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Kirtland Banking Crisis Apostasy

This was originally posted at Mormon Matters Feb 20, 2009.  I am reposting it here.

Since Hawkgrrrl does not offer Virtual RS/PH lessons anymore, I thought I’d try my hand at it this one time. My wife was preparing Lesson 27: Beware the Bitter Fruits of Apostasy, and I couldn’t help but think that this was a perfect bloggernacle discussion.

From the Manual

“In the weeks before and after the completion of the Kirtland Temple in the spring of 1836, the Saints experienced a time of harmony and a rich outpouring of the gifts of the Spirit. But the Prophet Joseph Smith warned the Saints that if they did not continue to live righteously, their joy and unity would not last…..”

“As that year wore on, a spirit of apostasy grew among some of the Saints in Kirtland. Some members became proud, greedy, and disobedient to the commandments. Some blamed Church leaders for economic problems caused by the failure of a Kirtland financial institution established by Church members. This failure occurred in 1837, the same year that a banking panic swept across the United States, compounding the Saints’ economic problems. As many as two or three hundred members fell away from the Church in Kirtland, sometimes joining with those who opposed the Church to torment and even physically threaten the Saints. Some apostates openly claimed that the Prophet was fallen and tried to have other men put in his place.”

Supplementary material.

When Joseph Smith encouraged the saints to move to Kirtland, the city experienced a significant population increase, tripling from 1000 people to 3000 people between 1830 and 1836. Surrounding agricultural areas experienced similar increases in population. The population growth was at least partially responsible for a rapid increase in land prices between 1832 and 1837. Daniel H. Ludlow, in “Church History, Selections From the Encyclopedia of Mormonism” tells us “The average price per acre of land sold in Kirtland rose from approximately $7 in 1832 to $44 in 1837, only to fall back to $17.50 in 1839.” (p. 283)

Inflation for the period is estimated to be between 25% and 40%. Historian Larry T. Wimmer estimated that the LDS church held approximately $60,000 in real estate at this time. However, it also needed liquidity to repay outstanding loans. The credit needs of the church, growing population and ongoing land transactions required a local bank.

Apostles Orson Hyde and Oliver Cowdery made several attempts to gain a bank charter from the state of Ohio. All attempts were rejected. Smith attributed the failure to anti-Mormon bias. Ohio Legislator Grandison Newell was a professed antagonist of the church, and persuaded three other legislators to vote against the bank charter. However, this Ohio legislature was much more restrictive in issuing bank charters than the previous legislative body. The legislature refused all applications for bank charters (except one) during 1836 and 1837. They cited problems with land speculation, wildcat banking, and counterfeiting as reasons against bank charters.

The Mormons sought a way around this banking problem. With encouragement and advice of non-Mormon legal counsel, the Kirtland Safety Society Anti-Banking Company (KSSABC) was formed as a quasi-bank. Quasi-banks were relatively common in Ohio, and the Whig party (which later gave way to the Republican Party), encouraged businesses to operate as quasi-banks. A Quasi-bank served many of the purposes of a regular bank.

The Kirtland quasi-bank failure was part of the Panic of 1837“Out of eight hundred and fifty banks in the United States, three hundred and forty-three closed entirely, sixty-two failed partially, and the system of State banks received a shock from which it never fully recovered.”(seehttp://www.publicbookshelf.com/public_html/The_Great_Republic_By_the_Master_Historians_Vol_III/thepanic_ce.html) The Panic was followed by a five-year depression. Banks continued to fail, and unemployment shot up throughout the United States. It sounds strikingly similar to our current economic situation.

Smith was blamed by many in and outside the church for the failure of the quasi-bank, and was accused of enriching LDS leadership. Yet, Smith took out a $1,225 loan from a separate bank in order to keep KSSABC solvent. Smith publicly denied claims that the quasi bank was created for the purpose of greed. Smith risked losing as much or perhaps more than anyone else due to bank’s failure.

Apostasy within the Church

Reflecting on the bank failure, LDS Apostle Heber C. Kimball later said that “there were not twenty persons on earth that would declare that Joseph Smith was a prophet of God.” Apostle Brigham Young, was one of the few vocal proponents of Smith. Young left Kirtland for Missouri to avoid the dissidents who were angry with Young and threatened him because of his persistent public defense of Joseph Smith.

Apostle William McClellin was one of the most notable church members who lost faith in church leadership. He was one of the original 12 Apostles, called in 1831, and was excommunicated in 1838, in large part due to this banking scandal mentioned in the manual. Following the collapse of the bank, McClellin declared that he had no confidence in the presidency of the church. These comments led to his excommunication for apostasy on May 11, 1838.

Subsequently, he actively worked against the LDS Church and its leaders. Some believe he may have participated in robbing Joseph Smith’s home and stable while Smith was being held in jail. (Joseph had been jailed on charges relating to the banking failure.) Recently, Mormon Times addressed a recently discovered notebook of William McClellin.

McLellin never wavered in his support for the Book of Mormon. He experimented with some other Mormon offshoots, such as RLDS and Strangite branches. He unsuccessfully tried to persuade David Whitmer to lead a movement as well.

Questions and Statements to Consider

Armed with this background, what do you think of the following statement from the manual? “Losing confidence in Church leaders, criticizing them, and neglecting any duty required by God lead to apostasy. “

Finally, What do you make of McLellin? Did Joseph put too much trust in him?

Discuss.

13 Responses to Virtual RS/PH Lesson #27: Beware the Bitter Fruits of Apostasy.

  1. February 20, 2009 at 6:10 am

    I was actually surprised that this lesson didn’t draw more comments in the bloggernacle. I’m glad to see someone talking about it now.

  2. February 20, 2009 at 6:38 am

    The context on this is interesting. They had tried to form a bank, were not able to get approval, so instead of a specie based bank, they formed a land based anti-banking society.

    The focus went from a local bank to land speculation, and you can read a lot on Joseph Smith warning them against trying to get rich by buying up the land and then trying to gouge the latecomers (if you’ve ever wondered the context for parts of the D&C and commentary on them, that is it). Any resemblance between that event and the current debacle with sub-prime mortgages linked to land price bubbles is purely a coincidence.

    Then there was a general bank failure in the U.S. (something that was pretty regular) combined with a drop in the price of land, and the embezzlement of $15,000.00 by the president of the anti-bank. The combination led to the anti-bank failing and a lot of land speculation not paying off. Which angered a lot of people who blamed Joseph Smith in the general belief that he had kept them from becoming rich.

    It makes for a nice tangle to the background. $15,000.00 was a lot more in that day than it is now. Without the embezzlement the anti-bank would probably have survived in spite of the land speculation and the mortgage defaults it produced.

  3. February 20, 2009 at 10:53 am

    In case anyone was wondering, I (Mormon Heretic) me wrote this post.

    As I’ve studied this further, I realize that McLellin wasn’t the only one to fall away. All of the Three Witnesses to the BoM were excommunicated at the time of the bank failure: Martin Harris, David Whitmer, and Oliver Cowdery who held the title of Assistant President of the Church.

    Additionally, 5 apostles were excommunicated over the bank: McLellin, Lyman Johhnson, Luke Johnson, John Boynton, and Thomas Marsh.

    According to Wikipedia, George A Smith (November 15, 1864) attributes the bank failure to Warren Parrish (a former scribe of Joseph Smith.) “Warren Parrish was the teller of the bank, and a number of other men who apostatized were officers. They took out of its vault, unknown to the President or cashier, a hundred thousand dollars, and sent their agents around among the brethren to purchase their farms, wagons, cattle, horses and every thing they could get hold of. The brethren would gather up this money and put it into the bank, and those traitors would steal it and send it out to buy again, and they continued to do so until the plot was discovered and payment stopped.”

    Parrish and those supporting him soon claimed ownership of the Kirtland Temple. Eliza R. Snow relates that Parrish and a group of others came into the temple during Sunday services “armed with pistols and bowie-knives and seated themselves together in the Aaronic pulpits, on the east end of the temple, while father Smith and others, as usual, occupied those of the Melchizedek priesthood on the west.”[14] Parrish’s group interrupted the services and, according to Snow “a fearful scene ensued—the apostate speaker becoming so clamorous that Father Smith called for the police to take that man out of the house, when Parrish, John Boynton, and others, drew their pistols and bowie-knives, and rushed down from the stand into the congregation; John Boynton saying he would blow out the brains of the first man who dared to lay hands on him.” Police arrived and ejected the troublemakers, after which the services continued.[15]

    Warren Parrish, Martin Harris, Luke Johnson and John Boynton took control of the Kirtland Temple and they and their High Council excommunicated Joseph Smith and Sidney Rigdon, who fled to Far West.

    This doesn’t seem like apostasy as much as it does Civil War. It also seems to be a case of greed more than apostasy.

    According to Apostle John Boynton, Joseph Smith did say the bank “was instituted by the will & revelations of God, & he had been told that it would never fail.” President Smith replied that “if it had been declared…that unless the institution was conducted on righteous principles it would not stand.”

