Joseph Smith's Application for Bankruptcy
By Alex D. Smith
More than three of the four pages of the 6 May 1842 issue of the Sangamo Journal contained no news—no editorials, no articles, no letters-to-the-editor. Even the regular advertisements were published in an “extra” bearing the same date. Instead, the seven columns on each page of the Illinois capital’s newspaper were filled with hundreds of legally-mandated notices of persons filing for bankruptcy—including Joseph Smith. The surrounding months’ issues looked the same, as Illinois lawyers with names like Abraham Lincoln, Lyman Trumbull, Jesse B. Thomas, and Josiah Lamborn received essentially free advertising for their services in facilitating these applications.
What was the impetus for the leader of the Church of Jesus Christ of Latter-day Saints and fourteen other Nauvoo residents—including his brothers Hyrum and Samuel Smith, Sidney Rigdon, and Bishop Vinson Knight—to seek financial relief through bankruptcy at the same time? Following the economic panic of 1837 and the ascension of the Whig Party in 1840, Congress passed a new bankruptcy law in August 1841. This act allowed voluntary bankruptcy for the first time in American history. Any individual (the law prohibited voluntary bankruptcy by corporations) could apply for bankruptcy for either personal or business debts. Use of the new law became widespread shortly after the act took effect on 1 February 1842, with debtors flocking to lawyers who quickly tailored their services to the new act’s opportunities.
In mid-April 1842, Joseph Smith applied for bankruptcy with the assistance of attorney Calvin A. Warren. Smith was saddled with considerable debts that stemmed primarily from church-related business ventures in Ohio and land purchases made in Illinois and Iowa Territory after the Saints’ expulsion from northern Missouri in 1838 and 1839. Significant losses of personal and real property as part of the Missouri expulsion compounded the financial distress of Smith and other Saints. Foremost among the Ohio debts for which Smith was personally liable were those contracted by church firms Cahoon, Carter & Co. and Rigdon, Smith & Co. These two organizations operated mercantile stores in Kirtland and Chester, Ohio, respectively, and made extensive purchases on credit in 1836 from wholesale dealers in Buffalo, New York, and New York City. Though Joseph Smith was not a named partner in the first firm, he personally took on responsibility for both companies’ debts by 1842. Consequently, he employed the services of the Quincy, Illinois-based firm Ralston, Warren & Wheat to apply for bankruptcy and attempt to make use of the new law and the relief it could provide. On 18 April, Smith and others traveled to Carthage, Illinois, the seat of Hancock County, to declare insolvency before Samuel Marshall, clerk of the county commissioner’s court.
Over the ensuing years, Joseph Smith’s application for bankruptcy was opposed by United States attorney for Illinois, Justin Butterfield, largely because he believed Smith had undisclosed assets. Following the discharge of thousands of debtors, Congress repealed the 1841 bankruptcy act on 3 March 1843, a little over a year after it went into effect. Unlike his siblings’ debts and those of other Nauvoo residents, Joseph Smith’s debts were never successfully discharged in bankruptcy.
Extant portions of Joseph Smith’s application for bankruptcy and other important financial documents will be featured in Documents, Volume 9: December 1841―April 1842, available September 2019.