The LDS Church Corporation (feat. Nathan Oman & Kathleen Flake)

Professor Nathan Oman of The College of William & Mary Law School joins me and Professor Kathleen Flake to discuss the history of The Church of Jesus Christ of Latter-day Saints' incorporation and the role of church corporations in navigating American legal disestablishment

Transcript

The LDS Church Corporation

[00:00:00] Stephen Betts: We're chatting today with Professor Nathan Oman, Rollins Professor at William and Mary Law School about his article in the Journal of Law and Religion "Established According to the Laws of Our Country: Mormonism, Church Corporations, and the Long Legacy of America's First Disestablishment." Thanks for joining us today, Nate.

[00:00:17] Nathan Oman: My pleasure. Thanks for having me. 

[00:00:19] Stephen Betts: So Nate, your article talks about the legal history of The Church of Jesus Christ of Latter-day Saints and especially the way that it's used different kinds of incorporation to seek public recognition, hold property, and interact with territorial, state, and federal governments. Battles over legal personality took place within what you call "the long legacy of America's first disestablishment." So, I guess to start things out, what is legal personality and what is the "long legacy of America's first disestablishment?" 

[00:00:48] Nathan Oman: So I have an organization like a church or a business or a town or a university, some sort of collective of individuals. And we understand those collectives as having collective goals and purposes. And they need to be able to do things legally, like own property, enter into contracts, incur debts, things like that. When we say "the church," what is the church as a legal entity, legally, what is the church? And it turns out that the answer to that question is very complicated. And one of the reasons it's very complicated is because at the time of the American revolution the majority of states had, um, de jure legally established churches and between 1776 and 1830, those established churches were disestablished. And the legal mechanism for disestablishment by and large was not the first amendment to the U.S. Constitution. It was actually state corporate law. And so corporate law turns out to be the main way in which churches are regulated in the 19th century.

[00:01:54] That process of disestablishment created law that was designed to regulate religion. So that religion would behave in ways that it was supposed to behave in a democratic American Republic. And it turned out that The Church of Jesus Christ of Latter-day Saints did not behave that way. And so that creates a conflict and legally the point of this conflict, the point at which that conflict shows up, ends up being corporate law, the legal personality of the church.

[00:02:28] Stephen Betts: So Nate, obviously the corporate form of the church today is not the form that you talk about in the paper or I should say the forms that it took over the course of the latter part of the 19th century. In the 19th century, it was the states, not as we would think about it today, the federal government who were responsible for disestablishment. So what were the kinds of forms that it took and why did it adapt differently to different states? 

[00:02:52] Nathan Oman: One of the interesting things, if you look at the scriptures of the Latter-day Saints in the Doctrine & Covenants, is that the foundation of the church is actually dated to a legal event. The Doctrine & Covenants claims that the church was "established agreeable to the laws of our country." So what does that mean? What it means is that the church incorporated or tried to incorporate under a New York statute that allowed churches to incorporate. So this New York statute is actually a revolutionary statute at the first time it was when it was first enacted in 1784. It was the first time, that what is called a "general incorporation statute," as far as I know, was ever passed ever anywhere. And so what's a general incorporation statute? It used to be that in order to become a corporation, you had to have a special act from the legislature, um, creating the corporation. So to be a corporation was to be the recipient of some special benefit from the state. And in fact, in a lot of states, what it meant for a church to be the established church was that the church was incorporated, because that meant it had a charter of incorporation from the state legislature. What New York chose to do when it disestablished its churches was that in effect that it let anybody who wanted to could become an established church. You just file some paperwork with local government officials and you get a corporation. So this is the law that the Latter-day Saints were probably trying to use in 1830. There's reason to suppose they probably screwed the paperwork up and may not have actually been formally incorporated. Almost all American corporate law in the 19th century had really strong assumptions in it about what churches were supposed to do and how they were supposed to behave, essentially it encoded into the law Reformed ecclesiological assumptions. So what that meant is that all churches were to be congregationally based. All churches were to be under lay control and the assets that a church was able to control were going to be sharply limited. So the ability of churches to hold property was sharply limited. None of these things were problems for the Mormons in 1830. But as Joseph Smith and his successors articulate sort of more and more ambitious projects, right? They wanna gather the Saints to Zion and build up the city of God. That involves the church doing a whole bunch of stuff that church corporations simply weren't allowed to do. They weren't allowed to hold that much property. They weren't allowed to hold property for, for example, the purposes of creating a city, as the church tried to do in Nauvoo. And so what happens is the church tries various other kinds of legal mechanisms. So it operates some of its operations through business partnerships. It incorporates in New York. It also incorporates in Illinois shortly before Joseph Smith's death in 1844. And none of those legal entities really work very well. And some of them actually end up creating big legal problems for the Latter-day Saints. So when they finally get to Utah and they set up the state of Deseret what the state of Deseret does, is it grants a special charter of incorporation to The Church of Jesus Christ of Latter-day Saints. That is it reaches back to what ecclesiastical corporate law looked like before 1784.

