Here we have an example of a long dittography in the 1841 British edition (see under 3 Nephi 20:39 for another long dittography in that edition). After setting and peace, the compositor’s eye skipped back to the previous occurrence of peace, and he ended up setting the extra “and peace settled in the land”. The 1849 LDS edition restored the original text without the dittography.
Summary: Follow the earliest text for Mormon 1:12—that is, without the dittography that the 1841 compositor introduced into that edition.