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Safety
Society proposed no modest project befitting its relative worth and ability to pay. Its organizers launched, instead, a gigantic company capitalized at four million dollars, when the entire capitalization of all the banks in the state of Ohio was only nine and one third million. Such presumption could not have escaped the notice of bankers who would have been led to examine its capital structure more closely. ... according to the articles of incorporation capital stock was to be paid in by subscription but that the amount of payments were left to the discretion of the company managers. Furthermore, total issuance of notes was not prescribed, nor was the relation of notes to capital and assets. The members, to be sure, pledged themselves to redeem the notes and bound themselves individually by their agreement under the penal sum of one hundred thousand dollars. But there was no transfer of property deeds, no power of attorney, no legal pains and penalties. To a banker, the articles fairly shouted: 'this is a wildcat, beware!'
175:. The city of Kirtland experienced a significant population increase, growing from approximately 1,000 people in 1830 to 3,000 in 1836, with a similar increase in surrounding agricultural areas. The population growth was at least partially responsible for a rapid increase in land prices between 1832 and 1837. The average price per acre of land sold in Kirtland rose from approximately $ 7 in 1832 to $ 44 in 1837, only to fall back to $ 17.50 in 1839. (Ludlow, p. 283) Generalized inflation during the period accounted for between 25 and 40 percent of the price increase. Although the church held considerable real estate, estimated at approximately $ 60,000 in equity by historian
316:, every chartered bank stopped payment in specie (gold and silver coinage), leaving banks and local institutions like the KSS holding notes without adequate liquid assets. Within two months the failures in New York alone aggregated nearly $ 100,000,000 in value. "Out of eight hundred and fifty banks in the United States, three hundred and forty-three closed entirely, sixty-two failed partially, and the system of State banks received a shock from which it never fully recovered." Smaller, privately held financial institutions, like the KSS, also failed in droves. The Panic was followed by a five-year depression, characterized by ongoing failures of
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against Smith and Rigdon. Although Smith's only official capacity for KSSABC was cashier, other officers and parties with equal or greater responsibility were absolved from the suit. KSSABC continued issuing notes through June, but eventually failed due to insolvency, as most of the KSSABC reserves were tied up in land rather than
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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
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on church business and returned in late August. On
September 27, Smith and Rigdon departed Kirtland for Missouri. They arrived about one month later, spent about two weeks in Missouri on Church business and returned to Kirtland on December 10. In their absence, in October, they were fined $ 1,000 for
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Hyde returned to the Ohio legislature in
February with a petition, joined by several non-Mormons, for a bank based on far less capital stock. This time Hyde secured legislative sponsors, and the request was added as an amendment to another bill. However, the bill was defeated by the Ohio legislature.
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As it was projected, there was never the slightest chance that the
Kirtland Safety Society anti-Bank-ing Company could succeed. Even though their economy was in jeopardy, it could scarcely have suffered such a devastating blow as that which they were themselves preparing to administer to it. ... The
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Grandison Newell, a professed antagonist to the Latter Day Saints in general and its president in particular, instigated several lawsuits against the
Mormons in Ohio. Newell was close to three legislators who had taken the charter requests under consideration and used his influence to dissuade them.
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One of the tangible connections from this episode to the present are the notes that were printed at the time. Some church leaders encouraged people to retain these notes as they said that someday they would have value again. While the notes never regained their face value, by the late 19th century
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just ahead of an armed group intending to capture and hold Smith for trial. Smith and Rigdon were both acquainted with not only conflict and violent mobbing they experienced together in
Pennsylvania and New York, but with fleeing from the law. According to Smith, they left "to escape mob violence,
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later said that the bank's failure was so shattering that afterwards "there were not twenty persons on earth that would declare that Joseph Smith was a prophet of God." Woodruff records that Smith had an alleged revelation on the topic, but declined to share it, saying only that "if we would give
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scholars, "Four of these suits were settled; three were voluntarily discontinued by the plaintiffs; and ten resulted in judgments against Joseph Smith and others. Of these ten judgments, three were satisfied in full, three were satisfied in part, and only four were wholly unsatisfied." The church
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assumed management of the KSSABC until the institution closed its doors in
November with about $ 100,000 in unresolved debt. Smith appointed Granger as his agent to clear up his Kirtland affairs, as Smith was named in seventeen lawsuits with claims totalling $ 30,206.44 over debts incurred in the
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In
February 1837, at the behest of Newell, Samuel D. Rounds swore a writ against Smith and Rigdon for illegal banking and issuing unauthorized bank paper. At a hearing in March, this trial was postponed until autumn. Eventually Rounds voluntarily dropped all of the cases in his suit except those
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Although this rejection has been attributed to both political and religious differences, this Ohio legislature was much more restrictive in issuing bank charters than the previous legislative body. The legislature was now dominated by the hard money wing of the
Democratic party, the "Jacksonian
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left Kirtland for Missouri weeks earlier on December 22 to avoid the dissidents who were angry with Young and threatened him because of his persistent public defense of Smith's innocence. Most of those who remained committed to the church moved to join the main body of the church in Missouri.
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Shortly before his resignation, Smith also took out a $ 1,225 loan from a separate bank to help keep KSSABC solvent. Smith publicly denied claims that the KSSABC was created for the purpose of surreptitiously enriching the church leadership, but many disaffected members felt otherwise.
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to serve as a quasi-banking institution. Quasi-banks operated as banks (sometimes in conjunction with other business activities) although they had no formal bank charter. These corporate institutions were not uncommon in Ohio at the time as banking regulations were limited.
179:, it also needed liquidity to repay outstanding loans. The credit needs of the church, growing population and ongoing land transactions required a local bank. Banks in the United States in the period before the Civil War issued and often backed their own currency.
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went to Philadelphia and acquired plates to print notes for the proposed Kirtland Safety Society bank. On January 2, Hyde returned to Kirtland empty-handed. He had been unable to persuade any legislator to sponsor a bill giving KSS a bank charter.
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as signatory, secretary and teller; Joseph Smith was cashier. Supporters hoped that they would eventually be able to secure a formal banking charter. In the interim, the KSSABC began issuing notes as a quasi-bank in early January 1837.
255:—on the printing plates Cowdery had previously purchased in Philadelphia. Subscribers and organizers of the KSSABC were members of the Kirtland community (merchants, farmers, etc.), many of whom became shareholders of the company.
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they had become collector's items. A Kirtland Safety Society note bearing Joseph Smith's signature can be quite valuable. For example, in an auction in March 2006, a $ 100 note sold for $ 11,500 (about a 3% per year gain).
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operating an illegal bank. According to Dale W. Adams, professor of agricultural economics at Ohio State University, other, larger quasi-banks had been operating in Ohio longer than KSSABC and were not being prosecuted.
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After Parrish started to stir up the Latter Day Saint community, many church members (including Church leaders) became disillusioned with the failure of the KSSABC and left the Church or were disfellowshipped or
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settle the affairs of the quasi-bank, many financially harmed Latter Day Saints left the church because they believed Smith had established the institution in order to enrich himself and church leadership.
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heed to the commandments the Lord had given this morning all would be well." Then Woodruff expresses his own hopes that the KSSABC will "become the greatest of all institutions on EARTH."
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Among KSSABC's misfortunes, Smith also accused Parrish of embezzling $ 25,000 from KSSABC. In June Smith sought a search warrant to confirm the allegations against Parrish but was denied.
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went so far as to encourage businesses to operate as quasi-banks. Even after the national bank failure in 1837, there was no widespread opposition to quasi-banks in Ohio until 1873.
220:
Democrats". Due to their influence, the legislature refused all applications for bank charters but one during 1836 and 1837, in part because of endemic nationwide problems with
142:... for the promotion of our temporal interests, and for the better management of our different occupations, which consist in agriculture, mechanical arts, and merchandising.
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that began in May of that year. Underlying causes of the nationwide financial panic included speculative and inflationary selling of public lands in western states like
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also raised and put up $ 38,000 in bail money for Smith at the Geauga County Court which was to be held to satisfy any judgment that might be rendered against Smith.
267:
The proposed capitalization of the "anti-bank" greatly exceeded the resources that were available from its backers, as noted by historian, Robert Kent Fielding:
384:. In May 1837, disgruntled church members (including Church leaders) and non-members alike began to publicly blame Smith for their losses. Some members, like
154:, was fined for "running an illegal bank," though he was employed as the institution's Cashier. While Smith appealed the fine and made arrangements to have
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Smith warned the community against speculation and counterfeiting. Shortly after his resignation from the KSSABC in July he stated in the August 1837
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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.
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Smith transferred all of his holdings to Oliver Granger and J. Carter in June and resigned from the KSSABC in July. Parrish and
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On January 12, 1838, faced with a warrant for his arrest on a charge of illegal banking, Smith fled with Rigdon to
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which was about to burst upon us under the color of legal process to cover the hellish designs of our enemies."
853:
Wade Englund's apologetic response to the Tanners' claims of wrongdoing surrounding the Kirtland Safety Society
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130:. According to KSS's 1837 "Articles of Agreement", it was intended to serve the financial needs of the growing
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562:, The Great Republic by the Master Historians, edited by Hubert H. Bancroft, as found at publicbookshelf.com
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Regardless of the reasons for the KSSABC's failure, much of the blame was laid upon Smith. Half of
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The KSS failure, although unique in some ways, was part of a national bank crisis known as the
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122:) was first proposed as a bank in 1836, and eventually organized on January 2, 1837, as a
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Bank note issued by the Kirtland Safety Society in early 1837, after its reorganization.