[00:06:07] And basically gives the church everything it wants, right? An unlimited ability to hold property. The corporation can basically engage in any legal activity. There aren't limitations on what it can do. And when that law is passed in 1850, when that charter of incorporation is passed in 1850, it diverges actually quite dramatically from what mainstream American corporate law at the time looked like. And in 1862, Congress notices this fact and in something called the Morrill Antibigamy Act they nullify various portions of that charter and limit the ability of the church to hold property. So what that means is that from 1862 on the Latter-day Saints are in this weird limbo legally, because the church is in fact using lots of assets and lots of property, and it's doing lots of things. And it's probably not really allowed the corporate entity that it set up in 1850 isn't really allowed to do those things. And so it sort of unclear as a legal matter, who actually is doing them. So Brigham Young is holding all of this property and he's holding the property as "trustee-in-trust." But the problem is is that while "trustee-in-trust" is a legal-sounding phrase, it's actually not a legal term. It's a Mormon neologism. It doesn't have any actual legal meaning, right. It just is the term that Mormons use for the person who has formal control over church property. That neologism was invented in Nauvoo it's only used by Mormon offshoots, Mormon religious movements. So, The Church of Jesus Christ of Latter-day Saints has a trustee-in-trust. The Community of Christ has trustees-in-trust. Nobody else has them. And so, for the second half of the 19th century, the church's legal status is just in limbo and that creates a lot of legal problems for the church.

[00:08:04] Kathleen Flake: Can we pause there a minute, Nate? 

[00:08:05] Nathan Oman: Sure. Sure. 

[00:08:06] Kathleen Flake: This is interesting to me that they have this new word, this neologism. 

[00:08:10] Nathan Oman: Yeah. 

[00:08:11] Kathleen Flake: What do they think they're accomplishing by doing that? What are they trying to communicate in terms of a distinction between trustee, trustee-in- trust?

[00:08:21] Nathan Oman: It's hard to tell. The trustee-in-trust is, um, usually has been the president of the church, but it hasn't always been the president of the church. So after the death of Joseph Smith, there are various people who are not Brigham Young or members of the Quorum of the Twelve Apostles were appointed as trustees-in-trust.

[00:08:43] So what it is is it's a corruption of legal conveyencing language. And this may be getting a little technical. So if I want to create a trust, what I do is I convey property to a trustee. And what I would say is I am giving you a piece of land. I'm giving you "Blackacre" in trust to hold as trustee in trust for Stephen. Okay. So, what happens in Nauvoo is they shorten trustee in trust for to trustee-in-trust, right? And, what I think they mean by it is there is someone who has the office of controlling church property. And that person who has formal control of church property may be the president of the church, but needn't be the president of the church is just whoever it is, who controls church property. So when property was being held by Brigham Young, as trustee-in-trust, I think the single most important thing that that meant was that they were distinguishing between property that was Brigham Young's personal property and property that was the church's property. But of course the church doesn't exist as a legal entity at the time. 

[00:10:00] Kathleen Flake: So my question is if we were to look at other trusteeships right for other churches, for a moment leaving aside the question that in the Utah period they were granted a special charter, right?

[00:10:14] Nathan Oman: Right. 

[00:10:14] Kathleen Flake: Not a general charter, but under a general charter, general charters assumed also the existence of trustees. That was part of the democratization right of church hierarchy. 

[00:10:25] Nathan Oman: Yes. 

[00:10:25] Kathleen Flake: That was the double prong. The first prong was we limit how much property you have. The second one was, we don't really like these hierarchical institutions. So we not only want you to have less property, we want that to be held in trust for the group. 

[00:10:39] Nathan Oman: And importantly, we want it to be controlled by lay members. We don't want... 

[00:10:43] Kathleen Flake: Right. We want laity to be; that's what a trustee, a trustee is a lay person. Typically the Bishop of New York would not be the trustee as was intended in the antebellum period. It would rather be some other board within the diocese that would be denominated trustees. Right? Which becomes a whole problem in Catholicism with "trusteeism." 

[00:11:06] Nathan Oman: That's correct. 

[00:11:07] Kathleen Flake: But so I, 

[00:11:07] Nathan Oman: It's not a choice, right? That the Catholics are making; there there's only one legal form they can use. And the legal form requires 

[00:11:15] Kathleen Flake: multiple trustees 

[00:11:17] Nathan Oman: multiple trustees, and it requires the trustees not be the ministers. 

