Potter Palmer is responsible for Chicago's State Street as a business district.

Potter Palmer (1826-1902)

Potter Palmer was born on May 20, 1826, in Albany County, New York. Palmer began his interest in retail while working as a manager in a dry-goods store in Durham, New York. While employed, Potter paid close attention to the ethics of business. By 1848, 22-year-old Palmer opened his own dry-goods store in Lockport, New York. However, Palmer had his eye set on the west.

In 1852, Palmer's ambition directed him to Chicago. With the small amount of money he raised from his business in New York, along with a small family loan,  totaling $5,000 in gold and banknotes, he opened a retail dry goods store, P. Palmer & Company, at 137 Lake Street, and he soon expanded into an adjoining store. In 1857, Palmer added a wholesale department to 112, 114, and 116 Lake Street, the establishment just vacated by his long-time friend, Marshall Field, and his company, Field, Leiter & Co. 

Here, with increased room and added facilities, his business rapidly increased until within twelve years after beginning here with a capital of $5,000, the energy, perseverance, and fair dealing of Potter Palmer had made him the largest dry goods house in Chicago.

Palmer, at 38, was a millionaire many times over, not just from his dry goods business but also from well-thought-out investments in real estate. Unfortunately, his hard-driven lifestyle had taken a toll on his health, and his doctor urged him to slow down. Instead, he'd been buying up real estate at a fast pace.

He envisioned a new retail district, convenient to the railroad depots and farther removed from the foul-smelling Chicago River. The perfect location, he believed, was along State Street. State Street was an unlikely spot to build new businesses in most people's eyes, and many of his contemporaries openly mocked his grand plan. Although it was a main north-south thoroughfare, it was a slum district lined with cheap boardinghouses, butcher shops, saloons, and assorted shanties. The narrow street was muddy and rutted, and the only streetcar line was a "bobtail" car pulled by horses along a single rail. It frequently jumped the track in the mud, leaving passengers to wade through the muck to their destination.

Chicago's first one-horse-drawn streetcar ran along State Street from Randolph Street to 12th Street (today's Roosevelt Road) in 1859. The streetcar was called a Bobtail because it had no rear platform.

While property on Lak Street, the "street of merchants," was selling for up to $2,000 a linear foot for frontage, State Street land could be had for a song. The most expensive, at the corner of State and Madison, ran about $500 a front foot in 1867, but farther south on State Street, some properties sold for as little as $60 per front foot.

Palmer was not swayed by his critics. He was convinced that Lake Street was doomed to fail. Wedged in between the railroad and the sewage-filled river, it had no room to grow. The new Illinois Central Railroad and streetcar lines all converged at State Street, making it a convenient place to reach from any metropolis area. It only needed someone with a vision to make it happen, and Potter Palmer was nothing less than a visionary. 

Great Central Station (aka Great Central Depot) was an intercity train station in downtown Chicago, owned by the Illinois Central Railroad. It opened in 1856 at South Water Street (now Wacker Drive) and Michigan Avenue.

So Palmer bought every lot he could until he held title to most of the frontage property on State Street between Lake Street on the north and Quincy Avenue to the south, a distance of three-quarters of a mile. His first move was to tear down or set back each building he owned and persuade his remaining neighbors to do the same so that the once-narrow street was now over 100 feet wide. State Street now had aspirations to become a magnificent boulevard instead of a cramped and grimy country lane.

Next, Palmer tore down all the shacks on the south end of his properties and began construction on a majestic hotel, at the corner of State and Quincy, as a wedding gift to his new bride, Bertha Honore. The hotel opened its doors to the public on September 26, 1871, only to burn to the ground thirteen days later in the Great Chicago Fire on October 8, 1871. Palmer, undeterred, immediately started construction on a new and even grander hotel, this time built of brick and iron and later advertised as "The World's Only Fireproof Hotel."

While his first hotel was still being built to the south, Palmer began construction on a huge new retail palace on the north end of his property holdings, at the northeast corner of State and Washington Streets. The limestone and marble building towered six stories above the street, and the facade featured dramatic white Corinthian columns reaching toward the sky.

"Palmer's Place" first tenant, Field, Leiter & Company's, opened in 1868. This store burned in the Great Chicago Fire of 1871. Note the "Vault Lights" in the sidewalks around the building.

By this point, Palmer had spent over $2 million ($38,113,000 today) funding his dream of a new business district on State Street. All he needed were the proper tenants, and he knew exactly where to look for them.

When Palmer approached Field and Leiter about the grand store he was building, they were more than willing to listen. Palmer never steered them wrong, and besides, the store on Lake Street was uncomfortably cramped and confining. Worse yet, despite their best efforts to maintain high standards, Lake Street itself was growing more crowded and dirty by the day. Although Palmer was asking a veritable fortune for rent -- $50,000 per year ($953,000 today) -- the chance to escape the ailing business district and forge new ground held an undeniable appeal. After a short deliberation, Field, Leiter & Co. agreed to lead the pack and move to "Palmer's Place." The State Street store grand opening was scheduled for Monday, October 12, 1868. Field, Leiter & Co. decided to keep their Lake Street store open until the last possible moment.

Additional Reading:
Raising Chicago Streets Out of the Mud in 1858.

Marshall "Field, Leiter & Company" Department Store Fire of November 14, 1877.

Lake Shore Drive's origins date back to Potter Palmer, who coerced the City of Chicago to build the street adjacent to his lakefront property in 1882.

Compiled by Dr. Neil Gale, Ph.D.