In August, 1849, Alcalde John Geary, later to become San Francisco’s first mayor, announced in his inaugural message to the Ayuntamiento that “there was not a dollar in the treasury.” Further, he went on to say, “There is neither office for the magistry nor any other public edifice. There is not a single police officer or watchman; no means of confining a prisoner for an hour; no place to shelter indigent persons in sickness or bury them when dead; in short, there is no single requisite necessary for the promotion of prosperity, for the protection of property or for the maintenance of order.” Dramatic remedies would soon be put in motion.
By 1851, the debt had been piling up with extraordinary rapidity for the principal reason that, other than selling municipal lots, which by 1851 was prohibited by the state, the city did not have sufficient revenue to meet its quickly increasing current expenses. To make up the shortfall, they started issuing certificates of indebtedness or “scrip” as they were usually called, since it was unclear as to when the “scrip” would ultimately be redeemed by the city it rapidly depreciated.
It didn’t take long before it was trading in the aftermarket for 25 cents on the dollar. This meant that the city was forced to pay three to four times the value of all the goods and services it bought because all it had to pay with was the deeply devalued script. By the time the state legislature met in San Jose in January of 1851, city debt had exceeded $1,600,000. Finally, on May 1, 1851, the legislature passed an act to fund the city’s floating debt and provide for payment of same.
This statute appointed a board of commissioners of the funded debt of the city of San Francisco, consisting of five prominent citizens with the power to issue certificates of stock to be known as “The San Francisco City Stock” for an amount equal to the aggregate of all the floating debt due or that should have accrued on or before May 1, 1851. The certificates, which would be evidence of indebtedness on the part of the city to the holders, would be issued for sums of $100, $500 and $1,000. They would bear interest at 10% per annum. The principal sums were to be redeemable within 20 years after issue, and interest would be payable semi-annually, in accordance with coupons to that effect attached to the certificates.
This extremely rare $1,000 stock certificate is one of only two known in existence to possess its full allotment of redeemed coupons. It was issued on May 1, 1851, and signed by John W. Geary (Mayor), James King of William (newspaper man and banker), Drury John Tallant (banker), William Hooper (First President of The San Francisco Chamber of Commerce) and Peter A. Morse (judge and author).