Creation of the Kirtland Safety Society

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What is The Kirtland Safety Society and why did it fail?

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Questions

Some 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

To see citations to the critical sources for these claims, [[../CriticalSources|click here]]

Questions

Some 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

To see citations to the critical sources for these claims, [[../CriticalSources|click here]]

Detailed Analysis

After presenting a timeline of events associated with the KSS, this article will 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

The criticisms will then be addressed.

Criticisms

"Wildcat bank"?

There is no evidence that the KSS was a “wildcat bank.” It was located in Kirtland, a large and thriving town in Ohio. The bank did not decline to exchange scrip for specie. In fact, this willingness to honor its notes created trouble for the bank early on, since they had insufficient funds to honor their notes after only about two weeks.

Question: Was the establishment of the Kirtland Safety Society "anti-bank" illegal?

Starting operations without a charter was unwise, however the documents creating the KSS clearly bear the marks of being drafted by legal counsel

Starting operations without a charter was clearly an unwise decision. It is doubtful that Joseph and associates had time to receive detailed legal advice between the time their first charter application was denied and the beginning of banking operations, but the documents creating the KSS clearly bear the marks of being drafted by legal counsel. There are also marked differences between the documents prepared for a bank with a charter, and for the subsequent "anti-banking society," suggesting that Church leaders did not simply "rewrite" the original legal documents:

Joseph Smith, Sidney Rigdon and others directly involved were closely counseled by lawyers on the creation of the bank. The two organizing documents, of 2 November 1836, and 2 January 1837, respectively, are unlikely products of a lay hand. Quite plainly, they were drawn by counsel. Moreover, the differences between the two documents indicate legal craftsmanship, even more strongly than the style and content of the documents themselves. The organization of the Society, its form and legality, were matters upon which Joseph Smith obviously had close legal counsel and assistance. It is our conclusion that the legal advice he received was incorrect, or at best poor. It seems likely that Benjamin Bissell was the lawyer who counseled Joseph Smith concerning the bank, and who drew the organizing documents in both versions. It was Bissell who had been implicitly repealed by the Ohio legislature in 1824, and who unsuccessfully defended Joseph Smith and Sidney Rigdon in the litigation contesting the legality of the bank.

While the legal advice they received was probably poor, this is a professional failing on the lawyer's part

Furthermore, there was considerable debate as to whether the anti-banking laws were even constitutional.

A second charter application was made with the support of Joseph Smith’s non-LDS lawyer, Benjamin Bissell, and other non-Mormons. The bank’s supporters probably hoped that they could eventually get a charter when the political circumstances were more favorable, and the support of legal and political personalities probably encouraged them in their course of action.

Clearly, Joseph and his supporters did not simply set out to be reckless; they had both political and legal perspectives which gave them cause for optimism.

Even with a charter, the bank would not have survived the financial crisis of 1837

Even with a charter the Kirtland bank likely would have failed during the economic turmoil of 1837. At best a charter would have allowed the bank to survive a few months longer to close without raising a flurry of law suits and apostasy and to be known by posterity as a simple business failure rather than as a shady venture. It is also clear that with or without the bank the economic turmoil that began in 1837 would have wrecked the Mormon community in Kirtland because of its highly levered position and the extremely short term nature of its debts…painful as it was the bank affair probably did little to alter the course of Mormon history.

The Kirtland Safety Society was found by a jury to be an illegal bank, however, there does not seem to have been a willful effort to deceive or extort

In short, the KSS was found by a jury to be an illegal bank. The leaders of the Church made a sincere effort to solve the pressing financial problems which beset them, and were probably hasty and somewhat naïve about the undertaking. There does not seem to have been a willful effort to deceive or extort. And, the legal issues are not entirely clear, even in retrospect:

The question whether the activities of the Society in 1837 were indeed unlawful under Ohio law requires considerable and fairly sophisticated legal analysis. Although we are now satisfied that the activities of the Society did indeed violate the proscriptions of the 1816 Ohio Statute, that conclusion is not entirely free from doubt, even with the benefit of hindsight. It must have been much less clear in 1837, when Joseph Smith was faced with a decision as to how to proceed in the face of the refusal of the Ohio Legislature to grant a charter.

In any case, the financial crisis of 1837 likely could not have been averted even if all the legalities had been observed.

Deceptive?

Enriching Joseph?

Joseph did not profit personally from the bank, and withdrew his support before the failure. Joseph probably suffered more legal repercussions than anyone from the event. There is no evidence that Joseph was “getting rich,” or attempting to do so, from the bank. He paid more for his stock in the bank than 85% of the subscribers, and he put more of his own money into the bank than anyone else, save one person.

In June 1837, Kirtland land values had increased by 800% in just one year, so the idea of backing the bank with land does not seem unreasonable.

Furthermore, the bank's weakness became a drain on Joseph, and he expended considerable resources trying to save it—including obtaining three new loans—which only worsened his position in the end.

Joseph was left with debts of $100,000. He had that value in goods and land, but it was difficult to convert these to cash. (Ironically, it was this very issue which had led to the bank's formation in the first place.)

Joseph fled for fear of his life, but also left creditors behind. Admirably, even as late as 1843, he continued to work to settle his Kirtland debts, even though he was far away in Nauvoo and effectively beyond the reach of his creditors. In a 23 June 1874 speech, Brigham Young indicated that "some of his [Joseph's] debts had to be settled afterwards; and I am thankful to say that they were settled up."

Joseph falsely blamed others?

Question: Did Joseph Smith claim that the Kirtland Safety Society was established by a revelation from God?

Joseph did not record or claim a revelation on the formation of the Kirtland Safety Society

It seems, rather, to have been his attempt to solve a complex and serious problem that probably had no good solution given the financial tools available to him. His anxiety to solve the Church’s financial problems led to difficulty, but Joseph was not alone: hundreds of thousands of frontier settlers had to resort to similar tactics:

Erroneous banking policies caused financial services to expand much more slowly than the growth in real economic activities retarded the growth process and forced people to create illegal mediums of exchange to substitute for inefficient barter.

Joseph insisted that a prophet was only a prophet when he was acting as such. The Kirtland Bank episode is a good example of fallible men doing their best to solve an intractable problem. (Joseph also emphasized that there was no expectation of success if members did not follow his counsel--which they did not.)

Brigham Young described an incident from his own life that speaks to the Kirtland Safety Society period:

I can tell the people that once in my life I felt a want of confidence in brother Joseph Smith, soon after I became acquainted with him. It was not concerning religious matters-it was not about his revelations-but it was in relation to his financiering-to his managing the temporal affairs which he undertook. A feeling came over me that Joseph was not right in his financial management, though I presume the feeling did not last sixty seconds, and perhaps not thirty...

Though I admitted in my feelings and knew all the time that Joseph was a human being and subject to err, still it was none of my business to look after his faults. I repented of my unbelief, and that too, very suddenly; I repented about as quickly as I committed the error. It was not for me to question whether Joseph was dictated by the Lord at all times and under all circumstances or not...

Had I not thoroughly understood this and believed it, I much doubt whether I should ever have embraced what is called "Mormonism." He was called of God; God dictated him, and if He had a mind to leave him to himself and let him commit an error, that was no business of mine. And it was not for me to question it, if the Lord was disposed to let Joseph lead the people astray, for He had called him and instructed him to gather Israel and restore the Priesthood and kingdom to them.

That was my faith, and it is my faith still… it is taught to the people now continually, to have implicit confidence in our leaders to be sure that we live so that Christ is within us a living fountain, that we may have the Holy Ghost within us to actuate, dictate, and direct us every hour and moment of our lives. How are we going to obtain implicit confidence in all the words and doings of Joseph? By one principle alone, that is, to live so that the voice of the Spirit will testify to us all the time that he is the servant of the Most High....

Thus, Brigham did not deny the error, or insist that it could not happen. But, he did not allow himself to be distracted by it.

Warren Parrish, one year after hearing Joseph, claimed that he said that it "should swallow up all other Banks...and survive when all others should be laid in ruins"

Warren Parrish would apostatize, and later claim on 15 February 1838 (a little more than one year after the fact):

I have listened to [the Prophet] with feelings of no ordinary kind when he declared that the audible voice of God instructed him to establish a Banking-Anti-Banking Institution, which, like Aaron's rod, should swallow up all other Banks...and grow and flourish and spread from the rivers to the ends of the earth, and survive when all others should be laid in ruins.

