Denver has little reason to exist, and that may be why its inhabitants excel at superlatives. Like most American towns, it has been through booms and busts, but Denver’s big surges have been more dramatic than most — gold, war, the space race, oil and then the dot-com rise and fall.

Last year Denver was dubbed foreclosure capital of America as the backwash from the sub-prime mortgage market swept through the city’s suburbs. Denver has been a victim of its own popularity — the real estate tumble followed an extended period of growth.

Sitting at the base of the Rocky Mountains, Denver is a lifestyle place for outdoors people. A pocket of affluence in the middle of nowhere, it has the eighth-highest per capita income in the United States. It has no unique selling proposition other than its pleasant environment and astonishing views. It has no port, no specific connection to a big industry, yet it has become a magnet for people seeking an alternative to urban jungle.

Americans are quick to move in search of lifestyle, scenery and climate. Denver claims an average of 300 sunny days a year. When West Coast and East Coast firms established outposts in Denver, real estate speculators flocked to the city. The property market is now flat, working its way through the downturn, and the city is looking for its next big idea.

It grew up on waves of investment, successive inflows of ranchers, railroad workers and roustabouts, followed more recently by programmers and designers. George Bauer, a Denver real estate analyst, said: “Denver was a one-industry town. It grew up on agriculture. Then it was mining and then oil and gas. One day the oil and gas was gone. The oil price went down and 60 per cent of the buildings in downtown Denver were empty.”

Denver put itself on the map in the 19th century with a link to the transcontinental railroad. From cattle and mining, it became a training base during the Second World War. Former soldiers returned and sank roots, and during the Cold War the city profited further from global tension. With ample space beyond the reach of Soviet missiles at the time, it became an aerospace centre and headquarters of Martin, the rocket company, now part of Lockheed Martin.

Denver remains America’s second-largest private-sector aerospace employer, but defence suffers the swings and roundabouts of government spending. The city’s rollercoaster history is well understood by the Denver Metro Chamber of Commerce, and since the drama of the mid-1980s oil and gas downturn its mission has been diversification.

Tom Clark, the executive vice-president of the Metro Denver Economic Development Corporation, remembers the effect of cheap oil on Colorado’s oil and gas economy. He said: “Opec opened the spigots and we plunged into recession. Office space was 14 cents a foot. We were the poster child of why you shouldn’t bet on oil and gas.”

In the mid-1980s city fathers wondered how to create a more balanced economy and their solution was to spend and build. “In the minds of corporations we were a district, not a headquarters town,” Mr Clark said.

To change that perception and reel in the big-spending investors, Denver needed infrastructure and attractions to prevent the inner-city dereliction that afflicts so many American communities. There were obvious needs: a convention centre and then a baseball stadium, Coors Field, built to attract a Major League Baseball team.

Cleverly, the city chose to build the stadium, not in a populated suburb on the edge of the city, but in the centre, in a run-down area of warehouses near the railway station, known as Lower Downtown. It sparked the redevelopment of the station, the railyards and warehouses into loft apartments, restaurants and microbreweries.

In the 1990s Denver was swept up in the technology wave and then the dot-com boom as technology and multimedia firms, such as Qwest, Comcast and Level 3 looked for attractive locations for their expanding businesses. In another idiosyncratic move, it built a massive airport and a public transport system. A city that is emblematic of free enterprise and the hydrocarbon economy elected to spend taxpayer dollars on communal transport. The light-rail scheme, linking the suburbs to the city centre, did not convince everyone at first.

“Nobody thought cowboys would get out of their cars,” Mr Clark said. “It didn’t pass first time.” That the initiative passed at all is astonishing, and in 2004 voters approved another $4 billion to extend the rail network. The politics of public spending is different in Denver; in almost Swiss fashion every tax-raising measure is subjected to public referendum. The City depends heavily on sales taxes to fund its services, a strain on the budget.

State taxes are low, with income tax for individuals and corporations set at a flat rate of 4.6 per cent. The government does not have much cash to play with and there is wide concern about the neglect of some vital sectors. Oddly, although Denver’s big selling point is its skilled workforce, boosted by regular imports of highly educated people from the coasts, Colorado’s own education system is lacklustre. “We have not spent enough on higher education,” Mr Clark said.

However, in typical American fashion, when Denver decides to do something well, it pulls out all the stops. This is no cultural desert of ski bums and techie nerds. Denver boasts one of the more spectacular art museums in America, if not the world. Designed by Daniel Liebeskind, it is an exciting tumble of angular shapes and boasts an impressive modern art collection, not huge but of high quality, each piece given ample space and well explained. It puts to shame the clutter of many European museums.

The big question is what Denver’s next big idea might be, and there are some who believe that, once again, it could be energy. Not far from Denver, in Golden, is the National Renewable Energy Laboratory (NREL), which is enjoying a new lease of life as anxiety grows about energy security and greenhouse gases.

The lab’s work in photovoltaic solar energy has spawned several private ventures that are seeking funds. First Solar, a start-up that floated almost two years ago, is being followed by PrimeStar Solar, which has just secured investment from GE. Both ventures are exploiting new thin-film technology developed at NREL, which dramatically lowers the cost and increases the efficiency of solar power.

Ken Zweibel, an NREL scientist who recently joined PrimeStar, reckons that it is theoretically possible for the US to become self-sufficient using solar power. “There is enough sunlight in the Southwest to triple energy consumption,” he said.

Mile high city

Origin of name: James William Denver was a politician, soldier, lawyer and second Californian secretary of state

Area: 401.3 sq km (155 sq miles)

Population: 566,974

Density: 3,698 people/sq km

Annual economy: $1.4 billion (£715 million)

Exchange rate: £1 worth $1.96

Loaf of bread: $2.89

Visa regulations: British citizens do not need a visa for stays of less than 90 days under the US visa waiver programme

Timezone GMT -7 hours

Website denver.org

Travel Airlines offering direct flights from London to Denver include British Airways. Indirect services are offered by American Airlines, United, Northwest, Delta and Continental

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