In another thread ( http://exmormon.org/phorum/read.php?2,1377578,1378592#msg-1378592 ) there are certain posters who seem to think that Joseph Smith possessed a pure and pious heart (meaning he was truly trying to do right) while knowingly lying, cheating and defrauding people for the higher godly good. Hence, the "pious fraud" claim.

Joseph Smith was a fraud, alright, but not a faithful one. His chicanery in the Kirtland banking scandal is ample proof of that. Examine the history of this unsaintly scam of Smith and see for yourself. As RfM poster "Exmosis" observed:

"Yeah, right! Joseph Smith was the victim [in the Kirtland Anti-Banking Society caper]. I'd like to see Steve Benson do an expose on this." (posted by "Exmosis" on "Recovery from Mormonism" bulletin board, 27 January 2013)

OK, then, here we go:

Bank on This from Joe and Ollie: Smith's Kirtland Financial Scam and Cowdery's Infatuation with a Local Kirtland "Seeress" While Smith Was Fleeing from Fleeced Mormons

Let's keep it simple: Smith created the Kirtland mess and the Mormon Church created the Kirtland myth. In a nutshell, after Joseph Smith temporarily fled Kirtland, Ohio, to avoid rising discontent over his notorious banking swindle that victimized members of his own flock, Oliver Cowdery's loyalties were tested--and found wanting (as he stayed behind in Kirtland and decided to follow someone else).


--Background on Smith's Kirtland Bank Heist

Smith's criminal conspiracy in setting up a bank swindle was aimed not only at the general public, but at his own flock.

In 1837, Smith faced the wrath of his local Kirtland following due to of his clumsy financial scheming, otherwise known as the “Kirtland Safety Society Anti-Banking Company.” The Ohio state legislature had refused Smith's request to incorporate this trash-cash creation of his but a determined Smith chose to illegally run it anyway. It soon went under and Smith, along with co-criminal Sidney Rigdon, were eventually found guilty of violating state banking laws, fined and ordered to pay court costs.

Author Richard Abanes explains why the scam failed:

“Smith actually believed that his debts, along with those of his followers, could be wiped out by merely printing . . . notes [i.e., paper currency] and using them to pay creditors. The bills, however, were practically worthless because Smith had virtually no silver/gold coinage to back up the paper he issued. His entire capital stock consisted of nothing but land valued at inflated prices. . . . He pleaded with followers to support the financial association, leading them to believe that God have given hm the idea and that it would 'become the greatest of all institutions on Earth.'

"To augment their confidence in the organization, Smith resorted to a rather ingenious deception: 'Lining the shelves of the bank vault . . . were many boxes, each marked $1,000. Actually these boxes were filled with 'sand, lead, old iron, stone ad combustibles,' but each had a top layer of bright 50-cent silver coins. Anyone suspicious of the bank's stability was allowed to lift and count the boxes. 'The effect of those boxes was like magic,' said C.G. Webb. '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.'”

Smith's financial shenanigans led to him being sued by several non-Mormon creditors, while some of his LDS followers saw their invested monies evaporate before their eyes.

Historian Fawn Brodie reports in "No Man Knows My History" that Kirtland Saints began attacking Smith, whose “prophesy” (so described by the local LDS newspaper the “Latter-day Saint Messenger and Advocate,” which had declared that those who contracted with him on speculative land deals would get rich) was proven by events to be an uninspired flop. Half the Quorum of the Twelve went into open revolt, with Apostle Parley P. Pratt labeling Smith as “wicked,” accusing him of taking “[him]self and the Church . . . down to hell,” and threatening to sue Smith if he didn't pay Pratt what he was owed. Smith responded by counter-threatening to excommunicate any Mormon who filed suit against a fellow Church member and tried unsuccessfully to have Pratt stand trial before a divided High Council.

Writer Arza Evans, in his "The Keystone of Mormonism" under the subheading, "An Illegal Bank," observes:

"In November of 1836, Smith decided to start his own bank and print his own currency. This new bank was to be called the Kirtland Safety Society. When the Ohio legislature denied Smith's petition for an act of incorporation, he didn't let this stop him from organizing his bank and printing money. He simply ignored the laws of Ohio and went ahead with his bank.