Wilford Woodruff's diary on the day that Joseph spoke: "He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well"

Fortunately, there is a contemporaneous account from Wilford Woodruff, who wrote in his diary on the very day that Joseph spoke—6 January 1837:

I also herd President Joseph Smith jr. declare in the presence of F Williams, D. Whitmer, S. Smith, W. Parrish, & others in the Deposit Office that he had receieved ^{[check spelling]} that morning the Word of the Lord upon the Subject of the Kirtland Safety Society. He was alone in a room by himself & he had not ownly the voice of the Spirit upon the Subject but even an audable voice. He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well (spelling and capitalization in original, italics and emphasis added).

The similarities and differences in these accounts are striking. In both reports, Joseph said that the Lord has spoken to him in "an audible voice." Parrish was present at the event described by Woodruff. Yet, Woodruff indicated that Joseph did not tell them what the Lord had said, other than to make a conditional promise if they were all obedient.

Why should we believe the later, hostile report of Parrish (who had something to gain by lying) when it doesn't match the contemporary report written before there was any problem with the bank?

Parrish knew that the bank was in serious trouble by August 1838 - Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later?

The Kirtland Safety Society was in serious trouble by the spring of 1837. Joseph Smith had resigned from it by 8 June 1837. Yet, in the same month of June, Parrish was called to testify in the case of Grandison Newell vs. Joseph Smith. Newell put Parrish on the stand but

when [Warren Parrish was] asked by the lawyers, "Do you know of anything in the character or conduct of Mr. Smith which is unworthy of his profession as a man of God?" the answer was, "I do not."

So, by this date Parrish knew that the bank was in serious trouble. He was also hostile to Joseph (on May 29 he would bring high council charges against him for "lying...extortion...and...speaking disrespectfully against his brethren behind their backs." He was in court under oath, called by the prosecution because they thought he would help their case against Joseph Smith, and yet he said he knew nothing in Joseph's conduct or character which suggested his profession as a man of God was unfounded.

Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later? Quite simply because (as the Woodruff diary shows) Joseph reported the contents of no such revelation. This points to a February 1838 fabrication by Parrish. Would Parrish lie? He later brought charges against Sidney Rigdon for, among other things, "expressing an unbelief in the revelations of God, both old and new." To charge Sidney Rigdon—former Campbellite preacher, student of the Bible, and stirring biblical orator—with disbelieving the revelations of God is simple nonsense. It is one more bit of evidence that Parrish's word, by this point in time, cannot be trusted.

For further information related to this topic

R. McKay White, "The Kirtland Safety Society"

R. McKay White,  Proceedings of the 2009 FAIR Conference, (August 2009)

The Kirtland Safety Society Anti-Banking Company is an important part of our church history, having, as it did, a significant role in the Kirtland apostasy. Yet, to date, it has received much more attention from anti-Mormons, or “the other guys”, than from our own scholars and apologists. As a result, there are a large number of myths about the Safety Society that the other guys use to criticize Joseph Smith and destroy faith.

Today, I’m going to lay the episode wide open. We’ll see the myths that have sprung from the creative minds of interested parties, the facts will be laid bare, and in doing so, we’ll see why the Prophet deserves a good name.

Click here to view the complete article

Questions

Some 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

To see citations to the critical sources for these claims, [[../CriticalSources|click here]]

Detailed Analysis

After presenting a timeline of events associated with the KSS, this article will 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

The criticisms will then be addressed.

Criticisms

"Wildcat bank"?

There is no evidence that the KSS was a “wildcat bank.” It was located in Kirtland, a large and thriving town in Ohio. The bank did not decline to exchange scrip for specie. In fact, this willingness to honor its notes created trouble for the bank early on, since they had insufficient funds to honor their notes after only about two weeks.

Question: Was the establishment of the Kirtland Safety Society "anti-bank" illegal?

Starting operations without a charter was unwise, however the documents creating the KSS clearly bear the marks of being drafted by legal counsel

Starting operations without a charter was clearly an unwise decision. It is doubtful that Joseph and associates had time to receive detailed legal advice between the time their first charter application was denied and the beginning of banking operations, but the documents creating the KSS clearly bear the marks of being drafted by legal counsel. There are also marked differences between the documents prepared for a bank with a charter, and for the subsequent "anti-banking society," suggesting that Church leaders did not simply "rewrite" the original legal documents:

Joseph Smith, Sidney Rigdon and others directly involved were closely counseled by lawyers on the creation of the bank. The two organizing documents, of 2 November 1836, and 2 January 1837, respectively, are unlikely products of a lay hand. Quite plainly, they were drawn by counsel. Moreover, the differences between the two documents indicate legal craftsmanship, even more strongly than the style and content of the documents themselves. The organization of the Society, its form and legality, were matters upon which Joseph Smith obviously had close legal counsel and assistance. It is our conclusion that the legal advice he received was incorrect, or at best poor. It seems likely that Benjamin Bissell was the lawyer who counseled Joseph Smith concerning the bank, and who drew the organizing documents in both versions. It was Bissell who had been implicitly repealed by the Ohio legislature in 1824, and who unsuccessfully defended Joseph Smith and Sidney Rigdon in the litigation contesting the legality of the bank.

While the legal advice they received was probably poor, this is a professional failing on the lawyer's part

Furthermore, there was considerable debate as to whether the anti-banking laws were even constitutional.

A second charter application was made with the support of Joseph Smith’s non-LDS lawyer, Benjamin Bissell, and other non-Mormons. The bank’s supporters probably hoped that they could eventually get a charter when the political circumstances were more favorable, and the support of legal and political personalities probably encouraged them in their course of action.

Clearly, Joseph and his supporters did not simply set out to be reckless; they had both political and legal perspectives which gave them cause for optimism.

Even with a charter, the bank would not have survived the financial crisis of 1837

Even with a charter the Kirtland bank likely would have failed during the economic turmoil of 1837. At best a charter would have allowed the bank to survive a few months longer to close without raising a flurry of law suits and apostasy and to be known by posterity as a simple business failure rather than as a shady venture. It is also clear that with or without the bank the economic turmoil that began in 1837 would have wrecked the Mormon community in Kirtland because of its highly levered position and the extremely short term nature of its debts…painful as it was the bank affair probably did little to alter the course of Mormon history.

The Kirtland Safety Society was found by a jury to be an illegal bank, however, there does not seem to have been a willful effort to deceive or extort

In short, the KSS was found by a jury to be an illegal bank. The leaders of the Church made a sincere effort to solve the pressing financial problems which beset them, and were probably hasty and somewhat naïve about the undertaking. There does not seem to have been a willful effort to deceive or extort. And, the legal issues are not entirely clear, even in retrospect:

The question whether the activities of the Society in 1837 were indeed unlawful under Ohio law requires considerable and fairly sophisticated legal analysis. Although we are now satisfied that the activities of the Society did indeed violate the proscriptions of the 1816 Ohio Statute, that conclusion is not entirely free from doubt, even with the benefit of hindsight. It must have been much less clear in 1837, when Joseph Smith was faced with a decision as to how to proceed in the face of the refusal of the Ohio Legislature to grant a charter.

In any case, the financial crisis of 1837 likely could not have been averted even if all the legalities had been observed.

Deceptive?

Enriching Joseph?

Joseph did not profit personally from the bank, and withdrew his support before the failure. Joseph probably suffered more legal repercussions than anyone from the event. There is no evidence that Joseph was “getting rich,” or attempting to do so, from the bank. He paid more for his stock in the bank than 85% of the subscribers, and he put more of his own money into the bank than anyone else, save one person.

In June 1837, Kirtland land values had increased by 800% in just one year, so the idea of backing the bank with land does not seem unreasonable.

Furthermore, the bank's weakness became a drain on Joseph, and he expended considerable resources trying to save it—including obtaining three new loans—which only worsened his position in the end.

Joseph was left with debts of $100,000. He had that value in goods and land, but it was difficult to convert these to cash. (Ironically, it was this very issue which had led to the bank's formation in the first place.)

Joseph fled for fear of his life, but also left creditors behind. Admirably, even as late as 1843, he continued to work to settle his Kirtland debts, even though he was far away in Nauvoo and effectively beyond the reach of his creditors. In a 23 June 1874 speech, Brigham Young indicated that "some of his [Joseph's] debts had to be settled afterwards; and I am thankful to say that they were settled up."

Joseph falsely blamed others?

Question: Did Joseph Smith claim that the Kirtland Safety Society was established by a revelation from God?

Joseph did not record or claim a revelation on the formation of the Kirtland Safety Society

It seems, rather, to have been his attempt to solve a complex and serious problem that probably had no good solution given the financial tools available to him. His anxiety to solve the Church’s financial problems led to difficulty, but Joseph was not alone: hundreds of thousands of frontier settlers had to resort to similar tactics:

Erroneous banking policies caused financial services to expand much more slowly than the growth in real economic activities retarded the growth process and forced people to create illegal mediums of exchange to substitute for inefficient barter.

