Although Kirtland had seemed dynamic and prosperous on the surface, much of what Joseph Smith and the Mormons acheived there had required the church to accumulate considerable debt. By 1837, the same year the church established its first foreign mission in England, church debt was starting to have serious consequences. There had also been intense discontent brewing among a large number of Saints who disliked the increasingly authoritarian way in which Joseph ran the church, who objected to his theocratic attitudes, or who were opposed to the Law of Consecration -- a form of religious communalism in which Saints were required to surrender all "surplus" to the church. Finally, rumors were beginning to circulate about polygamy, and about the nature of the relationship between Joseph Smith and Fannie Alger. (See 1835 entry.)

Joseph tried to solve the church's fiscal difficulties by founding the Kirtland Safety Society Bank. When the bank's charter was denied by the Ohio legislature, Joseph simply changed the name of the bank to the "Kirtland Safety Society Anti-Banking Company," and proceeded to issue bank notes that had already been printed for the purpose, but that were not backed by specie. When there was a run on the bank later that year, Kirtland dissolved into chaos. The church split into feuding factions, with dissenters accusing Joseph of being a "fallen prophet." Among the dissenters were Oliver Cowdery and David Whitmer and their families. Creditors closed in on the church and initiated numerous lawsuits against Smith while dissenters siezed control of the bank and whatever remained of church assets.