Kirtland Safety Society

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Criticism

Critics attack Joseph Smith over the Kirtland Safety Society (KSS) on multiple grounds:

• they claim the KSS was a "wildcat bank"
• they claim that the bank was illegal, and that the Church broke the law by founding it
• they claim it was a money-making scheme for Joseph
• they claim its failure proves Joseph was not a prophet

Response

This article will address the above issues, but it necessary to first discuss:

• vocabulary often used in discussions of banks and banking
• the reason for the formation of the KSS
• the status of banks in the 1830s frontier
• the way in which the KSS functioned

Terms and Defintions

face value

the money value marked on scrip. For a $20 note, the face value would be $20.

note

another term for scrip

redeem

to exchange scrip for specie at the bank

specie

hard currency, 'official' US money

scrip

paper money, issued by a bank. An example of KSS scrip can be seen here.

wildcat bank

a bank established as a money-making scam. Hard currency (specie) would be accepted by the bank, who would issue paper money (scrip). To redeem the scrip, however, one had to travel to the bank (the "home office," so to speak). A wildcat bank would be established in a remote, hard-to-access place (where "the wildcats are"). This sometimes made it difficult to even find the bank, much less bring the scrip to be redeemed for specie. Wildcat banks would sometimes place the name of a town on their notes, but have the bank located somewhere else, making it difficult to track them down. Thus, the bank kept the specie, and the note holder was left with worthless paper which no one would honor, since it could not be redeemed. Such banks usually collapsed quite quickly when it became clear that their notes were not easily redeemed. Their owners tried, presumably, to skip town before the law or the note holders caught up with them.

What were banks like at the time?

Describe banking at the time

Given that banking was in its infancy, the Saints were not sophisticated in their understanding of how a bank worked. Brigham Young, an astute businessman, was even confused. Brigham deposited an American dollar with his mark on it with the bank. He was shocked to receive the same note in payment from someone else a few days later! It seems that Brigham thought that the bank kept his note for him, and did not allow it to circulate. He initially thought of a 'bank' as something more like a safe deposit box—you put your valuables in, and the bank keeps those same valuables safe, does not lend them out, and gives you the exact same items back when you ask for them. Brigham did not understand that a bank keeps a record of money deposited, but uses the funds deposited to make loans and investments, and to pay other creditors.

Criticisms

"Wildcat bank"?

A "wildcat bank" was a financial institution which was placed in a hard-to-access, out-of-the-way place (where "the wildcats were"). This meant that bank scrip

Conclusion

A summary of the argument against the criticism.

Further reading

FAIR wiki articles

• Links to related articles in the wiki

FAIR web site

• Links to articles on the FAIR web site; Topical Guide entries go first

External links

• Scott H. Partridge, "The Failure of the Kirtland Safety Society," BYU Studies 12:4 (Summer 1972):437–454. GospeLink
• Paul Sampson and Larry T. Wimmer, "The Kirtland Safety Society: The Stock Ledger Book and the Bank Failure," BYU Studies 12:4 (Summer 1972):427–436. GospeLink
• Dale W. Adams, "Chartering the Kirtland Bank," BYU Studies 23:4 (Fall 1983) 467–482. GospeLink
• Marvin S. Hill, Keith C. Rooker and Larry T. Wimmer, "The Kirtland Economy Revisited: A Market Critique of Sectarian Economics," BYU Studies 17:4 (Summer 1977): 389–471. GospeLink
• Images of KSS scrip and other "Mormon Money"

Printed material

• Printed resources whose text is not available online