"Smith even had a convenient revelation from God advising Church members to buy stock in his illegal enterprise:

"'It is wisdom and according to the mind of the Holy Spirt, that you should . . . call on us and take stock in our Safety Society.' [see "The History of the Church of Jesus Ch+rist of Latter-day Saints," vol. 2, pp. 467-73].

"About one year later Smith's bank went broke, costing some of his gullible followers their life's savings. Smith blamed this failure on the state of Ohio, his enemies and almost everyone else. He took no responsibility and made no apologies. Apparently, he couldn't even seem to understand why many of those who lost all of their money were angry at him. Ironically, Smith's Saftey Society proved to be anything but safe.

"When Ohio authorities finally realized what Smith had done, they sent a sheriff and a deputy to arrest Joseph Smith, Sidney Rigdon and other Church leaders who had violated Ohio state laws. Smith and Rigdon escaped arrest by secretly leaving for Missouri in the middle of he night of January 12, 1838. Other officials in the bank were were not so lucky. Josiah Butterfield, Jonathan Dunham and Jonathan Hale were arrested and thrown into jail for circulating illegal currency and for other unalwful banking activies."

The hounded, debt-ridden Smith's ultimate solution to this mounting mayhem was to make himself scarce, opting to leave on a five-week proselytizing mission to Canada--a ploy which historian Brodie described as Smith's hope “that in his absence the enmity against him would be still[ed].”
_____


--Cowdery Compounds Smith's Criminal Kirtland Mess by Hooking Up with a Kirtland "Seeress" After Smith Bolts Kirtland

Smith's hopes that things would cool down over his Kirtland-cooked banking scamwere in is absence were not exactly realized.

Brodie reports that upon returning, he discovered that while he was gone the magic-minded Cowdery had (along with fellow Book of Mormon witnesses David Whitmer and Martin Harris) become enamored with “a young girl who claimed to be a seeress by virtue of a black stone in which she read the future. . . . [Cowdery], whose faith in seer stones had not diminished when Joseph stopped using them, pledged her their loyalty, and F. G. Williams, formerly Joseph's First Counselor, became her scribe. Patterning herself after the Shakers, the new prophetess would dance herself into a state of exhaustion before her followers, fall upon the floor and burst forth with revelations.“ Brodie writes that “before long Smith effectively silenced the dancing seeress” and managed to bring Cowdery's wandering eye back into line. But Cowdery wasn't exactly the model of repentance. He (along with Whitmer) “came back into the fold half-contrite, half-suspicious and shortly thereafter went off to Missouri.

*Sources

--Richard Abanes, “One Nation Under Gods: A History of the Mormon Church”[New York, New York: Four Walls Eight Windows, 2002]

--Fawn Brodie, “No Man Knows My History: The Life of Joseph Smith, the Mormon Prophet,” 2nd ed. [New York, New York: Alfred A. Knopf, 1983]

--Arza Evans, "The Keystone of Mormonism" (St. George, Utah: Keystone Books, Inc., 2003)

***********


--Summing Up

For Joseph Smith and his band of bumbling connivers, Kirtland served as:

--first, a place for Smith to fleece his flock; and

--second, a hot spot from which Smith was forced to flee, whereupon it became The Land of Happy-Dance for his Book of Mormon witness friends who, in Smith's fugitive absence, decided to team up with a young prophesying "seeress."

Joseph Smith and his role in Mormon history is, like, so inspiring. So, pious. So, "yeah, right."



Edited 3 time(s). Last edit at 09/15/2014 11:59PM by steve benson.

Steve:

thanks, but:

is there a definitive essay or book regarding Kirtland Bank?

Is it covered on MormonThink?


I'm beginning to see that we as ex-mos need a body of work to correspond to the LDS lies & half-lies.

GNPE Wrote:
-------------------------------------------------------
> Steve:

> is there a definitive essay or book regarding
> Kirtland Bank?
>
> Is it covered on MormonThink?

