The was established by as a community bank in , Ohio, in November 1836. It was reorganized in January 1837 as an unincorporated banking company, and by September 1837 it had closed. Though organized by church leaders, including JS, and for the benefit of the church, it was not exclusively for the Latter-day Saints. The bank was organized in a time of prosperity for both Kirtland and the more broadly. However, the nationwide financial panic of 1837 led to widespread economic challenges for the institution. This panic was one of the central reasons the bank failed. Other contributing factors included external opposition, limited community support, and severe funding problems.
Few records for the Kirtland Safety Society are extant. Incomplete records, including a daybook, with daily transactions, and discount book, with the serial numbers of banknotes, have survived, documenting only the first few weeks after the society’s banking office opened in early January 1837. There are no other extant daybooks or discount records, and few other documents reflect the daily transactions of the society. The most complete extant record is a stock ledger, which includes subscriptions and payments made by stockholders in the society. Other extant records include printed banknotes issued by the society, agreements with individuals to become agents for the bank, and records of transactions, such as promissory notes.
By the 1830s, banks were becoming commonplace in the , and even people in outlying areas like hoped for a bank to be established in or near their town, in part because money was in extremely short supply in outlying regions like . However, banking was a divisive political issue in the United States in the 1830s. During his administration, President Andrew Jackson refused to renew the charter for the national bank—the Second Bank of the United States—and took other steps to decentralize banking by distributing federal deposits to state banks throughout the nation. At the time, the federal government did not print a paper currency; it only produced specie in the form of gold and silver coins. State banks, private banks, and unauthorized institutions printed and issued their own banknotes, which functioned as paper currency. Most individuals held their assets in land or livestock rather than gold or other liquid assets. A bank, if successful, could provide considerable financial aid to communities by supplying residents with a local currency and a source of credit, thereby establishing a stronger foundation for the local economy and a better means to provide liquidity for land purchases, construction, and mercantile activity. When a bank was established in a frontier community, it was often eagerly supported by the local residents, but they often lacked the necessary capital to sustain such an institution. As a result, investors from the eastern United States frequently funded new banks. Many banks in less populated areas were operated by men who, like JS and other church leaders in Kirtland, had little or no banking experience and who came from diverse backgrounds. Given such circumstances, bank closures and failures were a known risk in nineteenth-century America.
Banks in the early 1800s were officially recognized and regulated at the state level. Some states restricted banking services to a single state bank operated by the state government, while other states, like , granted charters to private banks. Ohio, like many other states, required parties intending to establish a private bank to petition the state legislature for an act of incorporation. If approved, the bank would receive a charter granting it banking privileges. If rejected, bank organizers had a few other options. One alternative, popular in the 1830s, involved requesting a charter for an institution that was not specifically connected to banking, such as a canal-building company or insurance company. Charters for such an institution included clauses that broadly granted banking privileges, usually by allowing the company to issue banknotes. These quasi-banks were incorporated by the state legislature but not categorized or regulated like standard private banks, even when they performed the same services as authorized and chartered financial institutions. Prospective bankers could also disregard the law and operate a bank without a charter; these unauthorized banks were not incorporated, regulated, or acknowledged by the state and could not receive government funds. In Ohio, unauthorized banks had become commonplace by the 1830s. The state legislature tried to impose penalties but did not enforce the contradictory banking statutes that had developed from politicians’ attempts to curb the spread of unauthorized banks.
JS and the Latter-day Saints in considered a variety of means to strengthen the economy of their community. In fall 1836, JS undertook several business ventures, including buying land in and around Kirtland and starting a store in nearby , Ohio. By late September or early October 1836, after returning from a trip that included spending time in the financial center of , , JS, and other church leaders had decided to establish a private bank in Kirtland and had chosen the name for the institution. They began looking for investors, who would become stockholders by subscribing to buy shares of stock in the new bank. The money gained from such subscriptions would function as the specie reserves of the society and allow it to redeem the notes it issued for specie.
On 2 November 1836, the initial stockholders met, ratified a constitution, and elected thirty-two bank directors and two officers: as president and JS as cashier. By December 1836, banknotes for the Kirtland Safety Society were engraved and printed by the firm Underwood, Bald, Spencer & Hufty. Unfortunately, the Kirtland Safety Society gained no large-scale investors and only minimal local support, which resulted in funding problems from the outset. The constitution set the capital stock at $4 million and divided that amount into 80,0000 shares of stock sold for $50 each. While the society did eventually get subscriptions for most of the stock, it was primarily sold to individuals who were only able to pay a fraction of the amount they had agreed upon.
The stockholders of the Safety Society met on 2 January 1837 to reorganize the institution. 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. The change in the name reflected the fact that the Kirtland Safety Society was not a state-chartered institution and could therefore conduct banking services only in an unofficial capacity. Although the officers still hoped to obtain a charter for a private bank, by this time they had likely realized the difficulty it posed. The Saints’ only documented attempt at obtaining a charter from the legislature involved a proposal for the Safety Society to be incorporated as a branch of a proposed state bank in Ohio. This petition was not heard until early February, when convinced legislator Samuel Medary to present the society’s petition to the state senate. The Safety Society’s petition failed to pass, on a vote of eleven in favor and twenty-four opposed. After this attempt, the society continued to function as an unauthorized bank, though the name had apparently already changed again, from the Kirtland Safety Society Anti-Banking Company to the Kirtland Safety Society Banking Company.
