods will be conveyed upon rail roads from Kirtland to many places & probably to Zion. houses of worship would be reared unto the most high beautiful streets was to be made for the Saints to walk in Kings of the earth would come to behold the glory thereof.
- Wilford Woodruff reports Joseph and Hyrum Smith teaching that Kirtland be a center of commerce where "Kings of the earth would come to behold the glory thereof."
[30]↩︎
Lyman E. Johnson and Orson Pratt addressed their letter as "To the Bishop & his council in Kirtland, the Stake of Zion," and wrote:
We prefer the following charges against Pres. Joseph Smith, Jr. viz., for lying and misrepresentation—also for extortion—and for speaking disrespectfully against his brethren behind their backs.
- Lyman E. Johnson and Orson Pratt accuse Joseph of lying, misrepresentation, and extortion.
[31]↩︎
Reflecting on the failure of the Kirtland Bank, Joseph wrote:
At this time <a> spirit of Speculation, in lands and property of all kinds, which was so prevalent throughout the whole nation, was taking deep root in the church, as the fruits of this spirit, evil surmisings, fault finding, disunion, dissention and apostacy followed in quick succession, and it seemed as though all the powers of earth and hell were combining their influence in an especial manner to overthrow the church at once, and make a final end. Other banking [HC 2:487] institutions refused the “Kirtland Safety Society’s Notes; The enemy abroad and apostates in our midsts united in their schemes; flour and provisions were turned toward other markets
- Joseph, reflecting on the failure of the Kirtland Safety Society, notes that a spirit of speculation was prevalent in the Church; no quorum in the Church was exempt from the influence of "those false spirits."
[32]↩︎
Land speculation involves purchasing undeveloped or underutilized land with the expectation that its value will increase due to future development, economic changes, or shifts in market demand. Speculators aim to profit by selling the land at a higher price, often taking on high risk due to uncertain future conditions.
According to the Smithsonian Museum, this was a "risky nineteenth-century investment practice or strategy. . . . During the peak time of U.S. westward expansion, large amounts of public land was opened for private speculation."
- Definition of "land speculation" from the Smithsonian American Art Museum.
[33]↩︎
Commenting on how speculation led to both the failure of the Kirtland Bank and his eventual resignation from his office, Joseph wrote:
Some time previous to this I resigned my office in the “Kirtland Safety Society” disposed of my interest therein, and withdrew from the institution: being fully aware, after so long an experiment, that no institution of the kind, established upon just and righteous principles, for a blessing not only to the church, but the whole nation, would be suffered to continue its operations in such an age of darkness, speculation, and Wickedness.
- Joseph records how he resigned his office from the Kirtland Bank; the bank was not successful due to the "darkness, speculation, and wickedness" of the time.
[34]↩︎
In the August 1837 issue of the Messenger and Advocate, Joseph would warn Church members about speculators "palming upon them" now-worthless Kirtland bills:
To the brethren and friends of the church of Latter Day Saints, I am disposed to say a word relative to the bills of the Kirtland Safety Society Bank. I hereby warn them to beware of speculators, renegadoes and gamblers, who are duping the unsuspecting and the unwary, by palming upon them, those bills, which are of no worth, here. I discountenance and disapprove of any and all such practices. I know them to be detrimental to the best interests of society, as well as to the principles of religion.
- Joseph cautions Church members about speculators who are "palming upon them" bills from the Kirtland Bank which are worthless.
[35]↩︎
The meeting took place on September 3, 1837, and the minutes included the following:
The question was then asked the church if the Twelve apostles should hold their office of Apostleship They were named by the President individually Voted that Thomas. B. Marsh David W. Patten Brigham Young Heber. C. Kimble [Kimball] Orson Hyde P. P. Prath [Parley P. Pratt] Orson Pratt William Smith Wm E. McLellin should retain their office of apostleship; Luke Johnson, Lyman Johnson John F Boyngton [Boynton], were rejected from serving in that office Privilege was given to those that were rejected of making their confession if they had any to make.
- Minutes of the September 3, 1837 meeting where Joseph reorganized the Church in Kirtland, Ohio.
[36]↩︎
Apostles such as Thomas Marsh, David Patten, and William Smith would dissent and would later confess their wrongdoings to Church leadership. In her letter to her brother, James C. Snow, dated July 22, 1837, Eliza Ann Carter recorded that, on the afternoon of July 8, 1837:
Confessions were made by William Smith, Parley P. Pratt, Orson Pratt, Sidney Rigdon and Joseph Smith, Jr. William Smith made a very humble confession to the Church with regard to his conduct the winter past—he said he was determined to forsake all and go forth and proclaim the Gospel to the ends of the earth. As for Parley Pratt and Orson Pratt, they said they were truly convinced that the charges which were laid to Brother Joseph the season past ware actually false. They were now fully persuaded in their own minds that Joseph had done the best that he could–considering all things. They confessed that their minds had been darkened, their hearts hardened, and they had said many things against the Prophet that they ought not to have said.
- Eliza Ann Carter, in a letter to James C. Snow, reports on the confession of apostles such as Thomas Marsh, David Patten, and William Smith after dissenting from Joseph due to the Kirtland Bank.
[37]↩︎
Justice Samuel Rounds would charge Joseph a total of $1,024.10, comprising a fine of $1,000, plaintiff costs of $23.50, and defendant costs of $0.75.
- October 24, 1837 judgment against Joseph by Samuel Rounds, totaling $1,024.10; Grandison Newell received $604.50 from the sheriff.
[38]↩︎
In his essay, "Kirtland Economy," Latter-day Saint historian Larry T. Wimmer wrote:
Heavy demand for redemption of the Kirtland Safety Society's notes led to the suspension of specie payments within its first month of operation. Thereafter, the notes were backed by land values, rather than specie, and almost immediately its notes circulated at a heavy discount. It was further buffeted by the nationwide banking panic of May 1837, when all Ohio banks suspended specie payment. The tenacious Kirtland bank, or anti-bank, continued its faltering operations until November, when it closed its doors for the last time.
- Larry T. Wimmer discusses the economy during the Kirtland era of Church history, including the history of the Kirtland bank.
[39]↩︎
On January 1, 1838, Joseph stated:
A new year dawned upon the church in Kirtland in all the bitterness of the spirit of apostate Mobocracy; which continued to rage and grow hotter and hotter until Elder [Sidney] Rigdon and myself were obliged to flee from its dealy influence as did the apostles and prophets of old, and as Jesus Said “when they persecute you in one city flee to another:” and on the evening of the 12th of Jan <12. Joseph & Sidney left Kirtland for Far West.> <about 10 o’clock> we left Kirtland, on horseback, to escape Mob violence which was about to burst upon us under the color of Legal process to cover their hellish designs, and save themselves from the just jud[g]ment of the Law.
- Joseph, on January 1, 1838, reports a "spirit of apostate mobocracy" continues to rage against him and Sidney Rigdon; they fled Kirkland to escape mob violence.
[40]↩︎
"Specie" was defined in Webster's 1828 Dictionary as "Coin; copper, silver or gold coined and used as a circulating medium of commerce.."
- Webster's 1828 dictionary defines of "Specie."
[41]↩︎
In his letter, Warren Parrish wrote that:
I have listened to [Joseph Smith] 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 (the Bank of Monroe excepted,) 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. I have been astonished to hear him declare that we had 60,000 Dollars 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 the institution, knew that there was at least $150,000.
