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I read your theory on how the name of the city came to be. If I may, I'd like to explain the Jewish traditional way the city has received its name. As you stated, there was a city called Salem. Of course, this is the English name. In Hebrew (as it is written in the Torah), it is Sha-lem (accent on the second syllable). This was on one of the hills (or mountains, if you will), which of course is the same spot Abraham almost sacrificed Isaac, Jacob wrestled with the angel, and of course upon which the temple was constructed. A second hill was added to Shalem, increasing Shalem. In Hebrew the word "Yeru" means "increase" or "more of". So the name of the city would have been YeruShalem, but since it was on two hills, the name would be slightly different. In Hebrew, anything of which there are two(as in pairs) has an "ayim" as the ending. For example, the word "yad" means hand. To say many hands, it's "yadim"(accent on second syll), but to say two hands, as in a pair that we each have, we say "ya-DA-yim". So, since Shalem was now on two hills, and not more than two, instead of Yerushalim, we have Yerushalayim" (Ye-ru-sha-LA-yim).
Of course, as you know, all Hebrew names that began with a yud("Y" in English) were written as a "J" in Roman(or was it Greek?), and incorrectly read with the "J" of today, not the Roman J which had the Y sound. The name would be Jerushalayim, but it was incorrectly translated, and became Jerusalem. You mention the Jebusites as adding their name to the city. In Hebrew, they were called the "Yevusie". The "b" in the English name was a "vet"(2nd letter of the alphabet without a dot, otherwise it is a "bet" for the "b" sound), which is not found anywhere in the name. The letter used in it's place is a "rashe", or "R" sound. This comes from the "Yeru" I mentioned above. What do you think about this? Have you heard this before?
The name Jerusalem is derived from the words Ir Shalom which mean "city of peace". In Hebrew the name of the city is Yerushalayim, and in the Bible it is also called Yerushalem. With the German transliterations, where the J makes the Y sound, and the double-s makes the SH sound, the name in English evolved to be Jerusalem.
Melchizedek means: King of Righteousness, and he was the Prince of Peace, or the Prince of Salem. Jerusalem means "city of peace."
Thanks Rameumptom, but a slight correction. City of peace is an Israelite folk etymology, which is seen in biblical wordplay. The name of the city is Canaanite, shalem was one of their gods. The yeru part can't mean city, there is no ayin. City is 'ir. Ayin-yod-reish.
The true name of the City was called Shalome and not a common word of its day. There is no Greek, Aramaic, or Hebrew definition for it.
Hebrews adopted the word and later through handed down copies, was translated incorrectly from Shalome to Salem.
Joseph Smith, stated the following at 27 August 1843 (Sunday Morning). Temple Grove A.M. at the Grove. Prest. J. preached on Hebrews Chapter 7. After reading a letter from Thos. Carlin to S. Rigdon and making some remarks about it. 47 He shewed that the word "Salem" is a wrong translation it should be "Shalome" signifying peace.
In Joseph Smith Commentary to the Bible, it states:
It is understood by many . . . that Melchizedek was king of some country or nation on the earth. But it was not so. In the original it reads "king of Shalom," which signifies king of peace or righteousness, and not of any country or nation.
The word "Salem" is a wrong translation. It should be "Shalom," signifying peace. "Salem" is designed for a Hebrew term. It should be "Shalom," which signifies righteousness and peace. As it is, it is nothing—neither Hebrew, Greek, Latin, French, or any other.