The Kirtland Safety Society (KSS) was first proposed as a bank in 1836, and eventually organized on January 2, 1837, as a
joint stock company
A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders are ...
, by leaders and followers of the
Church of the Latter Day Saints. According to KSS's 1837 "Articles of Agreement", it was intended to serve the financial needs of the growing
Latter Day Saint
The Latter Day Saint movement (also called the LDS movement, LDS restorationist movement, or Smith–Rigdon movement) is the collection of independent church groups that trace their origins to a Christian Restorationist movement founded by J ...
community in
Kirtland, Ohio
Kirtland is a city in Lake County, Ohio, United States. The population was 6,937 at the 2020 census. Kirtland is known for being the early headquarters of the Latter Day Saint movement from 1831 to 1837 and is the site of the movement's first t ...
. Its preamble stated it was:
... for the promotion of our temporal interests, and for the better management of our different occupations, which consist in agriculture, mechanical arts, and merchandising.
However, by November 1837, KSS failed and its business closed. In the aftermath,
Joseph Smith
Joseph Smith Jr. (December 23, 1805June 27, 1844) was an American religious leader and founder of Mormonism and the Latter Day Saint movement. When he was 24, Smith published the Book of Mormon. By the time of his death, 14 years later, he ...
, founder of the
Latter Day Saint movement
The Latter Day Saint movement (also called the LDS movement, LDS restorationist movement, or Smith–Rigdon movement) is the collection of independent church groups that trace their origins to a Christian Restorationist movement founded by Jo ...
, 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
Oliver Granger
Oliver Granger (February 7, 1794 – August 27, 1841) was an early leader in the Latter Day Saint movement. He was the subject of one of the Prophecies of Joseph Smith Jr., prophecies of movement founder Joseph Smith.
Early life
Granger was born ...
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.
[Adams, ''Chartering the Kirtland Bank.'']
Economy in Kirtland
By late 1836, many recent Latter Day Saint converts had gathered in
Missouri
Missouri is a U.S. state, state in the Midwestern United States, Midwestern region of the United States. Ranking List of U.S. states and territories by area, 21st in land area, it is bordered by eight states (tied for the most with Tennessee ...
and
Kirtland, Ohio
Kirtland is a city in Lake County, Ohio, United States. The population was 6,937 at the 2020 census. Kirtland is known for being the early headquarters of the Latter Day Saint movement from 1831 to 1837 and is the site of the movement's first t ...
. 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
Larry T. Wimmer, 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.
KSS organization
![Kirtland Safety Society bank note 2](https://upload.wikimedia.org/wikipedia/commons/8/8f/Kirtland_Safety_Society_bank_note_2.jpg)
After some discussion by the leadership of the Church, church apostle
Orson Hyde
Orson Hyde (January 8, 1805 – November 28, 1878) was a leader in the early Latter Day Saint movement and a member of the first Quorum of the Twelve Apostles. He was the President of the Quorum of the Twelve Apostles of the Church of Jesus ...
went to the Ohio legislature to request a bank charter while
Oliver Cowdery
Oliver H. P. Cowdery (October 3, 1806 – March 3, 1850) was an American Mormon leader who, with Joseph Smith, was an important participant in the formative period of the Latter Day Saint movement between 1829 and 1836. He was the first baptized ...
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.
Church president and founder
Joseph Smith
Joseph Smith Jr. (December 23, 1805June 27, 1844) was an American religious leader and founder of Mormonism and the Latter Day Saint movement. When he was 24, Smith published the Book of Mormon. By the time of his death, 14 years later, he ...
attributed the lack of sponsorship to disfavor toward the Mormons.
[Hill, Rooker, and Wimmer, p. 437.]
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. 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.
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 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
land speculation
In finance, speculation is the purchase of an asset (a commodity, goods, or real estate) with the hope that it will become more valuable shortly. (It can also refer to short sales in which the speculator hopes for a decline in value.)
Many s ...
,
wildcat banking
Wildcat banking was the issuance of paper currency in the United States by poorly capitalized state-chartered banks. These wildcat banks existed alongside more stable state banks during the Free Banking Era from 1836 to 1865, when the country ha ...
and
counterfeiting
To counterfeit means to imitate something authentic, with the intent to steal, destroy, or replace the original, for use in illegal transactions, or otherwise to deceive individuals into believing that the fake is of equal or greater value tha ...
.
Under the advice of non-Mormon legal counsel, the Kirtland Safety Society Anti-Banking Company (KSSABC) was formed under revised articles on January 2, 1837 as a
joint stock company
A joint-stock company is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholders are ...
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.
Whigs 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.
"Anti" and "ing" were engraved before and after "Bank"—in smaller
typeface
A typeface (or font family) is the design of lettering that can include variations in size, weight (e.g. bold), slope (e.g. italic), width (e.g. condensed), and so on. Each of these variations of the typeface is a font.
There are list of type ...
—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.
Sidney Rigdon
Sidney Rigdon (February 19, 1793 – July 14, 1876) was a leader during the early history of the Latter Day Saint movement.
Biography Early life
Rigdon was born in St. Clair Township, Allegheny County, Pennsylvania, on February 19, 1793. He was ...
served as the KSSABC's chairman and president,
Warren Parrish 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.
The proposed capitalization of the "anti-bank" greatly exceeded the resources that were available from its backers, as noted by historian, Robert Kent Fielding:
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 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!'
National bank crisis
The KSS failure, although unique in some ways, was part of a national bank crisis known as the
Panic of 1837
The Panic of 1837 was a financial crisis in the United States that touched off a major depression, which lasted until the mid-1840s. Profits, prices, and wages went down, westward expansion was stalled, unemployment went up, and pessimism abound ...
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
Michigan
Michigan () is a state in the Great Lakes region of the upper Midwestern United States. With a population of nearly 10.12 million and an area of nearly , Michigan is the 10th-largest state by population, the 11th-largest by area, and the ...
,
Ohio
Ohio () is a state in the Midwestern region of the United States. Of the fifty U.S. states, it is the 34th-largest by area, and with a population of nearly 11.8 million, is the seventh-most populous and tenth-most densely populated. The sta ...
and
Missouri
Missouri is a U.S. state, state in the Midwestern United States, Midwestern region of the United States. Ranking List of U.S. states and territories by area, 21st in land area, it is bordered by eight states (tied for the most with Tennessee ...
. The economic policies of the previous President
Andrew Jackson
Andrew Jackson (March 15, 1767 – June 8, 1845) was an American lawyer, planter, general, and statesman who served as the seventh president of the United States from 1829 to 1837. Before being elected to the presidency, he gained fame as ...
, including the
Specie Circular
The Specie Circular is a United States presidential executive order issued by President Andrew Jackson in 1836 pursuant to the Coinage Act. It required payment for government land to be in gold and silver.
History
The Specie Circular was a rea ...
and the withdrawal of government funds from the
Second Bank of the United States
The Second Bank of the United States was the second federally authorized Hamiltonian national bank in the United States. Located in Philadelphia, Pennsylvania, the bank was chartered from February 1816 to January 1836.. The Bank's formal name, ac ...
, also contributed to the crisis.
On May 10, 1837 in
New York
New York most commonly refers to:
* New York City, the most populous city in the United States, located in the state of New York
* New York (state), a state in the northeastern United States
New York may also refer to:
Film and television
* '' ...
, 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
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
s and financial institutions and record
unemployment
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
levels.
Opposition and failure
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 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
silver
Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, whi ...
as some erroneously believed.
Smith transferred all of his holdings to Oliver Granger and J. Carter in June and resigned from the KSSABC in July. Parrish and
Frederick G. Williams 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 failure of the KSSABC. According to
LDS Church
The Church of Jesus Christ of Latter-day Saints, informally known as the LDS Church or Mormon Church, is a Nontrinitarianism, nontrinitarian Christianity, Christian church that considers itself to be the Restorationism, restoration of the ...
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 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.
On July 28, Smith, Rigdon and
Thomas B. Marsh
Thomas Baldwin Marsh (November 1, 1800 – January 1866) was an early leader in the Latter-day Saint movement and an original member of the Quorum of the Twelve Apostles, who served as the quorum's first president in the Church of the Latter Day ...
headed to
Upper Canada
The Province of Upper Canada (french: link=no, province du Haut-Canada) was a part of British Canada established in 1791 by the Kingdom of Great Britain, to govern the central third of the lands in British North America, formerly part of the ...
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 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.
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.
Response in the Latter Day Saint community
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
excommunicated
Excommunication is an institutional act of religious censure used to end or at least regulate the communion of a member of a congregation with other members of the religious institution who are in normal communion with each other. The purpose ...
. In May 1837, disgruntled church members (including Church leaders) and non-members alike began to publicly blame Smith for their losses. Some members, like
Parley P. Pratt
Parley Parker Pratt Sr. (April 12, 1807 – May 13, 1857) was an early leader of the Latter Day Saint movement whose writings became a significant early nineteenth-century exposition of the Latter Day Saint faith. Named in 1835 as one of the first ...
and Cowdery, were later reconciled to Smith and the church.
Smith warned the community against speculation and counterfeiting. Shortly after his resignation from the KSSABC in July he stated in the August 1837 ''Messenger and Advocate'':
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 efectorsand 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.
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.
Regardless of the reasons for the KSSABC's failure, much of the blame was laid upon Smith. Half of
The Quorum of Twelve Apostles accused Smith of improprieties in the banking scandal, and church Apostle
Heber C. Kimball
Heber Chase Kimball (June 14, 1801 – June 22, 1868) was a leader in the early Latter Day Saint movement. He served as one of the original twelve apostles in the early Church of the Latter Day Saints, and as first counselor to Brigham Young ...
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 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."
On January 12, 1838, faced with a warrant for his arrest on a charge of illegal banking, Smith fled with Rigdon to
Clay County, Missouri
Clay County is located in the U.S. state of Missouri and is part of the Kansas City metropolitan area. As of the 2020 census, the county had a population of 253,335, making it the fifth-most populous county in Missouri. Its county seat is Liber ...
just ahead of an armed group out 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, which was about to burst upon us under the color of legal process to cover the hellish designs of our enemies."
Brigham Young
Brigham Young (; June 1, 1801August 29, 1877) was an American religious leader and politician. He was the second President of the Church (LDS Church), president of the Church of Jesus Christ of Latter-day Saints (LDS Church), from 1847 until his ...
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.
Kirtland Safety Society notes
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 hold onto 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 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).
Smythe Spring Sale Prices Strong
from www.news-antique.com.
See also
References
References
*
*
* Fielding, Robert Kent. ''The Growth of the Mormon Church in Kirtland, Ohio.'' Ph.D. Diss., Indiana University
Indiana University (IU) is a system of public universities in the U.S. state of Indiana.
Campuses
Indiana University has two core campuses, five regional campuses, and two regional centers under the administration of IUPUI.
*Indiana Universit ...
, 1957.
*
* Ludlow, Daniel H., Editor. ''Church History, Selections From the Encyclopedia of Mormonism.'' Deseret Book Co., Salt Lake City, UT, 1992. .
*
* .
*
* Tanner, Jerald and Sandra. '' Mormonism: Shadow or Reality?'', Chapter 35. Utah Lighthouse Ministry
Jerald Dee Tanner (June 1, 1938 – October 1, 2006) and Sandra McGee Tanner (born January 14, 1941) are American writers and researchers who publish archival and evidential materials about the history of the Church of Jesus Christ of Latter-day Sa ...
1964, .
External links
Wade Englund's apologetic response to the Tanners' claims of wrongdoing surrounding the Kirtland Safety Society
Identifying and tracking Kirtland Bank Notes
{{Authority control
History of Ohio
History of the Latter Day Saint movement
Banks established in 1836
Banks disestablished in 1837
1837 disestablishments in the United States
Defunct banks of the United States
Defunct Latter Day Saint organizations
Latter Day Saint movement in Ohio
1836 in Christianity
Church of Christ (Latter Day Saints)
Kirtland, Ohio
1836 establishments in Ohio