- In a letter to the editor of the Painesville Republican, Warren Parrish discusses the Kirtland Bank; notes he was astonished to hear Joseph declare that the bank had $60,000 in specie and $600,00 at their command.
[42]↩︎
The cost of the legal judgments against Joseph Smith and Sidney Rigdon were assigned to their agents, William Marks and Oliver Granger, for $1,600. Grandison Newell's report of the verdict on October 24, 1837, reads:
For and in consideration of Sixteen hundred dollars to me in hand paid by William Marks and Oliver Granger I do hereby sell assign and set over to the Said William Marks and Oliver Granger two Judgments in favor of Samuel D. Rounds and assigned to me by said Rounds against Joseph Smith jr and Sidney Rigdon of one thousand dollars each which Judgments were obtained at the Court of Common Pleas holden at Chardon in and for the County of Geauga, to wit, on the 24th day of October 1837, and I do agree to pay all costs that has accrued on said Judgments up to this date.
- Grandison Newell acknowledges that William Marks and Oliver Granger have been assigned $1,600 judgement against Joseph, acting as his agents.
[43]↩︎
Joseph Smith claimed:
Parrish stole the paper out of the institution, and went to buying bogus or counterfeit coin with it, becoming a partner with the Tinker’s creek blacklegs, and in company with Julias [Julius] Granger, in buying different kinds of property with it, and devoting it to his own use, and soon entirely destroyed the institution.
George A. Smith would repeat the charge of theft against Warren Parrish on November 15, 1864:
Warren Parrish was the teller of the bank, and a number of other men who apostatized were officers. They took out of its vault, unknown to the President or cashier, a hundred thousand dollars, and sent their agents around among the brethren to purchase their farms, wagons, cattle, horses and every thing they could get hold of. The brethren would gather up this money and put it into the bank, and those traitors would steal it and send it out to buy again, and they continued to do so until the plot was discovered and payment stopped. It was the cursed apostates—their stealing and robberies, and their infernal villainies that prevented that bank being conducted as the Prophet designed. If they had followed the counsel of Joseph, there is not a doubt but that it would have been the leading bank in Ohio, probably of the nation.
- Joseph, in the Elders' Journal, discusses the Kirtland Bank and Warren Parrish and Grandison Newell's charges against him.
- George A. Smith, in a sermon from 1864, accuses Warren Parrish and other dissenters of stealing from the safe of the Kirtland Bank.
[44]↩︎
Latter-day Saint historian Elizabeth Kuehn noted:
Although church members had sacrificed a great deal for the Temple, much of the construction costs were borne by the church, namely the temple building committee, resulting in thousands of dollars of debts. Joseph Smith and other church leaders were aware of and concerned by the substantial debts amassed in building the Temple, but this was not the crippling debt it has sometimes been made out to be. Church leaders were worried, not desperate.
In her presentation slides, Kuehn estimated that the Church's debt, as of March 1836, was between $10,000 and $20,000.
- Elizabeth A. Kuehn discusses the crisis of 1837 and the establishment and failure of the Kirtland Safety Society.
[45]↩︎
Leland Homer Gentry, in his PhD thesis on the history of the Church during the Missouri period, offered the following break-down of debts the Church had incurred before the establishment of the Kirtlank Bank:
The Church in Ohio, like the one in Missouri, was heavily in debt. Three principal items of expense were responsible for this fact: (1) a six-thousand-dollar debt which had accumulated from repeated attempts to recover the Church’s lands in Jackson County; (2) a thirteen-thousand-dollar debt incurred in building the Kirtland Temple; (3) a debt of unspecified amount for the purchase of lands which the Church could settle in peace.
- Leland Homer Gentry, in a PhD thesis on the history of the Church during the Missouri period, provides a discussion of the failure of the Kirtland Bank.
[46]↩︎
In a 2003 paper delivered to the Mormon History Association, Elwin C. Robison estimated that the total cost of the Kirtland Temple was approximately $30,000.
- Elwin C. Robison discusses the overall cost of the Kirtland Temple; concludes it may have cost overall $30,000.
[47]↩︎
Latter-day Saint historian Mark Lyman Staker, in a book on the historical setting for Joseph Smith's Ohio revelations, wrote:
Despite uncertainties about total cost, the building clearly incurred expenses much more significant than those initially anticipated. Cost estimates range between $30,000 and $100,000 with the actual cost probably reaching a little over $40,000.
- Mark Staker estimates the total cost of the construction of the Kirtland Temple to be "a little over $40,000."
[48]↩︎
According to the CPI Inflation Calculator, $30,000 in 1837 would be worth $976,037.50 in 2024, while $40,000 would be worth $1,301,383.33 in 2024.
- CPI Inflation Calculator estimates $40,000 in 1837 would be worth $1,301,383.33 today.
- CPI Inflation Calculator estimates $30,000 in 1837 would be worth $976,037.50 in 2024.
[49]↩︎
In a sermon delivered on March 18, 1855, George A. Smith taught that the total cost of the construction of the Kirtland Temple "was not less than one hundred thousand dollars." According to the CPI Inflation Calculator, $100,000 in 1837 would be worth $3,253,458.33 in 2024.
However, Elwin C. Robison, in a paper on the cost of the Kirtland Temple, wrote that George A. Smith was conflating some of the expenses of the Kirtland Temple with those of the later Nauvoo Temple. He said:
George A. Smith’s valuation of over $100,000 could be the result of some hyperbole, but may reflect the actual cost of the larger cut stone Nauvoo Temple. In any event, given all that George A. Smith endured, it is certain that he felt the effort of the Saints in building the Kirtland Temple was worth 100 grand.
[50]↩︎
Joseph Young recalled in an 1880 letter: "The prophet had conceived a plan of instituting a Bank, with a view of relieving their financial embarrassments which all the saints believed, that it met with the approval and favor of God."
- Writing in November 1880, Joseph Young informs Lewis Harvey that the Kirtland Bank is a stumbling block for Church members.
[51]↩︎
As summarized by the Joseph Smith Papers website:
A bank, if successful, could provide considerable financial aid to communities by supplying residents with a local currency and a source of credit, thereby establishing a stronger foundation for the local economy and a better means to provide liquidity for land purchases, construction, and mercantile activity.
- The Joseph Smith Papers website discusses the history of the Kirtland Bank.
[52]↩︎
Allen N. Berger and Christa H. S. Bouwman wrote, "The standard view of liquidity creation is that banks create liquidity by transforming illiquid assets into liquid liabilities."
As historian Elizabeth Kuehn noted:
A bank made sense for a growing community like Kirtland. Smaller frontier banks established by local members of the community were a common feature in nineteenth-century America. Banks allowed illiquid assets like land – the only real asset the Latter-day Saints had – to be used as collateral for loans, providing money the church and its members needed to buy land, build homes, and aid church members in Missouri.
- Elizabeth A. Kuehn discusses the crisis of 1837 and the establishment and failure of the Kirtland Safety Society.
- Allen N. Berger and H. S. Bouwman discuss the creation of liquidity by banks.
[53]↩︎
Latter-day Saint historian Dale W. Adams noted that there were many businesses (e.g., real estate associations, railroad companies, libraries) that were issuing banknotes in Ohio in the 1830s. For example:
The Granville Alexandrian Society Bank, for example, operated as a bank off and on from 1814 to 1741 under an act incorporating a library society. In several of these years this "bank" paid state taxes levied on all banks in Ohio. Another example of a quasi bank was the Ohio Railroad Company, which was incorporated by the state legislature in 1836. Located near Cleveland, this company interpreted its charter as allowing it to issue and circulate script. It started to do at about the same time as the Kirtland Bank. Over a period of just a few months, it issued almost $100,000 face value in script.