[00:11:20] Kathleen Flake: And that's the "little R" Republican slash democratic dimension of disestablishment right. As opposed to limited property. So here, everybody else has multiple trustees and here come the Latter-day Saints as early as you say Nauvoo? So early 1840s is the first time we see this. They say, no, we want a trustee, not trustees. We don't want plural. We want one. Is that what we're saying? Is that what we're seeing?

[00:11:46] Nathan Oman: The story's a little more complicated than that. The reason it's a little bit more complicated than that is because they generate legal documents that have multiple people that are called trustees. And the language of trustee is legally ambiguous because a trustee can mean like a trustee of a common law trust, which is a mode of titling property or the language of common law trust, which is very, very ancient, right. Goes back to the Middle Ages. That language of trusts and trustees is then imported into and borrowed in corporate law. So when people...

[00:12:20] Kathleen Flake: Can I just stop you there for a minute? My question actually goes to just the multiplicity versus the sole control. That's my question. I understand that there are legal principles that lie behind all these words that stretch back to Middle Ages but I, I don't know, unless you tell me that John Bennett and Joseph Smith and whoever else he considered a lawyer that was around him were thinking in those terms, unless you tell me they were that this was some kind of conscious adaptation with all this legal history in front of them. 

[00:12:53] Nathan Oman: So what they have, right, is they file articles of incorporation as are required by Illinois law. And those articles of incorporation have multiple trustees. Okay. However, they rapidly start talking about this thing called "the trustee-in-trust" and it's not clear how, like you have to guess at how legally sophisticated they're being with this. So you can tell two stories about the rise of the trustee-in-trust. The first story is they're just kind of ignorant and they don't really understand the law and they just sort of pick this word up and they think they're talking law and they it's just sort of accidental. The other idea, right, is they recognize that they're doing things that are ultra vires under Illinois law. And so they make up this thing called "trustee-in-trust" to say that when we're doing stuff that you're not allowed to do under Illinois law, it's being done by this trustee-in-trust figure. Right?

[00:13:58] Kathleen Flake: Well, can I, there's a third possibility that they think they're trying to do. They're trying to meet the legal demands for incorporation. They have a special need for incorporation because they want the protection of the law that incorporation gives them after Missouri. Right? So they really want this thing called incorporation, so they want to comply with the law, but as they begin to define their system in their charter, it's more complex than most churches. What they're doing in Nauvoo is not, this is part of what you say in that article. This is not a church like other churches. It's a township, it's a city state, right? So they're trying to fit what in their imagination is more like a city state into the forms of incorporation. And one of the places we see them getting uncomfortable is they don't really like a lot of people having control over certain things. And so they invent this term for this one person that is a hierarch and it's not so much that they're trying to be anti-Republican in this regard, it's that they have a theology about this particular status of this person. 

[00:15:12] Nathan Oman: I think that's true. I think there's also the issue of the church is just holding a lot of property. And that property that it's holding is in excess of the amount of property that it's, it's allowed to own under Illinois law. And so you've gotta be able to say who you, you wanna be able to claim owns that property. So the property is being conveyed to Joseph Smith as trustee of this corporation under Illinois law. And so then you can argue, well, the property that's being held in excess of what's allowed under Illinois law is being held by Joseph Smith as trustee-in-trust. 

[00:15:59] Kathleen Flake: Well, but that doesn't solve their problems because it's held personally 

[00:16:03] Nathan Oman: Oh, it does not solve their problems. It does not solve their problems.

[00:16:05] Kathleen Flake: Why are they doing this besides a) they're dumb and they don't understand what it is to incorporate, which I don't think is true, cuz it was too.

[00:16:13] Nathan Oman: I actually don't think that's true either. I'm just, 

[00:16:15] Kathleen Flake: or secondly, secondly, they're trying to fit themselves within a formula that they don't fit. 

[00:16:26] Nathan Oman: I think that the second is correct. I actually think they're, I think they're more legally sophisticated than they've been given credit for, by other historians, I think they're actually quite, 

[00:16:36] Kathleen Flake: so I don't even wanna argue for legal sophistication. I wanna argue for sincerity. 

[00:16:40] Nathan Oman: So I, yes, I think so. 

[00:16:42] Kathleen Flake: So that they're sincerely trying to fit within this thing. 

[00:16:45] What I'm talking about is I'm interested in this, this neologism, I'm not interested in the law so much. I'm interested in neologism as a religious studies person. Right? 

[00:16:54] Nathan Oman: Right. 

