What are the links between economic development and city building? Which one drives the other? Do business and government pursue them in conflict or in tandem with each other? And where should the borderlines be drawn between the private and public sectors to foster the twin goals of free enterprise and urban growth? In Liquid Capital: Making the Chicago Waterfront, Joshua Salzmann supplies answers to these perpetual questions of political economy. His finely crafted case study shows how the growth of the economic markets and the physical space of this entrepôt went hand in hand, for the most part, from frontier days to the Progressive Era.

Salzmann has written a lucid narrative of the city's rise at the strategic geographical location of the nation's transshipment point between its two major hydrologic basins, the Great Lakes and the Mississippi River. But Chicago's marshy site on Lake Michigan and its sluggish river connection across a muddy portage to the waters flowing downstream toward St. Louis and New Orleans presented its city boosters more of a bottleneck than a gateway between the East and the West. The earliest explorers’ dreams of a great center of trade only began to become a reality during the fifty years before the Civil War, when private investors and public officials joined forces to overcome the limitations of nature. To build a navigable waterway, the U.S. Army Corps of Engineers dug a channel through a sandbar to open a safe harbor in the Chicago River; the state government sponsored the Illinois [River] and [Lake] Michigan Canal; a railroad paid for a breakwater to save the lakefront; and businessmen built wharves, lumberyards, and grain elevators along the riverfront. City hall also played a role, acting as a regulator to ensure that this flow of people and goods remained an open, competitive market of opportunity and innovation. By the 1850s, Chicagoans’ combined success in making a waterfront propelled their city into first place for the next half century as the fastest growing metropolis in the Western world.

In a book series on the history of capitalism, Salzmann's contribution fulfills its mission to examine the intersections of “politics, law, and public policy.” Within their local contexts, he brilliantly reframes two landmark Supreme Court decisions, which still have currency. The first case, Munn v. Illinois (1877), involved an unscrupulous grain warehouseman who not only cornered the future's market, but also secured a monopoly of “access to market information” (p. 48). The court ruled that Munn's private business had become “affected with a public interest” because it had a chokehold on the “gateway to commerce” and therefore became subject to state regulation (pp. 59, 56). In effect, the court created an instrumental gray area, where future rulings could be made on a case-by-case basis. Today, the analogous question is whether Internet service providers are still just a private business or have become a public utility. In the second case, Illinois Central Railroad v. Illinois (1892), the justices made their first reference to the ancient Roman public trust doctrine. At issue was the question of who owned the submerged land under the lakefront that pitted business and government in a twenty-year battle. Salzmann follows every twist and turn in this fascinating story of political intrigue and corruption. He tells a cautionary tale of a protracted stalemate that served neither the public interests of city residents nor the private profits of company stockholders. In rejecting the railroad's bid to gain a monopoly over the harbor, the court kept the lakefront an open marketplace under public control. It also set an important precedent for the defense of the natural environment.

The most original chapter of Liquid Capital examines the impact of a disruptive technology that completely remade the economic and spatial development of the waterfront at the turn of the century. A revolution in lake shipping from wooden sailboats to ever-larger steamships, Salzmann contends, represents a classic case of the economist Joseph Schumpeter's concept of capitalism as a process of “creative destruction.” The new boats were simply too big, making obsolete the Chicago River's entire infrastructure of bridges, tunnels, wharves, and piers. Shippers and businesses moved out of their increasingly costly downtown locations to the metropolitan region's second harbor, in the already industrial Calumet district. At the same time, urban reformers such as architect and planner Daniel Burnham convinced Chicago's civic elite that beauty paid by attracting new residents, businesses, and tourists. Beginning with his utopian model of a White City for the World's Fair of 1893, Burnham's leadership of the City Beautiful movement would result in a masterpiece, the 1909 Plan of Chicago. Sponsored by the business elite, it reinforced a political culture of private plans and public policies. Ever since, city hall has followed its futuristic blueprint of the waterfront as free public space, with lakefront parks, recreational beaches, and river walkways.

In a short epilogue, Salzmann brings the perennial questions of government-business relations down to the present in Chicago. For example, Mayor Richard M. Daley's (1989–2011) Millennium Park on the lakefront helped boost Chicago's status into the ranks of so-called global cities—those with both a superior workforce and unique cultural attractions. In a similar public-private partnership, the river is currently undergoing a dramatic makeover into a postmodernist avenue of super-tall condominiums, corporate towers, and pedestrian promenades at water level lined with trendy shops. Salzmann sheds light on ways to harness together public and private institutions in the mutually advantageous work of building an urban environment that stimulates economic growth. For business history, Liquid Capital provides a rich case study of how the mix of politics, law, and policy has marked out the ever-moving borderline between the public and private sectors.