Joseph insisted that a prophet was only a prophet when he was acting as such. The Kirtland Bank episode is a good example of fallible men doing their best to solve an intractable problem. (Joseph also emphasized that there was no expectation of success if members did not follow his counsel--which they did not.)

Brigham Young described an incident from his own life that speaks to the Kirtland Safety Society period:

I can tell the people that once in my life I felt a want of confidence in brother Joseph Smith, soon after I became acquainted with him. It was not concerning religious matters-it was not about his revelations-but it was in relation to his financiering-to his managing the temporal affairs which he undertook. A feeling came over me that Joseph was not right in his financial management, though I presume the feeling did not last sixty seconds, and perhaps not thirty...

Though I admitted in my feelings and knew all the time that Joseph was a human being and subject to err, still it was none of my business to look after his faults. I repented of my unbelief, and that too, very suddenly; I repented about as quickly as I committed the error. It was not for me to question whether Joseph was dictated by the Lord at all times and under all circumstances or not...

Had I not thoroughly understood this and believed it, I much doubt whether I should ever have embraced what is called "Mormonism." He was called of God; God dictated him, and if He had a mind to leave him to himself and let him commit an error, that was no business of mine. And it was not for me to question it, if the Lord was disposed to let Joseph lead the people astray, for He had called him and instructed him to gather Israel and restore the Priesthood and kingdom to them.

That was my faith, and it is my faith still… it is taught to the people now continually, to have implicit confidence in our leaders to be sure that we live so that Christ is within us a living fountain, that we may have the Holy Ghost within us to actuate, dictate, and direct us every hour and moment of our lives. How are we going to obtain implicit confidence in all the words and doings of Joseph? By one principle alone, that is, to live so that the voice of the Spirit will testify to us all the time that he is the servant of the Most High....

Thus, Brigham did not deny the error, or insist that it could not happen. But, he did not allow himself to be distracted by it.

Warren Parrish, one year after hearing Joseph, claimed that he said that it "should swallow up all other Banks...and survive when all others should be laid in ruins"

Warren Parrish would apostatize, and later claim on 15 February 1838 (a little more than one year after the fact):

I have listened to [the Prophet] with feelings of no ordinary kind when he declared that the audible voice of God instructed him to establish a Banking-Anti-Banking Institution, which, like Aaron's rod, should swallow up all other Banks...and grow and flourish and spread from the rivers to the ends of the earth, and survive when all others should be laid in ruins.

Wilford Woodruff's diary on the day that Joseph spoke: "He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well"

Fortunately, there is a contemporaneous account from Wilford Woodruff, who wrote in his diary on the very day that Joseph spoke—6 January 1837:

I also herd President Joseph Smith jr. declare in the presence of F Williams, D. Whitmer, S. Smith, W. Parrish, & others in the Deposit Office that he had receieved ^{[check spelling]} that morning the Word of the Lord upon the Subject of the Kirtland Safety Society. He was alone in a room by himself & he had not ownly the voice of the Spirit upon the Subject but even an audable voice. He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well (spelling and capitalization in original, italics and emphasis added).

The similarities and differences in these accounts are striking. In both reports, Joseph said that the Lord has spoken to him in "an audible voice." Parrish was present at the event described by Woodruff. Yet, Woodruff indicated that Joseph did not tell them what the Lord had said, other than to make a conditional promise if they were all obedient.

Why should we believe the later, hostile report of Parrish (who had something to gain by lying) when it doesn't match the contemporary report written before there was any problem with the bank?

Parrish knew that the bank was in serious trouble by August 1838 - Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later?

The Kirtland Safety Society was in serious trouble by the spring of 1837. Joseph Smith had resigned from it by 8 June 1837. Yet, in the same month of June, Parrish was called to testify in the case of Grandison Newell vs. Joseph Smith. Newell put Parrish on the stand but

when [Warren Parrish was] asked by the lawyers, "Do you know of anything in the character or conduct of Mr. Smith which is unworthy of his profession as a man of God?" the answer was, "I do not."

So, by this date Parrish knew that the bank was in serious trouble. He was also hostile to Joseph (on May 29 he would bring high council charges against him for "lying...extortion...and...speaking disrespectfully against his brethren behind their backs." He was in court under oath, called by the prosecution because they thought he would help their case against Joseph Smith, and yet he said he knew nothing in Joseph's conduct or character which suggested his profession as a man of God was unfounded.

Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later? Quite simply because (as the Woodruff diary shows) Joseph reported the contents of no such revelation. This points to a February 1838 fabrication by Parrish. Would Parrish lie? He later brought charges against Sidney Rigdon for, among other things, "expressing an unbelief in the revelations of God, both old and new." To charge Sidney Rigdon—former Campbellite preacher, student of the Bible, and stirring biblical orator—with disbelieving the revelations of God is simple nonsense. It is one more bit of evidence that Parrish's word, by this point in time, cannot be trusted.

For further information related to this topic

R. McKay White, "The Kirtland Safety Society"

R. McKay White,  Proceedings of the 2009 FAIR Conference, (August 2009)

The Kirtland Safety Society Anti-Banking Company is an important part of our church history, having, as it did, a significant role in the Kirtland apostasy. Yet, to date, it has received much more attention from anti-Mormons, or “the other guys”, than from our own scholars and apologists. As a result, there are a large number of myths about the Safety Society that the other guys use to criticize Joseph Smith and destroy faith.

Today, I’m going to lay the episode wide open. We’ll see the myths that have sprung from the creative minds of interested parties, the facts will be laid bare, and in doing so, we’ll see why the Prophet deserves a good name.

Click here to view the complete article

Detailed Analysis

After presenting a timeline of events associated with the KSS, this article will 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

The criticisms will then be addressed.

Questions

Some 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

To see citations to the critical sources for these claims, [[../CriticalSources|click here]]

Detailed Analysis

After presenting a timeline of events associated with the KSS, this article will 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

The criticisms will then be addressed.

Criticisms

"Wildcat bank"?

There is no evidence that the KSS was a “wildcat bank.” It was located in Kirtland, a large and thriving town in Ohio. The bank did not decline to exchange scrip for specie. In fact, this willingness to honor its notes created trouble for the bank early on, since they had insufficient funds to honor their notes after only about two weeks.

Question: Was the establishment of the Kirtland Safety Society "anti-bank" illegal?

Starting operations without a charter was unwise, however the documents creating the KSS clearly bear the marks of being drafted by legal counsel

Starting operations without a charter was clearly an unwise decision. It is doubtful that Joseph and associates had time to receive detailed legal advice between the time their first charter application was denied and the beginning of banking operations, but the documents creating the KSS clearly bear the marks of being drafted by legal counsel. There are also marked differences between the documents prepared for a bank with a charter, and for the subsequent "anti-banking society," suggesting that Church leaders did not simply "rewrite" the original legal documents:

Joseph Smith, Sidney Rigdon and others directly involved were closely counseled by lawyers on the creation of the bank. The two organizing documents, of 2 November 1836, and 2 January 1837, respectively, are unlikely products of a lay hand. Quite plainly, they were drawn by counsel. Moreover, the differences between the two documents indicate legal craftsmanship, even more strongly than the style and content of the documents themselves. The organization of the Society, its form and legality, were matters upon which Joseph Smith obviously had close legal counsel and assistance. It is our conclusion that the legal advice he received was incorrect, or at best poor. It seems likely that Benjamin Bissell was the lawyer who counseled Joseph Smith concerning the bank, and who drew the organizing documents in both versions. It was Bissell who had been implicitly repealed by the Ohio legislature in 1824, and who unsuccessfully defended Joseph Smith and Sidney Rigdon in the litigation contesting the legality of the bank.

While the legal advice they received was probably poor, this is a professional failing on the lawyer's part

Furthermore, there was considerable debate as to whether the anti-banking laws were even constitutional.

A second charter application was made with the support of Joseph Smith’s non-LDS lawyer, Benjamin Bissell, and other non-Mormons. The bank’s supporters probably hoped that they could eventually get a charter when the political circumstances were more favorable, and the support of legal and political personalities probably encouraged them in their course of action.

Clearly, Joseph and his supporters did not simply set out to be reckless; they had both political and legal perspectives which gave them cause for optimism.

