The city of San Francisco was then extending her streets, sewering them, and planking them, with three-inch lumber.

In payment for the lumber and the work of contractors, the city authorities paid scrip in even sums of one hundred, five hundred, one thousand, and five thousand dollars.
These formed a favorite collateral for loans at from fifty to sixty cents on the dollar, and no one doubted their ultimate value, either by redemption or by being converted into city bonds.
The notes also of H.Meiggs, Neeley Thompson & Co., etc., lumber-dealers, were favorite notes, for they paid their interest promptly, and lodged large margins of these street-improvement warrants as collateral.

At that time, Meiggs was a prominent man, lived in style in a large house on Broadway, was a member of the City Council, and owned large saw-mills up the coast about Mendocino.

In him Nisbet had unbounded faith, but, for some reason, I feared or mistrusted him, and remember that I cautioned Nisbet not to extend his credit, but to gradually contract his loans.

On looking over our bills receivable, then about six hundred thousand dollars, I found Meiggs, as principal or indorser, owed us about eighty thousand dollars--all, however, secured by city warrants; still, he kept bank accounts elsewhere, and was generally a borrower.