Memoirs of General W.T. Sherman

Text to Speech

Sanders & Brenham; Davidson & Co.; Palmer, Cook & Co., and others.

Turner and I had rooms at Mrs. Ross's, and took our meals at

restaurants down-town, mostly at a Frenchman's named Martin, on the

southwest corner of Montgomery and California Streets. General

Hitchcock, of the army, commanding the Department of California,

usually messed with us; also a Captain Mason, and Lieutenant

Whiting, of the Engineer Corps. We soon secured a small share of

business, and became satisfied there was room for profit.

Everybody seemed to be making money fast; the city was being

rapidly extended and improved; people paid their three per cent. a

month interest without fail, and without deeming it excessive.

Turner, Nisbet, and I, daily discussed the prospects, and gradually

settled down to the conviction that with two hundred thousand

dollars capital, and a credit of fifty thousand dollars in New

York, we could build up a business that would help the St. Louis

house, and at the same time pay expenses in California, with a

reasonable profit. Of course, Turner never designed to remain long

in California, and I consented to go back to St. Louis, confer with

Mr. Lucas and Captain Simonds, agree upon further details, and then

return permanently.

I have no memoranda by me now by which to determine the fact, but

think I returned to New York in July, 1853, by the Nicaragua route,

and thence to St. Louis by way of Lancaster, Ohio, where my family

still was. Mr. Lucas promptly agreed to the terms proposed, and

further consented, on the expiration of the lease of the Adams &

Co. office, to erect a new banking-house in San Francisco, to cost

fifty thousand dollars. I then returned to Lancaster, explained to

Mr. Ewing and Mrs. Sherman all the details of our agreement, and,

meeting their approval, I sent to the Adjutant-General of the army

my letter of resignation, to take effect at the end of the six

months' leave, and the resignation was accepted, to take effect

September 6, 1853. Being then a citizen, I engaged a passage out

to California by the Nicaragua route, in the steamer leaving New

York September 20th, for myself and family, and accordingly

proceeded to New York, where I had a conference with Mr. Meigs,

cashier of the American Exchange Bank, and with Messrs. Wadsworth

& Sheldon, bankers, who were our New York correspondents; and on

the 20th embarked for San Juan del Norte, with the family, composed

of Mrs. Sherman, Lizzie, then less than a year old, and her nurse,

Mary Lynch. Our passage down was uneventful, and, on the boats up

the Nicaragua River, pretty much the same as before. On reaching

Virgin Bay, I engaged a native with three mules to carry us across

to the Pacific, and as usual the trip partook of the ludicrous--

Mrs. Sherman mounted on a donkey about as large as a Newfoundland

dog; Mary Lynch on another, trying to carry Lizzie on a pillow

before her, but her mule had a fashion of lying down, which scared

her, till I exchanged mules, and my California spurs kept that mule

on his legs. I carried Lizzie some time till she was fast asleep,

when I got our native man to carry her awhile. The child woke up,

and, finding herself in the hands of a dark-visaged man, she yelled

most lustily till I got her away. At the summit of the pass, there

was a clear-running brook, where we rested an hour, and bathed

Lizzie in its sweet waters. We then continued to the end of our

journey, and, without going to the tavern at San Juan del Sur, we

passed directly to the vessel, then at anchor about two miles out.

To reach her we engaged a native boat, which had to be kept outside

the surf. Mrs. Sherman was first taken in the arms of two stout

natives; Mary Lynch, carrying Lizzie, was carried by two others;

and I followed, mounted on the back of a strapping fellow, while

fifty or a hundred others were running to and fro, cackling like


Mary Lynch got scared at the surf, and began screaming like a fool,

when Lizzie became convulsed with fear, and one of the natives

rushed to her, caught her out of Mary's arms, and carried her

swiftly to Mrs. Sherman, who, by that time, was in the boat, but

Lizzie had fainted with fear, and for a long time sobbed as though

permanently injured. For years she showed symptoms that made us

believe she had never entirely recovered from the effects of the

scare. In due time we reached the steamer Sierra Nevada, and got a

good state-room. Our passage up the coast was pleasant enough; we

reached San Francisco; on the 15th of October, and took quarters at

an hotel on Stockton Street, near Broadway.