[00:16:55] Kathleen Flake: And the law forces me too much in a conversation of are they obeying the law? Are they not obeying the law? And I'm trying to figure out something about the human condition and what they're trying to do. So it's in their interest to comply as much as they can. So I assume they're trying. One of the things I hear them saying in this word trustee-in-trust, which has always seemed to be a curious redundancy is we really trust this guy and he's our trustee. So it that's the doubling up of the word trust. Legally it doesn't help them because it's private ownership. A law will always look at that as private ownership, not a trusteeship, right. 

[00:17:31] Stephen Betts: One thing that kind of ties this together for me as a non-specialist in law is what's the social function of what they're doing with these various different kinds of either incorporation or as you put it in Ohio, "sanctifying the mechanisms of commerce?" There seems to be, you put it in New York that, there may not have been very many legal enticements for them to incorporate other than things like owning property, that it may have served some kind of expressive purpose as a kind of, you know, seeking public recognition. We could come back to that if we want to, but we then see something else that they're doing where in Ohio they choose not to incorporate, right. They choose to use this United Firm model where they have these three different organizations, these commercial organizations that manage various things for them. And then in Nauvoo you have this idea of the trustee-in-trust. It seems to me like there's something even theological going on here about how Latter-day Saints are asserting something about what government means to them through the ways that they're trying to interact with with state governments and disestablishment. 

[00:18:35] Nathan Oman: I think there's some truth to that. So what happens in Ohio is that they pursue religious missions through the sorts of legal entities that were being used for commercial enterprises. So through joint stock companies and partnerships, and then through the aborted attempt to charter a bank. One of the interesting things is it's actually an extension, a little bit of what happens in New York, in that Joseph Smith and Martin Harris enter into what legally probably would've been considered a partnership agreement for the publication of the Book of Mormon. And so what they're doing in Ohio is they want to do a bunch of things that you're not allowed to do as a church corporation. And so what they do is they use the sorts of legal mechanisms that can do those sorts of things, which would be a, a partnership or a joint stock company. And then what happens is they overlay on these what were basically commercial partnerships, all of this theological discourse about the United Firm. And of course the United Firm shows up in the Doctrine & Covenants and then the language has changed in the published version of the Doctrine & Covenants to the United Order. So we have all these revelations about the United Order that are actually historically revelations about a business partnership. And so I think part of what you're seeing there is a sort of blurring right, of distinctions between religion and commerce between the sacred and the secular and that showing up in the kinds of legal entities that the Latter-day Saints are using. I do wanna be careful in that I don't want to overstate the uniqueness of what the Latter-day Saints are doing.

[00:20:16] There are other religious groups, right, that are creating sort of parachurch legal organizations to pursue religious missions. The Methodist Book Concern, right, is not a church corporation. It's publishing Methodist tracts, and it's actually the largest publishing company in the world at the beginning of the 19th century.

[00:20:36] And that's also a sort of sanctified commercial entity. So it's not that what the Latter-day Saints are doing here is completely unique. But they are doing it very aggressively beginning in Ohio. And, you see the same thing that is happening in Nauvoo in the sense that what they want to do in Nauvoo is basically have the church act as a real estate developer, functionally, and churches weren't allowed to be real estate developers under Illinois law. And the trustee-in-trust language is spinning out of that basic legal problem. Right. Which is how does the church engage in real estate development? 

[00:21:12] Kathleen Flake: Uh, maybe it would be helpful to talk for a minute about why the church wants to own so much property. What does that tell us about Mormonism? 

[00:21:20] Nathan Oman: In Nauvoo the basic issue is that they want to found this city and they need to own the land that the city sits upon. And the land is purchased from real estate speculators by the church which at the time of the purchase doesn't exist as a legal entity. And so functionally, what is happening is all of that land is being titled in the name of Joseph Smith. It's being purchased with borrowed money and the creditors understood that they're going to be repaid by the church. So then what Joseph Smith is doing is he's turning around and selling the land off to Latter-day Saints who are gathering to Zion and using the proceeds from those sales to pay off the creditors.

[00:22:06] So when I say the church is involved in real estate development, legally that's what they're doing, but the reason they're doing it is because they have this notion of the gathering of the Saints to Zion and the building up of the city of God. And that's why do that not to own. And they have to own an enormous amount of real estate that's being held for the purposes of resale. And so they're both holding too much real estate under Illinois law, and they're holding it for purposes that ecclesiastical corporations were not allowed under Illinois law to hold real estate for. 

[00:22:35] Kathleen Flake: So two things about that. They're converting large numbers of people. And instead of riding circuit like the Methodists, leaving people where they are and growing classes, branches, of church, they are gathering people to a central place. People are moving and they need a house to live in and they have to have a social organization. And out of this rises the problem of we need land, unlike other churches, we need land. Right? So this tells us something about the form of church and the theology of that church. If we were to talk about why do Latter-day Saints gather, right? Why did they gather as opposed to leave people where they were? And it also raises questions about where they were gathering on the frontier. They're moving out on a frontier. And so the legal mechanisms and land speculation and questions about authority are great around this. So all of that gets drawn into these questions. When we say they wanted to own a lot of land, they didn't want to own it for business purposes. 

