The narrative begins with the auction by the US Government of fictional Spencer Island, located 460 miles off the California coast (3215 N 145 18 W). The island is uninhabited and there are only two bidders, William W. Kolderup, a very wealthy San Franciscan, and his arch-rival J. R. Taskinar, a resident of Stockton, California. Kolderup wins the auction, buying Spencer Island for four million dollars. J. R. Taskinar mutters, I will be avenged! before retiring to his hotel.