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:"for the promotion of our temporal interests, and for the better management of our different occupations, which consist in agriculture, mechanical arts, and merchandising" However, by November 1837, KSS failed and its business closed. Critics have charged that the KSS was engaged in illegal, unethical or Fraud ulant actions nearly from its formation, while others contend such charges are at best inflated and at worse baseless. NATIONAL BANK CRISIS The KSSABC failure, although unique in some ways, was part of a national bank crisis, known as the Panic Of 1837 , that began in May of that year. Underlying causes of the nationwide financial panic included speculative and inflationary selling of public lands in western states like Michigan and Missouri . The economic policies of the previous President Andrew Jackson , including the Specie Circular and the withdrawal of government funds from the Second Bank Of The United States , also contributed. On May 10, 1837 in s and financial institutions and record Unemployment levels. HISTORY In late 1836, many recent LDS converts gathered in Missouri and Kirtland, Ohio . Given the sizeable population around Kirtland, a bank was needed to serve the credit needs of the growing community. Although the LDS church owned considerable land, it also needed liquidity to repay its loans. Orson Hyde went to the Ohio legislature to request a bank charter while Oliver Cowdery went to Philadelphia and acquired plates to print notes for the bank. Hyde returned to Kirtland on January 2 without being able to get any legislator to sponsor a bill giving KSS a bank charter. LDS church president and Prophet Joseph Smith, Jr. attributed the lack of sponsorship to discrimination against the Mormons. Hyde returned to the Ohio legislature in February with a petition, joined by several non-Mormons, for a bank with far less capital stock. This time Hyde secured sponsors, and the request was added as an amendment to another bill. However, the bill was defeated by the Ohio legislature. Perhaps the most visible example of discrimination against the LDS was Grandison Newell, a professed antagonist to the LDS church in general and its "prophet" in particular. He instigated several lawsuits against the Mormons in Ohio. Newell was close to three legislators who had taken the charter requests under consideration and used his influence to dissuade them. Although this rejection has been attributed to both political and religious differences, this legislature was much more restrictive in issuing bank charters than the previous legislative body. The Ohio legislature was now dominated by the hard money wing of the Democratic party, the "Jacksonian Democrats". Due to their influence, the legislature refused all applications for bank charters during 1836 and 1837, in part because land speculation, wildcat banking and Counterfeiting were endemic problems across the country. Under the advice of non-Mormon legal counsel, the Kirtland Safety Society Anti-Banking Company (KSSABC) was formed under revised articles on January 2, 1837 as a Joint Stock Company to serve as a quasi-banking institution. "Anti" and "ing" were engraved before and after "Bank"--in smaller Typeface --on the printing plates Cowdery had purchased in Philadelphia. Quasi-banks operated as banks (sometimes in conjunction with other business activities) although they had no formal bank charter. Quasi-banks were not uncommon in their time because of lax banking regulations throughout the country. Whigs went so far as to encourage businesses to operate as quasi-banks. Even after the national bank failure in 1837, there was no widespread opposition to quasi-banks in Ohio until 1873 . 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; Smith was cashier. Supporters hoped that they would eventually be able to secure a formal banking charter. In the interim, the KSSABC began issuing notes as a quasi-bank in early January 1837. However, in February at the behest of Newell, Samuel D. Rounds swore a writ against Smith and Rigdon for illegal banking and issuing unauthorized bank paper. At a hearing in March, this trial was postponed until autumn. Eventually Rounds voluntarily dropped all of the cases in his suit except those against Smith and Rigdon although Smith's only official capacity for KSSABC was cashier and other officers and parties with equal or greater responsibility were absolved from the suit. KSSABC continued issuing notes through June, but eventually failed due to insolvency (most of the KSSABC reserves were tied up in land rather than liquid silver as some erroneously believed). Smith transferred all of his holdings to Oliver Granger and J Carter in June and resigned from the KSSABC in July. Parrish and Frederick G. Williams assumed management of the KSSABC from then on until it closed its doors in November with about $100,000 in