from us; Pioche, Bayerque & Co. were already established on another corner of Jackson Street, and the new Metropolitan Theatre was in progress diagonally opposite us.  During the whole of 1854 our business steadily grew, our average deposits going up to half a million, and our sales of exchange and consequent shipment of bullion averaging two hundred thousand dollars per steamer.  I signed all bills of exchange, and insisted on Nisbet consulting me on loans and discounts.  Spite of every caution, however, we lost occasionally by bad loans, and worse by the steady depreciation of real estate.  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.  I instructed Nisbet to insist on his reducing his line as the notes matured, and, as he found it indelicate to speak to Meiggs, I instructed him to refer him to me; accordingly, when, on the next steamer-day, Meiggs appealed at the counter for a draft on Philadelphia, of about twenty thousand dollars, for which he offered his note and collateral, he was referred to me, and I explained to him that our draft was the same as money; that he could have it for cash, but that we were already in advance to him some seventy-five or eighty thousand dollars, and that instead of increasing the amount I must insist on its reduction.  He inquired if I mistrusted his ability, etc.  I explained, certainly not, but that our duty was to assist those who did all their business with us, and, as our means were necessarily limited, I must restrict him to some reasonable sum, say, twenty-five thousand dollars.  Meiggs invited me to go with him to a rich mercantile house on Clay Street, whose partners belonged in Hamburg, and there, in the presence of the principals of the house, he demonstrated, as