In a volume on the economic history of America, Herman E. Krooss noted that many institutions before the Civil War engaged in some type of commercial banking.
- Herman E. Krooss discusses early American commercial banking before the U.S. Civil War.
- Dale W. Adams examines the inability of the Kirtland Bank to receive a charter, a factor that would lead to its eventual failure.
[54]↩︎
Latter-day Saint historian Dale W. Adams wrote:
Even in the late 1830s some commercial firms with state charters of incorporation interpreted their charters as allowing them to carry out banklike functions. The Granville Alexandrian Society Bank, for example, operated as a bank off and on from 1814 to 1841 under an act incorporating a library society. In several of these years this “bank” paid state taxes levied on all banks in Ohio. Another example of a quasi bank was the Ohio Railroad Company, which was incorporated by the state legislature in 1836. Located near Cleveland, this company interpreted its charter as allowing it to issue and circulate script.
Adams also noted:
It appears that commercial firms were encouraged to conduct banklike business, even without state bank charters, by Whigs and people in the soft-money wing of the Democratic Party. Uniform opposition to these quasi banks did not appear until after most banking establishments in Ohio encountered serious financial problems as a result of the economic turmoil that began in 1873.
- Dale W. Adams examines the inability of the Kirtland Bank to receive a charter, a factor that would lead to its eventual failure.
[55]↩︎
The opening of the text of the Act of January 27, 1816, "An Act to prohibit the issuing and circulating of unauthorised Bank paper," reads:
Sec. 1. Be it enacted by the general assembly of the state of Ohio, That if any person shall, within this state, act as an officer or monied association, coming within the description contained in the second selection of this act, except a bank incorporated by a law of this state, he shall, for every such offence, forfeit and pay them the sum of one thousand dollars. Sec. 2. Be it further enacted, That every company or association that shall lend money, and shall issue by their officer or officers, or by any other person or persons, bonds, notes or bills, payable to bearer or payable to order, and endorsed in blank, or use other shift or device, whereby the bonds, notes, or bills given by such company or association or on their behalf, pass or circulate by delivery, shall be taken and deemed a bank within this act.
Historian William Graham Sumner provided the following background to the Act of 1816:
In 1815, Ohio commenced a war which she carried on longer and more vigorously, because apparently with less success, than any other State, against unauthorized bank notes. She also tried to impose taxation on her banks, and her first steps in this direction are especially noteworthy because they show that her attempt to tax the Bank of the United States, a few years later, was not an isolated act against that Bank. February 10, 1815, it was enacted that every banking company in the State should pay annually four cent on its dividends. If any bank failed to report, the Auditor was the levy one per cent on the normal capital of the bank. The Sheriff was to present the bill of the Auditor to the bank and if it was not paid at once, with four per cent additional for the Sheriff's fees, he was to levy on the specie and notes. If he could not obtain enough of these, he was to seize any other property of the bank, advertise, and sell it. All contracts with persons or firms issuing notes, without being authorized by law so to do, were to be void. Signing or issuing such notes was made punishable by imprisonment for one year and a fine not exceeding $5,000. The act was not to affect unincorporated banks which began before January 1, 1815, until after January 1, 1818.
- William Graham Sumner discusses the Act of 1816 issued by the Ohio General Assembly.
- Text of the Act of January 27, 1816, passed by the General Assembly of Ohio, prohibiting the issuing and circulating of unauthorized bank paper.
[56]↩︎
Section 23 of the Act of 1824 prohibits the unauthorized issuing of banknotes:
That no action shall be brought upon any notes or bills hereafter issued by any bank, banker or bankers, and intended for circulation, or upon any note, bill, bond or other security given, and made payable to any such bank, banker or bankers, unless such bank, banker, or bankers; shall be incorporated and authorized by the laws of this state to issue such bills and notes, but that all such notes, and bills, and bonds, and other securities shall be held and taken in all courts as absolutely void.
- Text of the the Act of 1824, issued by the Ohio General Assembly, prohibiting unauthorized issuing of banknotes.
[57]↩︎
This would later result in attempts to control the circulation of unauthorized banknotes in the 1830s. Ernest Ludlow Bogart, in his Financial History of Ohio, noted that, in 1838, all unincorporated companies were forbidden from issuing notes without authorization, and incorporated companies were not allowed to issue unauthorized notes under penalty of losing their charters.
- Ernest Ludlow Bogart reports on the shift to state bank money in Ohio; notes the Ohio legislature made it illegal for any person to act as an agent or circulate notes for the Bank of the United States.
[58]↩︎
The Protestant Bethmanns, according to historians Youssef Cassis and Philip L. Cottrell, "played a leading role in placing foreign securities, especially Austrian, in Frankfurt’s financial centre during the second half of the eighteenth century."
- Youssef Cassis and Philip L. Cottrell discuss the establishment of banks in Europe; notes that the Protestant Bethmanns played a leading role in placing foreign securities in Frankfurt's financial centre in the 18th-centry.
[59]↩︎
According to the document "Agreement to Divide and Organize, September 1, 1880," on August 20, 1880, the Oneida Community (a communitarian religious group in nineteenth-century America) "proposed to create a limited liability joint stock company – Oneida Community Limited – from the communal assets, with shares sold to current commune members according to a calculus determined solely by the commission."
- Text of the September 1, 1880 "Agreement to Divide and Reorganize" of the Oneida Community.
[60]↩︎
The organization's original constitution, dated November 2, 1836, called it "the Kirtland Safety Society Bank."
- Text of the Constitution of the Kirtland Safety Society Bank from November 2, 1836.
[61]↩︎
On November 2, 1836, Joseph reported:
President O[liver] Cowdery was delegated to Philadelphia [HC 2:467] to procure plates for the Institution; and Elder O[rson] Hyde, to repair to Columbus, with a petition to the Legislature of Ohio, for an act of incorporation, which was presented at an early period of their session, but 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 other, thus elder Hyde was compelled to return without accomplishing his this object of his Mission, while elder Cowdery succeeded, in at a great expence, in procuring the plates, and bringing them to Kirtland.
- Joseph reports the establishment of the Kirtland Bank and the procuring of plates for the bank; petition to Ohio legislature for an act of incorporation was not successful.
[62]↩︎
The change in name from "Kirtland Safety Society" to "Kirtland Safety Society Anti-Banking Company" took place on January 2, 1837, in “Articles of Agreement for the Kirtland Safety Society Anti-Banking Company, 2 January 1837":
We, the undersigned subscribers, for the promotion of our temporal interests, and for the better management of our different occupations, which consist in agriculture, mechanical arts, and merchandising; do hereby form ourselves into a firm or company for the before mentioned objects, by the name of the “Kirtland Safety Society Anti-Banking Company,” and for the proper management of said firm, we individually and jointly enter into, and adopt, the following Articles of Agreement.
- The text of the Articles and Agreements of the Kirtland Safety Society Anti-Banking Company from January 2, 1837.
[63]↩︎
The Joseph Smith Papers website explained:
The change in the name reflected the fact that the Kirtland Safety Society was not a state-chartered institution and could therefore conduct banking services only in an unofficial capacity.