unresolved debt. Smith appointed Granger as his agent to clear up his Kirtland affairs, as Smith was named in seventeen lawsuits with claims totalling $30,206.44 over debts incurred in the failure of the KSSABC. According to LDS scholars, ''"Four of these suits were settled; three were voluntarily discontinued by the plaintiffs; and ten resulted in judgments against Joseph Smith and others. Of these ten judgments, three were satisfied in full, three were satisfied in part, and only four were wholly unsatisfied."'' The LDS church also raised and put up $38,000 in bail money for Smith at the Geauga County Court which was to be held to satisfy any judgment that might be rendered against Smith. On July 28, Smith, Rigdon and Thomas B. Marsh headed to Ontario, Canada on church business and returned in late August. On September 27, Smith and Rigdon departed Kirtland for Missouri. They arrived about one month later, spent about two weeks in Missouri on Church business and returned to Kirtland on December 10. In their absence, in October, they were fined $1,000 for operating an illegal bank although other, larger quasi-banks had been operating in Ohio longer than KSSABC and were not being prosecuted. Among KSSABC's misfortunes, Smith also accused Parrish of embezzling $25,000 from KSSABC. In June Smith sought, but was denied, a search warrant to confirm his suspicions against Parrish. Many LDS (including Church leaders) became disillusioned with Smith and disaffected with the Church in the wake of KSSABC's failure and left the Church or were disfellowshipped or excommunicated. In May of 1837, disgruntled LDS (including Church leaders) and non-members alike began to publicly blame Smith for their losses. Some LDS, like Parley P. Pratt and Cowdery were later reconciled to Smith and the Church. Smith warned the community against speculation and counterfeiting. Shortly after his resignation from the KSSABC in July he stated in the August 1837 ''Messenger and Advocate'': "I am disposed to say a word relative to the bills of the Kirtland Safety Society Bank. I hereby warn them to beware of speculators, renegades and gamblers, who are duping the unsuspecting and the unwary, by palming upon them, those bills, which are of no worth, here. I discountenance and disapprove of any and all such practices. I know them to be detrimental to the best interests of society, as well as to the principles of religion." Shortly before his resignation, Smith also took out a $1,225 loan from a separate bank to help keep KSSABC solvent. Smith publicly denied claims that the KSSABC was created for the purpose of surreptitiously enriching the LDS leadership, but many disaffected members felt otherwise even though Smith risked losing as much or perhaps more than anyone else due to KSSABC's failure. Regardless of the reasons for the KSSABC's failure, much of the blame was laid upon Smith. Half of .) {Link without Title} Wilford Woodruff's diary confirms this in partial detail. Woodruff records that Smith had a revelation on the topic, but declined to share it, saying only that "if we would give heed to the commandments the Lord had given this morning all would be well." It is then Woodruff who expresses his own hopes that the KSSABC will "become the greatest of all institutions on EARTH." (see The Kirtland Diary of Wilford Woodruff by Dean C. Jessee Fn, BYU Studies, vol. 12 (1971-1972), Number 4 - Summer 1972, p. 381.) On January 12, 1838, faced with a warrant for his arrest on a charge of illegal banking, Smith and Rigdon fled to Clay County, Missouri just ahead of an armed group out to capture and hold him for trial. Smith and Rigdon were both acquainted with conflict and violent mobbing they experienced together in Pennsylvania and New York. Anticipating more of the same, in Smith's words, they left "to escape mob violence, which was about to burst upon us under the color of legal process to cover the hellish designs of our enemies." Brigham Young left Kirtland for Missouri weeks earlier on December 22 to avoid the dissidents who were angry with Young and threatened him because of his persistent public defense of Smith's innocence. Most of those who remained committed to the church moved to join the main body of the LDS in Missouri. KIRTLAND SAFETY SOCIETY NOTES One of the tangible connections from this episode to the present are the notes that were printed at the time. Some church leaders encouraged people to hold onto these notes as they said that someday they would have value again. While the notes never regained their face value, they are now collector's items worth many hundreds of dollars. Part of their value is attributable to the fact that most, if not all, of the notes have Joseph Smith's signature on them. Images of some of these notes are available at MormonMoney.com under the Early Utah/Resigned Kirtlands heading. EXTERNAL LINKS
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