Even with a charter, the bank would not have survived the financial crisis of 1837

Even with a charter the Kirtland bank likely would have failed during the economic turmoil of 1837. At best a charter would have allowed the bank to survive a few months longer to close without raising a flurry of law suits and apostasy and to be known by posterity as a simple business failure rather than as a shady venture. It is also clear that with or without the bank the economic turmoil that began in 1837 would have wrecked the Mormon community in Kirtland because of its highly levered position and the extremely short term nature of its debts…painful as it was the bank affair probably did little to alter the course of Mormon history.

The Kirtland Safety Society was found by a jury to be an illegal bank, however, there does not seem to have been a willful effort to deceive or extort

In short, the KSS was found by a jury to be an illegal bank. The leaders of the Church made a sincere effort to solve the pressing financial problems which beset them, and were probably hasty and somewhat naïve about the undertaking. There does not seem to have been a willful effort to deceive or extort. And, the legal issues are not entirely clear, even in retrospect:

The question whether the activities of the Society in 1837 were indeed unlawful under Ohio law requires considerable and fairly sophisticated legal analysis. Although we are now satisfied that the activities of the Society did indeed violate the proscriptions of the 1816 Ohio Statute, that conclusion is not entirely free from doubt, even with the benefit of hindsight. It must have been much less clear in 1837, when Joseph Smith was faced with a decision as to how to proceed in the face of the refusal of the Ohio Legislature to grant a charter.

In any case, the financial crisis of 1837 likely could not have been averted even if all the legalities had been observed.

Deceptive?

Enriching Joseph?

Joseph did not profit personally from the bank, and withdrew his support before the failure. Joseph probably suffered more legal repercussions than anyone from the event. There is no evidence that Joseph was “getting rich,” or attempting to do so, from the bank. He paid more for his stock in the bank than 85% of the subscribers, and he put more of his own money into the bank than anyone else, save one person.

In June 1837, Kirtland land values had increased by 800% in just one year, so the idea of backing the bank with land does not seem unreasonable.

Furthermore, the bank's weakness became a drain on Joseph, and he expended considerable resources trying to save it—including obtaining three new loans—which only worsened his position in the end.

Joseph was left with debts of $100,000. He had that value in goods and land, but it was difficult to convert these to cash. (Ironically, it was this very issue which had led to the bank's formation in the first place.)

Joseph fled for fear of his life, but also left creditors behind. Admirably, even as late as 1843, he continued to work to settle his Kirtland debts, even though he was far away in Nauvoo and effectively beyond the reach of his creditors. In a 23 June 1874 speech, Brigham Young indicated that "some of his [Joseph's] debts had to be settled afterwards; and I am thankful to say that they were settled up."

Joseph falsely blamed others?

Question: Did Joseph Smith claim that the Kirtland Safety Society was established by a revelation from God?

Joseph did not record or claim a revelation on the formation of the Kirtland Safety Society

It seems, rather, to have been his attempt to solve a complex and serious problem that probably had no good solution given the financial tools available to him. His anxiety to solve the Church’s financial problems led to difficulty, but Joseph was not alone: hundreds of thousands of frontier settlers had to resort to similar tactics:

Erroneous banking policies caused financial services to expand much more slowly than the growth in real economic activities retarded the growth process and forced people to create illegal mediums of exchange to substitute for inefficient barter.

Joseph insisted that a prophet was only a prophet when he was acting as such. The Kirtland Bank episode is a good example of fallible men doing their best to solve an intractable problem. (Joseph also emphasized that there was no expectation of success if members did not follow his counsel--which they did not.)

Brigham Young described an incident from his own life that speaks to the Kirtland Safety Society period:

I can tell the people that once in my life I felt a want of confidence in brother Joseph Smith, soon after I became acquainted with him. It was not concerning religious matters-it was not about his revelations-but it was in relation to his financiering-to his managing the temporal affairs which he undertook. A feeling came over me that Joseph was not right in his financial management, though I presume the feeling did not last sixty seconds, and perhaps not thirty...

Though I admitted in my feelings and knew all the time that Joseph was a human being and subject to err, still it was none of my business to look after his faults. I repented of my unbelief, and that too, very suddenly; I repented about as quickly as I committed the error. It was not for me to question whether Joseph was dictated by the Lord at all times and under all circumstances or not...

Had I not thoroughly understood this and believed it, I much doubt whether I should ever have embraced what is called "Mormonism." He was called of God; God dictated him, and if He had a mind to leave him to himself and let him commit an error, that was no business of mine. And it was not for me to question it, if the Lord was disposed to let Joseph lead the people astray, for He had called him and instructed him to gather Israel and restore the Priesthood and kingdom to them.

That was my faith, and it is my faith still… it is taught to the people now continually, to have implicit confidence in our leaders to be sure that we live so that Christ is within us a living fountain, that we may have the Holy Ghost within us to actuate, dictate, and direct us every hour and moment of our lives. How are we going to obtain implicit confidence in all the words and doings of Joseph? By one principle alone, that is, to live so that the voice of the Spirit will testify to us all the time that he is the servant of the Most High....

Thus, Brigham did not deny the error, or insist that it could not happen. But, he did not allow himself to be distracted by it.

Warren Parrish, one year after hearing Joseph, claimed that he said that it "should swallow up all other Banks...and survive when all others should be laid in ruins"

Warren Parrish would apostatize, and later claim on 15 February 1838 (a little more than one year after the fact):

I have listened to [the Prophet] with feelings of no ordinary kind when he declared that the audible voice of God instructed him to establish a Banking-Anti-Banking Institution, which, like Aaron's rod, should swallow up all other Banks...and grow and flourish and spread from the rivers to the ends of the earth, and survive when all others should be laid in ruins.

Wilford Woodruff's diary on the day that Joseph spoke: "He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well"

Fortunately, there is a contemporaneous account from Wilford Woodruff, who wrote in his diary on the very day that Joseph spoke—6 January 1837:

I also herd President Joseph Smith jr. declare in the presence of F Williams, D. Whitmer, S. Smith, W. Parrish, & others in the Deposit Office that he had receieved ^{[check spelling]} that morning the Word of the Lord upon the Subject of the Kirtland Safety Society. He was alone in a room by himself & he had not ownly the voice of the Spirit upon the Subject but even an audable voice. He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well (spelling and capitalization in original, italics and emphasis added).

The similarities and differences in these accounts are striking. In both reports, Joseph said that the Lord has spoken to him in "an audible voice." Parrish was present at the event described by Woodruff. Yet, Woodruff indicated that Joseph did not tell them what the Lord had said, other than to make a conditional promise if they were all obedient.

Why should we believe the later, hostile report of Parrish (who had something to gain by lying) when it doesn't match the contemporary report written before there was any problem with the bank?

Parrish knew that the bank was in serious trouble by August 1838 - Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later?

The Kirtland Safety Society was in serious trouble by the spring of 1837. Joseph Smith had resigned from it by 8 June 1837. Yet, in the same month of June, Parrish was called to testify in the case of Grandison Newell vs. Joseph Smith. Newell put Parrish on the stand but

when [Warren Parrish was] asked by the lawyers, "Do you know of anything in the character or conduct of Mr. Smith which is unworthy of his profession as a man of God?" the answer was, "I do not."

So, by this date Parrish knew that the bank was in serious trouble. He was also hostile to Joseph (on May 29 he would bring high council charges against him for "lying...extortion...and...speaking disrespectfully against his brethren behind their backs." He was in court under oath, called by the prosecution because they thought he would help their case against Joseph Smith, and yet he said he knew nothing in Joseph's conduct or character which suggested his profession as a man of God was unfounded.

Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later? Quite simply because (as the Woodruff diary shows) Joseph reported the contents of no such revelation. This points to a February 1838 fabrication by Parrish. Would Parrish lie? He later brought charges against Sidney Rigdon for, among other things, "expressing an unbelief in the revelations of God, both old and new." To charge Sidney Rigdon—former Campbellite preacher, student of the Bible, and stirring biblical orator—with disbelieving the revelations of God is simple nonsense. It is one more bit of evidence that Parrish's word, by this point in time, cannot be trusted.

For further information related to this topic

R. McKay White, "The Kirtland Safety Society"

R. McKay White,  Proceedings of the 2009 FAIR Conference, (August 2009)

The Kirtland Safety Society Anti-Banking Company is an important part of our church history, having, as it did, a significant role in the Kirtland apostasy. Yet, to date, it has received much more attention from anti-Mormons, or “the other guys”, than from our own scholars and apologists. As a result, there are a large number of myths about the Safety Society that the other guys use to criticize Joseph Smith and destroy faith.