And in reference to the term "Anti-banking" it stated:
This term is misleading. Unlike the anti-bank wing of the Democratic Party, which opposed paper currency and the proliferation of banks, the stockholders of the Kirtland Safety Society were not opposed to banking and continued to run their institution as a bank.
- The Joseph Smith Papers website provides historical background to the Samuel Rounds vs. Joseph Smith lawsuit (February 1837).
[64]↩︎
Joseph Smith reported the denial of a Charter on November 2, 1836:
On the 2d of November the Brethren at Kirtland drew up certain articles of Agreement, preparatory to the organization of a Banking Institution, to be called the Kirtland Safety society. President O[liver] Cowdery was delegated to Philadelphia [HC 2:467] to procure plates for the Institution; and Elder O[rson] Hyde, to repair to Columbus, with a petition to the Legislature of Ohio, for an act of incorporation, which was presented at an early period of their session, but 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 other, thus elder Hyde was compelled to return without accomplishing his this object of his Mission, while elder Cowdery succeeded, in at a great expence, in procuring the plates, and bringing them to Kirtland.
In March 1847, after his excommunication from the Church, William E. McClellin charged Joseph et al. with violating the law by operating a bank without a charter:
Soon, therefore, it is determined that a KIRTLAND BANK must be established, to hold their treasures; and to aid them to get more. So eager were they, and so sanguine of success, that they did not even wait to get a charter from the State, but seemed to think that everything must bow at their nod—thus violating the laws of the land in which they live, which in the end brought upon them swift destruction.
- Joseph reports the establishment of the Kirtland Bank and the procuring of plates for the bank; petition to Ohio legislature for an act of incorporation was not successful.
- William McLellin recalls the establishment of the Kirtland Bank; argues that Church leaders were so eager to establish it they did not wait to get a charter from the State, thereby violating the law.
[65]↩︎
One reason why the Kirtland Safety Society was not given a charter was due to the policies of the Democratic party at the time. As Dale W. Adams commented:
For a number of years the mainstream of the Democratic Party, under Jackson’s leadership, was strongly anti-bank. At the national level, the efforts to eliminate the Bank of the United States as a national bank captured most of the headlines. The refusal of Andrew Jackson in 1833 to renew the bank’s charter when it expired in 1836 was the focal point of these efforts. Strong anti-bank feelings were also held by many Democrats at the state level. This was expressed in refusals to grant new bank charters as well as in various forms of legislation aimed at controlling and restricting the operation of banks already in existence. This anti-bank position of the Democrats was due to party politics. The Whigs tended to represent the well-established business interests including banks, while the Democrats were strongly supported by the frontier settlers and new business interests.
- Dale W. Adams examines the inability of the Kirtland Bank to receive a charter, a factor that would lead to its eventual failure.
[66]↩︎
In the year the Kirtland Safety Society was established, the General Assembly of Ohio only issued one bank with a charter.
Historian Dale W. Adams noted:
In the Thirty-fourth General Assembly, which met in 1835–36, the Democrats again held similar majorities in both the House and the Senate, and a Democratic governor, Robert Lucas, was in office. A large number of bills for new bank charters were submitted to the assembly, but only one very special case was approved.
- Dale W. Adams examines the inability of the Kirtland Bank to receive a charter, a factor that would lead to its eventual failure.
[67]↩︎
According to the Joseph Smith Papers website, "The society continued to function as an unauthorized bank, though the name had apparently already changed again, from the Kirtland Safety Society Anti-Banking Company to the Kirtland Safety Society Banking Company."
The website further explains:
Unauthorized banks were not incorporated, regulated, or acknowledged by the state and could not receive government funds. In Ohio, unauthorized banks had become commonplace by the 1830s. The state legislature tried to impose penalties but did not enforce the contradictory banking statutes that had developed from politicians’ attempts to curb the spread of unauthorized banks.
- The Joseph Smith Papers website discusses the history of the Kirtland Bank.
[68]↩︎
Legal historian Jeffrey N. Walker, commenting on this merger, wrote:
The second effort was to acquire a controlling interest in an out-of-state chartered bank and make the Kirtland Safety Society a branch or subsidiary of that already chartered bank. This business and legal approach had been done numerous times by large banking institutions in the East as they acquired banks as branches or affiliates in various states throughout the country.
He later added:
The owners of the Bank of Monroe sold their controlling interest in that bank to the Kirtland Safety Society, with the Society paying upfront $3,000 in Cleveland drafts and receiving notes totaling more than $20,000 from principals of the Bank of Monroe. As a part of the deal Cowdery was appointed as a director and vice president of the Monroe Bank. Cowdery stayed in Monroe when the others returned to Kirtland.
- Jeffrey N. Walker discusses the Kirtland Bank and the lawsuit brought against Joseph.
[69]↩︎
In his journal for January 31, 1837, Wilford Woodruff recorded Joseph Smith and Sidney Rigdon teaching "on the temporal business of the Church" and how "the presidency of the Church bought the Monroe charter." On February 19, Woodruff noted that Joseph "had been absent from Kirtland on bus-iness for the Church."
As the Joseph Smith Papers website notes:
At this meeting, Cowdery was made vice president and a bank director of the Bank of Monroe. However, this partnership appears to have been short-lived. The Bank of Monroe was struggling financially and was forced to suspend specie payments by the end of March. This setback did not deter the Safety Society’s officers, who made two additional agreements in March to appoint individuals in Painesville, Ohio, and Beaver County, Pennsylvania, as agents of the society.
Non-Latter-day Saint, S.A. Davis, editor of the periodical, Glad Tidings, reported that during this time:
We had not the pleasure of seeing Joseph Smith Jr. Sidney Rigdon, or O. Cowdery, three leading men of this sect, as they had gone to Michigan on business for their Banking Institution, of which I will not speak at the present.
[70]↩︎
The "Kirtland Safety Society Bank Stock Ledger," dating from October 18, 1836, to June 12, 1837, records the accounts for stockholders in the Kirtland Safety Society. As The Joseph Smith Papers website notes,
In order to acquire the funds needed to operate the institution, which they named the Kirtland Safety Society, and redeem its banknotes for specie, the society solicited subscriptions from individuals interested in purchasing the society’s stock.
They also added stock subscriptions began in mid-October 1836, and by January 1837, with the Stock Ledger book noting that "the society had more than one hundred stockholders who had paid nearly $12,000 in specie or banknotes to fulfill some portion of the first installment due on their stock."
- The Stock Ledger book for the Kirtland Bank.
- The Joseph Smith Papers website provides historical background to the Samuel Rounds vs. Joseph Smith lawsuit (February 1837).
[71]↩︎
On September 13, 1836, 39 acres of farmland was purchased from Hiram and Pamelia Dayton. The next day, 13.25 acres were purchased from William Draper Jr. and Elizabeth Staker Draper. Later, on October 5, 1836, Joseph Smith William Miller, William Smith, and Don Carlos Smith entered into a mortgage agreement with Peter French for land in Kirtland.
Latter-day Saint historian Elizabeth Kuehn believes it is "likely" that part of this land was to be used as security for the Kirtland Safety Society:
When Joseph Smith and his companions returned to Kirtland in mid-September 1836, they began making plans for several business ventures. Joseph in partnership with Sidney Rigdon, and possibly Oliver Cowdery, started a store in Chester, Ohio.[1] Joseph also bought a significant amount of land in the Kirtland area – over 400 acres. Some of this land was likely intended for use by newly arrived church members, but a portion also likely served as security for the other significant business venture that Joseph Smith and several other Latter-day Saints started in the fall of 1836 – a bank.