[00:23:40] Nathan Oman: No 

[00:23:40] Kathleen Flake: they wanted to own it for religious purposes. 

[00:23:43] Nathan Oman: Yeah.

[00:23:43] Kathleen Flake: And, and so that puts them squarely over against how the United States is trying to create a disestablished environment because land means dominion.

[00:23:54] Nathan Oman: Yes. And they're very concerned, right about any ecclesiastical organization that can control large amounts of land. 

[00:24:04] Kathleen Flake: So far, Nate, we've talked about how Mormonism is trying to fit itself into the manner in which the United States has imagined it can create a disestablished society, right. And Mormonism doesn't fit. Because the way it is essentially oriented to a religious city-state requires the ownership of property and the consolidation of authority in an individual. Both of those violate the very mechanisms by which disestablishment was supposed to be brought into being through a corporation. So do we still see a Mormonism that doesn't fit? Let's talk about Ensign Peak. Let's talk about the kinds of economic activity, the kind of responsibilities you could say. Smith was assuming responsibility for the settlement of large populations of people on the frontier. He wasn't a land speculator in the sense that he was trying to make profit. This was not a commercial enterprise. It was the founding of a city-state. And obviously all these other commercial interests are gonna come up. But for him, for the church, what they're trying to do is create a particular kind of society. So how do we see this today in the kinds of concerns that are being expressed about Mormonism in its activities that don't strike people as religious? What does that say to us about what Mormonism thinks it is as a religion? 

[00:25:29] Nathan Oman: So I will talk about this first in legal terms, 'cause I'm a lawyer. One thing that has happened over the course of the 20th century is American corporate law has become very, very, very flexible. And so it's quite easy now and legally, utterly unproblematic to create a corporation for any legal purpose or to carry on any legal business. And so in terms of the legal structures, the church actually doesn't face particularly daunting challenges legally in structuring its affairs these days. We're much more comfortable with the contractualization of the corporate form and we let people do what they want to do by and large.

[00:26:13] Now there's the separate cultural question of what is it proper for churches to do? And that seems to me is still very contested. And it seems to me that the assumptions that initially in the first disestablishment were codified into the law, while those assumptions are no longer codified into the law, I think they're still largely codified into our culture. And so there is something that looks very suspect when the Latter-day Saints are acquiring large amounts of property. The reasons that the church is acquiring property today are somewhat different than they were in the 19th century. The church is not acquiring property to create cities. However, it's similar in that it's not acquiring property to enrich the leadership of the church. Mostly what the church is doing with its property now is it's just generating passive reserves. And I think the reason it's generating passive reserves is because it wants to ensure that it will always have the resources available to pursue institutional expansion and particularly institutional expansion in parts of the world where the church locally cannot pay for itself. And it wants the ability to do that indefinitely into the future, regardless of background economic conditions. And so in order to do that, what it's done is it's just acquired an enormous bit of passive reserves. I do wanna make one point here too, that it is possible to overstate the uniqueness of what Latter-day Saints are doing. There are a lot of religious corporations in the United States that are enormously wealthy. And the great example of this is Trinity church in New York. So Trinity church in New York was actually the established church of the colony of New York when they were disestablishing the church in New York during the revolution, what that was, was a fight about Trinity church, Trinity church is located in lower Manhattan. It's where Alexander Hamilton is buried. Going back to colonial times, Trinity church owned much of the island of Manhattan. Trinity church continues to own much of the island of Manhattan. So many of those skyscrapers around Wall Street are actually sitting on real property that is owned by an Episcopalian congregation in lower Manhattan.

[00:28:51] And that congregation is one of the wealthier, non nonprofit institutions in the United States. So there are lots of nonprofit institutions like universities and churches that have a lot of passive reserves. And the reason they have passive reserves is they want to make sure that they have in income to pursue their missions indefinitely for the future, regardless of background economic circumstances.

[00:29:16] And so what the Latter-day Saints are doing there in some ways sort of violates norms around what churches are supposed to do. But it's possible to overstate the uniqueness. I think of what they're. 

