The Kirtland Bank

[AndyOne]

If you are thinking it had anything directly to do with the KSS, you may want to think again. In fact, in terms of the KSS court issues under appeal at the time JS fled, and given the potential for successful appeal, it would have been in his interest to have stayed.

Thanks, -Wade Englund-

I find this argument in contradiction with even apologetic views. Fleeing potential mob violence and perceived unjust legal persecution seems quite rational to me.

[wenglund]

I find this argument in contradiction with even apologetic views. Fleeing potential mob violence and perceived unjust legal persecution seems quite rational to me.

I think it quite reasonable as well. Where is the assumed contradiction?

Thanks, -Wade Englund-

[AndyOne]

I think it quite reasonable as well. Where is the assumed contradiction?

Thanks, -Wade Englund-

Maybe none, just think that such concerns were directly linked to the failure of the quasi-bank. I also think that fleeing potential persecution doesn't evidence guilt on JS's part. The Lord never decreed that a prophet would automatically make a good businessman.

[JangoStango]

If you are thinking it had anything directly to do with the KSS, you may want to think again. In fact, in terms of the KSS court issues under appeal at the time JS fled, and given the potential for successful appeal, it would have been in his interest to have stayed.

I find this argument in contradiction with even apologetic views. Fleeing potential mob violence and perceived unjust legal persecution seems quite rational to me.

I'm thinking he fled because he feared the consequences of his bank failure.

[Deborah]

The Lord never decreed that a prophet would automatically make a good businessman.

Joseph in fact was a good businessman according to Truman Madsen. Look what he did with Nauvoo. Furthermore, the bank failure was not of his doing and this was not the only bank failure of that time. In fact Joseph liquidated some of his personal assets to pay off the debts of the bank, which were due to mishandling by his partners. However, it wasn't enough.

Did anyone even read Br. Whiteâ??s paper? You need to click on the points under discussion to read the detailed evidence. Note that Joseph did not defraud anyone and all his debts were paid by his legal representative. Furthermore he had prophesied that the bank would fail if it were not run on principles of righteousness and those in charge of running the bank did not operate under such principles. Josephâ??s enemies and the apostate William Parrish were responsible for the failure of the bank.

[wenglund]

Maybe none, just think that such concerns were directly linked to the failure of the quasi-bank.

I don't see how the persecution and vexing lawsuites were directly linked to the KSS. Perhaps you could explain. I think you may find in your research that while some of the persecution fommented by former members may have been at best indirectly tied to the KSS, the bulk of the persecution was religiously or politically motivated. Certainly, the vexing lawsuits were religiously motivated.

I also think that fleeing potential persecution doesn't evidence guilt on JS's part. The Lord never decreed that a prophet would automatically make a good businessman.

But, he didn't flee prosecution involving the KSS. Nor, is there any evidence to suggest that he wasn't a good business man. The KSS didn't fail because of Joseph's business practices. In fact, there is reason to conclude that the failure might have come sooner and had been worse were it not for Joseph's good business practices.

So, I am beginning to wonder if you even know what you are talking about.

Thanks, -Wade Englund-

[wenglund]

I'm thinking he fled because he feared the consequences of his bank failure.

Your "thinking", then, would be uninformed and incorrect.

Thanks, -Wade Englund-

[katherine the great]

If you are thinking it had anything directly to do with the KSS, you may want to think again.

Can you expound on this statement? Am I reading it wrong or are you saying that the arrest warrant for bank fraud had absolutely nothing to do with Joseph Smith leaving the state of Ohio? I think that if he had stayed, he would have been met with mob violence that may have hurried along his untimely death. I absolutely believe that his fleeing the state was connected to the bank (anti-bank) failure and the (lynch) mob that was following him to see that "justice" was served. However, I'm certainly not making a judgment on Joseph Smith because in those circumstances, I probably would have done the same. In the frontier areas, the long arm of the law didn't necessarily extend to protect the accused.