Not a big one but we have it and some good links. http://www.mormonthink.com/glossary/anti-banking.htm

Great post!

The Kirtland Bank seems so obviously a scam. If Joseph Smith had wanted a real bank for the needs of the Mormon settlers in that area, he wouldn't have needed to print bank notes. He could have used US currency and trustworthy bank notes from other institutions. The bank would have taken deposits from people and paid out interest. It would have loaned money to people and charged them interest. But since it would have been using real money with value, it would not have loaned out any more money than it had on hand. It could have provided a valuable service to the people of Kirtland and turned a tidy profit. He could have done this without a license, and although he may have gotten in trouble for that, it wouldn't have been serious trouble, and nobody would be calling him a crook. He would have just been another person having trouble with red tape and regulations.

But nobody would attempt to run a bank in this irresponsible and deceitful fashion unless they were a crook.

. . . "pious pilfering."

The problem, Heretic 2, is that virtually all banks lend more than they have on hand. It is not unusual for a bank to lend 8-10 times as much as it holds in its vaults and even in accounts at other banks and the Federal Reserve.

The problem with the Kirtland bank was the fact that it was unlicensed, unregulated, and run by people who had no clue what they were doing. The logic was that if you created credit, people would borrow and spend and the economy would boom, bringing the level of wealth up to a point that justified the initial expansion in credit. That kind of self-delusion happens all the time in financial markets; sometimes you even hear investment bankers or central bankers like Alan Greenspan say such things.

The difference is that Greenspan had legal authority to do foolish things.JS and OC were acting illegally in a misplaced belief that God would make everything work out alright. They wanted to facilitate the immigration of all those English saints, to enhance the local economy, and to make themselves rich. As the national financial crisis of 1837-1842, which began several months after the implosion of the Kirtland bank showed, JS and OC were not unusual in their greed and optimism. They went further than a lot of other financiers, but they weren't at the extreme.

Where they did differ was in their promise to the Mormons that God would guarantee everyone's deposits and make them all rich. As a consequence they almost destroyed their little church. The other irony is that since they believed their own rhetoric, they were not smart enough to take the money and run while they still had time. Rather, they lost almost everything and, in JS's case, stayed in the church if not in Ohio.

JS and OC were not even good thieves.

On hand cash reserves plus bank capital from investors forms the monetary basis for the operations. Regulators make sure that the actual value of the loans vs deposits balance and that the loans are balanced across a spectrum of maturities and risk areas to reduce the overall risk.

From the description of this non-bank bank, the operation lacked the paid-in capital from investors (just sand in boxes) and seemed to have no diversity in loans being mainly funding purchases in land in Kirtland at inflated prices. The seller being mainly Joe Smith, Jr.

I'm arguing details with you, but a bank can lend more than it has in deposits. Core capital includes cash on hand, deposits at some other institutions, credit at the central bank, some corporate bonds and equities, depending on jurisdiction. Recall how subprime assets were held as regulatory capital on some banks' balance sheets in the lead-up to the 2007-2009 crisis. That applies to risk management as well: there are government regulations but a large chunk of the geographic and maturity distributions are determined in house.

Back to the topic, there was some capital in the Kirtland Bank. I was just reading the other day the account in the (excellent) biography of Sidney Rigdon. The capital cushion was tiny relative to the outstanding currency and, as you note, the collateral for loans was indeed largely inflated land values.

But if the capital is say, 1/100th of the value of the loans, it is not properly capitalized. Also I believe for printed script, they needed to have a certain percent of that cash on hand (cash at the time being silver, US notes or notes from other banks). I don't know those details for this operation, but given that the state would not issue a charter for this bank, it was very likely poorly conceived.

You could say he was just naive on this, but the pattern of behavior, including open defiance of state law in this operation, tells me Joe Smith was a fraud.

In modern days he would have been extradited to Ohio for prosecution over this, but in those days of "wild west justice", I guess they were just glad to be rid of him.

