It's important to note that "the priesthood" in the Mormon faith is every adult male[1]; so by not permitting Blacks into the priesthood, they were basically not permitted in the church at all.
The Mormon faith was founded in 1830s New York (shortly after slavery was abolished in that state), long before efforts to redefine racial relations and blacks as humans. It isn't very fair of you to project your 19th century politics back on the creators of a <200 year old religion.
> so by not permitting Blacks into the priesthood, they were basically not permitted in the church at all.
That is a wild and incorrect jump to make. Why do Mormons go to church? What are you referencing the physical buildings used or something else?
The thing is, often people will say that Mormons are racist towards blacks until 1978 and if you ask why they usually don't know. Sometimes, they'll reference the Priesthood and if you ask what that is, they usually don't know.
From your comment, unless your answers to my questions indicate otherwise, I would say you do not understand. There is so much that people do not understand in regards to this topic yet they feel valid to proclaim others as being racist.
"The Lord had cursed Cain’s seed with blackness and prohibited them the Priesthood." - Brigham Young (second LDS prophet, 1847-77).
Note that "the priesthood" is considered a requirement for salvation, so denying blacks the priesthood was quite significant. Various LDS sources seem to disagree as to why this is; Joseph Fielding Smith (10th LDS prophet, 1970-72) claimed it's because blacks didn't fight on God's side in a war during the pre-mortal existence, while Gordon B. Hinkley (15th LDS prophet, 1995-2008) simply says "I don't know".
The official position of the LDS church now is that blacks are fully equal to whites: "Forget everything that I have said, or what President Brigham Young or President George Q. Cannon or whomsoever has said in days past that is contrary to the present revelation. We spoke with a limited understanding and without the light and knowledge that now has come into the world. We get our truth and our light line upon line and precept upon precept. We have now had added a new flood of intelligence and light on this particular subject, and it erases all the darkness and all the views and all the thoughts of the past. They don't matter any more." (Bruce R. McConkie, member of the Quorum of the Twelve -- basically, the lesser prophets one step below the top guy. 1978.) When he says "forget all I said" he's referring to his 1958 comments affirming the view that blacks were less valiant in the pre-mortal war [0].
EDIT: to be totally fair, despite institutionalized LDS racism, they were strongly anti-slavery in the early years; LDS founder Joseph Smith ran for president as an abolitionist in 1850.
This isn't really the place for an in-depth discussion of Mormon doctrine (and I don't really have the time today), so feel free to email me if you would like to continue the conversation.
But I will quickly correct a few of the mistakes in this conversation:
* There were black members of the Church before the lifting of the ban on the priesthood.
* Though Brigham Young characterized the priesthood ban as a "cursing" he was very clear that the priesthood would be available to people of African decent at some point in the future.
* Not being ordained to the priesthood never meant that blacks would be excluded from salvation. Through the practice of proxy ordinances for the dead, Mormon doctrine has always made clear that all would have the chance at salvation even if denied the opportunity to have the priesthood during this life.
* Limiting the priesthood, or even the preaching of the gospel, to a specific family is part of the Biblical pattern in both the Old and New Testaments.
* Though there was clearly some racism in the Mormon Church before 1978 (and probably still is today), the people I know who were part of the church at that time say it was limited. The official position then, as it is now, was of love and acceptance within the limitations they felt the Lord had set.
Conversations such as this one are valuable, but be aware that they tend to oversimplify complex topics.
A great book on the topic written by a black Mormon who joined the Church before 1978 is this one: