This engaging account traces the history of the Philadelphia Stock Exchange from its earliest antecedent in 1746 to its ultimate absorption by NASDAQ in 2008. It is foremost a work of business history and should be judged by its effectiveness in describing that history accurately and effectively. It does this well. At the same time, the early years of organized financial markets in the city and the role of the early traders in building not only Philadelphia but the nation's capital market as a whole could easily have been the subject of an entire monograph.

The authors begin by telling us of a coffee house on the city's waterfront where capitalists, businessmen, and their intermediaries met regularly to discuss projects and politics but also to trade claims on real commodities and financial assets. It seems natural that securities markets would develop rapidly as the bustling port of Philadelphia became the commercial hub of the New World. It was from these mainsprings that capitalists began to fund voyages and vessels as joint equity ventures in much the same way that it had been done in the Old World more than a century earlier. With voyages came a need for marine insurance to spread the risks of the commercial economy across multiple investors, and so the beginnings of modern financial arrangements in North America fell into place.

The first several chapters are filled with interesting anecdotes about how the members of this private exchange club, or “London House” as it was called, helped to shape the young nation. For example, the reader learns that the coffee house regulars had organized their own protest against British taxation and may have even instigated the Boston Tea Party of December 16, 1773. This is supported by the fact that Bostonians adopted a set of resolutions that matched an earlier document penned in Philadelphia nearly word for word. Indeed, the precocious Philadelphians had apparently prohibited a British tea ship from entering their port at all, turning it back to England, before news of the Tea Party had even reached the city.

Philadelphia not only became the home of the nation's first organized stock exchange in 1790, but also enjoyed a ten-year run as the nation's capital. It was the place where Alexander Hamilton established the nation's first central bank, and where markets were quickly readied to trade the bank's stock and the newly assumed and restructured federal debt. There was also much work to be done in building infrastructure such as local roads, bridges, and navigational improvements, and the city's stock exchange intermediated the flow of capital. The city was indeed the “workshop of the world.”

Perhaps as early as the federal government's move to Washington in 1800, however, the fate of Philadelphia ultimately to lose its position as the nation's premier city and capital market was sealed. Competition in financial services from New York and the transfer of the political center to the south placed Philadelphia in a position of constant struggle to hold its ground. It did so for a while, continuing to host the Second Bank and later playing a key role in Civil War finance, but in the end to no avail. At the same time, the authors bring life to this fascinating period by offering a wealth of examples of the financiers, projects, and capitalists that chose to stay in the city.

But perhaps a story of Philadelphia's early capital market could have ended there. The city's natural disadvantages compared to New York and the grave difficulties that it faced in penetrating the Appalachians to reach the Ohio River had already left it behind as a center of internal commerce by 1825. When the rails that finally linked the nation's cities sprang up, they had been financed with capital issued in New York. Unfortunately, even if one assumes that the exchange remained a major force in the United States until 1890, this leaves the authors with more than a century of history remaining to discuss. The story of the decline of the city and its stock exchange, the topic of the final three chapters, is punctuated with fitful bouts of innovation that were later adopted and improved upon by New York. At times, it seems that the struggle for survival was prolonged only by the entrepreneurship of the exchange's leaders, who continually found niches in which to operate beside its upstart brother 90 miles to the north. Given the energy that must have been required to keep the exchange viable, however, its fall is probably best viewed as a casualty of the city's deeper problems, rather than the other way around. To say the least, the tale of decline, while at times entertaining, is certainly not upbeat.

The authors are determined to tell the full story of the exchange. This might be characterized as one of finance-led growth in the early stages of industrialization, but later on the process seems to conform more closely to the classic words of Joan Robinson, who wrote in 1952 that “where enterprise leads, finance follows.” I learned from reading the book, but was left with the desire to learn more about the early years when the youthful energy of a vibrant nation was focused on its then-greatest city—that rare time in the history of successful nations where the more interesting causal link from finance to growth may have been operational. At the same time, we are fortunate to have such a thorough and high-quality history of the exchange committed to print.