This is an interesting question. By today's standards, the Kirtland operation was incredibly irresponsible. I don't know much about regulation in the 1830s, other than that it was terrible and applied unevenly. The 37-42 crisis proved that, as did the 1870s crisis, the 1930s depression, etc. I think today's system is still terribly flawed, but that of the 1830s was . . . choose your adjective.

You are right that Ohio denied the license that JS requested. The volume on SR, incidentally, says that a big part of that decision was political. The politicians who needed to authorize the bank were dependent on support from anti-Mormons and an election was fast approaching. So it could be that under other circumstances the Mormons might have received their charter.

That aside, I agree that the Kirtland operation was "poorly conceived." JS and OC and SR had no experience, no expertise, and way too much self-confidence. I'd have to check some books and come up with the actual leverage, but I think it was more like 1,000:1 than the 100:1 that you rightly call absurd.

Again, whether the Ohio decision was based on politics is largely irrelevant. JS was a fraud. Whether he was always fully aware of that fact or, like many grandiose narcissists, sometimes felt he was called by a higher power to achieve purposes that coincided with his own self-interests, is likewise a separate issue.

From the OP:

"To augment their confidence in the organization [i.e., Smith's criminal banking enterprise], Smith resorted to a rather ingenious deception: 'Lining the shelves of the bank vault . . . were many boxes, each marked $1,000. Actually these boxes were filled with 'sand, lead, old iron, stone ad combustibles,' but each had a top layer of bright 50-cent silver coins. Anyone suspicious of the bank's stability was allowed to lift and count the boxes. 'The effect of those boxes was like magic,' said C.G. Webb. '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.'”

Next.

Another example was the investment banks. Before 2008 they raised the vast majority of their capital in short term money markets and had almost no deposits. What the regulators demanded was Tier 1 and Tier 2 capital, not a deposit base. Reshuffled subprime real estate loans was used in part in Tier 2, which meant that the whole system was massively leveraged on bad core capital. When the subprime market crashed, the banks' capital levels fell far below the regulatory threshold and the banks had to call in credit, starving the corporate and household economies and triggering a global crisis.

Again, the story resembles what happened on a much smaller scale in Kirtland. Very little capital supported massive credit that was invested in overpriced real estate. When real estate prices plummeted, people demanded their money from the bank and JS, SR and OC could not meet that demand.

Of course regulators were fooled, you could argue conned by the bankers as a whole into thinking those were secure enough to be counted as Tier2 capital.

Again, the major difference is that the Ohio regulators REJECTED the application for Joe's so-called bank.

I'll stop with this because we're getting away from the main point of the thread, which is JS's fraud and his awareness of that fraud.

But on the question of whether the banks deceived the regulators in order to get the regulators to permit them to take unwise risks, I am profoundly skeptical. It is my conviction, having watched the process, that the banks and the regulators had much the same interests. If the banks could take on more risk, they made more money. If the banks made more money and lent more, the US economy grew faster and the regulators and Alan Greenspan looked better. What happened in the 2000s was that the regulators and the regulated faced the same incentives and therefore chose to pat each other on the back rather than taking a hard look at specific and systemic risk.

I think that pattern is still basically in place. When Wall Street and Big Business fund the political parties, elected officials are inclined to install regulators who are friendly to the banks. Janet Yellen is relatively independent of the banks, but she and other reformists were not able to impose a strong version of the Volker rule. To that extent, the possibility of another 2008-9 crisis is real.

Financial regulation has to be one of the few areas of policy most susceptible to the influence of money in a democracy.

End of rant.

not that he was impious.

There's a tendency around here to polarize everything.Things are either true or false. That kind of dichotomous reasoning is often psychologically unrealistic.

You have produced lots of evidence proving fraud but little pertaining to JS's state of mind. It is, in other words, an open question whether he fully realized that he was ripping people off. The counter-argument would be that Joseph thought that God loved him enough that he would find a way to enrich him. So Joseph tried treasure hunting, then decided to write a book that promoted Christianity (even if it was false), tried unsuccessfully to sell that book for a fortune in Canada, then decided to organize a church in part to get rich, then founded his United Firm (not United Order as the D&C was later revised to say), and finally opened his bank. Each of these was a get-rich-quick scheme based on some falsehood and a whole lot of wishful thinking. This is not an unusual pattern. A similar mix of greed and self-deception is present in many dubious and illegal activities, especially among Mormons whose scriptures say that if a person is good God will make him or her rich.