[72]↩︎
Some historians believe that the price was set this high because the bank was believed to become merged with a larger institution (i.e., the Bank of Monroe), though it never did reach $4 million. Latter-day Saint historian Max H. Parkin, in his 1966 M.A. thesis on Latter-day Saints in Ohio from 1830 to 1838, noted that:
At the time of the bank's inception, it was capitalized at four million dollars. Critics have found fault with this enormous figure because the capitalization of all the banks in the state of Ohio at that time was only nine and one third million. Yet, if the capitalization of the bank at four million dollars is viewed with the concept that the Kirtland Safety Society was to be the parent of a national, and, perhaps, an international financial system, the high capitalization figure would seem realistic.
According to The Joseph Smith Papers website:
On 2 November 1836, the initial stockholders met, ratified a constitution, and elected thirty-two bank directors and two officers: Sidney Rigdon as president and JS as cashier. By December 1836, banknotes for the Kirtland Safety Society were engraved and printed by the firm Underwood, Bald, Spencer & Hufty. Unfortunately, the Kirtland Safety Society gained no large-scale investors and only minimal local support, which resulted in funding problems from the outset. The constitution set the capital stock at $4 million and divided that amount into 80,0000 shares of stock sold for $50 each. While the society did eventually get subscriptions for most of the stock, it was primarily sold to individuals who were only able to pay a fraction of the amount they had agreed upon.
[73]↩︎
Article I of the Constitution of the Kirtland Safety Society Bank (November 2, 1836) reads:
The capital stock of said Bank shall not be less than four millions of dollars; to be divided into shares of fifty dollars each; and may be increased to any amount, at the discretion of the directors.
This figure is also found in "Articles of Agreement for the Kirtland Safety Society Anti-Banking Company, 2 January 1837":
Art. 1st. The capital stock of said society or firm shall not be less than four millions of dollars; to be divided into shares of fifty dollars each; and may be increased to any amount, at the discretion of the managers.
An article published in the January 19, 1837 issue of the Painesville Republican, "Anti-Banking Company," we read that:
A company has been formed in Kirtland, in this county, by the Mormons, or "latter day saints," as they call themselves, with a capital stock of no less than four millions of dollars.
[74]↩︎
As explained by the Joseph Smith Papers website, "The Society’s capital stock [of $4 million] was a considerably higher amount than that of other community banks in the period, which ranged from $100,000 to $300,000."
- The Joseph Smith Papers discusses the amount of the Kirtland Safety Society's initial capital stock.
[75]↩︎
For comparison, in 1816 the Second Bank of America was founded. The Second Bank was a national bank (significantly larger than the typical community bank) and was capitalized with $35,000,000.
- George Dangerfield discusses the charter fo the Second Bank of the United States; it had a capital of $35,000,000.
- George Dangerfield discusses the Second Bank of the United States; notes that it collected $2 million in coin, $14 million in government securities, and $12 million in personal notes.
[76]↩︎
In his journal for January 6, 1837, Wilford Woodruff recorded Joseph as teaching 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 & support the above named institution & protect it so that every weapen formed against it may be broaken & come to nought while the Kirtland Safety Society shall become the greatest of all institutions on EARTH
Sidney Rigdon, in an article published in the December 1836 issue of the Messenger and Advocate, understood the success of the Kirtland Safety Society to be contingent upon the faithfulness of the Saints:
Once more, in order that Zion may become the joy of the whole earth, the saints must practice holiness in the fear of the Lord; for without this, no man can see the Lord, neither will he prosper them unless they do it. -- They must attend punctually to the orders of his house, every head of a family must see that his or her house is kept in order before the Lord, so that in their midst the name of the Lord may be had in reverence, and his commandments regarded with veneration, and his worship respected as of the first importance.
During the minutes of a meeting held September 3, 1837, Joseph taught that "he allways said that unless the institution was conducted upon righteous principles it could not stand . . ."
[77]↩︎
For example, on September 4, 1837, George W. Robinson reported that John F. Boynton believed that Joseph taught the Kirtland Bank would never fail:
Elder Boynton again arose & still attributed his difficulties to the failure of the Bank, stating that he had understood the Bank was instituted by the will of God, and he had been told that it never should fail.
In a letter dated May 23, 1837, Parley P. Pratt critiqued Joseph and Sidney Rigdon concerning the Bank, claiming he was
Led astray and Caught in the same snare By your Example and By false Prophesying and preaching from your mouths. . . . By an undue religious influence for it is this kind of influence which Led us to make such kind of trades, in this society, such as saying it was the will of God that Lands Should Bear such a price and many other Prophesyings Preachings and Statements of a like nature.
Warren Parrish, in a letter dated February 5, 1838, addressed to the editor of the Painesville Republican, wrote that:
I have listened to [Joseph Smith] 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 (the Bank of Monroe excepted,) 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.
[78]↩︎
During 1837, there was an economic downturn in the USA. As historian Daniel Walker Lowe noted, the reasons for this were the USA dedicating 70% of its government revenue to paying off its national debt and the return of capital to Europe by President Jackson.
- Daniel Walker Howe discusses the economic panic of 1837 and its repercussions, including its affects upon banks in the USA.
[79]↩︎
Wayne Cowdery, in an editorial published in the July 1837 issue of the Messenger and Advocate, wrote:
All banks throughout the country, one after another suspended specie payment. Some of them were as illy able to continue when they stopped as was ours, but they had charters, were popular and waited till it was popular to suspend payment, and then they could do so with impunity whether they had five dollars or five thousand to redeem their paper. It is unnecessary to say that confidence has failed in all paper money, though we would not be understood to say that it has failed equally with all. Gold and silver has risen in value in a direct ratio with the depreciation of paper. Many of the monied institutions are thought to be unsound, and from the best evidences that can not be obtained, will never be able to redeem their bills.
Commenting on the Panic of 1837, Elizabeth Kuehn noted that this "resulted in banks across the nation failing, land values falling, and debts being called in."
She added:
The Panic of 1837 caused an economic decline that would lead to years of economic depression in the United States. This panic and resulting depression were catastrophic and are analogous to the Great Depression of the twentieth century. It was this financial panic that devastated the Kirtland economy, and not the failure of the bank. While many in Kirtland experienced some financial loss as a result of the bank’s failure, the community’s economy and individual church members’ finances were far more drastically affected by plummeting land values.
- Elizabeth A. Kuehn discusses the crisis of 1837 and the establishment and failure of the Kirtland Safety Society.
- In an editorial for Messenger and Advocate, Warren Cowdery discusses the establishment and subsequent failure of the Kirtland Bank.
[80]↩︎
Other financial institutions in Ohio were negatively affected by the economic collapse of 1837. Historian Ernest Ludlow Bogart, in his Financial History of Ohio, noted:
Specie payments had been suspended in Ohio, in common with the rest of the country, after the panic of 1837. The following year all bank notes under $3 were forbidden after July 4, 1839; all those under $5 and between $5 and $10 after October 1, 1839. If any bank offended it was to pay a fine of $50 for each unauthorized note, or lose its banking privileges. Another law in 1840 showed how ineffective this legislation had been. Small notes were once more forbidden, as were post notes and those payable elsewhere than at place of issue. All notes were declared redeemable in specie, no broker was to pay out illegal notes, and no state officer was to receive or pay out notes under $5. This law was successful in reducing somewhat the circulation of unauthorized notes.