[AndyOne]

So, I am beginning to wonder if you even know what you are talking about.

Thanks, -Wade Englund-

Yeah, okay, sure - enjoy.

[AndyOne]

I recommend the following as a fair treatment:

https://byustudies.byu.edu/Shop/PDFSRC/12.4Partridge.pdf

On the prophet/businessman connection, consider what some might have made of the failure of one of our major investment banks during the downturn had it been owned and operated by the church. The greed and lack of foresight of these sophisticated entities, under well-trained and experienced management, in failing to recognize that the well would dry up on demand for their financial products are really quite remarkable. Woefully under-capitalized relative to extant debt commitments and call obligations, these venerable, seemingly indestructible investment houses collapsed. That doesn't mean these managers are dumb people, they are not - but they did support and direct choices, in a competitive environment of seemingly exponential growth, that were clearly, in hindsight, unwise.

Now, KSS suffered a fate not uncommon at all in the period in which it existed. It was the victim of mass speculation, and was woefully under-capitalized. As with other similar mass failures of our financial systems (think S&L crisis), several financial institutions failed - and the masses went straight for the jugglers of those responsible. I don't believe that the foundation of the KSS, of which JS was a part, was terribly sound - but understand that it was not alone in having its defects.

I guess the question becomes one of expectation of (later to be disaffected) members of the day, who lost money in the process. Should the prophet, in participating in the establishment of the foundations of the KSS (including ensuring a reasonable capitalization - and the maintenance thereof) have anticipated (prophetically) the difficulties in the financial markets about to arise and designed the KSS in a manner so as not to fail? My view is JS's prophetic role should not have been assumed to extend to his role as a founder of the KSS. Hence my earlier statement that being a prophet does not ensure that one is a good businessman - which I stand by 100%.

Added: To be clear, so as to avoid further petty jabs, my point is that business dealings with a prophet should not be assumed to all be successful by virtue of the fact that the person is a prophet.

[JangoStango]

Your "thinking", then, would be uninformed and incorrect.

If you say so then it must be so. AnyOne and Katherine and I are just fools for thinking there was a direct relationship between the bank failure, the potential consequences for him, and Joseph running away from Ohio.

No apparent connection whatsoever!

Thanks, -Wade Englund-

Yer welcum.

[katherine the great]

Josephâ??s enemies and the apostate William Parrish were responsible for the failure of the bank.

I really have to disagree with this statement. This incident did not happen in a vacuum. It was part of the entire nation's banking crisis. I see some similarities between the economic conditions of their time and the "housing bubble" of a couple of years ago. Housing prices were rising so quickly in some places that it became only a matter of time that they would come crashing down. With them, it was land. Of course it isn't nearly as simple as that, but they faced a similar problem in Kirtland. The establishment was doomed with or without Joseph's enemies and William Parrish. It wasn't the prophet's fault. It wasn't any single person's fault.

[John Williams]

I really have to disagree with this statement. This incident did not happen in a vacuum. It was part of the entire nation's banking crisis. I see some similarities between the economic conditions of their time and the "housing bubble" of a couple of years ago. Housing prices were rising so quickly in some places that it became only a matter of time that they would come crashing down. With them, it was land. Of course it isn't nearly as simple as that, but they faced a similar problem in Kirtland. The establishment was doomed with or without Joseph's enemies and William Parrish. It wasn't the prophet's fault. It wasn't any single person's fault.

Well said, Katherine. My problem with the FAIR presentation is that it boils down to Deborah's overly simplistic summary: it was the antis and Warren Parrish who were at fault.

Isn't it possible that the bank failure was just a run-of-the-mill bank failure with multiple causes? My understanding is that the bank was set up to purchase property for the gathering of the Saints, and thus, as has been said, when land prices collapsed preceding the panic of 1837, the bank failed as a matter of course. And I agree with you that Joseph's fleeing Kirtland had everything to do with the bank failure and its legal and financial consequences. He most likely would have faced death had he stayed in Kirtland. Leaving as he did was the prudent thing to do.

Just to throw this out, there's an old Williams family story about the bank failure (so take its accuracy with a grain of salt, though my family swears to it). My ancestor, Frederick G. Williams, was a justice of the peace, and when the bank failed, Joseph Smith asked him to write out a warrant for Warren Parrish's arrest for embezzlement. Frederick refused, citing a lack of evidence. Joseph became very angry, and they ended up in a shouting match, after which Frederick physically ejected Joseph from his home. Williams family history says that Joseph later returned and apologized to Frederick. Many in the family have speculated that Frederick's being dropped from the First Presidency and his later excommunication while Joseph was in Liberty Jail stem from this incident.

[katherine the great]

If you say so then it must be so. AnyOne and Katherine and I are just fools for thinking there was a direct relationship between the bank failure, the potential consequences for him, and Joseph running away from Ohio.

No apparent connection whatsoever!

In all fairness, I will say that I agree with Wade that the failure of the KSS was not Joseph Smith's fault and that charging him with it's failure was an incredibly unjust thing to do.

[AndyOne]

KtG - please see my post above - I think it's a fair way to approach the issue regarding the degree of blame that can be attributed to JS. The foundations of the bank did not anticipate the impact of the impending financial crisis. JS is "responsible" in the sense that he, like many others of his day, helped establish a financial institution that was, in hindsight, doomed to collapse. The article I link in that post, IMHO, is very fair in laying this out. His actions were not unlike those of many others - and he was certainly not alone in acting.

[cinepro]

If you unhook your money (currency) from the precious metal that gives it its value and just print money you immediately begin to lesson its buying power. All you have then is script printed on paper. Your economy may inflate but with no real growth. There is nothing behind it but paper, printing presses and hot air.

Luckily, the US government has figured out a way to get around this.

I hope.

[AndyOne]

Luckily, the US government has figured out a way to get around this.

I hope.

We haven't seen any defaulted US debt securities (of which I'm aware) and the US can still find buyers for its paper.

[Pahoran]

I really have to disagree with this statement. This incident did not happen in a vacuum. It was part of the entire nation's banking crisis. I see some similarities between the economic conditions of their time and the "housing bubble" of a couple of years ago. Housing prices were rising so quickly in some places that it became only a matter of time that they would come crashing down. With them, it was land. Of course it isn't nearly as simple as that, but they faced a similar problem in Kirtland. The establishment was doomed with or without Joseph's enemies and William Parrish. It wasn't the prophet's fault. It wasn't any single person's fault.

Perhaps not, but Warren Parrish absconding with 95% of the bank's hard cash reserves was probably not overly helpful.

Regards,

Pahoran

[Deborah]

This incident did not happen in a vacuum. It was part of the entire nation's banking crisis.

I made that point "the bank failure was not of his doing and this was not the only bank failure of that time" as did Br. White. However, the fact is that William Parrish did embezzle and was responsible for the run on the bank. I don't think the KSS necessarily needed to have failed with the other banks had there not been other factors.

[AndyOne]

Perhaps not, but Warren Parrish absconding with 95% of the bank's hard cash reserves was probably not overly helpful.

Regards,

Pahoran

To the extent the extant reserves were removed, clearly that hurt - but there is also the fact that reserves, such as they were, were insufficient from the very beginning. Banking on money to eventually be there is a problem far from unique to the KSS with its obvious modern counterparts.

[AndyOne]

I made that point "the bank failure was not of his doing and this was not the only bank failure of that time" as did Br. White. However, the fact is that William Parrish did embezzle and was responsible for the run on the bank. I don't think the KSS necessarily needed to have failed with the other banks had there not been other factors.

Even with all its extant reserves, the KSS did not have sufficient assets to cover its notes. The inability to cover one's obligations when called will inevitably devalue the paper on which they are written - and in many cases to the point of becoming worthless. The very foundations of the KSS, established with the help of JS, enabled this outcome - it being understood that they weren't sitting with a crystal to know that it would happen before they had time or opportunity to beef up their reserves.

[LifeOnaPlate]

I'm surprised at all the commenting that doesn't even interact with the original posted paper.

[Alf O'Mega]

Just to throw this out, there's an old Williams family story about the bank failure (so take its accuracy with a grain of salt, though my family swears to it). My ancestor, Frederick G. Williams, was a justice of the peace, and when the bank failed, Joseph Smith asked him to write out a warrant for Warren Parrish's arrest for embezzlement. Frederick refused, citing a lack of evidence. Joseph became very angry, and they ended up in a shouting match, after which Frederick physically ejected Joseph from his home. Williams family history says that Joseph later returned and apologized to Frederick. Many in the family have speculated that Frederick's being dropped from the First Presidency and his later excommunication while Joseph was in Liberty Jail stem from this incident.

Here's the story told by Lucy Mack Smith:

Prior to this, a bank was established in Kirtland. Soon after the sermon, above mentioned, Joseph discovered that a large amount of money had been taken away by fraud, from this bank. He immediately demanded a search warrant of Esquire Williams, which was flatly refused. "I insist upon a warrant," said Joseph, "for if you will give me one, I can get the money, and if you do not, I will break you of your office." "Well, break it is then," said Williams, "and we will strike hands upon it." "Very well," said Joseph, "from henceforth I drop you from my quorum, in the name of the Lord."

Williams, in wrath, replied, "Amen." Joseph entered a complaint against him, for neglect of duty, as an officer of justice; in consequence of which the magistracy was taken from him, and given to Oliver Cowdery (Biographical Sketches of Joseph Smith the Prophet, and his Progenitors for Many Generations [Liverpool: S. W. Richards, 1853], 210).

After quoting from this account, Richard S. Van Wagoner cites the Williams family version thus:

Ezra Granger Williams, Frederick's son, and an eyewitness to the above incident, related the matter differently. He admitted that the prophet approached Williams but not for a search warrant. Evidently Smith unsuccessfully attempted to convince Williams, the Safety Society's treasurer, to let him withdraw additional funds from the bank for "speculative purposes." Williams refused and suggested that he knew more about the rules of banking. An ugly quarrel erupted. "I did not think that the Prophet had any faults," young Williams later wrote, "but heard him as he greatly condemned my father." According to Williams, shortly thereafter the contrite prophet

returned and on bended knees, crying like a child, humbly asked my father's forgiveness, admitting that he was wrong and that my father was right. He pleaded with him to still be friends and to continue by his side as usual [in the First Presidency]. My father gladly forgave him, but answered, "No, as the people would never have the confidence in him again that they had had before." [note 40: Nancy Clement Williams,

After 100 Years

(Independence, MO: Zion's Printing and Publishing Co., 1951), 44.] (

Sidney Rigdon: A Portrait of Religious Excess

[salt Lake City: Signature Books, 1994], 200â??201)

I think there's more than a whiff of injured family pride in both accounts, so I doubt either one captures exactly what went down.

[wenglund]

Can you expound on this statement? Am I reading it wrong or are you saying that the arrest warrant for bank fraud had absolutely nothing to do with Joseph Smith leaving the state of Ohio?

What arrest warrant for bank fraud? In the Spring of 1837 Joseph and Sydney were charged with violating the banking act of 1816, which made it illegal for banks without a charter to issue notes. The charge was for illegally issuing notes, not fraud.

Besides, he didn't flee arrest. The arrest and charge were made in the spring of 1837, and Joseph was mostly in Kirtland until the end of September. The trial was held in October while Joseph was away on a mission for the purpose of "lay[ing] off other stakes of Zion, or places of gathering, so that the poor may have a place of refuge, or places of refuge, in the day of tribulation which is coming swiftly on the earth" as appointed to them on the 18th of September." (History of the Church, Vol.2, Ch.36, p.516 and 518)

During his absense, he was found guilty, and his case was later appealed. Joseph returned to Kirtland on the 10th of December of that year.