Is there evidence that JS believed his nonsense completely or in part? Yes. If he were simply trying to get rich, he would have taken the money and run. For the most part he did not do that. He had access to tons of money in the United Firm/United Order before that entity collapsed but he emerged with little. He could also have taken the money in the subsequent (anti-)bank and run, but he didn't get much out of that venture either. In these cases he hung around until the house of cards collapsed, which is not what cold-blooded and intentional thieves usually do.

No, Joseph was a more complex character than a mere conman. He was greedy, dishonest, and predatory. But he also thought, probably to varying degrees at different times, that he was chosen of God to do things that were beneficial to society. Again, this sort of grandiosity, entitlement and impaired insight is a common trait in many narcissists.

I agree that it's "pschologically unrealistic" to reduce the motivations of a historical figure down to one thing and call the problem solved.

He seemed to want to resolve the religious differences in his family. This doesn't mean he wasn't a con man as well.

Agreed.

He's busy but was available for lunch today, but I worked late, so we'll have to wait until next week for new information on that guy Orrin Porter Rockwell who worked for both Joseph Smith and Brigham Young...

Rockwell's attempted assassination of Governor Boggs kind of puts a bit of impiety in Joseph Smith's "pious nature," and there's pretty strong circumstantial evidence Rockwell did the deed at JS's behest (why else was Rockwell in Independence?), and afterwards the normally impoverished Rockwell was pretty flush for a time.

Incidentally, I saw your "hope" that Dan Vogel might contribute to this discussion, but he came here in the past and found the waters way too rough for his soapbox to navigate. You can perhaps find him over on Mormon Dialogue, the successor to the old FAIR and Mormon Apologetics and Discussion boards.

Thing is, he blames me for his troubles here because folks wouldn't buy into his "pious fraud" ideas, and I offered some some information on how narcissistic disorders preclude such notions. And seriously, I consider myself an expert on narcissistic stuff; they were the subject of a grad class in addictions I took years ago, and nowadays, the taxi business is chock-full of them. I've got the road rage ulcer to prove it. Okay, I made that last bit up, but I do a fair amount of screaming in an empty taxi cab as a catharsis.

Per a PhD psychologist who used to post here: "Anyone who thinks narcissists believe in God has never met one. They believe they are God."

Perpetrators of pious frauds, on the other hand, do demonstrate a religous faith; the fraudulent artifacts of medieval times, bones of saints, thorns from Jesus' crown, pieces of the cross, were imbued with powerful religious elements, and the goal was to augment people's faith, and not replace it with one the narcissist had fashioned from their own imaginative yet deluded reality.

Google up the Newark Holy Stones as one example of a more modern pious fraud...

Finally, when Vogel came here, Steve Benson defended a lot of his work, particularly as it related to Native Americans, but the aburdity of the notion that JS's agenda was the way he described it brought "the wrath of RFM" down around his ears.

I was accused, incidentally, of orchestrating Vogel's tar-and-feathering, when in fact, all I did was give him some schooling on Joseph Smith as a sexual predator and let the board processes flow in the direction they were going to anyway. Group processes are another area I've had clinical training in, BTW, and I know better than to try to manipulate them to my own agendas.

Ultimately, Vogel concluded (on the old MA&D board) that posters here rejected his "pious fraud" theory because they were all wedded to the Spaulding/Rigdon belief involving BOM authorship. Of course in the years since, others such as Craig Criddle and brothers Duane and Chris Johnson--to name just a few--have contributed some powerful evidence pointing to other authors besides JS, whose writings were incorporated into the BOM. I suggest those conclusions are just unsupported beliefs that prop up his own denial of JS's actual nature; there was a whole lot of monster and very little martyr in his being.