Today, I’m going to lay the episode wide open. We’ll see the myths that have sprung from the creative minds of interested parties, the facts will be laid bare, and in doing so, we’ll see why the Prophet deserves a good name.

Click here to view the complete article

Questions

Some 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

To see citations to the critical sources for these claims, [[../CriticalSources|click here]]

Detailed Analysis

After presenting a timeline of events associated with the KSS, this article will 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

The criticisms will then be addressed.

Criticisms

"Wildcat bank"?

There is no evidence that the KSS was a “wildcat bank.” It was located in Kirtland, a large and thriving town in Ohio. The bank did not decline to exchange scrip for specie. In fact, this willingness to honor its notes created trouble for the bank early on, since they had insufficient funds to honor their notes after only about two weeks.

Question: Was the establishment of the Kirtland Safety Society "anti-bank" illegal?

Starting operations without a charter was unwise, however the documents creating the KSS clearly bear the marks of being drafted by legal counsel

Starting operations without a charter was clearly an unwise decision. It is doubtful that Joseph and associates had time to receive detailed legal advice between the time their first charter application was denied and the beginning of banking operations, but the documents creating the KSS clearly bear the marks of being drafted by legal counsel. There are also marked differences between the documents prepared for a bank with a charter, and for the subsequent "anti-banking society," suggesting that Church leaders did not simply "rewrite" the original legal documents:

Joseph Smith, Sidney Rigdon and others directly involved were closely counseled by lawyers on the creation of the bank. The two organizing documents, of 2 November 1836, and 2 January 1837, respectively, are unlikely products of a lay hand. Quite plainly, they were drawn by counsel. Moreover, the differences between the two documents indicate legal craftsmanship, even more strongly than the style and content of the documents themselves. The organization of the Society, its form and legality, were matters upon which Joseph Smith obviously had close legal counsel and assistance. It is our conclusion that the legal advice he received was incorrect, or at best poor. It seems likely that Benjamin Bissell was the lawyer who counseled Joseph Smith concerning the bank, and who drew the organizing documents in both versions. It was Bissell who had been implicitly repealed by the Ohio legislature in 1824, and who unsuccessfully defended Joseph Smith and Sidney Rigdon in the litigation contesting the legality of the bank.

While the legal advice they received was probably poor, this is a professional failing on the lawyer's part

Furthermore, there was considerable debate as to whether the anti-banking laws were even constitutional.

A second charter application was made with the support of Joseph Smith’s non-LDS lawyer, Benjamin Bissell, and other non-Mormons. The bank’s supporters probably hoped that they could eventually get a charter when the political circumstances were more favorable, and the support of legal and political personalities probably encouraged them in their course of action.

Clearly, Joseph and his supporters did not simply set out to be reckless; they had both political and legal perspectives which gave them cause for optimism.

Even with a charter, the bank would not have survived the financial crisis of 1837

Even with a charter the Kirtland bank likely would have failed during the economic turmoil of 1837. At best a charter would have allowed the bank to survive a few months longer to close without raising a flurry of law suits and apostasy and to be known by posterity as a simple business failure rather than as a shady venture. It is also clear that with or without the bank the economic turmoil that began in 1837 would have wrecked the Mormon community in Kirtland because of its highly levered position and the extremely short term nature of its debts…painful as it was the bank affair probably did little to alter the course of Mormon history.

The Kirtland Safety Society was found by a jury to be an illegal bank, however, there does not seem to have been a willful effort to deceive or extort

In short, the KSS was found by a jury to be an illegal bank. The leaders of the Church made a sincere effort to solve the pressing financial problems which beset them, and were probably hasty and somewhat naïve about the undertaking. There does not seem to have been a willful effort to deceive or extort. And, the legal issues are not entirely clear, even in retrospect:

The question whether the activities of the Society in 1837 were indeed unlawful under Ohio law requires considerable and fairly sophisticated legal analysis. Although we are now satisfied that the activities of the Society did indeed violate the proscriptions of the 1816 Ohio Statute, that conclusion is not entirely free from doubt, even with the benefit of hindsight. It must have been much less clear in 1837, when Joseph Smith was faced with a decision as to how to proceed in the face of the refusal of the Ohio Legislature to grant a charter.

In any case, the financial crisis of 1837 likely could not have been averted even if all the legalities had been observed.

Deceptive?

Enriching Joseph?

Joseph did not profit personally from the bank, and withdrew his support before the failure. Joseph probably suffered more legal repercussions than anyone from the event. There is no evidence that Joseph was “getting rich,” or attempting to do so, from the bank. He paid more for his stock in the bank than 85% of the subscribers, and he put more of his own money into the bank than anyone else, save one person.

In June 1837, Kirtland land values had increased by 800% in just one year, so the idea of backing the bank with land does not seem unreasonable.

Furthermore, the bank's weakness became a drain on Joseph, and he expended considerable resources trying to save it—including obtaining three new loans—which only worsened his position in the end.

Joseph was left with debts of $100,000. He had that value in goods and land, but it was difficult to convert these to cash. (Ironically, it was this very issue which had led to the bank's formation in the first place.)

Joseph fled for fear of his life, but also left creditors behind. Admirably, even as late as 1843, he continued to work to settle his Kirtland debts, even though he was far away in Nauvoo and effectively beyond the reach of his creditors. In a 23 June 1874 speech, Brigham Young indicated that "some of his [Joseph's] debts had to be settled afterwards; and I am thankful to say that they were settled up."

Joseph falsely blamed others?

Question: Did Joseph Smith claim that the Kirtland Safety Society was established by a revelation from God?

Joseph did not record or claim a revelation on the formation of the Kirtland Safety Society

It seems, rather, to have been his attempt to solve a complex and serious problem that probably had no good solution given the financial tools available to him. His anxiety to solve the Church’s financial problems led to difficulty, but Joseph was not alone: hundreds of thousands of frontier settlers had to resort to similar tactics:

Erroneous banking policies caused financial services to expand much more slowly than the growth in real economic activities retarded the growth process and forced people to create illegal mediums of exchange to substitute for inefficient barter.

Joseph insisted that a prophet was only a prophet when he was acting as such. The Kirtland Bank episode is a good example of fallible men doing their best to solve an intractable problem. (Joseph also emphasized that there was no expectation of success if members did not follow his counsel--which they did not.)

Brigham Young described an incident from his own life that speaks to the Kirtland Safety Society period:

I can tell the people that once in my life I felt a want of confidence in brother Joseph Smith, soon after I became acquainted with him. It was not concerning religious matters-it was not about his revelations-but it was in relation to his financiering-to his managing the temporal affairs which he undertook. A feeling came over me that Joseph was not right in his financial management, though I presume the feeling did not last sixty seconds, and perhaps not thirty...

Though I admitted in my feelings and knew all the time that Joseph was a human being and subject to err, still it was none of my business to look after his faults. I repented of my unbelief, and that too, very suddenly; I repented about as quickly as I committed the error. It was not for me to question whether Joseph was dictated by the Lord at all times and under all circumstances or not...

Had I not thoroughly understood this and believed it, I much doubt whether I should ever have embraced what is called "Mormonism." He was called of God; God dictated him, and if He had a mind to leave him to himself and let him commit an error, that was no business of mine. And it was not for me to question it, if the Lord was disposed to let Joseph lead the people astray, for He had called him and instructed him to gather Israel and restore the Priesthood and kingdom to them.

That was my faith, and it is my faith still… it is taught to the people now continually, to have implicit confidence in our leaders to be sure that we live so that Christ is within us a living fountain, that we may have the Holy Ghost within us to actuate, dictate, and direct us every hour and moment of our lives. How are we going to obtain implicit confidence in all the words and doings of Joseph? By one principle alone, that is, to live so that the voice of the Spirit will testify to us all the time that he is the servant of the Most High....

Thus, Brigham did not deny the error, or insist that it could not happen. But, he did not allow himself to be distracted by it.

Warren Parrish, one year after hearing Joseph, claimed that he said that it "should swallow up all other Banks...and survive when all others should be laid in ruins"

Warren Parrish would apostatize, and later claim on 15 February 1838 (a little more than one year after the fact):

I have listened to [the Prophet] with feelings of no ordinary kind when he declared that the audible voice of God instructed him to establish a Banking-Anti-Banking Institution, which, like Aaron's rod, should swallow up all other Banks...and grow and flourish and spread from the rivers to the ends of the earth, and survive when all others should be laid in ruins.