Latter-day Saint historian Scott H. Partridge wrote:
At the time the Ohio banks declined the redemption of their bills with specie, they were apprised that the banks of the states North and South, East and West, had generally, if not universally, suspended specie payments. The Ohio banks were well aware that a continuance of specie payments, under such conditions, would subject them to heavy and constant drafts on their coin; and that, too, by banks of other states which had closed their doors to this mode of payment.
- Ernest Ludlow Bogart reports on the shift to state bank money in Ohio; notes the Ohio legislature made it illegal for any person to act as an agent or circulate notes for the Bank of the United States.
- Scott H. Partridge discusses the failure of the Kirtland Bank and the question of how much blame Joseph has for such; also discusses contemporary banks and their failures.
[81]↩︎
Commenting on the lack of funding for the institution, Stanley B. Kimball wrote:
The grand totals eloquently reveal the inherent weakness of the project—200 persons subscribed to 79,420 shares worth at face value approximatley $3,854,000 at $50 par value per share which was paid for with only $20,725 in specie. Heber C. Kimball, for example, subscribed to $50,000 worth of shares for only $15 in cash. Other important Mormons paid in correspondingly small sums: Brigham Young, $7.00; Lorenzo Snow, $7.97; Wilford Woodruff, $5.25; Erastus Snow, $5.25. A few others, however, were able to come up with larger amounts: Parley P. Pratt, $102.00; Hyrum Smith, $169.00; Vinson Knight, $262.00; Emma Smith, $315.00; Joseph Smith, Sr., $323.00; and W. J. Peterson, $785.00.
Brent M. Rogers et al. noted:
Yhe society was significantly underfunded, in large part because of the small amount that stockholders were required to pay for their stock. At fifty dollars per share, the price of stock for the Kirtland Safety Society was lower than average, but not unusually low when compared with similar financial institutions. What was substantially reduced for the society’s stockholders was the amount they were required to pay when they first subscribed for stock. At twenty-six cents per share, this initial payment was significantly lower than what other banks or banking companies charged, which typically required between five and fifty dollars’ initial payment per share. The Kirtland Safety Society officers showed leniency to those who would not pay their full initial payment at $262.50, but many with subscriptions of a thousand or more shares of stock only ever paid a few dollars. The combination of relatively low share prices, some of which was never paid, meant that the society was low on funds from the outset.
- Brent M. Rogers et al., note that the Kirtland Safety Society was underfunded due to the small amount stockholders were required to pay for their stock.
- Stanley B. Kimball discusses the original Stock Ledger of the Kirtland Safety Society.
[82]↩︎
Legal historian Jeffrey N. Walker noted that Grandison Newell began "buying Kirtland Safety Society notes and then taking them to the Kirtland Safety Society to be redeemed for specie in order to deplete its capital reserves."
Elsewhere, Walker noted that this was a problem that other banks of the time faced:
Rural banks had capital tied up in land and generally could not turn assets into cash fast enough to meet notes presented for redemption. The nation was beset with land speculation, and the Saints were not immune from it
- Jeffrey N. Walker discusses the Kirtland Bank and the lawsuit brought against Joseph.
- Jeffrey N. Walker discusses the Kirtland Bank and the lawsuit brought against Joseph.
[83]↩︎
Latter-day Saint historian Mark Lyman Staker noted:
Those claiming a bank closure seemed tentative in their assessment, such as the February 7, 1837, report in the Western Reserve Chronicle which placed the suspension of specie on Saturday, February 4, but acknowledged that its information was based on rumor.
On the claim that the Kirtland Bank had run out of gold and silver, Staker wrote:
Financial records and subsequent transactions confirm that the Safety Society clearly had at least some specie still in its control shortly after these announcements, suggesting that the institution had not yet refused to redeem notes and that the rash accusations were intended to influence the outcome of the vote in the Senate.
- Mark Staker discusses the history of the Kirtland bank and Oliver Cowdery's relationship to the institution.
[84]↩︎
Land speculation involves purchasing undeveloped or underutilized land with the expectation that its value will increase due to future development, economic changes, or shifts in market demand. Speculators aim to profit by selling the land at a higher price, often taking on high risk due to uncertain future conditions.
According to the Smithsonian Museum, this was a "risky nineteenth-century investment practice or strategy. . . . During the peak time of U.S. westward expansion, large amounts of public land was opened for private speculation."
- Definition of "land speculation" from the Smithsonian American Art Museum.
[85]↩︎
On June 1, 1837, Joseph, reflecting on the failure of the Kirtland Safety Society, wrote:
At this time <a> spirit of Speculation, in lands and property of all kinds, which was so prevalent throughout the whole nation, was taking deep root in the church, as the fruits of this spirit, evil surmisings, fault finding, disunion, dissention and apostacy followed in quick succession, and it seemed as though all the powers of earth and hell were combining their influence in an especial manner to overthrow the church at once, and make a final end. Other banking [HC 2:487] institutions refused the “Kirtland Safety Society’s Notes; The enemy abroad and apostates in our midsts united in their schemes; flour and provisions were turned toward other markets
Speculation was offered as one reason why Joseph resigned his office in the Bank:
Some time previous to this I resigned my office in the “Kirtland Safety Society” disposed of my interest therein, and withdrew from the institution: being fully aware, after so long an experiment, that no institution of the kind, established upon just and righteous principles, for a blessing not only to the church, but the whole nation, would be suffered to continue its operations in such an age of darkness, speculation, and Wickedness.
In the August 1837 issue of the Messenger and Advocate, Joseph would warn Church members about speculators "palming upon them" now-worthless Kirtland bills:
To the brethren and friends of the church of Latter Day Saints, I am disposed to say a word relative to the bills of the Kirtland Safety Society Bank. I hereby warn them to beware of speculators, renegadoes and gamblers, who are duping the unsuspecting and the unwary, by palming upon them, those bills, which are of no worth, here. I discountenance and disapprove of any and all such practices. I know them to be detrimental to the best interests of society, as well as to the principles of religion.
[86]↩︎
In a letter dated May 23, 1837, which was reprinted in the April 1888 issue of Naked Truths about Mormonism, Parley P. criticized Joseph Smith and Sidney Rigdon of having a "Speculating Spirit":
Haveing Long Pondered the Path in which we as a people have been led in regard to our temporal management, I have at Length Become fully convinced that the whole scene of Speculation in which we have Been Engaged is of the Devel; I allude to the covetous Extortionary Speculating Spirit which has reigned in this place for the Last season; which Has given rise to Lying deceiveing and takeing the advantage of ones Nabour [neighbor] and In Short to Every Eavle [evil] work.
Pratt would later claim in the August 1838 issue of the Elders' Journal that this letter was "not a true copy" of the letter he wrote, adding:
I have had full confidence in the book of Mormon, the Revelations of God to Joseph Smith Jr., and I still esteem both him and President Rigdon. as men of the highest integrity, the most exalted principles of virtue and honor, and men who will yet be instruments in the Lord’s hand to accomplish a work in which I shall esteem it the highest honor and the greatest blessing to bear some humble part.
