Kirtland Safety Society
In 1837, The Church of Jesus Christ of Latter-day Saints (commonly called the Mormon Church) was centered in Kirtland, Ohio. Things were finally going well for the Latter-day Saints, and prosperity began to increase. As more people began to settle in the area, church leaders discovered the necessity of having a bank to extend loans to the community, in order for the citizens to develop their land and society. In fact, the 1830s were a time of such growth and expansion throughout the United States in general, that the number of banks in the country nearly doubled during the decade.
In 1836, Joseph Smith and other church leaders sought to secure a charter for a bank in Kirtland, which they planned to call the Kirtland Safety Society Bank. Orson Hyde went to the state capital to request approval at the same time Oliver Cowdery went to Philadelphia to purchase plates for printing their own currency. At this time many banks printed their own currency, which eventually led to a nationwide panic in 1837.
Oliver was successful in obtaining the printing plates, but Orson was not granted the permission necessary to form a bank. By this time the Democrats, who had gained power in Ohio, were opposing the formation of more banks in the state and were denying most similar requests. Still, at this time, many banks were still being formed throughout the country, especially in the West. The solution which church leaders came up with was to form an anti-banking society which, though it didn’t have a charter, would be funded by local citizens and would function like a bank, though it was technically a private joint-stock company. The Kirtland Safety Society Anti-Banking Company opened its doors on January 2, 1837.
Though the intentions of Joseph and many other leaders were pure, problems soon arose, not the least of which was that the collateral the Kirtland Safety Society possessed was mostly land, not gold or silver. This made it very difficult for the Society to turn its collateral into hard money to give its clients. Enemies of the Church quickly gathered enough notes to initiate a run on the “bank” just a few weeks after it opened its doors.
In spring of the same year, the Panic of 1837 commenced in New York and swept the nation. Many banks were failing, causing creditors to collect on their debts. Since money was so scarce, creditors were unable to extend more credit or to postpone due dates. However, since customers simply did not have the money, banks or companies who had lent money were forced to close.
In addition to the financial state of the nation, many of the members of the Church of Jesus Christ began to lose focus on the importance of building up the kingdom of God and began instead to focus on how they could build their own importance and wealth. Since the Church of Jesus Christ was now centered in Kirtland, many Saints were still moving there. A few of the brethren, who simply could not withstand the temptation, began to buy up land at a standard price in order to flip it for a profit when more Saints arrived. This caused the value of land to skyrocket. In a short period of time, a lot which had sold for $150 was said to be worth between $500 and $1000.
Joseph Smith warned these brethren that such behavior would bring financial ruin to them all. They had become selfish, prideful, and ceased to heed the prophet’s counsel. Many were criticizing Joseph for the impending failure of the company and put a lot of pressure on him. He finally stepped aside and handed the company over to others, but rumors that some of the owners were embezzling funds, combined with clumsy management, forced the Kirtland Safety Society to close its doors in November 1837, less than one year after it opened.
Joseph did everything he could to keep the Kirtland Safety Society afloat.
- Joseph Smith was, along with three others, the largest shareholder of the Safety Society. All else equal, he would stand to lose the most if the Safety Society failed.
- He also paid more per share than 85% of the shareholders. So he invested more money than probably everyone else. He really would lose the most in the event of failure.
- If he was in it for money, he would have gotten out at the first signs of trouble. Instead, while the Safety Society was really struggling, he increased his subscription in order to try to help the Safety Society succeed.
- That wasn’t all. He also took out three loans on behalf of the Safety Society to give some added liquidity.
- Finally, he also sold personal property for $5000 in order to give more help to the Safety Society. 
So Joseph Smith actually lost a lot of money from the Safety Society.
Antagonists to Joseph Smith and Probable Causes of the Bank's Failure
- The first was a good old-fashioned bank run. When the Safety Society opened its doors, antagonists began collecting as many of its notes as they could. Then they took them in to the bank to redeem them for specie. The antagonists basically had the Safety Society at gunpoint. If it continued to redeem the notes for specie, they’d drain all the reserves and the Safety Society would fail. If it stopped redeeming notes, confidence in the Safety Society would plummet. As a result, its notes started trading at a steep discount. Enemies of the Church set out to make the Safety Society fail, and they were very effective.
