The Great Sport of Luxury Shopping . . .

               And The Man Who Invented It


It all began on Chicago’s Lake Street in the1850s.





By Megan McKinney


Every day, millions of people—from Bond Street to Madison Avenue and from Faubourg Saint-Honoré to Rodeo Drive—indulge in luxury shopping as an exhilarating recreational activity. They travel to New York and Paris, London, Dubai, Milan and Hong Kong to shop in the opulent shops and boutiques of those cities. The quest for beautiful possessions within a sumptuous environment has been a passion, not only of the very rich but also for ordinary people, throughout more than a century and a half. And, it began in Chicago in the mid-19th century with a man better known as a great hotelier and consummate husband, a man who then left retailing entirely to completely reconfigure the basic structure of the city of Chicago … twice!

His name was Potter Palmer.

The selling of dry goods—products that are neither food nor hardware—was not a new activity in America; these wares had been on the shelves of country stores and in peddlers’ wagons for several decades. And the small communities of New England and New York State had begun to support stores that offered only clothing, textiles and home furnishings. In New York City, Irish immigrant Alexander Turney Stewart, who sold linens in a shop on lower Broadway in 1820, later offered other dry goods, thereby creating the first such store with “departments,” developing the model the Chicago entrepreneur would refine—and elevate.

The Chicago field had begun with a pair of brothers, John V. and Charles B. Farwell, who wandered into wholesale dry goods in the 1840s and within a decade were mentors to budding merchants Levi Leiter and Marshall Field, initiating the catalyst for a new industry.

Meanwhile, a few blocks away, another East Coast transplant, Potter Palmer, was experimenting with shaping a retail business that would appeal to customers in a way none had before. Palmer navigated his business into tradition-shattering areas, and, by 1855, he had begun to transform the existing concept of the retail trade by focusing on women—especially women of means.

Gowns of Chicago ladies were created by dressmakers from fine fabrics shipped from the East or Europe.

He would institute such innovative policies as sending merchandise to customers’ homes on approval, offering unquestioned money back guarantees, delivering purchases at no extra charge, and scheduling sales and bargain days, all groundbreaking moves. He began stocking laces, velvets, silks and other fine goods, but his prices were lower than competitors because he went directly to manufacturers in the East for his stock or purchased it on personal buying trips to Europe. 

Through interweaving careers told often elsewhere, Field and Leiter—led by the innovative Palmer and supported by the wholesaling Farwells—would produce the modern department store and its accompanying specialty shop. In the process, they originated a system for gratifying the senses and satisfying hidden needs in the exhilarating, frequently addictive experience that endures today as the great sport of luxury shopping.

Potter Palmer was born in Potter’s Hollow, Albany County, New York, in 1826, son of a prosperous Quaker farmer. After clerking for a short time in a nearby dry goods store, the 18-year-old opened a shop of his own in upstate New York, but after visiting Chicago in 1851, he decided to sell out in New York State and move west. Potter invested the resulting $5,000 in a frame building at Chicago’s 137 Lake St., between Clark and LaSalle, one of six shops on the south side of the city’s most prosperous commercial stretch.

Palmer’s Lake Street shop is the tall building to the far right. Because the sign maker charged by the letter, the name at the top was P. Palmer & Company.

Although old-timers remembered Palmer’s shop as a store where “tobacco chewers loafed with their feet on top of the stove” while hosiery and jewelry were being sold, that image would change. Other changes at the upper levels of the Chicago dry goods business were accelerating with the approach of the Civil War, based on the correct assumption that war would bring a vast upsurge in dry goods profits.   

It was Potter Palmer who would benefit from the bonanza more than any; by anticipating the approaching conflict and stockpiling mammoth quantities of the cottons and woolens he knew would soar in price, he became immensely wealthy—often without ever moving the merchandise from the vast warehouses he had leased. However, Palmer’s gain in personal riches had come at the expense of his health, and, when his physician sternly cautioned him to retire from active business, another dry goods upheaval was generated.

The doctor’s advice prompted Potter to look for partners to bring into his remarkable firm, and, although Leiter and Field were without retail experience, he respected both and the superb training they had received from the Farwell wholesale firm. The restructured company followed the magic Palmer formula of going directly to New York and Europe for quality goods and moving them at fair prices with policies equitable to customers. It also took the novel step of hiring three female sales clerks to ensure the comfort of women buying lingerie or dresses. Although prices plummeted with Appomattox a few months later, Field, Palmer, Leiter showed a profit at year’s end. The following year also proved uneven; however, Levi and Marshall were able to pay off their notes, and, in January 1867, the firm became Field, Leiter & Co., a celebrated name in dry goods for the next decade and a half. 

In 1867, Potter Palmer, now a 41-year-old bachelor freed from the rigors of a merchandising career, exceedingly rich and apparently miraculously restored to health, left Chicago to enjoy a prolonged vacation in Europe and then New York City. He returned to Chicago the following year a dramatically transformed man; friends and former colleagues were amazed to find the quiet Quaker in the company of the fast sporting crowd. He was reported to routinely guide his crony-filled four-horse barouche toward the baseball park he had just built for the Chicago White Stockings, and he was seen steering a stylish French open carriage, leopard skins thrown over its seats, to the June races at Washington Park Race Track

Washington Park Race Track.

He followed the fashionable racing calendar to Saratoga Springs, where he further burnished his new image by entertaining extravagantly and outrageously over-tipping waiters. Observers noted that he was appearing regularly in society columns with assorted glamorous young women.

The playboy period proved to be a short phase in the life of a man whose nature required challenge. Furthermore, always lingering in his mind was a vision of the great shopping streets of Europe, a memory that diminished the aura of Lake Street, which had seemed so glamorous 15 years earlier. The richness of travel had inspired Potter to visualize a wide thoroughfare, leading away from the stench and turbulence of the river.

He imagined an elegant street that would enhance not only the shopping experience but also the entire city of Chicago. During the months that onlookers perceived a liberated, and possibly out-of-control, bachelor, Potter was thinking about, planning and then quietly taking measures toward the next stage of his career.

One by one, he approached owners of the flimsy boarding houses, shops, saloons and blacksmith shops that lined an ancient Indian trail known as State Street. By cajoling or intimidating each, he soon managed to own a stretch of the narrow—but strategically located—dirt road, beginning at the Chicago River and extending south for three quarters of a mile. After gaining permission from a bewildered city council, he razed his new properties and widened and paved the street to conform with avenues and boulevards in the great European capitals he had visited.

He then established the standard for a glittering new shopping experience by erecting handsome buildings along both sides and, in doing so, profoundly altered the commercial axis of Chicago. His supreme stroke was a six-story, marble Corinthian-columned, Mansard-roofed anchor at the corner of Washington Street.

He leased this “Marble Palace,” as it was known, to Field and Leiter for the exorbitant annual rent of $50,000. His final move was a second fine anchor, the deluxe hotel he named the Palmer House. With this, the reputation of “that great street” was established, making State Street the smart stretch for merchants to move their shops. Potter’s total investment in the reconfiguration of the city’s business district was $4 million.  

Stereoscopic view of the first Palmer House.

Potter Palmer was far from the end of his surprises. And, as with the transformation of State Street, his next revelation had been developing privately for quite a long time. Eight years in fact, and it involved the woman who would enhance both Potter’s own life and the public life of Chicago more than even he could imagine.


Edited by Amanda K. O’Brien

Author Photo by Robert F. Carl

Megan McKinney’s report on the life and career of Potter Palmer will continue in the next segment of her series Great Chicago Fortunes.