Oh, and the relevance to Bagley? Well, he offered a "quick summary" of the Smith family a few weeks ago, saying it was essentially a "textbook example of a crime family."

Our three minute conversation yesterday included that theme. I added that the dynamics "included huge elements of insanity," and offered my old obsevation, "Sane people have a difficult time grasping and processing insanity."

http://exmormon.org/phorum/read.php?2,1377578



Edited 2 time(s). Last edit at 09/16/2014 03:54PM by steve benson.

At Mormonthink there are several references.
https://www.google.com/?gws_rd=ssl#q=kirtland+bank+site:mormonthink.com

Now one of the misfortunes for Smith was that he started this bank just months before the famous "Panic of 1837" in American history got underway. Had he started this "bank" a few years earlier then maybe he would've gotten it well enough capitalized and managed risks sufficiently so that it could survive economic downturns. Assuming the church is true and God is just then one must assume that God had a sick sense of humor in telling Joe in Jan 1837 to have the members put their trust in this "bank" of his. Normally the best time to start a new enterprise is during the height of the downturn as long as you have sufficient capital, a good business plan, and take advantage of the low prices you can get on labor, property, plant, equipment, and resources. Those who start their businesses right before a downtrend tend to have the greatest risk of failure.

It's important to note, though, that the Kirtland bank collapsed before the onset of the national panic. It was a distinct event, one not attributable at all to the problems that were developing elsewhere.

I don't think that starting the Kirtland operation a few years earlier would have helped much because JS, SR, and OC had no idea how to run a bank. They had no reliable records, no sense of how much currency they'd printed, no idea how to build and manage reserves, etc. The only way it could have worked was if God really was involved.

Could you please provide your reference about the Kirtland "bank" collapsing before the onset of the nationwide panic?

I think the general consensus is that the nationwide panic had its onset in early May 1837.

But did the collapse of the Kirtland "bank" occur before this onset in early May 1837?

Acccording to the Wikipedia page there was a suit by an "anti-Mormon" in Feb 1837 but that the real collapse didn't happen until late Summer -> Fall 1837.

http://en.wikipedia.org/wiki/Kirtland_Safety_Society

Now I'm well-aware at how there are plenty of self-anointed apologists for Mormondom who troll the church-related Wiki pages in order to try to whitewash the history. So I've learned that when it comes to potentially controversial topics of Mormonism on Wikipedia to take it all with a grain of salt.

Personally I try to not take sides, except for the truth, whatever that may be.

Edited 1 time(s). Last edit at 09/16/2014 03:48PM by steve benson.

Kirtland is another nail in the credibility of JS; people can forgive & forget, look for 'the larger' good, larger person, etc. But when so many issues came back to Joe's door, his fate was sealed.

I was reading Brodie's book secretly on my lunch hours out on a public plaza. I read the chapter on the scheme and how the bank had boxes filled with scrap metal with a layer of gold coins on top to make it appear that they were full of gold coins. These were used to convince investors that the bank's notes were backed by gold specie. When I read that, I abandoned any notions I had about JS being a pious fraud. It also made my ears burn and a stream of profanities to be muttered from my lips.

It's pretty hard to ignore this. It could only fit the M.O. of a notorious narcissist IMO. I think a lot of times it's hard for normal people to fathom how people like this operate, but they're out there and well documented.

The only way I've been able to make all the pieces of the JS puzzle fit is coming to the conclusion that he was a conman and not a misguided person of a pious persuasion (alliteration thrown in for SB's amusement).

A small and amusing detail hit me as I read Steve's posting of Joey's banking days. Joey invited people to LIFT the boxes so they could judge for themselves just how heavy they were and therefore, must be filled with silver coins.

Seems like he also had this same way of operating with the Golden Plates supposedly enclosed in a box. Is my memory off, or did he not invite people to life this box for themselves?

I don't know.....it just seems like something one does to go out of their way to prove that they are ...um....really, really telling the truth. SEE HOW HEAVY THEY ARE FOR YOURSELF! WHY, I AM NOT LYING!