Kirtland Safety Society

In late 1837 as membership in The Church of Jesus Christ of Latter-day Saints (LDS) reached thousands, new converts gathered to Missouri and Kirtland, Ohio. Seeing the population influx, the LDS leadership decided a bank could be organized to provide financial services. Orson Hyde went to the Ohio legislature to request a bank charter while Oliver Cowdery went to Philadelphia to acquire plates to print notes for the bank.

The Ohio legislature rejected Hyde's request even after a second attempt in February 1838 was joined with a petition from several non-Mormons for a bank with less capital stock. Anti-banking politicians who were in control of the legislature were much more restrictive in issuing bank charters than the previous legislative body, although the rejection is also attributed to political and religious differences. For example, Grandison Newell, an antagonist to the LDS and its Prophet Joseph Smith in particular, filed several lawsuits against the Mormons of Ohio. Grandison was close to three legislators who had taken the charter requests under consideration and used his influence to dissuade the legislators.

Under the advice of non-Mormon legal counsel, the Kirtland Safety Society Anti-Banking Company ("KSSABC") was formed under revised articles as a joint stock company, a type of legal entity whose supposed limited financial privileges were being vigorously debated in Ohio at the time. Subscribers and organizers of the KSSABC were members of the Kirtland community (merchants, farmers, etc.), many of whom became shareholders of the company. Sidney Rigdon served as the KSSABC' chairman and president, Warren Parrish as signatory, secretary and teller and Joseph Smith as cashier.

Before a charter was legally granted, however, the KSSABC began issuing notes. At the behest of Grandison Newell, Samuel D. Rounds swore a writ against Joseph Smith and Sidney Rigdon for illegal banking and issuing unauthorized bank paper. This trial was postponed until October. In the meantime, despite Joseph Smith's admonitions to the Kirtland community against speculation, the KSSABC failed due to insolvency (most of the KSSABC reserves were tied up in land rather than liquid silver as some erroneously believed), as bank failures across the nation spread to Ohio. Joseph Smith took out loans from other banks and sold personal property to shore up the KSSABC, but finally resigned from the KSSABC and disposed of his interests in it by early July. Parrish and Frederick G. Williams assumed management of the KSSABC from then on until it closed its doors in November with about $100,000 in unresolved debt.

The previous month in October, the court adjudicated the case against Smith and Rigdon (neither of whom appeared at the trial) and fined them each $1,000 plus court costs under an 1816 law. They appealed the case on the grounds that the KSSABC was an association and not a bank, but since Smith and Rigdon left Ohio in December, the appeal was never decided.

Disgruntled LDS members (including church leaders) and non-members alike blamed Joseph Smith for their losses, claiming along with others that the LDS administration were acting independently of the legal system. Some were later reconciled, coming to believe Smith warned them against speculation and that he tried to keep the bank solvent. Joseph Smith vigorously opposed claims that the KSS was created for the purpose of surreptitiously enriching the LDS leadership, but many disaffected members felt otherwise. Many members including some prominent church leaders either left or were excommunicated by Smith from the LDS Church after this incident. Most of those who remained moved to join the main body of the LDS in Missouri.

Further reading:

• The Refiner's Fire: The making of Mormon Cosmology, 1644-1844 by John L. Brooke, Cambridge University Press 1996.

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