    Steven, I was under the impression that Sidney Rigdon was the president of the anti-bank. Are you saying he embezzled money?

    One other observation. This anti-bank and the anti-Nephi-Lehies share an interesting similarity in the use of “anti”.

  4. John Nilsson
    February 20, 2009 at 3:07 pm

    “Losing confidence in Church leaders, criticizing them, and neglecting any duty required by God lead to apostasy. “

    Of course, this does not describe the fundamentalist apostasy at all. Their apostasy consisted in having too much confidence in past church leaders, valorizing them, and adding to the duties required by God many others.

    Repeated, open opposition to the policies of the Church might be a better definition of apostasy. Of course, the equation of apostasy=EVIL, as in FROO-ITS OF THE DEV-ILL, is part of the definition I would strongly disagree with. Yesterday’s apostates are today’s mainstreamers. Yesterday’s mainstreamers are today’s fundamentalists.

    Most apostates are just ahead, or sometimes, to the side of, their times.

  5. February 20, 2009 at 4:30 pm

    “Losing confidence in Church leaders, criticizing them… lead to apostasy.”

    Certainly, Joseph was a much different leader than our current leaders. We don’t trust Pres Monson with running a bank. If the bank was mismanaged (as it was in this case), I can’t imagine that it would be inappropriate to “lose confidence”, and “criticize” the leaders of the bank, even if they happen to be church leaders.

    Certainly, if I had lost my life savings, I’d be pretty upset. On the other hand, there were some economic problems that contributed to the banking problems. It’s easy for me to be understanding of those problems 150 years later, but if I had lost money, I’d have definitely lost confidence and criticized, and I don’t view that as inappropriate in this situation.

    Having said that, we shouldn’t be “neglecting any duty required by God”. However, if I’m unemployed and out of money, I’m not going to have a desire to go home teaching, as there seem to be bigger fish to fry in the situation these early saints found themselves in.

  6. February 20, 2009 at 7:36 pm

    Not Sidney Rigdon. The actual operator. I’ll have to get the name again, I had it Sunday.

  7. Andrew Ainsworth
    February 20, 2009 at 11:01 pm

    I remember being struck by the fact that the lesson had plenty of warnings against “apostasy” but I don’t remember the lesson defining that term. Could be wrong on that. But many of the quotes just seemed like circular logic. If you define apostasy as disregarding the directives of Church leaders, then quotes that say, in effect: “don’t disregard Church leaders’ counsel because then you’ll become an apostate (i.e., someone who disregards Church leaders’ counsel)” are unremarkable.

    I also wish the lesson would have had some balance, like discussing how to best approach Church leaders to express valid concerns; that was wholly absent from the lesson. As a result, it was a lopsided presentation about how people should just do what Church leaders say and not question them. Reminded me of that recent post about the plane flying into the side of the mountain because nobody wanted to speak up and second-guess the captain. I wish there were more talk about the appropriate way to talk to our leaders when we feel they are flying a plane into the side of a mountain. Dallin H. Oaks wrote a good Ensign article entitled “Criticism” along those lines. I think the lesson would have benefited from the inclusion of Elder Oaks’ words on that topic.

    But, then again, who am I to question whoever it is that creates the lesson manuals. Sounds like I’m already on the road to apostasy! :)

  8. February 21, 2009 at 12:27 am

    Andrew,

    I like your idea of presenting balance in the lesson, and I agree it is wholly absent from the manual. The section dealing with “Losing confidence in leaders” has several quotes from church leaders saying that if we don’t follow counsel, serve missions, etc that we are on the high road to apostasy. The balance you mention is completely mission.

  9. February 21, 2009 at 12:28 am

    …completely missing! (not mission) :(

  10. zionssuburb
    February 21, 2009 at 8:23 am

    I found the treatment in Busman’s Rough Stone Rolling of Joseph Smith’s introduction of the High Priesthood in Kirtland very thought-provoking. The failure of the bank and the Kirtland ‘apostacy’ never really made sense to me until that chapter brought out the difficulties around that meeting and it’s aftermath.

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2 comments on “Kirtland Banking Crisis Apostasy

  1. […] 1837-38 are known as the most challenging times in LDS History.  I’ve previously discussed the Kirtland Bank Crisis, but let me offer a brief summary here.  The saints in Kirtland had just completed the beautiful […]

  2. […] 1837-38 are known as the most challenging times in LDS History.  I’ve previously discussed the Kirtland Bank Crisis, but let me offer a brief summary here.  The saints in Kirtland had just completed the beautiful […]

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