Part 5: 5 October 1836–10 April 1837

From fall 1836 to early spring 1837, JS and other leaders focused on developing the town of , Ohio, and finding means to pay church debts. JS was involved in several large land transactions and, according to extant records, purchased about 440 acres in fall 1836. A primary motivation for these acquisitions was expanding the amount of land the church had available for newly arriving members to purchase. Some of these purchases may also have acted as financial security for JS’s other major endeavor in this period, the . An ambitious endeavor, the Safety Society was never able to realize its founders’ aspirations because of the insurmountable obstacles it faced, including underfunding, opposition, the lack of a bank charter, and the financial panic of 1837.
JS and other church leaders in began making plans for a bank in October 1836. By mid-October they had chosen the name of the institution, the Kirtland Safety Society Bank, and had begun taking subscriptions for stock. On 2 November 1836 the stockholders met and ratified the Kirtland Safety Society’s constitution. Thirty-two stockholders were then elected as bank directors, likely at this same meeting, and they elected two primary officers for the society, as president and JS as cashier.
, like many other states, required parties intending to establish a bank to petition the state legislature for an act of incorporation. If approved, the bank would receive a charter granting it banking privileges. After the 2 November organization of the Safety Society, was assigned to go to , Ohio, where the legislature met, to find a politician willing to present the society’s petition for a charter. Although the Kirtland Safety Society directors may have hoped for a quick approval, Hyde was not able to find a legislative sponsor until February 1837. In the meantime, JS, , and the society’s stockholders reorganized their institution on 2 January 1837. They restructured the society as an unincorporated bank, renamed it the Kirtland Safety Society Anti-Banking Company, and drafted new articles of agreement to replace the original constitution. This change in structure led to new titles for the society’s officers: Rigdon became the secretary and JS the treasurer. After this reorganization, the society conducted banking services in an unofficial capacity while Hyde continued pursuing a bank charter.
A record of loans from the institution bears the date of 7 January, but the institution may have opened for business as early as 4 January, the date found on the earliest extant Kirtland Safety Society notes. When individuals took out a loan, they received the amount borrowed in the form of Kirtland Safety Society notes. The clerks and officers of the society also exchanged the society’s notes for the notes of other banks, thereby increasing the circulation of the society’s notes and its financial reserves. According to the extant records, most of the individuals involved in financial transactions with the Kirtland Safety Society were residents, along with a few people from and . Nearly all stockholders and loan recipients were church members.
After opening in early January, the Kirtland Safety Society quickly garnered both popular interest and hostility. Contemporary and reminiscent accounts indicate there was general acceptance and circulation of the society’s notes in the first weeks of the institution’s operation. Early on, however, several newspapers concentrated on the solvency of the institution. Editors for the Cleveland Gazette expressed surprise at “the readiness with which these anti-banking bank bills are thrown into circulation without any evidence or knowledge of the solvency of the issues” and considered it “a most reprehensible fraud on the public,” since “as far as we can learn there is no property bound for their redemption, no coin on hand to redeem them with, and no responsible individuals whose honor or whose honesty is pledged for their payment.” The Ohio Star, a Ravenna newspaper that frequently criticized JS and the church, printed an article warning readers of the “emission of Mormon money, purporting to be bank paper.” In contrast, a few newspapers defended the society. Although skeptical about the institution, the editors of the Painesville Republican wrote in mid-January that they had been informed that Safety Society officers “have a large amount in specie on hand and have the means of obtaining much more, if necessary,” and, if this were the case, the circulation of the society’s notes “would be beneficial to [the] community, and sensibly relieve the pressure in the money market.” The editors of the Cleveland Weekly Advertiser wrote an outright defense of the society, which they believed was “most shamefully and cruelly persecuted; whose motives and intentions were totally misconstrued and misrepresented” by other newspapers, particularly the Cleveland Gazette.
Newspapers were not the only source of hostility; some individuals in actively campaigned against the Kirtland Safety Society, with prominent county resident apparently taking a lead role. Amid heightened opposition in late January came rumors that the Safety Society had closed its doors. It is unclear whether or not the business did temporarily close, and if it did, what led to the closure. recounted in his journal hearing that a mob from was coming to destroy the society’s office. Though it is not known whether the mob materialized in , fear of violence may have led the directors to close the office temporarily. Writing about events at a distance, the Cleveland Weekly Advertiser described a “furious and insulting mob” gathering in Kirtland and threatening to destroy the society. In a July 1837 editorial in the Messenger and Advocate, reported that “hundreds who were enemies, either came or sent their agents and demanded specie till the officers thought best to refuse payment.”
Rumors that the society had closed and was refusing to redeem notes for specie damaged its reputation and led some to assume the worst. In response to the reported closing of the society’s office, the Cleveland Gazette announced the failure of the institution, and other papers echoed this conclusion. Such news may have been based on false stories devised by opponents to harm the institution and discredit JS as its officer. If the Safety Society did close in late January, it was a brief closure, probably around 23 or 24 January. Even though a few newspapers continued to insist that it had failed, the society made loans and accepted payments for stock after January 1837.