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However, by November 1837, KSS failed and its business closed. In the aftermath,
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730:"The Kirtland Economy Revisited: A Market Critique of Sectarian Economics"
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accused Smith of improprieties in the banking scandal, and church Apostle
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805:"The Kirtland Safety Society: The Stock Ledger Book and the Bank Failure"
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Emigration—The Saints Warned to Repent or Judgements Will Come Upon Them
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After some discussion by the leadership of the Church, church apostle
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By late 1836, many recent Latter Day Saint converts had gathered in
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239:(KSSABC) was formed under revised articles on January 2, 1837 as a
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attributed the lack of sponsorship to disfavor toward the Mormons.
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251:"Anti" and "ing" were engraved before and after "Bank"—in smaller
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Church History, Selections From the Encyclopedia of Mormonism.
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went to the Ohio legislature to request a bank charter while
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and Cowdery, were later reconciled to Smith and the church.
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Adams, pp. 469-70; Hill, Rooker, and Wimmer, pp. 433-434.
625:, vol. 12 (1971-1972), Number 4 - Summer 1972, p. 381.
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Adams, p. 468; Hill, Rooker, and Wimmer, pp. 433-434.
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A Kirtland Safety Society bank note for five dollars.
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297:. The economic policies of the previous President
235:Under the advice of non-Mormon legal counsel, the
702:The Growth of the Mormon Church in Kirtland, Ohio
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305:and the withdrawal of government funds from the
259:served as the KSSABC's chairman and president,
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126:, by leaders and followers of the then-named
16:Financial scandal in Latter Day Saint history
858:Identifying and tracking Kirtland Bank Notes
770:"The Failure of the Kirtland Safety Society"
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334:Joseph Smith and the criminal justice system
237:Kirtland Safety Society Anti-Banking Company
893:1837 disestablishments in the United States
492:"Episode 421: The Birth Of The Dollar Bill"
375:Response in the Latter Day Saint community
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586:Latter Day Saints' Messenger and Advocate
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878:History of the Latter Day Saint movement
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903:Defunct Latter Day Saint organizations
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615:The Kirtland Diary of Wilford Woodruff
320:and financial institutions and record
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918:Church of Christ (Latter Day Saints)
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351:failure of the KSSABC. According to
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898:Defunct banks of the United States
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908:Latter Day Saint movement in Ohio
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787:Peck, Reed (September 18, 1839),
571:Hill, Rooker, and Wimmer, p. 419.
520:Hill, Rooker, and Wimmer, p. 441.
511:Hill, Rooker, and Wimmer, p. 437.
644:Smythe Spring Sale Prices Strong
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307:Second Bank of the United States
683:"The Waning of Mormon Kirtland"
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700:Fielding, Robert Kent (1957).
661:"Chartering the Kirtland Bank"
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359:On July 28, Smith, Rigdon and
343:as some erroneously believed.
138:. Its preamble stated it was:
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827:Mormonism: Shadow or Reality?
793:, Quincy Adams City, Illinois
480:Chartering the Kirtland Bank.
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434:Kirtland Safety Society notes
410:The Quorum of Twelve Apostles
888:Banks disestablished in 1837
768:Partridge, Scott H. (1972).
756:, Salt Lake City, UT, 1992.
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928:1836 establishments in Ohio
605:4:108 (September 28, 1856).
560:The financial panic of 1837
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646:from www.news-antique.com.
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883:Banks established in 1836
822:Tanner, Jerald and Sandra
152:Latter Day Saint movement
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62:January 2, 1837
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832:Utah Lighthouse Ministry
588:3/11 (August 1837), 560.
457:Latter-day Saints portal
659:Adams, Dale W. (1983).
116:Kirtland Safety Society
22:Kirtland Safety Society
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393:Messenger and Advocate
328:Opposition and failure
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603:Journal of Discourses
422:Clay County, Missouri
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348:Frederick G. Williams
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913:1836 in Christianity
790:Reed Peck manuscript
724:; Rooker, C. Keith;
277:National bank crisis
24:Anti-Banking Company
634:Adams, footnote 33.
597:Heber C. Kimball, "
312:On May 10, 1837 in
241:joint stock company
163:Economy in Kirtland
124:joint stock company
45:Joint-stock company
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799:Sampson, D. Paul;
706:Indiana University
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77:November 1837
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150:, founder of the
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810:BYU Studies
775:BYU Studies
735:BYU Studies
688:BYU Studies
666:BYU Studies
623:BYU Studies
867:Categories
749:, Editor.
653:References
464:References
363:headed to
353:LDS Church
332:See also:
197:Orson Hyde
108:Bank notes
803:(1972).
728:(1977).
681:(1972).
443:See also
324:levels.
314:New York
295:Missouri
287:Michigan
253:typeface
169:Missouri
105:Products
51:Industry
714:6043664
582:Caution
496:NPR.org
478:Adams,
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74:Defunct
64: (
59:Founded
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834:1964,
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341:silver
318:banks
246:Whigs
836:ISBN
758:ISBN
710:OCLC
621:Fn,
293:and
291:Ohio
228:and
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114:The
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120:KSS
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