English immigrant Edward William Cole developed his entrepreneurial skill on the Castlemaine goldfields where he sold lemonade cordial from his tent to thirsty diggers. On his return to Melbourne, he turned to book-selling, trading as a hawker at the Eastern Market from 1865, with his barrow labelled 'Cole's Cheap Books'.
In 1873 Cole opened his first bookstore in Bourke Street, using its trademark giant rainbow sign on his famous Cole's Funny Picture Book, the first of which appeared in 1879. His second and more famous store, Cole's Book Arcade, opened in 1883. By 1906 it ran between two city blocks from Bourke to Collins streets and between Swanston and Elizabeth streets, Cole having paid £18 000 in cash in 1906 for the Collins Street frontage and meeting the asking price for the building behind. In an effort to avoid obtaining council permission, Cole built the glass and ornamental iron roof and paved Howey Place at his own cost. With nearly 2 million books on its shelves, Cole's Book Arcade, 'the Palace of the Intellect', was reputedly the biggest bookstore in the world.
Renowned for its exotic displays and installations, the Arcade boasted monkeys, cane chairs for reading, wall-to-wall mirrors, a confectionery department and changing displays and oddities. Children delighted in features like The Hen That Clucked and Laid Eggs, which 'laid' a tin with a sweet or a toy when a penny was dropped in the slot. Cole died in 1918, and Cole's Book Arcade, for so long a popular meeting place of many Melburnians, shut its doors for the last time in 1929.