The success of the Safety Society was also hampered by the terms of its incorporation. The articles of agreement set the original capital stock for the institution at $4 million, a considerably higher amount than that of other community banks in the period, which ranged from $100,000 to $300,000. The capital stock was divided into 80,000 shares of stock valued at $50 each. Stockholders were required to pay a first installment of twenty-six cents per share of stock, and these subscription payments were intended to provide the reserves that would give the society financial stability, allowing the officers to exchange the society’s paper notes for specie when customers presented them for redemption. By the beginning of January, the society had received almost $12,000 in specie or banknotes, as more than one hundred investors paid some portion of the first installment due on their stock subscriptions. It is unclear how many Kirtland Safety Society notes were put in circulation, but based on banking practices of the time, the society would have needed enough reserves to repay ten to thirty percent of the notes it issued, meaning its officers could feasibly have issued notes for between $40,000 and $120,000.
Nevertheless, the society was significantly underfunded, in large part because of the small amount that stockholders were required to pay for their stock. At fifty dollars per share, the price of stock for the Kirtland Safety Society was lower than average, but not unusually low when compared with similar financial institutions. What was substantially reduced for the society’s stockholders was the amount they were required to pay when they first subscribed for stock. At twenty-six cents per share, this initial payment was significantly lower than what other banks or banking companies charged, which typically required between five and fifty dollars’ initial payment per share. The Kirtland Safety Society officers showed leniency to those who could not pay their full initial payment, and several stockholders made only partial payments, while a few never paid anything. Individuals who subscribed for one thousand shares should have made an initial payment of $262.50, but many with subscriptions of a thousand or more shares of stock only ever paid a few dollars. The combination of relatively low share prices, an unusually high capital stock, and a very low initial installment payment for stock, some of which was never paid, meant that the society was low on funds from the outset.
JS and other stockholders appear to have obtained additional funding by taking out loans from two nearby banking institutions. These loans would not have significantly improved the society’s solvency but would likely have increased its available specie, which was needed for the redemption of notes. On 2 January, JS, , and received a loan for $3,000 from the in , due in forty-five days. The second loan was taken out on 10 January from the in for $1,200, due in four months. This second loan was taken out by Reynolds Cahoon, a stock holder in the Safety Society who may have been working in the Kirtland Safety Society office in January, as his handwriiting appears in the office’s early records.
By mid-January, JS, , and managers of the Kirtland Safety Society began making arrangements to expand its reach outside of . On 14 January the managers signed a contract with David Cartter, a lawyer in Akron, Ohio, designating him an agent of the society, and later that month, the officers made business arrangements with the Bank of Monroe in Monroe, Michigan. They appear to have bought stock in the bank and reached an agreement to partner with its officers, perhaps intending to become a branch of the Bank of Monroe and act under its charter. In early February, JS, Rigdon, , and traveled to for a stockholders’ meeting of the bank. At this meeting, Cowdery was made vice president and a bank director of the Bank of Monroe. While in Monroe in February, Hyrum Smith and Rigdon each borrowed notes from the Bank of Monroe, likely taking these notes back to Kirtland and using them in the society’s office. By the end of March the Bank of Monroe suspended specie payments, and it appears to have failed by the end of the year.
Two events in February significantly affected the development of the Kirtland Safety Society and its ability to gain public support. First, Samuel D. Rounds brought charges against JS, , , , , and under an 1816 statute that made it a finable offense for an unchartered bank to perform banking services, including the issuing of notes. Public understanding of banking laws in 1837 was muddled, and there was disagreement regarding the enforcement of the 1816 statute, in large part due to an 1824 statute that had prohibited lawsuits against the notes of unauthorized or unincorporated banks. The legal disjuncture between the two statutes was not formally resolved until 1840. Though the other four church members were not prosecuted, JS and Rigdon were tried in absentia in October 1837. In the trials, “the Court charged the Jury that said Statute was in force,” and JS and Rigdon were both found guilty according to the Act of 1816 and fined $1,000 each.
The second significant event in February occurred when Samuel Medary presented the society’s petition for a bank charter in the senate. The petition was presented as an amendment to a bill to create a state bank in Ohio, and some aspects of the proposal differed from the society’s articles, possibly to make the legislature more amenable to granting a charter. The most significant change was a decrease in the society’s capital stock from $4 million to $300,000, which, although still higher than most, was within the range of other community banks. The Safety Society’s petition failed to pass, on a vote of eleven in favor and twenty-four opposed. In fact, the legislature did not approve the incorporation of a single bank in its 1836–1837 session. Some banks were approved for a charter by virtue of being added to the bill for a state bank, but that bill was not passed until 1845. There were no other documented attempts to obtain a banking charter for the Kirtland Safety Society from the Ohio legislature.
Despite these setbacks, the society continued to expand its economic reach and acquire financial supporters inside and outside of . In March two additional contracts were signed, establishing individuals in , Ohio, and Beaver County, Pennsylvania, as agents of the Safety Society. In discourses given on 6 April 1837, JS, , and each focused on debt and the need for church members to support the Kirtland Safety Society financially. In his address, Rigdon identified three distinct sources of the church’s debt: building the Kirtland , losing property in , and purchasing land in Kirtland for the Saints. A few days later, on 9 April, JS and Rigdon again spoke on the financial situation of the church and urged members to accept the notes of the Kirtland Safety Society and support the institution. Possibly fearing the seizure of his property to pay outstanding debts, JS on 7 and 10 April sold or transferred several large properties he owned to , who appears to have acted as his agent.
From November 1836 to April 1837 financial matters were one of JS’s greatest concerns. Over these six months he struggled to repay the debts of the church while attempting to establish a new banking company. The documents concerning the Kirtland Safety Society demonstrate its tumultuous period of operation, from an ambitious beginning in November 1836, through reorganization in January 1837, and into a constant struggle for investors and support in spring 1837. Despite JS’s efforts, the society faced frequent opposition and received only limited support.