Here Joseph Smith edited “all mankind was” to “all mankind were”. The singular works as long as mankind is considered a collective whole, but the use later on in the verse of the plural pronoun they suggests that “all mankind” should be treated as a plurality of separate individuals (“save they should rely on this Redeemer”).
Elsewhere the text has consistently preferred the plural were with “all mankind”:
Nonetheless, the critical text will restore the singular was in 1 Nephi 10:6 since its use there appears to be intentional. For complete discussion, see subject-verb agreement in volume 3.
Summary: Restore the singular was in “all mankind was in a lost and in a fallen state” (1 Nephi 10:6).