- The second blow was Warren Parrish. ... Warren Parrish was an officer of the Safety Society. Joseph Smith started noticing that money went missing when only Parrish had access to it. Evidence seemed clear the money was being kept in Parrish’s trunk. But before Joseph Smith could get a warrant to search it, the trunk disappeared. As Heber C. Kimball records, Parrish later admitted to embezzling $20,000. That’s the equivalent of $475,000 today.
- Let’s get some perspective on this: Parrish embezzled $20,000. The Safety Society had a reserve of $21,000 in specie and notes from other banks. With that $20,000, Parrish could completely wipe out the Safety Society’s liquid assets. That would ruin the Safety Society. (Parrish would later drive LDS leaders out of the Kirtland Temple at gunpoint.) 
The failure of the Society caused many to accuse Joseph of being a false, or at least a fallen, prophet. However, Joseph never claimed that his involvement in this venture was directed or inspired by God. He did say he had felt guided by the Spirit to participate, but no commandment was ever given to him regarding the Society. As with so many things, it could have turned out well, but many men gave in to the temptation to pursue personal gain. If members of the Society had followed Joseph’s advice and counsel, it is likely they would have succeeded despite the widespread panic around them. Those who gave in to temptation were ruined not only financially but spiritually as well. A few of the brethren were excommunicated due to their behavior and refusal to repent. Martin Harris was one of these men. Even Parley P. Pratt came close to losing his testimony, but stated the following,
- “There were also envyings, lyings, strifes and divisions, which caused much trouble and sorrow. By such spirits I was also accused, misrepresented and abused. And at one time, I also was overcome by the same spirit in a great measure, and it seemed as if the very powers of darkness which war against the Saints were let loose upon me. But the Lord knew my faith, my zeal, my integrity of purpose, and he gave me the victory.
- “I went to brother Joseph Smith in tears, and, with a broken heart and contrite spirit, confessed wherein I had erred in spirit, murmured, or done or said amiss. He frankly forgave me, prayed for me and blessed me. Thus, by experience, I learned more fully to discern and to contrast the two spirits, and to resist the one and cleave to the other.”
The failure of the Kirtland Safety Society was certainly not the only disaster which tried the Saints’ faith, but the Church of Jesus Christ and the Latter-day Saints prevailed. These experiences simply served as a tool to separate those with the necessary faith from those who were not committed. The faith of those who stayed served to bring them West and settle in the Utah Territory and build the Church there.
What is a Prophet?
The Latter-day Saints who lost their testimonies of the Church and the Prophet Joseph Smith, because of the failure of the Kirtland Safety Society were not centered properly on the Savior Jesus Christ, but instead were focused on the things of the world. Some may not have properly understood the role and definition of a prophet. Prophets receive revelation for the followers of God in their particular dispensation, but God does not lead or inform them in all things. In their personal lives, they move through mortality "seeing through a glass, darkly," just like the rest of us. Consider the prophet Abraham, who talked with God personally on many occasions. Remember his confusion when Sarah desired to banish Hagar and Ishmael. Abraham finally received help from the Lord, but he went through a period of great personal consternation beforehand, and even afterwards. Consider Jacob's trouble with his wives, and Elijah's depression over the spiritual condition of Israel. Finally, the Lord brought him out of his cave with the information that there were still many thousand righteous who needed a spiritual guide.
Joseph Smith was actually told by the Lord that he would have no strength in worldly pursuits:
- For thou shalt devote all thy service in Zion; and in this thou shalt have strength.
- Be patient in afflictions, for thou shalt have many; but endure them, for, lo, I am with thee, even unto the end of thy days.
- And in temporal labors thou shalt not have strength, for this is not thy calling. Attend to thy calling and thou shalt have wherewith to magnify thine office, and to expound all scriptures, and continue in laying on of the hands and confirming the churches (Doctrine and Covenants, Section 24:7-9).
Those Latter-day Saints who humbled themselves and went to the Lord in prayer for validation of Joseph Smith's role as a prophet, received the confirmation they sought, followed the Prophet, and were the backbone of the stalwart membership of the Church.
- The Safety Society was an honest endeavour for which Joseph Smith sacrificed greatly to help it succeed.
- It was not bungled up or mismanaged by Joseph Smith and Sidney Rigdon; they were prudent in what they did. Its failure was the work of antagonists and an apostate.
- "The Kirtland Safety Society and Its Effect on the Faith of the Latter-day Saints," by Joshua Bell, Religious Studies Center, Brigham Young University