Quotation marks when quoting more than one paragraph

[Unregistered]

This is a subject of intense discussion. I have several sources which do not agree. I need documentation about the correct answer.

What is the proper use of quotation marks when a speaker is quoted for more than one paragraph?

For example:
Example 1
“It is a wise man who knows his limits. He listens to good reason and is seldom judgmental before collecting his facts.

“I have witnessed his knowledge first hand. I have gained.”
- Jeff Smith

Example 2
“It is a wise man who knows his limits. He listens to good reason and is seldom judgmental before collecting his facts.”

“I have witnessed his knowledge first hand. I have gained.”
- Jeff Smith

Note the position of the quotation marks.

[Mister Micawber]

Example 1 is correct. Begin the first quoted paragraph with a quotation mark. Each succeeding paragraph in the same quotation is begun with another quotation mark. At the end of the final paragraph, close the quotation marks.

Note that when quoting a multi-paragraphed passage, all lines should be indented from the left margin (more so than for the main body of the paper). This is an additional aid to making the extent of the quotation clear.