[00:29:29] Kathleen Flake: So I'm not, I'm not so much looking for uniqueness. I'm looking for what's characteristic, right? What do these financial choices tell us about who they are? And it seems to me, and I think the point you make about passive reserves in service to infinite expansion, right? The other thing that underlies that is the carrying forward of the old communal ethic. For example, local churches do not pay for their buildings. All of that comes out of a centralized pool of money. Right? And so the church is still centralizing its activities. It certainly is not doing it geographically. Latter-day Saints are not gathering to one place where all these churches are built and all these welfare services are provided and books are published or whatever, but now they're doing it globally. But a similar notion is the church pays for all of this that you never see a plate passed in Mormonism, you will never be asked to raise money for its school system or these charitable purposes, right. So I think you still see the sense of a collective financial arrangement that doesn't fit the American idea of the church. I'm not saying that's unique, but I think it is something that's always been characteristic of Mormonism. 

[00:30:53] Nathan Oman: The other thing I think that's also characteristic, right is there's a deep level of comfort within the Latter-day Saint tradition, right of the religious involvement with the commercial. And there is not an enormous amount of anxiety around the religious involvement with the commercial. So it is possible, right? If I'm a modern Latter-day Saint, to say something like, well, yes, owning a large swath of agricultural property in central Florida as an investment for investment purposes, that is a religious. Because what we're doing there is we're conserving consecrated funds to ensure that the resources are available for the future of the Lord's work. And so the ideas of the sacred and the commercial are intermeshed in a way that historically and theologically, while it's generated at various points in the history of Mormonism, it's generated, certainly generated conflicts in the past. There is a tradition of meshing these things without an enormous amount of anxiety. And I think that goes all the way back to the publication of the Book of Mormon. So if you look at the publication of the Book of Mormon, one thing that is oftentimes glossed over is that it was the sort of major financial undertaking that required financing and contracts and copyrights and agreements about revenues and the rest of it. And from the very beginning, there was this sort of sanctification of that process. We talk about the coming forth of the Book of Mormon. You could just as easily talk about that, right as a publishing enterprise. 

[00:32:34] Kathleen Flake: To me that's not the characteristic dimension of that activity. I think Mark Valeri in his book on the Puritan acceptance of the commercial as a legitimate religious activity might even show some roots of that dimension in Mormonism. But I think when you mention that farm in Florida, what is characteristic is that they're harvesting honey to put in cans for welfare services. Even as they may be husbanding financial resources for future needs, that farm is acting in service to present religious ideologies as well as future needs to this infinite future need that they have, that they take responsibility for the physical needs of their membership is also reflected in that land ownership. But there's an ethic. There is a religious ethic in that very American idea that it's okay to make money for God. There's another religious ethic going on that has to do with a communalism that hasn't gone away. 

[00:33:44] Nathan Oman: I think that's right. I do think that something kind of new has happened in Latter-day Saint history since the say early 1970s, and that is that the church has started to generate really large liquid passive reserves that are not being used, for example, as part of the welfare system or something like that, they're being held as investment properties, right? So it's basically a store of resources and wealth for future use. And, the church has had reserves in the past, but it's never had reserves on the scale that it's developed from the sort of 1970 to the present. And that's actually created a new issue for the church. And that is that when you have large reserves that are sort of sitting around, and you don't really plan on spending or doing anything with them in the immediate future at all, you have to make choices about where you park them. Where is that money parked. And when you have really, really, really large sums of money, the simple choice of where you park them has effects on the rest of the world. And they have to start thinking about what are the effects of just parking our reserves one place rather than another place. And I think this is what you're seeing in all of the fights and controversies over City Creek, right, is that they made a choice to park their reserves in that mall in downtown Salt Lake. And I actually suspect that from an investment point of view, that was not a great decision. They would've been better off just parking those, like in a diversified investment portfolio, in the stock exchange. 

[00:35:22] Kathleen Flake: And doesn't that tell you that something else was going on?

[00:35:25] Nathan Oman: I think that's exactly right. So what they're doing is they're saying, well, we think that we have a kind of obligation to this community that we wanna sort of keep downtown Salt Lake vibrant because we're a big citizen here and it's where we live in our headquarters.

[00:35:42] Kathleen Flake: I think it's as simple as you're not gonna see urban blight around the Salt Lake temple,

[00:35:46] Nathan Oman: I think that's, 

[00:35:46] Kathleen Flake: and it's worth it to us to landscape this as they continue to do to preserve it from urban blight. 

[00:35:52] Nathan Oman: I think that's right and from the church's point of view, it seems to me is that that's actually not a big money making proposition for them.

[00:36:01] Kathleen Flake: No, in fact, they explicitly said that they weren't intending to do that. 

[00:36:05] Nathan Oman: Yeah. 

[00:36:06] Kathleen Flake: So I think in these decisions, you're seeing two things. One that you're mentioning though, this change in passive assets and the problem of you can't put passive assets in a bank anymore, 'cause you lose money, right? That says something about how our financial structure has changed since the 1970s. And we also know that since that at least the 1980s, the church assumed a greater responsibility for the financing of its local units and every other activity in Mormonism. Right? So all of these things are happening at the same time, and when I'm looking for what is the ethic, if you prefer, what is the theological impulse, behind some of these decisions, I'm still seeing that notion of for lack of a better word communalism, communitarianism that this is still a communitarian tradition in a much different financial environment. 

[00:37:03] Nathan Oman: Certainly one of the things that the church, um, does in a way that is really, I think, quite extreme as religious organizations go is the pooling of financial risk and resources. Right. So, wards are not left on their own, financially. Stakes are not left on their own, financially. Regions are not left on their own, financially. Countries are not left on their own financially. There's enormous amounts of centralization of control of

[00:37:34] Kathleen Flake: redistribution of wealth. I would use there's enormous amount of redistribution of wealth that the Latter-day Saints

[00:37:39] Nathan Oman: that's exactly right. So the church as a financial organization, basically exists to redistribute money from wealthy Latter-day Saints and wealthy Latter-day Saint congregations to poor Latter-day Saints and poor Latter-day Saint congregations, and to redistribute wealth from the present to the future which is what saving does, 

[00:38:03] Kathleen Flake: which is why some people would say, well, if you're really redistributing wealth, you would do more for the poor. And what you're saying is that these assets that are so passive are with future expenditures in mind. 

[00:38:18] Nathan Oman: Yeah. So if I'm speculative if I'm sitting on the Council for the Disposition of Tithes and I'm just like a bean counter, and I look at the Mormon church, it actually has a terrifying business model to me. Right. Which is that you're financially dependent on North America, largely for your revenue. Religious observance in North America seems to be in decline and all of the places where you're expanding are really poor. And where you're expanding most aggressively are poor. And so if I look at that financially over time, right, what I see is that your liabilities are increasing and your income stream is either stable or declining. And so what I would want to do right is to have as much money squirreled away for the future as I can because the financial profile of the institution on a cash flow basis is becoming less attractive over time on a purely cash flow basis. And so what I would want is I would want enough reserves, right. That I can at some point not be utterly dependent on tithing donations from Latter-day Saints in North America. 

[00:39:43] Kathleen Flake: Yeah. And I would think it'd be clear that even that is insufficient their investments. It'd be interesting to compare investments vis-a-vis you know, tithing, but I think there's two other things that would scare me to death if I were in that position, one is that I was part of an institution that it assumed a fiduciary duty for the thriving, social, physical, economic, thriving of a large population. Not just worship services, I'm on the hook for a particular kind of life. Right. And then secondly, I would be scared to death that the particular economic rule under which I was working is you don't, you don't use debt. You don't grow based on debt, you pay cash, right? Yeah. I mean, that, that to me is extraordinary that an, that an organization, this size.

[00:40:34] Nathan Oman: That's a relatively, 

[00:40:35] Kathleen Flake: is not living on debt. 

[00:40:36] Nathan Oman: That's a relatively recent phenomenon. Financial 

[00:40:39] Kathleen Flake: since the seventies. Yeah.

[00:40:41] Nathan Oman: So prior to the 1970s, the church regularly would incur large amounts of debt. But Joseph Smith incurred large amounts of debt and it's really only with N. Eldon Tanner that the church institutes really consistent and rigorous cash controls and financial discipline. And you do that for 50 years, right? You rigorously never spend more money than you're taking in in revenues. And you do that for 50 years and you're an organization with millions of members. Yeah. You're gonna get big reserves. But that's really something that's happened in the last generation.

[00:41:16] Kathleen Flake: Right. 

[00:41:17] Nathan Oman: That's discontinuitous with the rest of LDS history. 

[00:41:20] Kathleen Flake: So Nate, the title of your article, which we have not emphasized enough in this interview is having to do with established according to the laws of the United States. And those laws were designed to create the disestablished environment that we have. And so I'm wondering how successful those laws have been. That's probably the wrong way to phrase it. Those laws I'm thinking of Sally Gordon's article here. 

[00:41:49] Nathan Oman: Mm-hmm 

[00:41:49] Kathleen Flake: I'm thinking of Sally Gordon's article, where she talks about the ironies, the paradoxes in disestablishment that freedom of conscience led to schism that schism led to both great varieties of religion, but also establish the needs of disestablishment to not have concentrations of power in churches. Where would you put the Latter-day Saints in that history today? Have they been successfully disestablished under that original criteria of control over dominion and land? And the diversification of authority in the institution through lay leadership, lay membership, I should say. And trusteeship, has disestablishment been successful? That's the wrong way to, of course it's been successful, right. What I'm trying to reach towards is the very nature of Mormonism seems to me to be contrary to the values that were expressed in these ways we have tried to disestablish. On the other hand, you can't really say that Mormonism doesn't fit with an American polity. So what do we learn from Mormonism interacting with, with these values?

[00:43:13] Nathan Oman: I would say a couple of things. So first, I'm probably less Whiggish on this history than Sally Gordon is. I think that it's important for us to acknowledge that the legal regime that was created by disestablishment of religion in the United States was by no means theologically or religiously neutral, right. It was essentially a Reformed Protestant legal regime, and it was quite hostile towards religious traditions that were not Reformed Protestant religious traditions. And those religious traditions had to prove to the Reformed Protestant legal system that they were safe. And if they couldn't prove to that Reformed Protestant legal system that they were safe, they were gonna run into problems. And I think you see this with the Latter-day Saints and you see this with the Roman Catholics very early on to a lesser extent. And when I say very early on like 1790s, 1780s, you see it with Episcopalians and Anglicans. So the first thing is, is that the regime of disestablishment was actually quite religiously coercive. And it was not about religious neutrality. It was about regulating religion so it behaved in respectable Reformed Protestant ways. The second thing I would say with the Latter-day Saints is the Latter-day Saints proved that they could be safe and they proved that they could be safe in two ways. The first way and we haven't discussed this very much, is that by the end of the 19th century, the Latter-day Saints has adopted a legal form that basically looked like Baptists or Methodists. They had all these congregational corporations and they had no super congregational religious structure and the church as trustee-in-trust by 1884, didn't actually own that much property. It was mostly owned by local congregations. So what that is, is to say is the Latter-day Saints said, look, if in order to survive within this legal system, we've gotta look like Reformed Protestants, then legally we'll make ourselves look like Reformed Protestants, but that's not what we're actually going to do. So that by 1900, the ecclesiastical structure of the church and the legal structure of the church they bear almost no relationship to one another. So then how is it that you prove that you are safe? Part of the way you prove that you're safe is you figure out ways of operating within the legal regime because you don't have the power to change that legal regime if you're the Latter-day Saints in the 19th century. And then the other thing that you do is you work out some political accommodation with American society, right? And that's not ultimately done through the legal system that's done through generating norms of political behavior among, and, and religious behavior among latter day saints to make them appear sufficiently unthreatening to the rest of American society, that the rest of American society is willing to tolerate them.

[00:46:13] Kathleen Flake: So what's happening in 2012? Mitt Romney. In other words, my other question would be, for example, based on what you said, is Mormonism safe? 

[00:46:25] Nathan Oman: For Americans? So for a long time, from Reed Smoot to Proposition 8 Mormonism was safe, right? There were sort of crack pots who would write books about the vast Mormon conspiracy to take over the Republic, but nobody took it seriously. Okay. With Proposition 8, for large swaths of American society, the church no longer looks safe. And part of that is that the church learned how to behave in the mid 20th century. And then it just kept behaving like a mid 20th century American organization in the opening decades of the 21st century. And so what had been culturally encoded in the mid 20th century as really safe and really respectable gets encoded in the opening decades of the 21st century as really reactionary and really dangerous at least to some non-trivial segment of the U.S. Population. And so now what we're seeing is the church is going through one of those processes where it figures out, right. Well, how much can we accommodate ourselves to this new political, cultural, and legal environment such that we are going to be safe for ourselves, that we're not going to be threatened. But at the same time, we want to remain true or faithful to what we see as the internal demands of our religion and our faith. And that's a process of negotiation, I think that is currently going on within the Latter-day Saint tradition. And so what we're seeing is a kind of moment of theological and institutional stress that we haven't really seen for about a hundred years, but it's also those moments of stress, I think are also kind of moments of creativity and self definition. And so I expect that whatever The Church of Jesus Christ of Latter-day Saints looks like in 20 years, it will not look like what it looks like right now. And it certainly will not look like what it looked like in 2000. And I think law is gonna play some role in that it's not gonna be corporate law anymore because corporate law has moved on. That's no longer where the fights over the place of religion in society occur. That's where they occurred in the 19th century. It's one of the big places they occurred in the 19th century. They don't really occur there anymore. But it is occurring in other places. And I think that to the extent that this story I tell in my article is of any interest in the present, it's interesting that it shows the sort of creative dialogue that goes back and forth between the religious tradition and the legal system and within the religious tradition about the legal system and that that dialogue with and about the legal system is part of what generates a modus vivendi between the church and the society.

[00:49:23] Stephen Betts: We've been discussing Nate Oman's article in the Journal of Law and Religion called "Established According to the Laws of our Country: Mormonism, Church Corporations, and the Long Legacy of America's First Disestablishment." Thanks for joining us today, Nate.

[00:49:38] Nathan Oman: Thank you.