Wilford Woodruff's diary on the day that Joseph spoke: "He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well"

Fortunately, there is a contemporaneous account from Wilford Woodruff, who wrote in his diary on the very day that Joseph spoke—6 January 1837:

I also herd President Joseph Smith jr. declare in the presence of F Williams, D. Whitmer, S. Smith, W. Parrish, & others in the Deposit Office that he had receieved ^{[check spelling]} that morning the Word of the Lord upon the Subject of the Kirtland Safety Society. He was alone in a room by himself & he had not ownly the voice of the Spirit upon the Subject but even an audable voice. He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well (spelling and capitalization in original, italics and emphasis added).

The similarities and differences in these accounts are striking. In both reports, Joseph said that the Lord has spoken to him in "an audible voice." Parrish was present at the event described by Woodruff. Yet, Woodruff indicated that Joseph did not tell them what the Lord had said, other than to make a conditional promise if they were all obedient.

Why should we believe the later, hostile report of Parrish (who had something to gain by lying) when it doesn't match the contemporary report written before there was any problem with the bank?

Parrish knew that the bank was in serious trouble by August 1838 - Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later?

The Kirtland Safety Society was in serious trouble by the spring of 1837. Joseph Smith had resigned from it by 8 June 1837. Yet, in the same month of June, Parrish was called to testify in the case of Grandison Newell vs. Joseph Smith. Newell put Parrish on the stand but

when [Warren Parrish was] asked by the lawyers, "Do you know of anything in the character or conduct of Mr. Smith which is unworthy of his profession as a man of God?" the answer was, "I do not."

So, by this date Parrish knew that the bank was in serious trouble. He was also hostile to Joseph (on May 29 he would bring high council charges against him for "lying...extortion...and...speaking disrespectfully against his brethren behind their backs." He was in court under oath, called by the prosecution because they thought he would help their case against Joseph Smith, and yet he said he knew nothing in Joseph's conduct or character which suggested his profession as a man of God was unfounded.

Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later? Quite simply because (as the Woodruff diary shows) Joseph reported the contents of no such revelation. This points to a February 1838 fabrication by Parrish. Would Parrish lie? He later brought charges against Sidney Rigdon for, among other things, "expressing an unbelief in the revelations of God, both old and new." To charge Sidney Rigdon—former Campbellite preacher, student of the Bible, and stirring biblical orator—with disbelieving the revelations of God is simple nonsense. It is one more bit of evidence that Parrish's word, by this point in time, cannot be trusted.

For further information related to this topic

R. McKay White, "The Kirtland Safety Society"

R. McKay White,  Proceedings of the 2009 FAIR Conference, (August 2009)

The Kirtland Safety Society Anti-Banking Company is an important part of our church history, having, as it did, a significant role in the Kirtland apostasy. Yet, to date, it has received much more attention from anti-Mormons, or “the other guys”, than from our own scholars and apologists. As a result, there are a large number of myths about the Safety Society that the other guys use to criticize Joseph Smith and destroy faith.

Today, I’m going to lay the episode wide open. We’ll see the myths that have sprung from the creative minds of interested parties, the facts will be laid bare, and in doing so, we’ll see why the Prophet deserves a good name.

Click here to view the complete article

Questions

Some 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

To see citations to the critical sources for these claims, [[../CriticalSources|click here]]

Detailed Analysis

After presenting a timeline of events associated with the KSS, this article will 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

The criticisms will then be addressed.

Criticisms

"Wildcat bank"?

There is no evidence that the KSS was a “wildcat bank.” It was located in Kirtland, a large and thriving town in Ohio. The bank did not decline to exchange scrip for specie. In fact, this willingness to honor its notes created trouble for the bank early on, since they had insufficient funds to honor their notes after only about two weeks.

Question: Was the establishment of the Kirtland Safety Society "anti-bank" illegal?

Starting operations without a charter was unwise, however the documents creating the KSS clearly bear the marks of being drafted by legal counsel

Starting operations without a charter was clearly an unwise decision. It is doubtful that Joseph and associates had time to receive detailed legal advice between the time their first charter application was denied and the beginning of banking operations, but the documents creating the KSS clearly bear the marks of being drafted by legal counsel. There are also marked differences between the documents prepared for a bank with a charter, and for the subsequent "anti-banking society," suggesting that Church leaders did not simply "rewrite" the original legal documents:

Joseph Smith, Sidney Rigdon and others directly involved were closely counseled by lawyers on the creation of the bank. The two organizing documents, of 2 November 1836, and 2 January 1837, respectively, are unlikely products of a lay hand. Quite plainly, they were drawn by counsel. Moreover, the differences between the two documents indicate legal craftsmanship, even more strongly than the style and content of the documents themselves. The organization of the Society, its form and legality, were matters upon which Joseph Smith obviously had close legal counsel and assistance. It is our conclusion that the legal advice he received was incorrect, or at best poor. It seems likely that Benjamin Bissell was the lawyer who counseled Joseph Smith concerning the bank, and who drew the organizing documents in both versions. It was Bissell who had been implicitly repealed by the Ohio legislature in 1824, and who unsuccessfully defended Joseph Smith and Sidney Rigdon in the litigation contesting the legality of the bank.

While the legal advice they received was probably poor, this is a professional failing on the lawyer's part

Furthermore, there was considerable debate as to whether the anti-banking laws were even constitutional.

A second charter application was made with the support of Joseph Smith’s non-LDS lawyer, Benjamin Bissell, and other non-Mormons. The bank’s supporters probably hoped that they could eventually get a charter when the political circumstances were more favorable, and the support of legal and political personalities probably encouraged them in their course of action.

Clearly, Joseph and his supporters did not simply set out to be reckless; they had both political and legal perspectives which gave them cause for optimism.

Even with a charter, the bank would not have survived the financial crisis of 1837

Even with a charter the Kirtland bank likely would have failed during the economic turmoil of 1837. At best a charter would have allowed the bank to survive a few months longer to close without raising a flurry of law suits and apostasy and to be known by posterity as a simple business failure rather than as a shady venture. It is also clear that with or without the bank the economic turmoil that began in 1837 would have wrecked the Mormon community in Kirtland because of its highly levered position and the extremely short term nature of its debts…painful as it was the bank affair probably did little to alter the course of Mormon history.

The Kirtland Safety Society was found by a jury to be an illegal bank, however, there does not seem to have been a willful effort to deceive or extort

In short, the KSS was found by a jury to be an illegal bank. The leaders of the Church made a sincere effort to solve the pressing financial problems which beset them, and were probably hasty and somewhat naïve about the undertaking. There does not seem to have been a willful effort to deceive or extort. And, the legal issues are not entirely clear, even in retrospect:

The question whether the activities of the Society in 1837 were indeed unlawful under Ohio law requires considerable and fairly sophisticated legal analysis. Although we are now satisfied that the activities of the Society did indeed violate the proscriptions of the 1816 Ohio Statute, that conclusion is not entirely free from doubt, even with the benefit of hindsight. It must have been much less clear in 1837, when Joseph Smith was faced with a decision as to how to proceed in the face of the refusal of the Ohio Legislature to grant a charter.

In any case, the financial crisis of 1837 likely could not have been averted even if all the legalities had been observed.

Deceptive?

Enriching Joseph?

Joseph did not profit personally from the bank, and withdrew his support before the failure. Joseph probably suffered more legal repercussions than anyone from the event. There is no evidence that Joseph was “getting rich,” or attempting to do so, from the bank. He paid more for his stock in the bank than 85% of the subscribers, and he put more of his own money into the bank than anyone else, save one person.

In June 1837, Kirtland land values had increased by 800% in just one year, so the idea of backing the bank with land does not seem unreasonable.

Furthermore, the bank's weakness became a drain on Joseph, and he expended considerable resources trying to save it—including obtaining three new loans—which only worsened his position in the end.

Joseph was left with debts of $100,000. He had that value in goods and land, but it was difficult to convert these to cash. (Ironically, it was this very issue which had led to the bank's formation in the first place.)

Joseph fled for fear of his life, but also left creditors behind. Admirably, even as late as 1843, he continued to work to settle his Kirtland debts, even though he was far away in Nauvoo and effectively beyond the reach of his creditors. In a 23 June 1874 speech, Brigham Young indicated that "some of his [Joseph's] debts had to be settled afterwards; and I am thankful to say that they were settled up."

Joseph falsely blamed others?

Question: Did Joseph Smith claim that the Kirtland Safety Society was established by a revelation from God?

Joseph did not record or claim a revelation on the formation of the Kirtland Safety Society

It seems, rather, to have been his attempt to solve a complex and serious problem that probably had no good solution given the financial tools available to him. His anxiety to solve the Church’s financial problems led to difficulty, but Joseph was not alone: hundreds of thousands of frontier settlers had to resort to similar tactics:

Erroneous banking policies caused financial services to expand much more slowly than the growth in real economic activities retarded the growth process and forced people to create illegal mediums of exchange to substitute for inefficient barter.