John Whitmer, in 1847 after his excommunication from the Church, wrote:
In the fall of 1836, Joseph Smith Jr. S[idney] Rigdon & others of the Leaders of the church at Kirtland Ohio, Established a bank for the purpose of Speculation and the whole church partook of the same Spirit, they were lifted up in pride, and lusted after the forbiden things of God such as covetousness, & in secret combination, spiritual wife doctrine, that is pleurality of wives, and gadianton bands in which they were bound with oaths &c. that brought divisi[o]ns and mistrust among those who were pure in heart, and desired the upbilding of t Kingdom of God—
In July 1889, Ebenezer Robinson, reflecting upon the establishment of the Kirtland Safety Society, wrote:
A spirit of speculation was poured out, and instead of that meek and lowly spirit which we felt had heretofore prevailed, a spirit of worldly ambition, and grasping after the things of the world, took its place. Some farms adjacent to Kirtland, were purchased by some of the heads of the church, mostly on credit, and laid out into city lots, until a large city was laid out on paper, and the price of the lots put up to an unreasonable amount ranging from $100 to $200 each, according to location.
[87]↩︎
The Joseph Smith Papers project website notes: "The society’s tenuous credibility, however, was further marred by the new officers’ decision to issue additional loans, straining the society’s diminished specie reserves and increasing the number of notes in circulation."
- The Joseph Smith Papers website discusses the history of the Kirtland Bank.
[88]↩︎
RLDS historian Paul M. Edwards notes how "the directors [of the Kirtland Safety Society] were inexperienced and unable to meet the demands, or to save the bank as economic failure swept the country."
- Paul M. Edwards notes the inexperience of Church leaders in banking and financial affairs.
[89]↩︎
In a study on the impact of Litigation on the Kirtland economy, Gordon A. Madsen noted that:
Of the $52,251.44 reduced by duplications noted above to $49,828.23 recorded debt of Joseph and the Committee, $43,225.91 was paid. There were no defrauded creditors, but rather paid creditors, 87 percent of whose claims were satisfied in a reasonably prompt time frame. And that payment came largely after the Saints had abandoned Kirtland and the symbol of their sacrifice, the temple.
- Gordon A. Madsen discusses the impact of the litigation against Joseph and their effects upon the Kirltand Economy after the failure of the Kirtland Bank.
[90]↩︎
According to Milton V. Backman:
The two hundred individuals who invested in the bank lost nearly everything they subscribed; others secured notes issued by the company and redeemed their currency at heavy discounts. As the months passed, many still held bills that had no redeemable value. When the company failed, many persons lost their savings and a few were ruined financially.
- Milton V. Backman, Jr. reports that the financial losses of the Kirtland bank approached $40,000; Joseph had accumulated debts amounting to approximately $100,000.
[91]↩︎
In his study of the Church in Ohio from 1830 to 1838, historian Milton V. Backman noted:
It has been estimated that the financial loss approached $40,000, almost the total coast of building the Kirtland Temple. This loss was sustained by persons whose income averaged about $400 annually.
And that:
Joseph Smith’s economic losses from the failure of the Kirtland Safety Society were greater than those of any other individual. While seeking to establish and then sustain the company and at the same time purchase land in Kirtland and goods for his store, he had accumulated debts amounting to approximately $100,000. Although he had asserts in lands and goods that were of greater value in some respects than his debts, he was unable to immediately transform these asserts into a form that could be used to pay his creditors.
- Milton V. Backman, Jr. reports that the financial losses of the Kirtland bank approached $40,000; Joseph had accumulated debts amounting to approximately $100,000.
[92]↩︎
In his study of the Church in Ohio from 1830 to 1838, historian Milton V. Backman noted:
Joseph Smith’s economic losses from the failure of the Kirtland Safety Society were greater than those of any other individual. While seeking to establish and then sustain the company and at the same time purchase land in Kirtland and goods for his store, he had accumulated debts amounting to approximately $100,000. Although he had asserts in lands and goods that were of greater value in some respects than his debts, he was unable to immediately transform these asserts into a form that could be used to pay his creditors.
- Milton V. Backman, Jr. reports that the financial losses of the Kirtland bank approached $40,000; Joseph had accumulated debts amounting to approximately $100,000.
[93]↩︎
Critic E. G. Lee claimed that Joseph filled the safe of the Kirtland Safety Society with 100-200 boxes marked "$1,000" filled with lead, rocks, and sand to give the impression the Bank had gold and silver reserves. In his book published in 1841, Lee wrote:
[Joseph Smith] had some one or two hundred boxes made, and gathered all the lead and shot that the village had or that part of it that he controlled and filled the boxes with lead, shot, &c., and marked them, one thousand dollars each—then, when they went to examine the vault, he had one box on a table partly filled for them to see, and when they proceeded to the vault, Smith told them that the church had two hundred thousand dollars in specie and he opened one box and they saw that it was silver, and they helped a number and Smith told them that they contained specie, and they were seemingly satisfied and went away for a few days . . .
Other critics mention this claim but do not give the dimensions of the boxes. For example, in a satirical poem from 1842, Oliver H. Olney wrote:
As gold and silver began to be scarce, They got hold of a quantity of boxes, And nearly filled them with sand, Lead, old iron, stone, and combustibles, And covered it up with clean coin. That darkened the deception beneath,
Fawn McKay Brodie would also repeat this charge in her 1945 biography of Joseph Smith:
Lining the shelves of the ban vault, they said, were many boxes, each marked $1,000. Actually these boxes were filled with "and, lead, old iron, stone, and combustibles," but each had a top layer of bright fifty-cent silver coins.
[94]↩︎
Dale W. Adams noted that the safe measured only 25 by 24 by 29 inches, calling into question the claim that there were "many boxes each marked $1,000" filled with "sand, lead, old iron, and stone with only a thin layer of coins on top."
- Dale W. Adams examines the inability of the Kirtland Bank to receive a charter, a factor that would lead to its eventual failure.
[95]↩︎
The summons for February 9, 1837 read:
To the Sheriff of our said County. . . Greeting:— We command you that you summon Joseph Smith Junior if he be found in your bailiwick to appear before our Court of Common Pleas, to be held at the court house in the town of Chardon the twenty first day of March next to answer Samuel D. Rounds who sues as well for the State of Ohio as for himself in a plea of debt for one thousand dollars, damage one thousand dollars, as is said. Herein fail not but of this Writ and your service make due return. Witness the Honourable Van R. Humphrey President of our said Court at Chardon the ninth day of February Anno Domini one thousand eight hundred and thirty seven. D[avid] D. Aiken Clerk.
Joseph Smith, Sidney Rigdon, and other leading officers of the Kirtland Bank were charged under an 1816 Ohio Law, which originally imposed a fine of $1,000 against any officer of an unincorporated bank.
Section 1 of "An Act to prohibit the issuing and circulating of unauthorised Bank paper" (January 27, 1816) reads:
Be it enacted by the general assembly of the state of Ohio, That if any person shall, within this state, act as an officer or monied association, coming within the description contained in the second selection of this act, except a bank incorporated by a law of this state, he shall, for every such offence, forfeit and pay them the sum of one thousand dollars.
- Text of the Act of January 27, 1816, passed by the General Assembly of Ohio, prohibiting the issuing and circulating of unauthorized bank paper.
- Summons issued by Sheriff Abel Kimball for Joseph on October 9, 1837.
[96]↩︎
An 1824 statute suspended the 1816 law. It did not stipulate penalties for unincorporated bankers but instead made the notes issued by such banks unenforceable.
Section 23 of "An Act, to regulate judicial proceedings where banks and bankers are parties, and to prohibit issuing bank bills of certain descriptions" (January 24, 1824) reads:
That no action shall be brought upon any notes or bills hereafter issued by any bank, banker or bankers, and intended for circulation, or upon any note, bill, bond or other security given, and made payable to any such bank, banker or bankers, unless such bank, banker, or bankers; shall be incorporated and authorized by the laws of this state to issue such bills and notes, but that all such notes, and bills, and bonds, and other securities shall be held and taken in all courts as absolutely void.
