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The Mormon Church is not only wealthy but it’s unusually secretive about the extent of this wealth. Richard Ostling, co-author Mormon America
Warren Parrish, who had been an officer in the bank and had apostatized from the Church, made this statement: I have listened to him [Joseph Smith] with feelings of no ordinary kind, when he declared that the audible voice of God instructed him to establish a banking-anti-banking institution, who like Aaron’s rod shall swallow up all other banks (the Bank of Monroe excepted), 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. Painesville Republican 22nd February 1838, cited Conflict at Kirkland p297
On April 10, 1834, the Kirtland council dissolved the Order [consecration]. Dividing the community property was a thorny business. Tired of quibbling and recrimination, Joseph finally resorted to a revelation to parcel out the real estate, deeding himself the temple lot, Rigdon the tannery, Cowdery the printing shop, and most of the other leaders the lots on which they were then living. In 1835, when the time came to print this curious document in the Doctrine and Covenants, he substituted fictitious names to avoid any unpleasantness – Ahashdah for Whitney, Olilah for Cowdery, Pelagorum for Rigdon, Mahemson for Harris, and Gazelam for himself. He even used code names for the industries – Laneshine house for the printing shop and Ozondah for the store. Except for a few leaders who knew better, the Mormons believed these to be the names of people living in the days of Enoch. Fawn M Browdie, No Man Knows My History p141
If the bank needed a final blow to shatter what little prestige it still held among the faithful, it received it when Warren Parrish resigned as cashier, left the church, and began openly to describe the banking methods of the prophet. Parrish was later accused of absconding with $25,000, but if he took the sum it must have been in worthless bank notes, since that amount of specie in the vaults would have saved the bank, at least during Joseph’s term as cashier.
The toppling of the Kirtland bank loosed a hornets’ nest. Creditors swarmed in upon Joseph armed with threats and warrants. He was terribly in debt. There is no way of knowing exactly how much he and his leading elders had borrowed, since the loyal Mormons left no itemized account of their own claims. But the local non-Mormon creditors whom he could not repay brought a series of suits against the prophet which the Geauga county court duly recorded. These records tell a story of trouble that would have demolished the prestige and broken the spirit of a lesser man.
Thirteen suits were brought against him between June 1837 and April 1839, to collect sums totaling nearly $25,000. The damages asked amounted to almost $35,000. He was arrested seven times in four months, and his followers managed heroically to raise the $38,428 required for bail. Of the thirteen suits only six were settled out of court – about $12,000 out of the $25,000. In the other seven the creditors either were awarded damages or won them by default.
Joseph had many additional debts that never resulted in court action. Some years later he compiled a list of still outstanding Kirtland loans, which amounted to more than $33,000. If one adds to these the two great loans of $30,000 and $60,000 borrowed in New York and Buffalo in 1836, it would seem that the Mormon leaders owed to non-Mormon individuals and firms well over $150,000. ibid. pp.198-202
It was natural that blame for the entire situation should be charged against the Prophet. They had gathered to Kirtland at his command; the idea of purchasing housing lots in the great subdivision scheme had his full support; he had inferred that the bank would not only succeed, but would one day be the most powerful institution of its kind ... the Church populace was genuinely disillusioned when the bank failed. It was difficult for them to comprehend that a man who claimed to have divine revelation in religious matters could fail so miserably in economic affairs ... No amount of shifting of blame could obscure the fact that a prophet had failed in a grand project ... As the Sheriff appeared ever more regularly with summons and as the fortunes and anticipations of one after another of the leaders faced the humiliating prospect of publicly acknowledged incompetence and bankruptcy, the discipline and sense of responsibility, which are the heart of all organizations, broke completely and plunged Mormondom into ecclesiastical anarchy. Robert Ken Fielding, ‘The Growth of the Mormon Church in Kirtland, Ohio’, viz also Mormonism – Shadow or Reality? p533
Smith knew a good thing when he saw it, and in 1836, the best thing by far was land speculation. With the westward drive, land values were shooting up at such a frenzied rate that fortunes could be made virtually overnight. By the mid-thirties Smith had already spent every dollar he had buying up land around the Mormon community in Kirtland, hoping that a railroad would run a line somewhere across his property and make him a rich man. When he ran out of his own money, he started looking for other people’s money to use. The best way to attract money, of course, was to open a bank, and in 1836, coincidentally, the Lord commanded him to do just that.