The precise date the Kirtland Safety Society banking office starting doing business is not known, but it was likely between 4 and 7 January 1837. Opening an office or banking house allowed the society to offer loans, using Kirtland Safety Society notes, and to exchange their notes for the notes of other banks, which increased the number of the society’s notes in circulation as well as the society’s financial reserves. Aside from the extant loan and discount papers, little is known about the Kirtland Safety Society’s first few weeks of business, but it appears to have garnered both popular interest and hostility.
Contemporary and reminiscent accounts indicate there was general acceptance and circulation of the society’s notes in its first weeks of operation. Early on, however, there were efforts to close the society, apparently led by resident . Several newspapers also called into question 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.” 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 the 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.
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. noted in his journal threats made of mobs coming from to destroy the bank, while the Cleveland Weekly Advertiser described a “furious and insulting mob” gathering in and threatening to destroy the society. Though it is not known whether the mob materialized, fear of violence may have led the directors to close the office temporarily. If the Safety Society did close in late January, it was a brief closure, probably around 23 or 24 January. 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. Even though a few newspapers continued to insist that it had failed, the society made loans and accepted payments for stock after January 1837.
Despite the turmoil in its opening month, Safety Society officers sought opportunities to expand the institution’s reach outside of . On 14 January the managers signed a contract with David Cartter, a lawyer in , Ohio, designating him an agent of the society. 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, , , 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. However, this partnership appears to have been short-lived. The Bank of Monroe was struggling financially and was forced to suspend specie payments by the end of March. This setback did not deter the Safety Society’s officers, who made two additional agreements in March to appoint individuals in , Ohio, and Beaver County, Pennsylvania, as agents of the society.
In discourses given in early April 1837, JS and urged the Saints to support the Kirtland Safety Society by accepting the society’s notes and investing in the institution. While some church members appear to have answered this plea, the nationwide financial crisis destroyed any momentary success. The Panic of 1837 caused bank closures, devalued currency, inflation, declining land values, and a general economic downturn. It led creditors to prematurely demand repayment and left individuals throughout the country unable to meet the debts they had amassed under the assumption of continued economic success.
Because of the Panic of 1837, the prospects for the society—which were already shaky— worsened. In May and June, several stockholders withdrew their funds and unloaded their stock, signifying a lack of confidence in the society. Sometime before 7 July, JS and resigned as officers of the Kirtland Safety Society. Their resignations officially ended their leadership of the society, but rather than closing, the Safety Society’s directors elected new officers, and . The society’s tenuous credibility, however, was further marred by the new officers’ decision to issue additional loans, straining the society’s diminished specie reserves and increasing the number of notes in circulation. By issuing more loans, Williams and Parrish may have hoped to increase funding, but their decision resulted in steeper discounts for the redemption of the society’s notes at any banks still willing to accept them.
The Kirtland Safety Society closed sometime during the summer of 1837, likely between the end of July and the end of August. The last entry in the society’s stock ledger is dated 19 June 1837, and the last date on extant notes is 20 July 1837. In the August issue of the Messenger and Advocate, JS published a notice cautioning the public against accepting or using the notes of the closed Kirtland Safety Society, reporting that they were being fraudulently used by speculators and other unscrupulous characters. In December 1837, the Safety Society was included in the newspaper Daily Herald and Gazette’s list of closed or bankrupt banking institutions.
For more on the “Bank War” between President Andrew Jackson and Nicholas Biddle, president of the Second Bank of the United States, see Hammond, Banks and Politics in America, 369–450; Howe, What Hath God Wrought, 375–386; and Sellers, Market Revolution, 321–326, 332–337. The Second Bank of the United States handled the federal governments’ financial transactions. Its federal charter allowed the banknotes it issued to be considered legal tender, exchangeable for gold and silver. (Howe, What Hath God Wrought, 374.)
Hammond, Bray. Banks and Politics in America from the Revolution to the Civil War. Princeton, NJ: Princeton University Press, 1957.
Howe, Daniel Walker. What Hath God Wrought: The Transformation of America, 1815–1848. The Oxford History of the United States. New York: Oxford University Press, 2007.
Sellers, Charles. The Market Revolution: Jacksonian America, 1815–1846. New York: Oxford University Press, 1991.
Paper money printed by state banks and state-chartered private banks was considered an authorized currency, although not official U.S. currency. Unauthorized paper money was printed by a range of institutions.
Golembe, State Banks and the Economic Development of the West, 13–16, 52–54; Coover, “Ohio Banking Institutions, 1803–1866,” 312–313. In some instances, an unauthorized bank might petition the legislature after years of successful operation and receive a charter.
