by Jane Kamensky
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Product Description
The startling story of an early American dreamer whose wily schemes made him a founding father of our speculation nation
Rediscover a lost chapter in early American history: the story of financial- pioneer-turned-confidence-man Andrew Dexter, Jr., and the skyscraper for which he amassed—and then lost—a paper fortune. In the 1790s, printed money and banks themselves were still regarded with tremendous suspicion, as traditional strictures about moneylending slowly made way for modern freewheeling capitalism. A pioneer in the new age of paper, Dexter challenged the notions of his Puritan ancestors by embarking on a wild career in real estate speculation, all financed by the string of banks he commandeered and the millions of dollars they freely printed. Upon this paper pyramid he built the tallest building in the United States—the Exchange Coffee House, a seven-story colossus in downtown Boston. But in early 1809, just as the exchange was ready for unveiling, the scheme collapsed. In Boston, the exchange became an opulent but largely vacant building, a symbol of monumental ambition and failure.
Kamensky deftly steers the reader through this history, providing a riveting historical narrative of a second American founding: the birth of speculative capitalism. The book will appeal to fans of Peter Bernstein’s Against the Gods, John Gordon’s Empire of Wealth, and Ron Chernow’s Alexander Hamilton, as well as Ross King’s Brunelleschi’s Dome.
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Average Customer Review:
2 of 2 people found the following review helpful:
 4.5 stars-Speculation leads to widespread destruction, 2008-07-20
Kamensky has done an excellent job in this book.The book is a detailed study of the events leading up to the first bank failure in American history.In March,1809,the Farmers Exchange Bank of Gloucester,Rhode Island,collapsed.The story starts in late 1807 as a real estate speculator named Andrew Dexter,Jr.,is able to convincingly persuade many investors to financially back his Exchange Coffee House,a gigantic seven story building which will supposedly allow financial and commercial interests to conduct their business affairs in comfort and style, with easy access to other members of the Boston financial community ,instead of haphazard meetings spread out over a number of different street corners.At this point in time the failure of Dexter's speculative " house of cards " would have had a relatively small impact.It is here that Dexter is able to use the completed but practically empty building as collateral to buy a controlling interest in a number of banks.He then used the banks currency creation power to further leverage his own speculations.Dexter's banks did not have anywhere near the necessary required reserves in gold and silver.Suspicious merchants finally started taking the notes in to redeem them for the claimed metallic backing.It was soon realized that there was no such backing.The collapse of Dexter's speculative endeavor now led to a panic and crash that severely impacted businesses that had accepted the now worthless bank notes as payment.
The most important part of the book is an implicit generalization that can be universally observed in all speculative bubbles.In order for the bubble to grow and cause great damage in the future when it deflates,bankers must extend credit to the speculators ,allowing them to leverage their own precarious debt position many times over.Without banker complicity(many times the bankers themselves begin to engage in speculative behavior,compounding the damages already done through their loan committments to speculators in the first place)the speculative bubble can't grow.
I have deducted one half of a star because the author is not aware of the extensive warnings made by Adam Smith ,in 1776 in his The Wealth of Nations,about the extreme dangers to economic growth and welfare if bankers are allowed to make loans to speculators.Smith's conclusion,that the savings will be wasted and destroyed,is as true today,as we witness the destruction being wrought by the banker financed and directed sub prime mortgage backed bonds fiasco.
1 of 1 people found the following review helpful:
Superb tale of a building, a bank failure, and the man behind both, 2008-05-19
This book describes the making and unmaking of the largest building in Boston---at the time---all built on bank notes of questionable value. It is a superb tale. The building construction is fascinating, the shaky finance more so, and the man behind it even more.
1 of 1 people found the following review helpful:
 exchange artist, 2008-04-30
Very interesting story and a nice piece of Boston and US history. The author has covered this event well. In some cases she uses an affected present tense when referring to historical events - can make reading a bit confusing until you get used to it. But the insights on the history of banking and the rise of paper money are fascinating.
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