There was just one problem: you had to have money to open a bank. Never a stickler for details, Smith went out and borrowed the money to open the Kirtland Safety Society Bank and have plates made up for printing the currency the bank would issue. To assure depositors that their money would be secure, he filled several strong boxes with sand, lead, old iron, and stones, then covered them with a single layer of bright fifty-cent silver coins. Prospective customers were brought into the vault and shown the heaping chests of silver. ‘The effect of those boxes was like magic,’ claimed one witness. ‘They created general confidence in the solidity of the bank, and that beautiful paper money went like hot cakes. For about a month it was the best money in the country.’
Smith wasn’t fazed a bit when the state legislature refused to grant his bank a charter. With only a few additions to the printing plates (why waste money to have new ones made up?), the Kirtland Safety Society Bank became the Kirtland Safety Society Anti-Banking Co. As far as Smith was concerned, a company, unlike a bank, didn’t need a charter.
The faithful, of course, didn’t care what it was called. It was enough for them that the bank was run by Joseph Smith. What safer place could they put their money than in the hands of the Prophet? Lest they miss the message, Smith wrote an article for the Mormon newspaper inviting his flock to ‘take stock in our safety society ... We would remind them also of the sayings of the prophet Isaiah ... which are as follows: Surely the isles shall wait for me, and the ships of Tarshish ... to bring ... their silver and their gold (not their bank notes) with them, unto the name of the Lord they God ...’ Smith added the parenthetical to the biblical text as a discreet reminder that his bank wanted deposits in hard coin, not in notes drawn on other banks. Naifeh & Smith, ‘A True Story of Greed, Forgery, Deceit, and Death’ pp.25-26
Construction of the temple had temporarily boosted the economy of Kirtland, but after the dedication the economy declined as poor converts arrived in ever increasing numbers. The old settlers attempted to keep them out of Kirtland by economic pressures, but the Mormon population increased twentyfold while the landholdings only quadrupled. In November 1836 Joseph and other church leaders drew up articles for a bank to provide capital for investments. It was a desperate gamble. Oliver Cowdery went to Philadelphia for plates to print bank notes, and Orson Hyde went to the legislature in Columbus with a petition for a bank license. It was refused. Oliver returned with plates for the Kirtland Safety Society Bank, but Orson Hyde came back without a charter. The plates were so expensive that they printed some specie anyway, writing in Anti before the word Bank and ing after it. The notes read, Kirtland Safety Society Anti-Banking Company and the paper passed as legal tender from a joint-stock company. At first the money circulated wildly. When merchants and businessmen who were more sophisticated than the Mormons began to redeem their notes, Joseph could see that a run would ruin the bank. After one month he and Sidney Rigdon resigned as officers but the bank failed. This affected Joseph’s status.
People who were convinced that Joseph had intended a swindle at the outset attacked him verbally and threatened him physically. This disruption forced Joseph to leave the city frequently ...
In April 1837 Joseph went into hiding without seeing Emma before he left. Newell & Avery, Mormon Enigma: Emma Hale Smith p62
To today’s Mormons, ‘consecration’ means giving of their money or goods to the church. In 1838, upon the failure of their Kirtland Bank and ‘United Order’ Smith and Rigdon went to Missouri and again tried to institute an economic commune. The Missouri Mormons, who had been expelled from Jackson County in 1834, were living in relative (albeit temporary) peace in Clay County, buying land and starting farms. But the arrival of Smith and Rigdon in the spring of 1838 brought an influx of thousands more Mormons from Kirtland as well, spilling them over into ‘Gentile’ areas, causing new tensions. Mormon population increased from 1,200 to 15,000 in just a few months. Having been stung by the Kirtland failure, Smith and Rigdon implemented new policies that they hoped would make the new commune succeed. The policy mandated that all Mormons sign their lands over to the church, and then the church would lease the land back to them as ‘stewardships’. The Mormons who had bought and developed their lands and farms balked at the idea – among them being Cowdery, the Whitmers, Phelps, Lyman Johnson, etc. They correctly perceived that the new ‘consecration’ policy was nothing more than Smith and Rigdon’s latest scheme to fleece the flock. Their refusal to sign lands over to the church prompted Rigdon’s ‘Salt Sermon’ (which was heartily endorsed by Smith), ...