Golembe, Carter H. State Banks and the Economic Development of the West 1830–1844. New York: Arno, 1978.
An 1816 Ohio statute made it a finable offense for an unchartered bank to perform banking services, including the issuing of notes. However, an 1824 statute that prohibited lawsuits against the notes of unauthorized or unincorporated banks seemed to contradict the earlier statute. It was unclear to the public which of the statutes was in force and how unincorporated banks would be judged. In February 1837, Samuel Rounds used the 1816 statute to bring litigation against JS, Sidney Rigdon, and temporary officers of the society for issuing notes from an unincorporated bank. (See Documents, Volume 5, Introduction to Part 5: 5 Oct. 1836–10 Apr. 1837; An Act to Prohibit the Issuing and Circulating of Unauthorized Bank Paper [27 Jan. 1816], Statutes of the State of Ohio, of a General Nature , pp. 136, 137, secs. 1–4, 12; see also Introduction to Rounds qui tam v. JS.)
Statutes of the State of Ohio, of a General Nature, in Force, December 7, 1840; Also, the Statutes of a General Nature, Passed by the General Assembly at Their Thirty-Ninth Session, Commencing December 7, 1840. Columbus, OH: Samuel Medary, 1841.
This term is misleading. Unlike the anti-bank wing of the Democratic Party, which opposed paper currency and the proliferation of banks, the stockholders of the Kirtland Safety Society were not opposed to banking and continued to run their institution as a bank.
The Ohio legislature had granted a considerable number of bank charters in the early 1830s, but it began issuing fewer charters by the 1835–1836 legislative session. In the 1836–1837 session, when Orson Hyde was seeking state authorization for the Kirtland Safety Society, the legislature did not approve any bank charters. 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. (Golembe, State Banks and the Economic Development of the West, 52, 251–255.)
Golembe, Carter H. State Banks and the Economic Development of the West 1830–1844. New York: Arno, 1978.
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 community banks, was within the range of a few. (See Constitution of the Kirtland Safety Society Bank, 2 Nov. 1836.)
A former employee of Newell’s, James Thompson, claimed that Newell “used to drive about the country and buy up all the Mormon money possible, and the next morning go to the bank and obtain the specie.” At the end of his life, Newell claimed responsibility for driving the church and its members out of Kirtland. (James Thompson, Statement, Naked Truths about Mormonism [Oakland, CA], Apr. 1888, 3; Henry Holcomb, “Personal Experience’s after the Civil War,” in “Personal and Family History 1865–1903,” p. 52, in Henry Holcomb Papers, Western Reserve Historical Society, Cleveland, OH.)
Naked Truths about Mormonism: Also a Journal for Important, Newly Apprehended Truths, and Miscellany. Oakland, CA. Jan. and Apr. 1888.
Holcomb, Henry. Papers, 1864–1919. Western Reserve Historical Society, Cleveland.
Woodruff wrote in his journal, “We had been threatened by a mob from Panesville to visit us that night & demolish our Bank & take our property but they did not appeare but the wrath of our enemies appears to be kindled against us.” (Woodruff, Journal, 24 Jan. 1837; “Kirtland Safety Society,” Cleveland Weekly Advertiser, 2 Feb. 1837, .)
Woodruff, Wilford. Journals, 1833–1898. Wilford Woodruff, Journals and Papers, 1828–1898. CHL. MS 1352.
In a July 1837 editorial in the Messenger and Advocate,Warren A. Cowdery reported that “hundreds who were enemies, either came or sent their agents and demanded specie till the officers thought best to refuse payment.” (Warren A. Cowdery, Editorial, Messenger and Advocate, July 1837, 3:536.
Latter Day Saints’ Messenger and Advocate. Kirtland, OH. Oct. 1834–Sept. 1837.
The earliest extant record of a transaction between the Kirtland Safety Society and the Bank of Monroe is a receipt dated 25 January 1837. This receipt was signed by Sidney Rigdon, identifying himself as the president of the Kirtland Safety Society, and Bailey J. Hathaway, a bank director for the Bank of Monroe, who replaced G. B. Harleston as the bank’s cashier. (B. J. Hathaway, Receipt, 25 Jan. 1837, JS Office Papers, CHL; “Bank of Monroe,” Painesville [OH] Republican, 29 Feb. 1837.)
“Bank of Monroe,” Painesville (OH) Telegraph, 24 Feb. 1837, . Bailey J. Hathaway, who was appointed cashier at the same gathering, announced the new positions to the public. S. A. Davis, the editor of the Universalist paper Glad Tidings, and Ohio Christian Telescope, visited Kirtland in February or March 1837 and wrote, “We had not the pleasure of seeing Joseph Smith Jr. Sidney Rigdon, or O. Cowdery, three leading men of this sect, as they had gone to Michigan on business for their Banking Institution.” (“Bank of Monroe,” Painesville [OH] Republican, 29 Feb. 1837; “Kirtland,—Mormonism, &c.,” Messenger and Advocate, Apr. 1837, 3:491.)