Major Turner remained till some time in November, when he also

departed for the East, leaving me and Nisbet to manage the bank. I

endeavored to make myself familiar with the business, but of course

Nisbet kept the books, and gave his personal attention to the

loans, discounts, and drafts, which yielded the profits. I soon

saw, however, that the three per cent. charged as premium on bills

of exchange was not all profit, but out of this had to come one and

a fourth to one and a half for freight, one and a third for

insurance, with some indefinite promise of a return premium; then,

the, cost of blanks, boxing of the bullion, etc., etc. Indeed, I

saw no margin for profit at all. Nisbet, however, who had long

been familiar with the business, insisted there was a profit, in

the fact that the gold-dust or bullion shipped was more valuable

than its cost to us. We, of course, had to remit bullion to meet

our bills on New York, and bought crude gold-dust, or bars refined

by Kellogg & Humbert or E. Justh & Co., for at that time the United

States Mint was not in operation. But, as the reports of our

shipments came back from New York, I discovered that I was right,

and Nisbet was wrong; and, although we could not help selling our

checks on New York and St. Louis at the same price as other

bankers, I discovered that, at all events, the exchange business in

San Francisco was rather a losing business than profitable. The

same as to loans. We could loan, at three per cent. a month, all

our own money, say two hundred and fifty thousand dollars, and a

part of our deposit account. This latter account in California was

decidedly uncertain. The balance due depositors would run down to

a mere nominal sum on steamer-days, which were the 1st and 15th of

each month, and then would increase till the next steamer-day, so

that we could not make use of any reasonable part of this balance

for loans beyond the next steamer-day; or, in other words, we had

an expensive bank, with expensive clerks, and all the machinery for

taking care of other people's money for their benefit, without

corresponding profit. I also saw that loans were attended with

risk commensurate with the rate; nevertheless, I could not attempt

to reform the rules and customs established by others before me,

and had to drift along with the rest toward that Niagara that none

foresaw at the time.

Shortly after arriving out in 1853, we looked around for a site for

the new bank, and the only place then available on Montgomery

Street, the Wall Street of San Francisco, was a lot at the corner

of Jackson Street, facing Montgomery, with an alley on the north,

belonging to James Lick. The ground was sixty by sixty-two feet,

and I had to pay for it thirty-two thousand dollars. I then made a

contract with the builders, Keyser, & Brown, to erect a three-story

brick building, with finished basement, for about fifty thousand

dollars. This made eighty-two thousand instead of fifty thousand

dollars, but I thought Mr. Lucas could stand it and would approve,

which he did, though it resulted in loss to him. After the civil

war, he told me he had sold the building for forty thousand

dollars, about half its cost, but luckily gold was then at 250, so

that he could use the forty thousand dollars gold as the equivalent

of one hundred thousand dollars currency. The building was

erected; I gave it my personal supervision, and it was strongly and

thoroughly built, for I saw it two years ago, when several

earthquakes had made no impression on it; still, the choice of site

was unfortunate, for the city drifted in the opposite direction,

viz., toward Market Street. I then thought that all the heavy

business would remain toward the foot of Broadway and Jackson

Street, because there were the deepest water and best wharves, but

in this I made a mistake. Nevertheless, in the spring of 1854, the

new bank was finished, and we removed to it, paying rents

thereafter to our Mr. Lucas instead of to Adams & Co. A man named

Wright, during the same season, built a still finer building just

across the street 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 clearly as a proposition in mathematics, that

his business at Mendocino was based on calculations that could not

fail. The bill of exchange which he wanted, he said would make the

last payment on a propeller already built in Philadelphia, which

would be sent to San Francisco, to tow into and out of port the

schooners and brigs that were bringing his lumber down the coast.

I admitted all he said, but renewed my determination to limit his

credit to twenty-five thousand dollars. The Hamburg firm then

agreed to accept for him the payment of all his debt to us, except

the twenty-five thousand dollars, payable in equal parts for the

next three steamer-days. Accordingly, Meiggs went back with me to

our bank, wrote his note for twenty-five thousand dollars, and

secured it by mortgage on real estate and city warrants, and

substituted the three acceptances of the Hamburg firm for the

overplus. I surrendered to him all his former notes, except one

for which he was indorser. The three acceptances duly matured and

were paid; one morning Meiggs and family were missing, and it was

discovered they had embarked in a sailing-vessel for South America.

This was the beginning of a series of failures in San Francisco,

that extended through the next two years. As soon as it was known

that Meiggs had fled, the town was full of rumors, and everybody

was running to and fro to secure his money. His debts amounted to

nearly a million dollars. The Hamburg house which, had been

humbugged, were heavy losers and failed, I think. I took

possession of Meiggs's dwelling-house and other property for which

I held his mortgage, and in the city warrants thought I had an

overplus; but it transpired that Meiggs, being in the City Council,

had issued various quantities of street scrip, which was adjudged a

forgery, though, beyond doubt, most of it, if not all, was properly

signed, but fraudulently issued. On this city scrip our bank must

have lost about ten thousand dollars. Meiggs subsequently turned

up in Chili, where again he rose to wealth and has paid much of his

San Francisco debts, but none to us. He is now in Peru, living

like a prince. With Meiggs fell all the lumber-dealers, and many

persons dealing in city scrip. Compared with others, our loss was

a trifle. In a short time things in San Francisco resumed their

wonted course, and we generally laughed at the escapade of Meiggs,

and the cursing of his deluded creditors.

Shortly after our arrival in San Francisco, I rented of a Mr.

Marryat, son of the English Captain Marryat, the author, a small

frame-house on Stockton Street, near Green, buying of him his

furniture, and we removed to it about December 1,1853. Close by,

around on Green Street, a man named Dickey was building two small

brick-houses, on ground which he had leased of Nicholson. I bought

one of these houses, subject to the ground-rent, and moved into it

as soon as finished. Lieutenant T. H. Stevens, of the United

States Navy, with his family, rented the other; we lived in this

house throughout the year 1854, and up to April 17, 1855.




During the winter of 1854-'55, I received frequent intimations in

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