. . .

10.2.6.2 Collaboration with the Bank of Monroe

Another way to bypass the charter question was to become a branch or subsidiary of an already chartered bank located in another state. This meant that one member of the Church leadership had to withdraw from the safety society and then join the out-of-state bank at a sufficiently high level of management. Oliver Cowdery did just that, dissolving Oliver Cowdery and Company as well and transferring the establishment to Smith Jr and Rigdon.

On February 10, 1837, the church leadership accompanied Cowdery to Monroe, Michigan, equipped with a $3,000 Cleveland draft, and bought a controlling stake in the Bank of Monroe, chartered in 1827. The bank was probably chosen because Newell K. Whitney and Sidney Gilbert had lived in Monroe, and its president Captain Smith was an old army acquaintance of Whitney’s.The purchase of the controlling stake made Oliver Cowdery a director and vice-president of the Bank of Monroe. In return, the Kirtland Safety Society received “notes totaling more than $20,000” of the Bank in Monroe.

. . .

10.2.8 The Banking Crisis

In March of 1837, the Banking Crisis swept the land.205 By this time, the company had been in trouble for about two months, so the correlation between the bank’s failure and the crisis is at best indirect. However, the crisis forced the Bank of Monroe to suspend payments,206 and the fortunes of the Kirtland Safety Society were now entangled with that institution. Joseph Smith Jr and other Mormon leaders often gave the banking crisis of 1837 as an argument for the failure of the company, but this was only true in the sense that it took the indirect charter away.208 The general banking crisis did reduce available credit, which did not help those church members that had credit notes coming due. In a replay of Owl Creek bank president James Smith’s plea that members should accept its notes, cashier Joseph Smith Jr also appealed to the Mormons to accept the company’s notes, predicting that the company would be unable to continue its operation without their support. By June 1837, Smith Jr withdrew from the bank, and Frederick G. Williams and Warren Parrish—by then already disaffected from the church—took over the day-to-day operations of the Kirtland Safety Society.

At the jury trial in October 1837 Rigdon and Smith were both found guilty and fined $1,000 each plus court charges. Although they appealed, both fled the state [in January of 1838, RCK] before their court date.

The bank finally closed its doors in November of 1837, almost a year after the drafting of its constitution.