I think that if he had stayed, he would have been met with mob violence that may have hurried along his untimely death. I absolutely believe that his fleeing the state was connected to the bank (anti-bank) failure and the (lynch) mob that was following him to see that "justice" was served. However, I'm certainly not making a judgment on Joseph Smith because in those circumstances, I probably would have done the same. In the frontier areas, the long arm of the law didn't necessarily extend to protect the accused.

I suppose it is possible. But, I think it helpful to remember that in the spring of 1837, a month or so after the doors to the KSS were openned, the Society began to experience significant problems with stores and other institutions not accepting the notes and enemies collecting and redeeming the notes, causing a run on the bank (as explained by White in his online paper).

However, after sinking large amounts of his own money, and securing loans, and collateralizing his land to keep the bank afloat, by July of 1837 Joseph had washed his hands of the KSS and had begun warning people against involvement therein. For all intents and purposes, the bank failed later that summer, and finally closed its doors for good in Dec of that year.

So, by the time the trial of Joseph and Sydney took place for illegally issuing bank notes (October of 1837), the matter was already 4 months outdated and moot in Joseph's case. And, as previously intimated, he left town a month earlier, not to flee persecution, but to fulfill a mission. And, he returned in December of that year.

Joseph mentioned that: "During my absence in Missouri Warren Parrish, John F. Boynton, Luke S. Johnson, Joseph Coe, and some others united together for the overthrow of the Church. Soon after my return this dissenting band openly and publicly renounced the Church of Christ of Latter-day Saints and claimed themselves to be the old standard, calling themselves the Church of Christ, excluding the word 'Saints,' and set me at naught, and the whole Church, denouncing us as heretics, not considering that the Saints shall possess the kingdom according to the Prophet Daniel." (History of the Church, Vol.2, Ch.36, p.52)

So, while the issue of the KSS may have innitially fostered bad blood among many of the dissenting leaders (in part, ironically, because Joseph denounced the KSS after it continued to be run by some of the dissidents), the persecution and later the mob violence was religious in nature, and consisted mainly of a rift within the Church and sharp divisiveness over leadership, fommented by the belief that Joseph was a fallen prophet.

In fact, on the 10th of December, 1837, Brigham Young, who was not an officer of the KSS, "left Kirtland in consequence of the fury of the mob spirit that prevailed in the apostates who had threatened to destroy him because he would proclaim publicly and privately that he knew by the power of the Holy Ghost that I was a Prophet of the Most High God, that I had not transgressed and fallen as the apostates declared. Apostasy, persecution, confusion, and mobocracy strove hard to bear rule at Kirtland, and thus closed the year 1837." (History of the Church, Vol.2, Ch.36, p.528)

That same day (Dec. 10th, 1837), Joseph and Sydney returned from Far West to Kirtland, and in "January, 1838.--A new year dawned upon the Church in Kirtland in all the bitterness of the spirit of apostate mobocracy; which continued to rage and grow hotter and hotter, until Elder Rigdon and myself were obliged to flee from its deadly influence, as did the Apostles and Prophets of old, and as Jesus said, 'when they persecute you in one city, flee to another.' On the evening of the 12th of January, about ten o'clock, we left Kirtland, on horseback, 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, and to save themselves from the just judgment of the law." (History of the Church, Vol.3, Ch.1, p.1)

So, to suggest that Joseph's fleeing was about the KSS, would be to grossly oversimplify things and give it the same false color of legal process that Joseph intimated.

Thanks, -Wade Englund-

[LifeOnaPlate]

But it is a lot more fun and easy just to say JS was a fraud involved in fraudulent fraudery, wade.