Kirtland Safety Society Discounted Notes, circa January 1837
Source Note
Kirtland Safety Society, Discounted Notes, , Geauga Co., OH, ca. Jan. 1837; handwriting of , , and unidentified scribes; docket in handwriting of ; fourteen pages; JS Office Papers, CHL.
Historical Introduction
The was formed in November 1836; however, the institution did not open for business or operate a banking house until January 1837. When the bank opened to the public, sometime between 4 and 7 January, the clerks began keeping a record, which they titled “List of notes for discounting.” This record consists of sequential numbers recorded in categories labeled “No. [number] 1,” “No. 2,” and “No. 3.” The list comprises seven loose sheets.
Discounting was a nineteenth-century banking term, most commonly describing the practice wherein banks accepted banknotes from other financial institutions and paid a lower amount than the face value of the note. This discount depended on the distance from the originating bank, the perceived credibility of that bank, and the difficulty the bank receiving the note might face in redeeming it.
Because there are few surviving records for the Safety Society, it is unclear if those involved in the Safety Society used the term “discounting” in the same way as other banks. If the title referred to the common form of discounting, then the numbers in the list would have corresponded with numbers written on the banknotes received by the Safety Society. Alternatively, the Safety Society may have applied some form of discounting to its own notes when they were issued for a loan or exchanged for specie, in which case the numbers on the list may represent serial numbers that clerks assigned to Safety Society notes as they were distributed or redeemed. In this case, the three categories used in the list may signify the one-dollar, two-dollar, and three-dollar denominations of Kirtland Safety Society notes. Another possibility is that the categories may refer more broadly to the three formats of uncut printed sheets of Safety Society notes, which clerks appear to have filled out sequentially, regardless of denomination.
The page order for the seven loose pages of numbers that comprise the “List of notes for discounting” has been changed to reflect the creation order of the record and therefore deviates from the order in which the record was archived at the Church History Library.
Bodenhorn, State Banking in Early America, 48–49; Murphy, Other People’s Money, 58–59, 90. A less common form of discounting related to the issuing of loans. When a bank would issue a loan, it would subtract a set percentage from the loan amount, which usually represented interest, as a discount. For example, if an individual took out a loan for $1,000, and the bank applied a ten percent discount, the loan recipient would receive $900. (See JSP, D5:286n11; Kirtland Safety Society Notes, 4 Jan.–9 Mar. 1837; and Hill, Rooker, and Wimmer, Kirtland Economy Revisited, 55.
Bodenhorn, Howard. State Banking in Early America: A New Economic History. New York: Oxford University Press, 2003.
Murphy, Sharon Ann. Other People’s Money: How Banking Worked in the Early American Republic. Baltimore: John Hopkins University Press, 2017.
JSP, D5 / Rogers, Brent M., Elizabeth A. Kuehn, Christian K. Heimburger, Max H Parkin, Alexander L. Baugh, and Steven C. Harper, eds. Documents, Volume 5: October 1835–January 1838. Vol. 5 of the Documents series of The Joseph Smith Papers, edited by Ronald K. Esplin, Matthew J. Grow, and Matthew C. Godfrey. Salt Lake City: Church Historian’s Press, 2017.
Hill, Marvin S., C. Keith Rooker, and Larry T. Wimmer. The Kirtland Economy Revisited: A Market Critique of Sectarian Economics. Provo, UT: Brigham Young University Press, 1977.
Each uncut printed sheet comprised four notes, with different series of denominations. The first sheet included two one-dollar notes, one two-dollar note, and one three-dollar note. The second sheet included three five-dollar notes and one ten-dollar note. The third sheet is not extant, but likely included the twenty-dollar note, fifty-dollar note, and one hundred-dollar note. In the few extant uncut sheets of notes, clerks filled out the relevant information, including the serial numbers, for all the notes before cutting the sheet into four separate notes. (See Kirtland Safety Society Notes, 4 Jan.–9 Mar. 1837.)