Wilford Woodruff, who remained true to the Church and became the fourth President, confirmed the fact that Joseph Smith claimed to have a revelation concerning the bank. Under the date of January 6, 1837, he recorded the following in his journal: "I also herd [sic] President Joseph Smith, jr., declare in the presence of F. Williams, D. Whitmer, S. Smith, W. Parrish, and others in the Deposit office that HE HAD RECEIVED THAT MORNING THE WORD OF THE LORD UPON THE SUBJECT OF THE KIRTLAND SAFETY SOCIETY. He was alone in a room by himself and he had not only [heard] the voice of the Spirit upon the Subject but even an AUDIBLE VOICE. He did not tell us at that time what the Lord said upon the subject but remarked that if we would give heed to the commandments the Lord had given this morning all would be well." ("Wilford Woodruff's Journal," January 6, 1837, as quoted in Conflict at Kirtland, page 296)
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.
The Messenger and Advocate published an appeal for investors which said:
"…we invite the brethren from abroad, to call on us, and take stock in our Safety Society; and we would remind them also of the sayings of Isaiah…'Surely the isles shall wait for me, and the ships of Tarshish first, to bring thy sons from far, their silver and their gold (not their bank notes) with them, unto the name of the Lord thy God.'" (The parenthetical expression is part of the original text, reprinted in History of the Church, Vol. 2, p. 473)
According to several individuals that left the church, the bank was established on fraudulent claims of capital security. They related that the bank vault was lined with many boxes, each marked $1,000. These boxes were actually filled with "sand, lead, old iron, stone, and combustibles," but each had a top layer of bright fifty-cent silver coins. Anyone suspicious of the bank's stability was permitted to lift and count the boxes. According to C. G. Webb:
"The effect of those boxes was like magic. 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." (Interview by W. Wyl. See Mormon Portraits, p. 36; the letter of Cyrus Smalling in E. G. Lee, The Mormons, p. 14; and Fawn Brodie, No Man Knows My History, pp. 194-8).
William Parrish, secretary for Joseph and cashier of the bank for a short time, wrote in 1838:
"I have been astonished to hear him declare that we had $60,000 in specie in our vaults and $600,000 at our command, when we had not to exceed $6,000 and could not command any more; also that we had but about ten thousand dollars of our bills in circulation when he, as cashier of that institution, knew that there was at least $150,000." (Letter to Zion's Watchman, published March 24, 1838)
It should be noted that Parrish left the church following this fiasco and began openly to describe Joseph's banking methods. He was later accused of absconding with $25,000, probably in bank notes which ultimately proved worthless.
On January 27, less than a month after the bank's opening, the Painesville Telegraph reported that Joseph had "shut up shop…saying he would not redeem another dollar except with land." Everyone with Kirtland anti-bank bills now realized their quandary and tried desperately to get rid of them. By February 1 the bills were selling for 12 ½ cents on the dollar (William Harris: Mormonism Portrayed (Warsaw, Illinois, 1841), p. 30)
From the beginning, the bank had been operated illegally and Joseph was eventually ordered by the courts to pay the standard $1,000 penalty as well as court costs (see Chardon, Ohio, courthouse, Vol. U, p. 362). Needless to say, the dissolution of the bank and the catastrophic effects it held for those that trusted Joseph's word resulted in widespread disillusionment with the prophet. Under accusations of fraud, Joseph threatened to excommunicate any Saint who brought suit against a brother in the church. As Heber Kimball put it, during this time "there were not twenty persons on earth that would declare that Joseph Smith was a prophet of God." (Sermon delivered September 28, 1856. Journal of Discourses, Vol. 4, p. 105)
"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." (No Man Knows My History, page 198)
"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."
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.
***My Thoughts***
So, all that time when the "Prophet" was in hiding and staying far from Kirtland, it turns out that he was not avoiding "religious persecution" after all. He was avoiding his creditors!!! No WONDER there was so much hostility towards the members in Ohio, no WONDER they all had to leave their lands and their brand-new temple behind to head to Independence, MO. They were practically run off due to yet ANOTHER money-making scam gone bust.
Remember that saying, 'if you want to know about Mormons, go to the source?" This is what the "official Mormon website" has to say about it.....
I checked on the lds.org site, and came up with an article clear back from 1989 in the Ensign where they actually talk about the Kirtland Bank failure. See how they spin it for yourselves by clicking here.
As usual, they don't miss an opportunity to blame the members for their lack of faith, and divert attention away from the prophet's misdeeds that lead up to the crisis and the ultimate failure of their "Anti-Bank". The simple fact is, while obeying the letter of the law in establishing a type of bank, they stretched the credibility of the establishment to the point of no return, and when their bluff was called, both Joseph and Brigham fled, leaving the members to fend for themselves. Those who turned away from the church were accused of loosing "the Spirit through pride, selfishness, greed, immorality, and criticism." In short, they blamed the victims.
As if that isn't enough of a kick in the pants.....
An Ensign article written in 1996 by Dallin H. Oaks of the quorum of twelve apostles, talks of the difference between "Sins and Mistakes", and had this little bit regarding the Kirtland Banking scandal:
"some mistaken decisions on Kirtland banking policies plagued the Saints for more than a decade. These financial difficulties were perhaps portended in the Lord’s warning to the Prophet Joseph Smith that “in temporal labors thou shalt not have strength, for this is not thy calling” (D&C 24:9).
[So, using this logic, Joseph made a simple mistake in judgment, a faux-pas if you will... AND because it clearly states IN CANNONIZED SCRIPTURE that he would not have strength in temporal labors, why would the members be encouraged to follow his advice when he started a bank? Obviously they were warned, so I guess it really IS their fault after all...]
"Both sins and mistakes can hurt us and both require attention, but the scriptures direct a different treatment....Violations of the commandments of God are sins that require chastening and repentance. In the treatment process we should not require repentance for mistakes, but we are commanded to preach the necessity of repentance for sins."
[So, because Joseph didn't violate COMMANDMENTS, (just the trust of hundreds of faithful Mormons) he doesn't have to repent, because it was all a mistake of PERSONAL judgment, NOT a failure of his 'prophetic office'. Oh, come ON!!!]
"Applying that fact to the question of sins and mistakes, I would say that a deliberately wrong choice in the contest between what is clearly good and what is clearly bad is a sin, but a poor choice among things that are good, better, and best is merely a mistake."
[Yeah, try using THAT argument the next time you come up for a worthiness interview!!! Yeah, I made some mistakes, I wrote a couple bad checks, I'm not current on my child support obligations, I watched some R-rated movies a couple weeks ago, but those are MISTAKES, not SINS!!! I haven't broken any COMMANDMENTS, just made some bad decisions on 'temporal matters'. I don't have much strength when it comes to temporal stuff. Can I have my temple recommend now?]
Wow, my head hurts from all the spinning....
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