Joseph insisted that a prophet was only a prophet when he was acting as such. The Kirtland Bank episode is a good example of fallible men doing their best to solve an intractable problem. (Joseph also emphasized that there was no expectation of success if members did not follow his counsel--which they did not.)

Brigham Young described an incident from his own life that speaks to the Kirtland Safety Society period:

I can tell the people that once in my life I felt a want of confidence in brother Joseph Smith, soon after I became acquainted with him. It was not concerning religious matters-it was not about his revelations-but it was in relation to his financiering-to his managing the temporal affairs which he undertook. A feeling came over me that Joseph was not right in his financial management, though I presume the feeling did not last sixty seconds, and perhaps not thirty...

Though I admitted in my feelings and knew all the time that Joseph was a human being and subject to err, still it was none of my business to look after his faults. I repented of my unbelief, and that too, very suddenly; I repented about as quickly as I committed the error. It was not for me to question whether Joseph was dictated by the Lord at all times and under all circumstances or not...

Had I not thoroughly understood this and believed it, I much doubt whether I should ever have embraced what is called "Mormonism." He was called of God; God dictated him, and if He had a mind to leave him to himself and let him commit an error, that was no business of mine. And it was not for me to question it, if the Lord was disposed to let Joseph lead the people astray, for He had called him and instructed him to gather Israel and restore the Priesthood and kingdom to them.

That was my faith, and it is my faith still… it is taught to the people now continually, to have implicit confidence in our leaders to be sure that we live so that Christ is within us a living fountain, that we may have the Holy Ghost within us to actuate, dictate, and direct us every hour and moment of our lives. How are we going to obtain implicit confidence in all the words and doings of Joseph? By one principle alone, that is, to live so that the voice of the Spirit will testify to us all the time that he is the servant of the Most High....

Thus, Brigham did not deny the error, or insist that it could not happen. But, he did not allow himself to be distracted by it.

Warren Parrish, one year after hearing Joseph, claimed that he said that it "should swallow up all other Banks...and survive when all others should be laid in ruins"

Warren Parrish would apostatize, and later claim on 15 February 1838 (a little more than one year after the fact):

I have listened to [the Prophet] with feelings of no ordinary kind when he declared that the audible voice of God instructed him to establish a Banking-Anti-Banking Institution, which, like Aaron's rod, should swallow up all other Banks...and grow and flourish and spread from the rivers to the ends of the earth, and survive when all others should be laid in ruins.

Wilford Woodruff's diary on the day that Joseph spoke: "He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well"

Fortunately, there is a contemporaneous account from Wilford Woodruff, who wrote in his diary on the very day that Joseph spoke—6 January 1837:

I also herd President Joseph Smith jr. declare in the presence of F Williams, D. Whitmer, S. Smith, W. Parrish, & others in the Deposit Office that he had receieved ^{[check spelling]} that morning the Word of the Lord upon the Subject of the Kirtland Safety Society. He was alone in a room by himself & he had not ownly the voice of the Spirit upon the Subject but even an audable voice. He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well (spelling and capitalization in original, italics and emphasis added).

The similarities and differences in these accounts are striking. In both reports, Joseph said that the Lord has spoken to him in "an audible voice." Parrish was present at the event described by Woodruff. Yet, Woodruff indicated that Joseph did not tell them what the Lord had said, other than to make a conditional promise if they were all obedient.

Why should we believe the later, hostile report of Parrish (who had something to gain by lying) when it doesn't match the contemporary report written before there was any problem with the bank?

Parrish knew that the bank was in serious trouble by August 1838 - Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later?

The Kirtland Safety Society was in serious trouble by the spring of 1837. Joseph Smith had resigned from it by 8 June 1837. Yet, in the same month of June, Parrish was called to testify in the case of Grandison Newell vs. Joseph Smith. Newell put Parrish on the stand but

when [Warren Parrish was] asked by the lawyers, "Do you know of anything in the character or conduct of Mr. Smith which is unworthy of his profession as a man of God?" the answer was, "I do not."

So, by this date Parrish knew that the bank was in serious trouble. He was also hostile to Joseph (on May 29 he would bring high council charges against him for "lying...extortion...and...speaking disrespectfully against his brethren behind their backs." He was in court under oath, called by the prosecution because they thought he would help their case against Joseph Smith, and yet he said he knew nothing in Joseph's conduct or character which suggested his profession as a man of God was unfounded.

Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later? Quite simply because (as the Woodruff diary shows) Joseph reported the contents of no such revelation. This points to a February 1838 fabrication by Parrish. Would Parrish lie? He later brought charges against Sidney Rigdon for, among other things, "expressing an unbelief in the revelations of God, both old and new." To charge Sidney Rigdon—former Campbellite preacher, student of the Bible, and stirring biblical orator—with disbelieving the revelations of God is simple nonsense. It is one more bit of evidence that Parrish's word, by this point in time, cannot be trusted.

For further information related to this topic

R. McKay White, "The Kirtland Safety Society"

R. McKay White,  Proceedings of the 2009 FAIR Conference, (August 2009)

The Kirtland Safety Society Anti-Banking Company is an important part of our church history, having, as it did, a significant role in the Kirtland apostasy. Yet, to date, it has received much more attention from anti-Mormons, or “the other guys”, than from our own scholars and apologists. As a result, there are a large number of myths about the Safety Society that the other guys use to criticize Joseph Smith and destroy faith.

Today, I’m going to lay the episode wide open. We’ll see the myths that have sprung from the creative minds of interested parties, the facts will be laid bare, and in doing so, we’ll see why the Prophet deserves a good name.

Click here to view the complete article

Criticisms

"Wildcat bank"?

There is no evidence that the KSS was a “wildcat bank.” It was located in Kirtland, a large and thriving town in Ohio. The bank did not decline to exchange scrip for specie. In fact, this willingness to honor its notes created trouble for the bank early on, since they had insufficient funds to honor their notes after only about two weeks.

Question: Was the establishment of the Kirtland Safety Society "anti-bank" illegal?

Starting operations without a charter was unwise, however the documents creating the KSS clearly bear the marks of being drafted by legal counsel

Starting operations without a charter was clearly an unwise decision. It is doubtful that Joseph and associates had time to receive detailed legal advice between the time their first charter application was denied and the beginning of banking operations, but the documents creating the KSS clearly bear the marks of being drafted by legal counsel. There are also marked differences between the documents prepared for a bank with a charter, and for the subsequent "anti-banking society," suggesting that Church leaders did not simply "rewrite" the original legal documents:

Joseph Smith, Sidney Rigdon and others directly involved were closely counseled by lawyers on the creation of the bank. The two organizing documents, of 2 November 1836, and 2 January 1837, respectively, are unlikely products of a lay hand. Quite plainly, they were drawn by counsel. Moreover, the differences between the two documents indicate legal craftsmanship, even more strongly than the style and content of the documents themselves. The organization of the Society, its form and legality, were matters upon which Joseph Smith obviously had close legal counsel and assistance. It is our conclusion that the legal advice he received was incorrect, or at best poor. It seems likely that Benjamin Bissell was the lawyer who counseled Joseph Smith concerning the bank, and who drew the organizing documents in both versions. It was Bissell who had been implicitly repealed by the Ohio legislature in 1824, and who unsuccessfully defended Joseph Smith and Sidney Rigdon in the litigation contesting the legality of the bank.

While the legal advice they received was probably poor, this is a professional failing on the lawyer's part

Furthermore, there was considerable debate as to whether the anti-banking laws were even constitutional.

A second charter application was made with the support of Joseph Smith’s non-LDS lawyer, Benjamin Bissell, and other non-Mormons. The bank’s supporters probably hoped that they could eventually get a charter when the political circumstances were more favorable, and the support of legal and political personalities probably encouraged them in their course of action.

Clearly, Joseph and his supporters did not simply set out to be reckless; they had both political and legal perspectives which gave them cause for optimism.

Even with a charter, the bank would not have survived the financial crisis of 1837

Even with a charter the Kirtland bank likely would have failed during the economic turmoil of 1837. At best a charter would have allowed the bank to survive a few months longer to close without raising a flurry of law suits and apostasy and to be known by posterity as a simple business failure rather than as a shady venture. It is also clear that with or without the bank the economic turmoil that began in 1837 would have wrecked the Mormon community in Kirtland because of its highly levered position and the extremely short term nature of its debts…painful as it was the bank affair probably did little to alter the course of Mormon history.

