The building included a bar, billiards room, offices, apartments, reading room with library, ball room, dining hall, post office, hotel suites, and of course a coffee room. All these amenities existed to facilitate the main event: the exchange. The exchange was the reason for the skyscraper, a place where speculators could come together and discuss what was worth what, all under the watchful eye of Andrew Dexter Jr.
Dexter had the vision but lacked the funds for such an ambitious endeavor. Though Dexter’s extended family did well for themselves, the massive project that was the Exchange would require incredible amounts of capital. Dexter used the majority shares in banks he obtained through the 'Changery to underwrite the scheme, commanding banks as far away as Detroit to issue bank notes far beyond their gold reserves. The banks were so far from Boston, Dexter predicted that by the time people bothered to trade the notes for actual specie, the Exchange would be funded and flourishing.
Drawing of the Boston Exchange Coffee House, made in 1828 by Caleb Snow. Courtesy of wikimedia.
However, the Exchange never flourished. People never warmed to the giant building, and speculators kept their business elsewhere. In 1809, suspicious Bostonians hired ‘runners’ to travel to the origin banks to return these ludicrously abundant notes for gold. Over and over, these banks did not have nearly the amount promised by the notes. One bank was discovered to have distributed upwards of $700,000 worth of notes while its vaults held less than $90 worth of gold. That bank collapsed, the first in the young nation to do so. Dexter and his family fled to Nova Scotia, where he evaded debt collectors and worse.
Meanwhile, the Exchange was taken over by a number of investors, but none were able to turn a profit with the gigantic structure. The only time it managed to catch the public's interest was when it burned to the ground in 1818, sparking the creation of a number of paintings and paraphernalia to commemorate the event. Dexter would not be in Boston to see his life's work turned to ash.
Conflagration of the Boston Exchange Coffee House by J.R. Penniman, 1824. Courtesy of wikimedia.
Andrew Dexter Jr. was born March 28, 1779 and grew up in Providence, Rhode Island. The Dexter family had come to prominence in late Colonial New England and gained more cache by supporting the American Revolution. Dexter's father, Andrew Dexter Sr, was a merchant in the valuable cloth industry, and his uncle Samuel was a successful lawyer and politician in Boston.
Dexter grew up in awe of the spirit of the Revolution. He attended Brown University, known at the time as Rhode Island College, and spoke at commencement. Dexter originally sought to go into law but was instead caught by the wave of currency speculation that swept through the young nation.
In the early 19th century, a bank would issue banknotes to represent gold specie locked away in its vaults, supposed to facilitate easier exchange of wealth between businesses and individuals. Boston, a financial powerhouse of post-revolutionary America, was home to many banks, each with its own banknotes. A bank’s reputation and physical distance helped decide how much these notes were worth compared to each other. Through trade, speculators decided the values of these notes and formed markets around them.
In 1805, Dexter joined the board of the Exchange Office, or 'Changery, a bold new bank that emphasized bank notes over specie, paper over the gold they represented. Within a year, Dexter revolutionized the already new business by purposely investing in remote banks. The 'Changery had accepted bank notes from far-flung banks, but Dexter prized them, as in his vision they could be bought low and used in the Exchange Office at face value.
Dexter’s ambitions, however, were bigger than trading banknotes. He envisioned a place where speculators came together to talk currency, where all of Boston’s speculation and currency exchange would take place, and where Dexter could take advantage of the free-flowing money. Dexter's vision for the Exchange Coffee House was born, and he dreamed big. At seven stories, the Exchange towered over the city, the tallest building in Boston.
Spirit of Speculation