SANDY — There were no bailouts for the Kirtland Safety Society Anti-Banking Company when it collapsed in 1837, and the failure of this private bank is still used by critics to attack Mormons and the Prophet Joseph Smith.
"I will explode the criticisms stemming from the Safety Society and put these issues to rest, once and for all," said R. McKay White, a lawyer and an economist from Edmonton, Alberta, Canada.
White spoke at the 11th annual Mormon Apologetics Conference presented by FAIR, the Foundation for Apologetic Information & Research, on Aug. 6, exploring and disputing the myths he says are used by critics.
Myth 1
The Safety Society was illegal because their application for a bank charter was rejected. They started up an "anti-bank" or joint-stock association, and Smith and Sidney Rigdon were convicted under an 1816 Act that prohibited those organizations.
"The court that convicted Joseph Smith and Sidney Rigdon got it wrong," White said. "Their appeal was never heard because they were forced to flee the state."
White used evidence he said had "never been published before." He quoted several articles from an 1837 newspaper that said the 1816 Act was not in force. In an interview after his presentation, White explained further that the Ohio State Legislature did not print the 1816 law in its official book of statutes in 1824.
White told conference participants that multiple organizations ran similar private "banks" at the same time with no prosecution.
"Now, why weren't they (prosecuted) when Joseph Smith and Sidney Rigdon were?" White said. "It couldn't be because of religious persecution. Well, it was. It was intended to get Joseph out of town, and it worked."
Bottom line: the Kirtland Safety Society wasn't illegal.
Myth 2
When Smith left the Safety Society, he had pockets filled with gold and silver coins.
"If that were true, you'd think he'd have something to show for it," White said.
If he were in it for the money, he would have pulled out at the first signs that the Safety Society was struggling. Instead, he took out loans on its behalf and even sold personal property for $5,000 to help it out. But his bailout attempts didn't work.
"So Joseph Smith actually lost a lot of money from the Safety Society," White said.
Myth 3
The Safety Society failed because Smith and Rigdon foolishly kept printing notes until it collapsed.
Under Smith's management, it printed $100,000 in notes with a reserve of $21,000. Compare that 21 percent reserve with Canada's largest bank's reserve ratio of 3 percent in 2008. Banks are different now, but 21 percent was very reasonable in 1837, White said.
White proposed two reasons why the Safety Society failed. First was "a good old-fashioned bank run" caused by antagonists. They collected as many notes as they could and then demanded hard money. Their intent was to drain the organization of all its reserves. The Safety Society had to stop exchanging hard money for the notes, which reduced their value.
The second reason was Warren Parrish, who was an officer of the Safety Society. Parrish admitted to embezzling $20,000. "With that $20,000 that Parrish stole from the Safety Society he could have completely wiped out the Safety Society's liquid assets," White said.
Parrish was the same person who attempted to take over the Kirtland Temple once with pistols and bowie knives.
"Did Joseph Smith ruin the Safety Society? No. It was a coordinated attack by church enemies, and fraud by the apostate Warren Parrish," White said.
"And that's it," White said. "The myths are gone. There's nothing to cover up, nothing to hide, nothing to be embarrassed about."
e-mail: mdegroote@desnews.com
FAIR online
Go to MormonTimes.com to read more from the conference:
Plural-marriage questions led to trust.
Mormon temple worship is similar to other religions.
Professors take argument to Square Two.
Duties, perils of defending the faith.
Church history is reliable.
How to keep the faith when children fall.Heady
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