The Kirtland Safety Society was found by a jury to be an illegal bank, however, there does not seem to have been a willful effort to deceive or extort

In short, the KSS was found by a jury to be an illegal bank. The leaders of the Church made a sincere effort to solve the pressing financial problems which beset them, and were probably hasty and somewhat naïve about the undertaking. There does not seem to have been a willful effort to deceive or extort. And, the legal issues are not entirely clear, even in retrospect:

The question whether the activities of the Society in 1837 were indeed unlawful under Ohio law requires considerable and fairly sophisticated legal analysis. Although we are now satisfied that the activities of the Society did indeed violate the proscriptions of the 1816 Ohio Statute, that conclusion is not entirely free from doubt, even with the benefit of hindsight. It must have been much less clear in 1837, when Joseph Smith was faced with a decision as to how to proceed in the face of the refusal of the Ohio Legislature to grant a charter.

In any case, the financial crisis of 1837 likely could not have been averted even if all the legalities had been observed.

Deceptive?

Enriching Joseph?

Joseph did not profit personally from the bank, and withdrew his support before the failure. Joseph probably suffered more legal repercussions than anyone from the event. There is no evidence that Joseph was “getting rich,” or attempting to do so, from the bank. He paid more for his stock in the bank than 85% of the subscribers, and he put more of his own money into the bank than anyone else, save one person.

In June 1837, Kirtland land values had increased by 800% in just one year, so the idea of backing the bank with land does not seem unreasonable.

Furthermore, the bank's weakness became a drain on Joseph, and he expended considerable resources trying to save it—including obtaining three new loans—which only worsened his position in the end.

Joseph was left with debts of $100,000. He had that value in goods and land, but it was difficult to convert these to cash. (Ironically, it was this very issue which had led to the bank's formation in the first place.)

Joseph fled for fear of his life, but also left creditors behind. Admirably, even as late as 1843, he continued to work to settle his Kirtland debts, even though he was far away in Nauvoo and effectively beyond the reach of his creditors. In a 23 June 1874 speech, Brigham Young indicated that "some of his [Joseph's] debts had to be settled afterwards; and I am thankful to say that they were settled up."

Joseph falsely blamed others?

Question: Did Joseph Smith claim that the Kirtland Safety Society was established by a revelation from God?

Joseph did not record or claim a revelation on the formation of the Kirtland Safety Society

It seems, rather, to have been his attempt to solve a complex and serious problem that probably had no good solution given the financial tools available to him. His anxiety to solve the Church’s financial problems led to difficulty, but Joseph was not alone: hundreds of thousands of frontier settlers had to resort to similar tactics:

Erroneous banking policies caused financial services to expand much more slowly than the growth in real economic activities retarded the growth process and forced people to create illegal mediums of exchange to substitute for inefficient barter.

Joseph insisted that a prophet was only a prophet when he was acting as such. The Kirtland Bank episode is a good example of fallible men doing their best to solve an intractable problem. (Joseph also emphasized that there was no expectation of success if members did not follow his counsel--which they did not.)

Brigham Young described an incident from his own life that speaks to the Kirtland Safety Society period:

I can tell the people that once in my life I felt a want of confidence in brother Joseph Smith, soon after I became acquainted with him. It was not concerning religious matters-it was not about his revelations-but it was in relation to his financiering-to his managing the temporal affairs which he undertook. A feeling came over me that Joseph was not right in his financial management, though I presume the feeling did not last sixty seconds, and perhaps not thirty...

Though I admitted in my feelings and knew all the time that Joseph was a human being and subject to err, still it was none of my business to look after his faults. I repented of my unbelief, and that too, very suddenly; I repented about as quickly as I committed the error. It was not for me to question whether Joseph was dictated by the Lord at all times and under all circumstances or not...

Had I not thoroughly understood this and believed it, I much doubt whether I should ever have embraced what is called "Mormonism." He was called of God; God dictated him, and if He had a mind to leave him to himself and let him commit an error, that was no business of mine. And it was not for me to question it, if the Lord was disposed to let Joseph lead the people astray, for He had called him and instructed him to gather Israel and restore the Priesthood and kingdom to them.

That was my faith, and it is my faith still… it is taught to the people now continually, to have implicit confidence in our leaders to be sure that we live so that Christ is within us a living fountain, that we may have the Holy Ghost within us to actuate, dictate, and direct us every hour and moment of our lives. How are we going to obtain implicit confidence in all the words and doings of Joseph? By one principle alone, that is, to live so that the voice of the Spirit will testify to us all the time that he is the servant of the Most High....

Thus, Brigham did not deny the error, or insist that it could not happen. But, he did not allow himself to be distracted by it.

Warren Parrish, one year after hearing Joseph, claimed that he said that it "should swallow up all other Banks...and survive when all others should be laid in ruins"

Warren Parrish would apostatize, and later claim on 15 February 1838 (a little more than one year after the fact):

I have listened to [the Prophet] with feelings of no ordinary kind when he declared that the audible voice of God instructed him to establish a Banking-Anti-Banking Institution, which, like Aaron's rod, should swallow up all other Banks...and grow and flourish and spread from the rivers to the ends of the earth, and survive when all others should be laid in ruins.

Wilford Woodruff's diary on the day that Joseph spoke: "He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well"

Fortunately, there is a contemporaneous account from Wilford Woodruff, who wrote in his diary on the very day that Joseph spoke—6 January 1837:

I also herd President Joseph Smith jr. declare in the presence of F Williams, D. Whitmer, S. Smith, W. Parrish, & others in the Deposit Office that he had receieved ^{[check spelling]} that morning the Word of the Lord upon the Subject of the Kirtland Safety Society. He was alone in a room by himself & he had not ownly the voice of the Spirit upon the Subject but even an audable voice. He did not tell us at that time what the LORD said upon the subject but remarked that if we would give heed to the Commandments the Lord had given this morning all would be well (spelling and capitalization in original, italics and emphasis added).

The similarities and differences in these accounts are striking. In both reports, Joseph said that the Lord has spoken to him in "an audible voice." Parrish was present at the event described by Woodruff. Yet, Woodruff indicated that Joseph did not tell them what the Lord had said, other than to make a conditional promise if they were all obedient.

Why should we believe the later, hostile report of Parrish (who had something to gain by lying) when it doesn't match the contemporary report written before there was any problem with the bank?

Parrish knew that the bank was in serious trouble by August 1838 - Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later?

The Kirtland Safety Society was in serious trouble by the spring of 1837. Joseph Smith had resigned from it by 8 June 1837. Yet, in the same month of June, Parrish was called to testify in the case of Grandison Newell vs. Joseph Smith. Newell put Parrish on the stand but

when [Warren Parrish was] asked by the lawyers, "Do you know of anything in the character or conduct of Mr. Smith which is unworthy of his profession as a man of God?" the answer was, "I do not."

So, by this date Parrish knew that the bank was in serious trouble. He was also hostile to Joseph (on May 29 he would bring high council charges against him for "lying...extortion...and...speaking disrespectfully against his brethren behind their backs." He was in court under oath, called by the prosecution because they thought he would help their case against Joseph Smith, and yet he said he knew nothing in Joseph's conduct or character which suggested his profession as a man of God was unfounded.

Why did Parrish not tell the court about the supposed "revelation" which he would cite about eight months later? Quite simply because (as the Woodruff diary shows) Joseph reported the contents of no such revelation. This points to a February 1838 fabrication by Parrish. Would Parrish lie? He later brought charges against Sidney Rigdon for, among other things, "expressing an unbelief in the revelations of God, both old and new." To charge Sidney Rigdon—former Campbellite preacher, student of the Bible, and stirring biblical orator—with disbelieving the revelations of God is simple nonsense. It is one more bit of evidence that Parrish's word, by this point in time, cannot be trusted.

For further information related to this topic

R. McKay White, "The Kirtland Safety Society"

R. McKay White,  Proceedings of the 2009 FAIR Conference, (August 2009)

The Kirtland Safety Society Anti-Banking Company is an important part of our church history, having, as it did, a significant role in the Kirtland apostasy. Yet, to date, it has received much more attention from anti-Mormons, or “the other guys”, than from our own scholars and apologists. As a result, there are a large number of myths about the Safety Society that the other guys use to criticize Joseph Smith and destroy faith.

Today, I’m going to lay the episode wide open. We’ll see the myths that have sprung from the creative minds of interested parties, the facts will be laid bare, and in doing so, we’ll see why the Prophet deserves a good name.

Click here to view the complete article

Notes