However, there seems to have been some uncertainty about how the two legislations related to each other, so the charges against Joseph and the other Church leaders were filed.
- Text of the the Act of 1824, issued by the Ohio General Assembly, prohibiting unauthorized issuing of banknotes.
[97]↩︎
The breakdown of the judgments against Joseph Smith on October 24, 1837 was
. . . Debt $1000.00 Plffs. costs 23.35 defts. do. 0.75 . . . Shff paid Grandison Newell $604.50 . . .
- October 24, 1837 judgment against Joseph by Samuel Rounds, totaling $1,024.10; Grandison Newell received $604.50 from the sheriff.
[98]↩︎
The cost of the legal judgments against Joseph Smith and Sidney Rigdon were assigned to their agents, William Marks and Oliver Granger, for $1,600 on March 1, 1838. In his statement to William Marks and Oliver Granger (March 1, 1838), Grandison Newell wrote:
For and in consideration of Sixteen hundred dollars to me in hand paid by William Marks and Oliver Granger I do hereby sell assign and set over to the Said William Marks and Oliver Granger two Judgments in favor of Samuel D. Rounds and assigned to me by said Rounds against Joseph Smith jr and Sidney Rigdon of one thousand dollars each which Judgments were obtained at the Court of Common Pleas holden at Chardon in and for the County of Geauga, to wit, on the 24th day of October 1837, and I do agree to pay all costs that has accrued on said Judgments up to this date.
- Grandison Newell acknowledges that William Marks and Oliver Granger have been assigned $1,600 judgement against Joseph, acting as his agents.
[99]↩︎
On June 1, 1837, Joseph noted:
At this time <a> spirit of Speculation, in lands and property of all kinds, which was so prevalent throughout the whole nation, was taking deep root in the church, as the fruits of this spirit, evil surmisings, fault finding, disunion, dissention and apostacy followed in quick succession, and it seemed as though all the powers of earth and hell were combining their influence in an especial manner to overthrow the church at once, and make a final end.
- Joseph, reflecting on the failure of the Kirtland Safety Society, notes that a spirit of speculation was prevalent in the Church; no quorum in the Church was exempt from the influence of "those false spirits."
[100]↩︎
During 1837 there was an economic downturn in the United States. As historian Daniel Walker Lowe noted the reasons for this included the United States dedicating 70% of its government revenue to paying off its national debt and the return of capital to Europe by President Jackson.
- Daniel Walker Howe discusses the economic panic of 1837 and its repercussions, including its affects upon banks in the USA.
[101]↩︎
In a letter dated May 23, 1837, Parley P. Pratt critiqued Joseph and Sidney Rigdon concerning the Bank, claiming he was
Led astray and Caught in the same snare By your Example and By false Prophesying and preaching from your mouths. . . . By an undue religious influence for it is this kind of influence which Led us to make such kind of trades, in this society, such as saying it was the will of God that Lands Should Bear such a price and many other Prophesyings Preachings and Statements of a like nature.
- In a letter to Joseph Smith dated May 23, 1837, Parley P. Pratt criticizes Joseph and Sidney Rigdon for the "Speculation in which we have been engaged of" with respect to the Kirtland Safety Society.
[102]↩︎
On May 29, 1837, Lyman E. Johnson and Orson Pratt addressed their letter "To the Bishop & his council in Kirtland, the Stake of Zion," and wrote:
We prefer the following charges against Pres. Joseph Smith, Jr. viz., for lying and misrepresentation—also for extortion—and for speaking disrespectfully against his brethren behind their backs.
- Lyman E. Johnson and Orson Pratt accuse Joseph of lying, misrepresentation, and extortion.
[103]↩︎
Warren Parrish, in a letter dated February 5, 1838, addressed to the editor of the Painesville Republican, wrote:
I have listened to [Joseph Smith] 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 (the Bank of Monroe excepted,) 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.
- In a letter to the editor of the Painesville Republican, Warren Parrish discusses the Kirtland Bank; notes he was astonished to hear Joseph declare that the bank had $60,000 in specie and $600,00 at their command.
[104]↩︎
Warren Parrish was excommunicated in December 1837, and Lyman Johnson was excommunicated on April 13, 1838.
- The high council in Missouri excommunicates Lyman E. Johnson.
- John Smith reports to George A. Smith that Warren Parrish was "cut off" from the Church in December 1837 in Kirtland.
[105]↩︎
In a letter dated July 22, 1837 addressed to James C. Snow, Eliza Ann Carter spoke of a meeting of Church leaders in the Kirtland Temple where Orson and Parley Pratt
said they were truly convinced that the charges which were laid to Brother Joseph the season past ware actually false. They were now fully persuaded in their own minds that Joseph had done the best that he could–considering all things. They confessed that their minds had been darkened, their hearts hardened, and they had said many things against the Prophet that they ought not to have said.
- Eliza Ann Carter, in a letter to James C. Snow, reports on the confession of apostles such as Thomas Marsh, David Patten, and William Smith after dissenting from Joseph due to the Kirtland Bank.
[106]↩︎
Samuel Rounds and Grandison Newell both raised legal complaints against Joseph Smith with issues related to the Kirtland Safety Society.
[107]↩︎
Joseph recorded in his manuscript history how a "spirit of apostate Mobocracy" arose in Kirtland and "continued to rage and grow hotter and hotter until Elder [Sidney] Rigdon and myself were obliged to flee" from Ohio.
- Joseph, on January 1, 1838, reports a "spirit of apostate mobocracy" continues to rage against him and Sidney Rigdon; they fled Kirkland to escape mob violence.
[108]↩︎
Joseph recorded in his history how "A new year [1838] dawned upon the church in Kirtland in all the bitterness of the spirit of apostate Mobocracy; which continued to rage and grow hotter and hotter until Elder [Sidney] Rigdon and myself were obliged to flee."
- Joseph, on January 1, 1838, reports a "spirit of apostate mobocracy" continues to rage against him and Sidney Rigdon; they fled Kirkland to escape mob violence.

Reason	Details
The Financial Panic of 1837 in the United States.	As a result of the economic downturn in 1837,[78] financial institutions, including the Kirtland Safety Society, faced bank runs and an inability to redeem issued bills.[79][80]
The underfunding of the Kirtland Safety Society.	The Kirtland Safety Society was underfunded due to the small amount stockholders could pay.[81]
The activities of Grandison Newell.	Grandison Newell engaged in concerted attacks on the Kirtland Safety Society by purchasing as many of the Kirtland Safety Society notes as he could and then redeeming them all at once for specie (hard currency), resulting in the liquid assets of the Kirtland Safety Society being diminished.[82]
Rumors that the Safety Society was illiquid.	There were rumors that the bank's vaults were empty and its officers were refusing to exchange banknotes for hard currency.[83]
Financial speculation among Church members.[84]	Joseph Smith believed that some Church members were engaged in speculation, which was one factor in the institution's failure.[85] Joseph himself was criticized for allegedly engaging in speculation.[86]
Insufficient reserves.	The bank lacked adequate specie (gold and silver) reserves to back its currency, which was a common problem for many banks of that era.[87]
Inexperienced leadership.	Joseph Smith and other church leaders had little to no experience in banking or finance.[88]