Kirtland Safety Society

The Kirtland Safety Society (KSS ) was a financial institution, which cried Joseph Smith, the founder and president of The Church of Jesus Christ of Latter-day Saints to January 1, 1837 to life to the liquidity problems of his faith and business community, and our community in Kirtland (Ohio ) remedy and thus to promote the region's economy. President of the Bank was Sidney Rigdon, Smith himself officiated as a cashier. Because of failed financial policies of the United States, lack of permits and lack of understanding of monetary policy on the part of the operator, the bank collapsed in November 1837, and caused their customers and shareholders losses.

The history

Kirtland, located far from Lake Erie, was in 1830 a thriving community on the edge of the U.S. and attracted many new settlers, a typical town of the " Wild West " full of boundless optimism, energy and often dubious business practices, where the gaps in laws not effective latch vorschoben. A veritable influx boom sparked in 1831 from the relocation of the seat of the newly formed Church of Jesus Christ of Latter-day Saints of Palmyra (New York) to Kirtland. The influx caused violent land speculation, which multiplied the price of land. To keep the economy going and growing to meet the liquidity needs of all the new entrepreneurs and the Church, both cash and loans increased amount were necessary. Both were unable to get or only at exorbitant interest rates. Assets in the form of land ownership and businesses was enough yet to secure any loans.

As for the Church, the situation worsened in 1836 by the relatively costly construction of the Kirtland Temple. The still held immigration of converts with their economic consequences was to organize. Since by the state or by the banks in the east no help was to be expected, banks were established in the border region. Joseph Smith also decided to establish a bank to eliminate the notes and loans issued by her constant cash shortages. In general, the inhabitants of the West hoped for the establishment of banks to solve their economic problem, especially on loans they hoped to share their ideas for the development of the country to finance and thus to become rich.

The founding

Already in August 1836 explored Oliver Cowdery the production of banknotes, which was completely legal at that time for licensed banks. Banknotes were documents which stated that would be paid when submitting the on -mentioned value of the bank in gold.

On November 2, 1836, the statutes of the Kirtland Safety Society Bank were approved by Sidney Rigdon as president and Joseph Smith as treasurer. The State of Ohio, dominated by Democrats in principle faced banks reluctant, but the bank refused admission. Subsequently, the Bank was converted into a public limited company with the name of the Kirtland Safety Society Anti- Banking Company. The measures provided notes were issued as shares. This was a legal trick. De facto should still work the society as a bank and above all ensure the necessary liquidity to the economy.

The operation

The Company commenced on 2 January 1837 the operation by granted loans in the form of securities that were backed by real estate. Joseph Smith encouraged the members to participate in this public company. The KSS announced in January that it can not be exchanged for gold, although their securities against the country, but because gold just was not going to get acceptable terms. This caused that the value fell. They were already trading at a price of 12.5 cents per dollar of face value in early February. As the rediscovered cash book shows, the shares have traded but from the beginning at a lower issue price of 26.5 cents. This means that the papers were not so, as specified by the founders, accepted as payment for goods and services. A second attempt to obtain a license as a bank, failed in February 1837.

The collapse

In May a major financial crisis the U.S. shook, it was foreseeable that can hold as many other institutions also, the Kirtland Safety Society would not, especially since she had not really enjoyed it from the beginning the people's trust.

Banks in the surrounding states discontinued the redemption of banknotes in gold or silver. In response, the banks were forced also to stop cashing in order not to lose completely through a complete migration of the already scarce precious metals reserves her own room in Ohio. Thus, the banks lost confidence in general and nobody wanted to stop accepting the output from them banknotes as payment. The collapse was inevitable so. The situation was exacerbated extreme by the fact that the borrowers of banks and thus the banks themselves grossly over-indebted in the hope that their companies to succeed and then be able to easily repay the loans. ( The mindset reminiscent of the financial crisis from 2007)

Allegations, the Institute was messy or even been out criminal, have been invalidated, since the cash book was found. It also shows that the business was continued at least until July 1837.

In June 1837 was clearly visible that the Kirtland Safety Society would not survive. Joseph Smith urged an end to the business and pulled himself back from the financial institution.

At that time became Edward Partridge greater significance, the bad faith continue spending bills of the company and thus aggravated the now safe collapse.

Consequences of the collapse

The immediate result was that quite a number of people lost power. Since it was a Mormon financial institution, it was mainly Mormons. It was not even able to get the urgent fiscal problems in Kirtland permanently in the grip, on the contrary, the situation was worse than before. The controversy over who contributed to the plight of debt, led, among other matters of principle, deep divisions in the church, which culminated with the excommunication of a whole series of leaders. Among the excluded that time were four from the 1835 furnished Quorum of the Twelve and all three witnesses of the Book of Mormon, Oliver Cowdery, David Whitmer, and Martin Harris. Of the malcontents, Joseph Smith was called a " fallen prophet ". He would have acted obviously uninspired in terms of Kirtland Safety Society, otherwise it would not make things went wrong, they argued.

Joseph Smith had, as he clung for liabilities of the company, paying debts in the amount of $ 100,000, which he tried. He and Sidney Rigdon fled to Missouri because they feared applied victims who had become their enemies, could tangibly take revenge on them, and they wanted to also evade the authorities in Ohio. On the other side sat Joseph Smith, Oliver Granger as an agent who should conduct the affairs of the Church as well as possible in Kirtland. This was reflected, among others, in a revelation. In addition, the transfer of the shares of Joseph Smith and nine other shareholders to " O.Granger and J.Carter " is on 8 June 1837, which was recorded in the cash book, an indication. In a civil case, Joseph Smith and Sidney Rigdon were sentenced to substantial fines for illegalities in the operation of the Kirtland Safety Society.

After the church had established a second center in Missouri as early as 1831, the seat in 1838 has been completely moved to Missouri and members of the church migrated almost entirely of Kirtland and surrounding areas from. The collapse of the KSS contributed to the acceleration of this move. The main reason was that Joseph Smith had already declared in revelations in 1831 and 1832, that the "New Jerusalem " in Missouri will be built and the Saints should gather there.