The Mormon Community Forms The Kirtland Safety Society
A bank illegally organized by Joseph Smith and other LDS leaders in 1836, The Kirtland Safety Society, failed in November 1837, loosing “a hornet's nest. Creditors swarmed in upon Joseph armed with threats and warrants.
He was terribly in debt...the local non-Mormon creditors whom he could not repay brought a series of suits against the prophet...
“Thirteen suits were brought against him between June 1837 and April 1839, to collect sums totaling nearly $25,000. The damages asked amounted to almost $35,000. He was arrested seven times in four months...only six [suits] were settled out of court -- about $12,000…”(No Man Knows My History, 199-201)
Many in the Church grew disillusioned with Smith’s leadership.
In November 1836, several leading members of the Mormon Church, including Joseph Smith, established a type of bank called the Kirtland Safety Society. The Ohio State legislature refused to grant the bank a charter. Acting on counsel from their lawyers, Joseph Smith, Sidney Rigdon, and several others reformed the society as an anti-banking society which permitted them to issue notes. Financial troubles caused by rampant speculation and a nationwide panic in 1837 led to the collapse of the Kirtland Safety Society. Many blamed Joseph Smith for the failure of the Kirtland Safety Society and called him a fallen prophet.